Wrap Accounts

Wrap accounts, or platforms, are becoming increasingly popular with UK pension savers. Research indicates that nearly half of pension providers and 37% of financial advisers predict that more than £300 billion of assets will be held on wrap platforms by the end of 2012.

How do they work?

Wrap accounts allow you to centralise your personal pension and investment portfolios. In theory, you can put any type of investment into a wrap, including ISAs and personal pension plans such as Sipps.

However, some providers impose restrictions so it is worth checking these first before opening an account. Once the account is up and running, all your holdings can be seen in one place, giving you a complete portfolio view.

Which wrap account should I choose?

As well as what you are allowed to hold within your wrap account, it is a good idea to check what the charges are before choosing a provider. In most cases, you pay an administration fee on the account, but benefit from lower charges on the investments you make within the wrap.

Providers of wrap platforms include Fidelity FundsNetwork, Cofunds available through a broker or independent financial adviser (IFA), Skandia, Standard Life and Hargreaves Lansdown. However, most less experienced investors find it preferable to take professional advice before taking the plunge.

What are wrap accounts?

Wrap Accounts are a method of pension investment that has only recently become available to people in the UK . The concept is by no means new, and wrap accounts are popular in America , New Zealand and South Africa . Several have now been launched in the UK .

What do wrap accounts do?

Wrap accounts allow private investors to centralise their personal pension and investment portfolios into one place. However, they are not investments themselves, and the investor does not make money. Instead, the provider holds and sometimes manages investments. Wrap accounts generally allow investors to take full advantage of all tax benefits with their investments, including ISAs, PEPS, and personal pensions. Wraps have three major components: tax wrappers, any investments, and a front-end system from which people can access investments.