For what its worth, an update on my coming to grips with BT's 'Wrap' product. (Professional super/adviser types here may care to look away to save some cringing or gagging
).
Seems most of the 'big providers' like Colonial First State etc have 'wrap' products. The wrap is a platform where they can tap into hundreds of individual investment products including their own firm's, but many others.
So an investor puts (say) $100K into the BT Wrap and then chooses their own collection of investments from the ~hundreds on offer in the supermarket (20% international share fund put out by A, 35% Australian equities fund sold by B, 10% specialist heath sold by C, 5% Bloggs fixed interest, 17% diversified fund X etc.). BT via subsidiaries then 'manage' and 'administer' investor's investments in the 'wrap' and give me a consolidated report on the
totality of the products in the portfolio. So, rather than 10 different entities to look at, its one at tax time. I can put cash in and take cash - pension proceeds - out. The fundies of course take their cut before distributions. BT charges a fee of ~0.5% for the 'management'.
You might think of a 'wrap' as shopping in a supermarket, vs at a lamb butcher, then a beef butcher, than the apple stall, then the carrot guy, then the Aussie cheese merchant, the overseas cheeses etc. One place, one sales docket at the end.
I could invest in the Wrap as an individual. I do not need an adviser. If I invest direct, there are additional fees BT will charge me (predictably).
BUT if I do have an adviser, my one will recommend a particular mix of products within the wrap to meet my stated objectives. My own 'fund of funds'. At the moment there are 12 products in the mix. They will advise me at least twice a year to keep the mix in 'balance', and continuing advice for a fee of <0.5%. If I start off with them, I can get rid of them at any time and self manage.
The pitch is that this is a better situation than say an 'index fund' - cheap, but fund blindly has to have the index mix in the fund, irrespective of performance, yield etc - and managed funds (most expensive).
Contrary to what i thought, I will have retail investor protection, if my SMSF invest via my financial adviser - that's the key relationship and I'm retail. If the SMSF invests direct to BT/Wrap, it will be treated as a wholesale investment, as the Wrap is the owner of the investment products; the SMSF is the beneficial owner and the relationship is direct with BT.
So, as usual, its fees vs likely returns.
I hate paying fees as much as the next person but I also believe in the (slightly altered) maxim "those who take their own advice have a fool for a client".
I've taken away some "light reading". A lot to digest. For someone who hasn't done badly managing their own investments in the SMSF, its a bit of a wrench to hand some of the hard-earned over and be charged for it.
My current thinking is to check the cost of exiting completely either during the cooling off period and after and then maybe give them 2/3 of the currently available dollop of cash and see how it goes. Vanguard ETFs may get the rest. My broker's gotta get fed as well.
"YMMV" as they say.
