By Harry Kerr, Director, Avalon Investment Services

Lehman’s, RBS, Northern Rock, Bradford and Bingley, AIG et al….large companies are not lower risk. And so with Wraps, what type of different risks might arise? The fabled term “known knowns” and “unknown unknowns” has been manifest in the credit crunch, while in contrast that overused conventional term “Financial Strength” is today rather elusive and less meaningful- it’s not size that counts.

One giant Global Brand- a Swiss bank – simply shut down its Wrap in 2008 causing chaos for a number of prominent IFAs. Meanwhile small contrasting boutique Wraps are delivering positive customer experience for wealth managers and their private clients. In 2007 another Global Brand- this a time a UK Life Company- also closed its Wrap. It has still not re-entered the Wrap market but left a bitter experience for early IFA adopters who were then understandably cynical about Platforms for some time. What is “strength” for IFAs and their clients?

Uncertainties among big banks and Life Companies in the credit crunch mean that strategies among large Platform/ Wrap providers are far from clear and so a number of boutique Wraps are now challenging larger companies. They are emulating boutique fund managers who have fiercely nurtured Brand kudos and Alpha as part of their quest for investment performance, customer service and independent thinking. Thames River Capital is a quintessential boutique in this regard and likewise, smaller niche Wraps are now following suit- broadband has “democratised” investment as well as everything else.

Correspondingly within Wraps, many IFAs are now adopting the “eggs in baskets” principle and using two or even three providers; for example, a boutique style Wrap along with a bigger brand. This obviously increases Compliance administration but offers a range of different benefits to clients and crucially; “eggs in baskets” is always the number one “unbroken rule” for independent wealth managers ( pace the fore-mentioned Wrap closures)

Avalon offers an Open Architecture Wrap with a boutique style culture complete with three core strengths: - Personal service to IFAs, investment innovation and third; guidance for IFAs making the “Old Model to New Model” transition. Avalon’s clients include discretionary managers, Advisory fund selectors and also Passive advocates – (increasingly using ETFs).

Avalon is not a Platform or Fund Supermarket. It is a transparent Open Architecture WRAP providing on-line “wealth management solutions” involving OEICS, ETFs, stocks, gilts, SIPPs and tax wrappers, VCTs, EIS… and of course, not forgetting- the cuddly toy.