MPS Direct, and why it can be an alternative to going via platform

Key takeaways

• Platform vs Direct choice: MPS can be accessed via platforms or through W1M custody, with both routes supporting the same investment approach.
• Greater tax control in Direct: MPS Direct enables more granular tax management, including ISA allocation, CGT budgeting, and phased investing on transfers.
• More personalised portfolios: Direct custody allows portfolio weights to be adjusted to reflect client circumstances (e.g. existing exposures or preferences).
• Closer portfolio manager access: Clients and advisers benefit from more direct interaction with portfolio managers and more tailored communication.
• Controlled but flexible investment approach: Portfolios remain model-driven but can be adjusted over time and managed within agreed constraints.
• Digital access still included: Online valuations, reporting tools, and portfolio visibility remain available in the direct structure.
• Not a replacement for platforms: Platform and direct routes serve different needs depending on client complexity, tax position, and preference.

Tax advantages

Where assets are held by W1M as opposed to by a platform, together with the adviser, we are able to take a more nuanced stance for each customer, particularly with respect to their tax affairs. For example, we can automatically subscribe to an ISA each year for the customer.

Along similar lines, given W1M's MPS is constructed using four ‘building block’ asset class funds, MPS Direct is able to hold the higher yielding assets (currently Bonds and Real Assets) in the tax-free environment, such as the ISA, for high-rate taxpayers if needed. The lower yielding equity and absolute return components could then be held in a General Investment Account (GIA). Alternatively, it may be the client or the advisers preference to shelter capital growth within the tax wrappers, which can also be accommodated.

 Similarly, where investments or a portfolio is transferred in-specie, our Portfolio Managers are able to phase investments into the models within a CGT budget. We may also be able to hold products, e.g. SIPPs or Offshore Bonds, in our custody, which might not be available or desirable on platform.

Source: W1M

Direct MPS allows for more control over capital gains tax (CGT) – it can ensure that you use as much as possible of your CGT allowance each year and help you to avoid going over the annual CGT allowance if required or crystallise an agreed amount of gain in case client has taken gains elsewhere. Directly managed MPS can also allow us to transfer in a CGT constrained portfolio and manage its holdings across to the model over time.

Portfolio Manager access

Portfolio Managers are able to phase cash into the markets over agreed time periods, giving advisers more control. Should the client wish to have direct contact and performance updates with the PM, this is easier facilitated where W1M have custody of the assets.

A directly held MPS is also able to offer a more personalised portfolio, adjusting the weights of the component funds to suit the clients wishes. For example, if a client has a large exposure to property, then they might wish to hold a lower weighting in the Real Asset Fund than the mandate guidance. Equally, a client may have fixed income exposure elsewhere in their portfolio, and therefore would prefer exposure purely to equity and alternatives.

Digital benefits

At W1M, if the MPS is held directly, then the client is able to take advantage of our digital account opening process and our online portal, where they can find up-to-date valuations of their holdings. These valuations provide a full look-through to the underlying portfolio. Financial advisers are also able to take advantage of an Intelliflo integration – giving them information on the assets that they are monitoring in one back-office system.

For many investors, the choice between platform and direct may not see a material benefit one way or the other. Both Direct MPS and MPS on Platform are accessed via a financial adviser, and for many of their clients both will be a great option, but there are cases where Direct MPS can be the more suitable route to an MPS investment.

Glossary

MPS (Managed Portfolio Service): A discretionary investment service where portfolios are managed to defined risk profiles and investment strategies.

MPS Direct: An MPS structure where assets are held in W1M custody rather than via an external platform, enabling more flexibility and tax control.

Platform (investment platform): A third-party service used for custody, administration, reporting, and trading of investments.

Custody: The holding and safeguarding of client assets. In MPS Direct, this is provided by W1M rather than a platform.

CGT (Capital Gains Tax) management: The process of controlling when gains are realised to optimise use of annual allowances and reduce tax impact.

Tax wrapper (ISA / GIA): Investment accounts with different tax treatments, such as ISAs (tax-free growth) and General Investment Accounts (taxable).