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Nma january 2011


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Nma january 2011

  1. 1. Working with Solicitors New Model Adviser Conference & Awards January 2011 This presentation is directed at professional advisers only and should not be distributed to, or relied upon by retail clients
  2. 2. Drivers of change <ul><li>Duties of Care </li></ul><ul><li>Regulation – Financial Services and Markets Act 2000 </li></ul><ul><li>Legislation impacting on professional work </li></ul><ul><li>Client expectations – service standards </li></ul><ul><li>Competition for clients </li></ul><ul><li>Downward pressure on fees </li></ul><ul><li>Impact of economic conditions </li></ul><ul><li>Risk management </li></ul><ul><li>2011 new Solicitors Code of Conduct – “outcome focussed regulation” </li></ul><ul><li>The Legal Services Act 2007 – England and Wales </li></ul>
  3. 3. Legal Services Act 2007- Background <ul><li>Need for common standards for professional practice </li></ul><ul><li>Office for Fair Trading report 2001 / Sir David Clementi review 2004 </li></ul><ul><ul><li>Different regulators potentially creating confusion, complexity and inconsistency especially for the public </li></ul></ul><ul><ul><li>Identified a need to increase competition, flexibility and choice </li></ul></ul>
  4. 4. Legal Services Act 2007 – Key Provisions <ul><li>Full implementation October 2011 </li></ul><ul><li>Creates a single supervisory board - the Legal Services Board </li></ul><ul><li>Creation of a single point for consumer complaints – the Office for Legal Complaints </li></ul><ul><li>Establishes the Alternative Business Structure (ABS) </li></ul>
  5. 5. Alternative Business Structures <ul><li>The Act removes restrictions on the ownership and structure of legal services businesses </li></ul><ul><li>Up to 100% external ownership </li></ul><ul><li>External investment </li></ul><ul><li>Listed companies </li></ul><ul><li>Ability to create a “one stop shop” for legal and associated non-legal services </li></ul><ul><li>No obligation to form an ABS but competitive pressures may influence decisions </li></ul>
  6. 6. Alternative Business Structures <ul><li>Benefits </li></ul><ul><ul><ul><li>Increased access to finance </li></ul></ul></ul><ul><ul><ul><li>Increased flexibility </li></ul></ul></ul><ul><ul><ul><li>Increased efficiency and economies of scale </li></ul></ul></ul><ul><ul><ul><li>Easier to hire and retain non-legal staff </li></ul></ul></ul><ul><ul><ul><li>New providers should lead to innovation and price reductions </li></ul></ul></ul><ul><ul><ul><li>Increased access to legal services </li></ul></ul></ul><ul><ul><ul><li>Ministry of Justice – Legal Services Reform fact sheet </li></ul></ul></ul>
  7. 7. Implications of the Act <ul><li>Entry of well known brands – “Tesco Law” </li></ul><ul><li>Basic services will be commoditised </li></ul><ul><li>Price will become a basis for competition </li></ul><ul><li>Revenue streams under pressure </li></ul><ul><li>Pressure on costs </li></ul><ul><li>Increasing use of technology </li></ul><ul><li>End to hourly billing?* </li></ul><ul><li>Easy alternatives - online services </li></ul><ul><li>Impact on the number of firms** </li></ul><ul><li>Legal firms may need to change the services they offer </li></ul><ul><li>*Lord Neuberger, Law Society Gazette April 2010 </li></ul><ul><li>**Money Management February 2008 – 35% high street law firms to disappear </li></ul>
  8. 8. Change is happening <ul><li>SAGA Legal Services </li></ul><ul><li>AA – legal documents </li></ul><ul><li>QualitySolicitors – “next generation” of legal services </li></ul><ul><li>Co-op – hiring solicitors and predicting £200m turnover in a few years. </li></ul><ul><li>The Times - May 2010 </li></ul><ul><li>Other retail, banking, and insurance brands expected to enter the market </li></ul>
  9. 9. What are the options? <ul><li>Carry on as now </li></ul><ul><li>Adopt different business structures </li></ul><ul><li>Mergers/acquisitions </li></ul><ul><li>Use technology to raise standards and lower costs </li></ul><ul><li>Specialise in certain markets </li></ul><ul><li>Compete on price or offer bespoke services </li></ul><ul><li>Widen range of services </li></ul><ul><li>Provide holistic advice </li></ul><ul><li>Work with a network of specialists </li></ul>
  10. 10. Potential for referrals <ul><li>81% of solicitors see opportunities for more referrals </li></ul><ul><li>82% of solicitors refer once a month or less </li></ul><ul><li>How IFAs are sourced: </li></ul><ul><ul><li>Personal or professional recommendation – 92% </li></ul></ul><ul><ul><li>Firms with a strong local profile – 51% </li></ul></ul><ul><ul><li>Professional networking – 41% </li></ul></ul><ul><ul><li>IFAs who proactively contact - 38% </li></ul></ul><ul><ul><li>Source: J P Morgan Asset Management Professional Connections Survey 2010 </li></ul></ul>
  11. 11. Referrals <ul><li>Solicitors Regulation Authority </li></ul><ul><ul><li>Ethics Guidance on the meaning of “independent intermediaries” </li></ul></ul><ul><ul><li>Where clients require advice etc. on investing in an asset that can rise or fall in value—for example, an endowment policy, life insurance with an investment element, or a pension policy— rule 9.03(6) of the Solicitors' Code of Conduct 2007 (the Code) states that they must only be referred to independent intermediaries authorised to give investment advice. </li></ul></ul><ul><ul><li>July 2009 </li></ul></ul>
  12. 12. FSMA 2000 <ul><li>Part XX - provision of financial services by members of the Professions </li></ul><ul><li>Exempt regulated activities – what professionals are permitted to do without the need for FSA authorisation </li></ul><ul><li>Incidental and complementary to professional services </li></ul><ul><li>Does not permit the giving of investment advice to clients </li></ul>
  13. 13. Areas of advice <ul><li>Investment matters are increasingly complex </li></ul><ul><li>They are a part of many areas of professional work </li></ul><ul><ul><li>Trusts and estate planning </li></ul></ul><ul><ul><li>Private clients </li></ul></ul><ul><ul><li>Probate </li></ul></ul><ul><ul><li>Financial planning and divorce </li></ul></ul><ul><ul><li>Personal Injury – investment of settlements </li></ul></ul><ul><ul><li>Property department </li></ul></ul><ul><ul><li>Corporate department </li></ul></ul>
  14. 14. Adding value <ul><li>Value IFAs can provide to solicitors </li></ul><ul><ul><li>Building long term relationships </li></ul></ul><ul><ul><li>Retention of clients </li></ul></ul><ul><ul><li>New business from existing clients </li></ul></ul><ul><ul><li>Obtaining referrals from clients </li></ul></ul><ul><ul><li>Business from new clients </li></ul></ul><ul><ul><li>Source: J P Morgan Asset Management Professional Connections Survey 2010 </li></ul></ul>
  15. 15. Issues to consider <ul><li>Be knowledgeable /expert/specialist </li></ul><ul><li>Have appropriate/higher qualifications – STEP/SOLLA/Resolution </li></ul><ul><li>Understand their regulatory regime for financial services </li></ul><ul><li>Understand how they work and their issues </li></ul><ul><li>Provide flexibility of remuneration </li></ul><ul><li>Provide a service to the professional practice </li></ul><ul><li>Have a clear client proposition </li></ul>
  16. 16. In conclusion <ul><li>Benefits you bring to professional firms </li></ul><ul><ul><li>Client management – new and existing </li></ul></ul><ul><ul><li>Risk management </li></ul></ul><ul><ul><li>Operational/regulatory support </li></ul></ul><ul><ul><li>Experience of adapting to significant change </li></ul></ul><ul><ul><li>Additional revenue </li></ul></ul><ul><ul><li>Wider range of services </li></ul></ul><ul><ul><li>Differentiated </li></ul></ul><ul><ul><li>Creation of a “new” business </li></ul></ul>
  17. 17. Important information Information regarding tax and practice is based on AXA Wealth’s understanding of current legislation and HM Revenue & Customs policy/practice. Tax treatment is subject to change and individual circumstances. The information contained in this presentation does not constitute advice. It is designed for financial adviser use only and is not intended for use with individual investors. Any sample screen shots displayed are correct at date of issue but may be subject to change. AXA Wealth, Winterthur Way, Basingstoke, Hampshire, RG21 6SZ. Telephone number: 01256 470707. As part of our commitment to quality service, telephone calls may be recorded. Architas Multi-Manager Limited (No. 06458717), AXA Portfolio Services Limited (No. 1128611), AXA Wealth Services Limited (No. 02238458), Winterthur Life UK Limited (No. 3116645) and AXA Wealth Limited (No. 01225468) are all companies registered in England and limited by shares. Their registered office is 5 Old Broad Street, London, EC2 1AD. Each company promotes and distributes its own products and is authorised and regulated by the Financial Services Authority. AXA Wealth Services Limited also promotes and distributes the products of AXA Isle of Man Limited and AXA Life Europe Limited in the United Kingdom. AXA Wealth is a marketing brand used by these companies. Details of the companies offering specific products are contained within product literature.