Financial advisers are increasingly using wrap platforms to manage their clients’ funds, according to new research1 from Investec Bank.

With almost two thirds (63%) of investment focused IFAs surveyed using wrap platforms. Over a third (38%) of those using platforms cite them as the most appropriate portfolio management tool for their clients. Just over a third (35%) use wrap platforms to consolidate clients’ portfolios and one in five (22%) say that it frees up time to spend on asset allocation and investment management.

However, Investec’s survey also shows that the returns on cash deposits held within wrap platforms are often very low. The research reveals that on average they are receiving a return of 1.30% on cash deposits invested through a wrap platform, with more than a quarter (27%) seeing returns of just 0.5% or less for their clients’ cash.

Investec warns that savers with larger deposits could be missing out on higher returns on the cash element of their investment portfolios because IFAs are using products on wrap platforms paying uncompetitive rates of return.

While the majority of IFAs surveyed said that up to 10% of their clients’ wrapped assets are currently in cash, 5% said that they had clients with over half of their wrapped assets in cash.

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Tags: financial advisers, ifas, investec, investment management, portfolio management tool