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


Agenda

What do your clients consider value? What determines real value? Delivering that value Effective deployment Summary Questions


Value to clients

Peace of mindReliabilityTrustFamily securityControl

Time SavingRelationshipProactiveAccessibleSave / make money


Value to clients

3. Specialist Advice3. Specialist Advice

• 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


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


Value dependent on experience of client


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


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?


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?.....


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


RDR impact on product market

Transparency Removal of product incentives Homogeneity Narrowing cost differentials Reduced “value-add” in product research


Reduce association with product

Remuneration…


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)


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


Agenda



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


Agenda



Delivering that value

3. Specialist Advice3. Specialist Advice



Significant value to those clients in more sophisticated situations.

1. Transactional / Administration1. Transactional / Administration



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



Value dependent on experience of client.


The enabler - automation

Paperless

Investment

Admin MgtBack Office


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


Determining your platform strategy

Single or multiple platforms? Do you switch between platforms? Systems and tools Different charging structures Justifying your selection


“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


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


Agenda



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


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?


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?


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

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