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Investor Education > Wrap Accounts > How to choose a wrap account?

HOW TO CHOOSE A WRAP ACCOUNT?

The popularity of wrap accounts has exploded with more than 75% of new investments going into some sort of platform. Using the wrong wrap account can prove to be an expensive option if you are not careful to avoid unnecessary fees. When choosing a wrap account there are some key features you should keep in mind:

Fees: The fee structure of a wrap account is of critical importance, investing in some platforms can be more expensive than just buying a comparable retail fund which undermines the cost effectiveness of using a wrap account in the first place. Find out more about fees

Direct access: Nearly all wrap platforms require you to access the wrap account via an financial adviser, which means you may be forced to pay entry fees on any new money added as well as advisor service fees. Make sure you can either access the platform directly or have the option of transferring to another platform without incurring capital gains tax. In many cases an in specie transfer, which means you can transfer the underlying investments without having to sell them and incur CGT, may be possible.

Avoid nil entry fee or deferred entry fee options: Some wrap accounts offer a nil entry fee or deferred entry fee option but will charge a higher annual management fee.

Consider potential conflicts of interest and compare available options: With nearly 70% of advisers linked to institutions there is a tendency to offer only an employer-owned wrap account. Ask an adviser to explain the number of available options available and carefully compare the fees and charges.

Professional advice: Investing can be complex, and where an investor needs assistance professional advice can be invaluable. How you access this advice can make a big difference to your returns so consider paying for advice separately and execute your own investment transactions through a direct access wrap account.

Compare different badged versions of the same product: Not all badged versions of the same product have the same fees and charges. The fee structure for a badged wrap account is often determined by the selling organisation. The table in this article compares the fees and charges of the largest operators of wrap accounts and their badges.


Accessing a wrap account direct
2020 DIRECTINVEST offers a badged version of the Asgard eWRAP platform, direct without entry fees or adviser service fees. Access the benefits of a wrap account with our low cost transaction only service. 

 

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