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Transcript of Axa Distribution Services
The drive to build value:For clients, advisers & practices
14-15 January 2010
This presentation is for professional financial advisers only. It should not to be distributed to, or relied upon by, retail clients.
09/04/23 The drive to build value Jan2010
The drive to build value: for clients, advisers & practicesIs... A clearly defined vision for your business A clearly defined offer for your client A clearly defined service offer A clearly defined investment offer
Clearly define where you add value to your clients and where you build value in your business
09/04/23 The drive to build value Jan2010
Agenda
What do your clients consider value? What determines real value? Delivering that value Effective deployment Summary Questions
09/04/23 The drive to build value Jan2010
Value to clients
Peace of mindReliabilityTrustFamily securityControl
Time SavingRelationshipProactiveAccessibleSave / make money
09/04/23 The drive to build value Jan2010
Value to clients
3. Specialist Advice3. Specialist Advice
• Ability to utilise knowledge• Highly technical / complex markets• Discretionary Fund Management
• Ability to utilise knowledge• Highly technical / complex markets• Discretionary Fund Management
Significant value to those clients in more sophisticated situations
1. Transactional / Administration1. Transactional / Administration
• Product selection• Putting a policy in place• Providing valuations• Maintaining files & records
• Product selection• Putting a policy in place• Providing valuations• Maintaining files & records
Limited value in client’s mind
4. Service / Relationship4. Service / Relationship
• Delivering on promises• Strategic Financial Planning• Disciplined reviews• Understanding client needs/goals• Trust, accessibility etc
• Delivering on promises• Strategic Financial Planning• Disciplined reviews• Understanding client needs/goals• Trust, accessibility etc
Highly valued by all clients
2. Advice2. Advice
• Generic advice on product• Basic information provision
• Generic advice on product• Basic information provision
Value dependent on experience of client
09/04/23 The drive to build value Jan2010
The advice market dilemma
Mis-match between how time is spent and what clients valueT
ime
spen
t b
y A
dvi
ser
Adviser Activity
Value perceived by client
Client Value
ADVICE PROCESS
Fact Build Quote Select Advise Monitor Review AmendFind Plan Research Product
09/04/23 The drive to build value Jan2010
Research:What are we trying to achieve?
Provider AXA Life
Clerical Medical
Friends Prov
L&G Sterling Ass
Pru Aegon SE
Skandia Life
Lincoln
Product Easy Access
My Normal
Wealth Sol Bond
Portfolio Bond
Inv. Bond Inv Plan Est. Charge
Inv. Bond
Inv. Bond
10 year RIY
(£100k)1.2% 0.9% 1.1% 1.2% 1.1% 0.9% 0.9% 1.0% 1.0%
Figures produced December 2009. Source: The Exchange. Figures assume the standard initial commission is taken. In cases where the commission and charges are flexed we have assumed a similar or equal commission to the AXA Standard initial commission (6.25%) . Figures based on a male aged 50, investing in the default fund in a bond with an exit fee. It is calculated using charges.
Most product wrappers have very similar charges
The ‘benefits’ of product wrapper choice?
09/04/23 The drive to build value Jan2010
If only it were that simple…
Comparing costs have to make certain assumptions: size of portfolios overall and by wrapper / products new money added funds chosen level of switching activity length of time money invested additional features.
Do we review the advice every time one or more of these factors changes? Cost of time and restructuring if we do? And what about platforms?.....
09/04/23 The drive to build value Jan2010
Platforms: Generally 0.1 – 0.2%
1.80%
2.00%
2.20%
2.40%
2.60%
2.80%
3.00%
15
65
115
165
215
265
315
365
415
465
515
565
615
665
715
765
815
865
915
965
1,0
15
1,0
65
1,1
15
1,1
65
1,2
15
1,2
65
1,3
15
1,3
65
1,4
15
1,4
65
Single Premium (£k)
RIY
09/04/23 The drive to build value Jan2010
RDR impact on product market
Transparency Removal of product incentives Homogeneity Narrowing cost differentials Reduced “value-add” in product research
09/04/23 The drive to build value Jan2010
Reduce association with product
Remuneration…
09/04/23 The drive to build value Jan2010
Two clients: Each have £250k invested
Client A Earning £150k p.a. Estate £2 million Wants 2 visits & reports p.a.
to their house Adventurous investor 20 funds / investments Discusses all aspects of
financial affairs
Client B Earning £50k pa. Estate £1 million Wants 1 visits & reports p.a.
in your office Cautious investor 10 funds / investments Only discusses investments
Both typically pay 0.5% (£1,250)
09/04/23 The drive to build value Jan2010
Payment independent of product
Is value… directly and solely linked to FUM? dependent on the sale of a product? time related?
Impartiality – payment for advice & service
09/04/23 The drive to build value Jan2010
Agenda
What do your clients consider value? What determines real value? Delivering that value Effective deployment Summary Questions
09/04/23 The drive to build value Jan2010
What elements create value for clients?
Impartiality
Accessibility
Reduced administration
time / paper
Speed to act
Speed &
accuracy of
info
Tax Optimisation
Ongoing
review
Investment strategy
Plan /Strategy
GoalsObjectives
Security for Family
Sense of control
Peace of mind
Value for money
09/04/23 The drive to build value Jan2010
Agenda
What do your clients consider value? What determines real value? Delivering that value Effective deployment Summary Questions
09/04/23 The drive to build value Jan2010
Delivering that value
3. Specialist Advice3. Specialist Advice
• Ability to utilise knowledge• Highly technical / complex markets• Discretionary Fund Management
• Ability to utilise knowledge• Highly technical / complex markets• Discretionary Fund Management
Significant value to those clients in more sophisticated situations.
1. Transactional / Administration1. Transactional / Administration
• Product selection• Putting a policy in place• Providing valuations• Maintaining files & records
• Product selection• Putting a policy in place• Providing valuations• Maintaining files & records
Limited value in client’s mind.
4. Service / Relationship4. Service / Relationship
• Delivering on promises• Strategic Financial Planning• Disciplined reviews• Knowing and understanding
client• Trust, accessibility etc
• Delivering on promises• Strategic Financial Planning• Disciplined reviews• Knowing and understanding
client• Trust, accessibility etc
Highly valued by all clients.
2. Advice2. Advice
• Generic advice on product• Basic information provision
• Generic advice on product• Basic information provision
Value dependent on experience of client.
09/04/23 The drive to build value Jan2010
The enabler - automation
Paperless
Investment
Admin MgtBack Office
09/04/23 The drive to build value Jan2010
IFAs recognise positive impact of platforms
Source: The Platforum August 2009
Not right for all or not used effectively?
73%
23%4%
Dramatic improvement Marginal improvement
Negative impact
09/04/23 The drive to build value Jan2010
Determining your platform strategy
Single or multiple platforms? Do you switch between platforms? Systems and tools Different charging structures Justifying your selection
09/04/23 The drive to build value Jan2010
“Predominantly” single platform approach
To support: Efficiency Consistency Streamlined systems and processes Standard charging Smarter monitoring and management Overall value add for service / relationship based proposition
09/04/23 The drive to build value Jan2010
Time saving: Putting it all together
Time forvalue add
Ad
min
/ Pa
pe
r
On
go
ing
en
qu
iries
Ne
w M
on
ey
Sw
itch
ing
Re
vie
w
Va
lua
tion
s
Re
co
nc
iliatio
n
Pro
ce
ss
ing
Re
se
arc
h &
R
ea
so
ns
Wh
y
Marketing
Time for value add
Ad
min
/ Pa
pe
r
On
go
ing
en
qu
iries
Ne
w M
on
ey
Sw
itch
ing
Re
vie
w
Va
lua
tion
s
Re
co
nc
iliatio
n
Pro
ce
ss
ing
Re
se
arc
h &
R
ea
so
ns
Wh
y
Marketing
09/04/23 The drive to build value Jan2010
Agenda
What do your clients consider value? What determines real value? Delivering that value Effective deployment Summary Questions
09/04/23 The drive to build value Jan2010
Pricing / Proposition options
B. Reduced servicesB. Reduced services
• ½% adviser charge• No extra cost• Client gets less
• ½% adviser charge• No extra cost• Client gets less
Reduced value for money
C. Price RiseC. Price Rise
• E.g. ½ to 1% adviser charge• Extra ½% cost• No change to services
• E.g. ½ to 1% adviser charge• Extra ½% cost• No change to services
Reduced value for money
D. “Value” RiseD. “Value” Rise
• Introduce Platform• Platform charge e.g. ½%• ½% adviser charge• Improved and more services
• Introduce Platform• Platform charge e.g. ½%• ½% adviser charge• Improved and more services
Improved value for money
A. Pressure on ProfitA. Pressure on Profit
• ½% adviser charge• No extra cost• Maintain services
• ½% adviser charge• No extra cost• Maintain services
Value for money under duress
Same Fee Increased Fee
09/04/23 The drive to build value Jan2010
The “Value” rise
Immediate access to current values Consolidated view Wider fund choice / investment options Speed to move, withdraw or invest Opportunity to reduce switch costs and set up charges Improved tax management Reduced drag costs on returns / no time out of market Asset Allocation monitored & managed across all investments not just
product by product Time dedicated to clients’ strategic needs, concerns and objectives Reduced paper / administration
WITHOUT A WRAP PLATFORM, HOW MUCH WOULD IT COST AN IFA FIRM TO DELIVER ALL THIS AND AT WHAT RISK?
09/04/23 The drive to build value Jan2010
Transition is not just a change of IT…
... it’s a metamorphosisWhere youwant to be
Skills / knowledge
People
Systems
Structure
Processes
Segmentation
Pricing
Proposition
Strategy
VisionWherenow?
09/04/23 The drive to build value Jan2010
Thank You
Any questions?
09/04/23
09/04/23 The drive to build value Jan201009/04/23
Elevate, PO Box 476, Bristol, BS32 4UY. Telephone: 0845 600 2399.
AXA is a worldwide leader in financial protection and wealth management. In the UK, one of the AXA companies is AXA Portfolio Services Limited, which uses the Elevate trading style. AXA Portfolio Services Limited is authorised and regulated by the Financial Services Authority. It is a company limited by shares, registered in England No. 1128611. Registered office: 5 Old Broad Street, London, EC2N 1AD. As part of our commitment to quality service, telephone calls may be recorded.
This presentation is for professional financial advisers only.It should not be distributed to, or relied upon by, retail clients