fbpx

Email: office@bloomfieldfinancial.co.uk

Call: 0191 406 6453

Bloomfield Financial's Blog

What is a wealth platform?

Written by John J Bloomfield

What is a wealth platform

You have probably heard the term 'wealth platform' in recent times the term is often used interchangeably with other terms such as 'fund supermarket' and 'wrap' but rarely is an explanation given to the reader of what a 'wealth platform' actually is. Perhaps this is understandable as they are indeed a relatively modern invention and there are many variations on a theme only really made possible by the existence of the internet and electronic trading systems.

Before 'Wealth Platforms' came along if you wanted to invest in say a couple of individual investment funds for your ISA say and one was run by Invesco Perpetual and the other by M&G for example you couldn't do it. As your ISA could only be held with one provider then you would have to choose with whom to invest M&G or Invesco Perpetual, or if you wanted to invest with both one of the investments would not have the benefit of being classed as an ISA.

So along came the forerunner of today's 'Wealth Platforms' Fund Supermarkets. Now an investor could open their ISA with the Fund Supermarket who would buy funds from both M&G and Invesco Perpetual on the investors behalf holding them as trustee. The aim of the fund supermarkets was to offer an investor access to virtually every fund available in the UK within one product. The fund managers were keen to support these as it is much cheaper to deal with just a few big investors (the fund supermarkets) rather than thousands of smaller investors.

Once 'Fund Supermarkets' became established they began to evolve so that rather than just offerring simple investments like ISAs they could also provide access to pensions and other 'tax wrappers' which is why they are sometimes called 'wraps'.

Today there are a plethora of Wealth Platforms available all with differrent offerring some have evolved little from the 'Fund Supermarket' days simply providing a vehicle to invest with lots of fund managers at once and others have moved towards providing valauable tools to help consumers and their advisers invest better, understand and monitor their money, and perform tax calculations.

What differentiates most Wealth Platforms in today's world is the price they charge and the tools they offer, getting the right balance is the key to getting the right 'Wealth Platform'. Most offer access to all the same funds as each other but some have gone a step further and used their size to get fund managers to design specific funds for them and force the costs down for investors.

Personally I think the right Wealth Platform is essential to anyone trying to build a solid financial future and I belive my preferred Wealth Platform offers a balance of features and costs that my clients can truly benefit from.

If you'd like to talk about what our preferred Wealth Platform, please feel free to get in touch.