Zurich new model adviser jan 2012 final


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  • Good morning, my name is from Zurich Intermediary group Today we’re going to have a look at technology - Explore how it is evolving - to support the changing world of financial planning So our agenda for today is…
  • - look at technology, how it can drive efficiencies - Adviser drivers and pressures are in the changing world of financial services. - Focus will be on platform selection and adoption - an insight into how a firm can better control and implement process - avoid deadends that can destroy efficiency / increase risk. - Consider current regulatory thinking - challenges in respect of platform adoption both today and into the future.
  • Broadly would you agree with this? - Explore each - Focus a little closer on Regulatory pressure
  • 2 key papers issued this year:- Final Guidance on assessing risk and suitability in March 2011 Policy Statement about platforms issued August 2011 Anyone read either of these?!1
  • In a nutshell… Concern around how firms have been assessing risk and suitability. FSA providing guidance to firms to help them ensure they have a robust, independent and repeatable investment process in place and that end solutions are considered and suitable for clients. Adopting technology can help ensure a consistent process. Good practice The firm has decided it wants to provide a ‘premier service’ to its more wealthy clients (which it has defined as having over a certain level of investable assets). It undertook appropriate due diligence on the platform to adopt and considered which clients this approach would be suitable for, and which it would not. Although this service, and the platform used to underpin it proved to be suitable for most clients within its defined segment it did not adopt a ‘one-size-fits-all’ approach and continued to recommend products off-platform on those occasions where the platform-based solution was not suitable for the individual client’s needs and circumstances. Poor practice Individual advisers within the firm adopted different platforms from each other. There was no consistent approach for providing services for clients. There was no clear understanding by advisers, or the compliance officer, about when their platform-based services were suitable and not suitable. This risked unsuitable advice, given the lack of understanding about the suitability issues. Finally, there was the potential for costs for clients to be higher than would have been the case had the firm used platforms in a more focused and economic way.
  • Independence - consider this in the context of platforms; sole use of one platform could put your business in the position of being considered Restricted by the FSA – is this a position you want to be in? Customer cost – mention Capita Comparitor tool, launched recently. Ensure that you are documenting to the client why one option is better than the another (this might include Platform vs Platform or Off Platform vs Platform. Full recommendations should be presented to the client including cost of current position vs cost of future position (based on recommendation) Whole debate around rebates goes on – the FSA stated in this paper they need to look into these in more detail and consider the impacts of removing or leaving rebates so we wait with baited breath on this one.
  • Transactional – upfront commissions New model – fee charging, ongoing remuneration We are an industry in transition. How will you put the building blocks in place to ensure that you are one of the winners?
  • One line comes up at a time. Charging – how many of you are already charging fees? Consider cashflow… transition from commission to fees is bound to have an impact on cashflow so the sooner you make the move, the longer you have to make the transition which will lessen the impact on cashflow. Don’t wait till 1 st Jan 2013!! This should all form part of your business and client proposition. Platforms must support your proposition, must allow you to do all these things the way you want to do them not force you to do things differently or indeed not at all.
  • Then there are the items that might well be used internally but can also be used to interact/interface with clients. We have separated Platform and Extranet, but in fact you could have these combined All this put together will give a robust infrastructure for your business.
  • Focus and clarity in each of these 3 key areas sill provide a good grounding for successful business proposition moving forward. We will be working with other partners to deliver a workshop programme during next year that is aimed at supporting you in the development of your business proposition moving up to and beyond RDR
  • Need to consider how will you achieve this? Last 3 bullets are regulatory statements from FSA FSA do understand IFAs need to make this transition.
  • Final point of previous slide highlighted the use of technology in driving efficiency. We will now look at this in more detail. So how do you go about successfully integrating technology within your business? Need to start with a Source of Truth for all of your client data. On screen we have displayed this as a back office system, but it could be elsewhere. Doesn’t really matter, the point is that you have one and that it meets the needs of the business and has the capability to interact with other system Who here uses a BOS? You must have an accurate data – data protection
  • Research: Aequos, exchange, O&M, synaptics Planning tools: ATR, investment process, CGT calcs, oeic v bond, cashflow analysis
  • Key questions around platform adoption Bringing in key personnel is absolutely necessary - greater buy-in, drives business efficiency What is your long term strategy Is it appropriate for your clients?
  • First 2 should be positives! But….. … if processes not in place and roles not defined. If unclear, can have adverse effect – decreased efficiency, inc costs Refocus on meeting regulatory requirements – One platform fits all might drive business efficiency but how will this be viewed? Too many platforms = inefficiency. What is right for you? Check the t&cs of the platform re contacting clients – what is their view on client ownership?
  • Anyone here been on the FSA website and read this factsheet?
  • Walk through each of the above highlighting why they are important and what they mean Is the provider of the platform fully committed to the UK market? Are they financially strong? Are the tools independent?! Training and Support Services; came out poorly in recent Money Marketing and Defaqto surveys. As mentioned before, without all these things it is easy for the platform to create inefficiencies.
  • Selecting the right platform should also focus on ensuring the appropriate and best outcome for clients
  • In addition there must be benefits for the client such as….
  • Ok, a bit flippant! Answer is 42?! In reality very simple.
  • Look at phones – hasn’t technology moved on?! Same for platforms, many in market based on old technology, hard to develop. Platform must use next-gen technology. Platform provider must have a long ter, strategy to support the UK advice sector. Must also have a great deal of financial strength. Should be looking for a long term relationship between adviser firm and platform. Continuous feedback loop, ongoing service and support. Also consumers changing… thinks developing regularly. Your business model will change and the platform and platforms that support it must be able to develop as well.
  • Consider…. 1 st 4 bullets Know that… next 2 bullets Understand… next one and Realise that… last bullet You must take all these into account and make sure you make a well informed platform choice
  • Zurich new model adviser jan 2012 final

    1. 1. TECHNOLOGY, AN EVOLVING WORLD New Model Adviser Conference 13th & 14th January 2012
    2. 2. Agenda <ul><li>Adviser drivers and pressures </li></ul><ul><li>The regulator ’ s view </li></ul><ul><li>An industry in transition </li></ul><ul><li>An evolving proposition </li></ul><ul><li>Technology driving efficiency </li></ul><ul><li>Platform adoption </li></ul><ul><li>Measuring success </li></ul><ul><li>Future-proofing </li></ul>
    3. 3. Adviser drivers New Model - raising their game Segmented approach Using technology well Competitor Pressure Consumer Pressure Better informed More demanding Less loyal Regulatory Pressure An industry in transition Retail Distribution Review Treating Customers Fairly Adviser Drivers Build sustainable business value Consistent earnings over the lifetime of the client relationship
    4. 4. PLATFORM PAPER GOOD PRACTICE # RISK PAPERS The view of the FSA <ul><li>‘ The high number of unsuitable investment selections we see in the pensions and investment markets is still a significant concern’* </li></ul><ul><li>‘ It is important that firms put plans in place sooner rather than later… to ensure the future sustainability of their business model’* </li></ul><ul><li>Due Diligence </li></ul><ul><li>Client suitability </li></ul>
    5. 5. GOOD PRACTICE # RISK PAPERS POOR PRACTICE # The view of the FSA <ul><li>‘ The high number of unsuitable investment selections we see in the pensions and investment markets is still a significant concern’* </li></ul>* Financial Risk OutlookRetail Intermediaries Sector Digest 2010 # Investment adviceand platforms: Good and poor practice report March 2010 <ul><li>Due Diligence </li></ul><ul><li>Client suitability </li></ul><ul><li>On vs Off platform </li></ul><ul><li>One size fits all </li></ul><ul><li>Inconsistent approach </li></ul><ul><li>Cost implications </li></ul><ul><li>‘ It is important that firms put plans in place sooner rather than later… to ensure the future sustainability of their business model’* </li></ul>
    6. 6. PLATFORM PAPER (PS 11/9) The view of the FSA Independence ‘ To meet the independence rule, firms will need to be able to identify clients for whom a particular platform-based service is not suitable, and advise them ‘off-platform’. Annex 3, point 5, page 2 ‘ We think that it is likely to be very rare, if possible at all, that a firm could use one platform for all clients and meet the independence rule’ Annex 3, point 5, page 2 ‘ We think an independent firm faces significant challenges in complying with COBS 6.2A.4AR and COBS 6.2A.4BG if they exclusively or extensively use a platform that only features products which pay the platform a rebate’ P age 14, penultimate paragraph Consumer cost ‘ If being on the platform gives the client a materially worse outcome than being off it, (for example, the costs are significantly higher on the platform), the adviser should clearly not be recommending using a platform for that client.’ page 14, paragraph 1 Fund Manager Rebates ‘ We believe that such payments can create a conflict of interest, which may result in consumer detriment, and that they result in a marketplace in which consumers cannot easily make price comparisons between different platforms, and between the products which are available on these’ P age 18, paragraph 2 Cash Rebates ‘ We have decided that we would ultimately like to move to a position where cash rebates are banned.’ P age 22, paragraph 2
    7. 7. An industry in transition Time No. of Advisers New Model Transactional indicative market trend
    8. 8. An evolving proposition Investment Strategy DFMs MoM / FoF Investment Committee Breadth of assets Segmented approach Review Process Engage with all clients? Who does what? Client support model Initial adviser charge? Ongoing adviser charge? Adviser switch charges? Adviser transactional charges? Cash flow
    9. 9. Technology driving efficiency
    10. 10. An evolving proposition
    11. 11. Delivering an evolving proposition <ul><li>Where you are now and where you want to be </li></ul><ul><li>Managing costs </li></ul><ul><li>Managing for profit </li></ul><ul><li>Driving efficiency </li></ul><ul><ul><li>Robust and repeatable process </li></ul></ul><ul><ul><li>Business risk reduction </li></ul></ul><ul><ul><li>Use of technology </li></ul></ul>
    12. 12. Technology driving efficiency
    13. 13. Technology driving efficiency
    14. 14. Platform adoption - selecting a platform <ul><li>Start by defining outcomes required </li></ul><ul><li>Is a platform appropriate? </li></ul><ul><li>Single or multiple solutions? </li></ul><ul><li>Long term strategy </li></ul><ul><ul><li>Independent / restricted </li></ul></ul><ul><ul><li>Relationships with platforms? </li></ul></ul><ul><ul><li>Input into platform proposition? </li></ul></ul><ul><li>Include key personnel in selection process </li></ul>
    15. 15. Platform adoption - selecting a platform <ul><li>Potential benefits of using a platform </li></ul><ul><ul><li>Implement and execute the client ’s plan </li></ul></ul><ul><ul><li>Practice management / efficiency </li></ul></ul><ul><ul><li>Integration with review process </li></ul></ul><ul><ul><li>Investment choice - whole of market? </li></ul></ul><ul><ul><li>Delivery and control mechanism for investment service </li></ul></ul><ul><ul><li>Client access </li></ul></ul>
    16. 16. <ul><li>Potential pitfalls of using a platform </li></ul><ul><ul><li>Increased efficiency? </li></ul></ul><ul><ul><li>Driving down costs? </li></ul></ul><ul><ul><li>Ownership of clients? </li></ul></ul><ul><ul><li>Meeting regulatory requirements? </li></ul></ul><ul><ul><li>Achieve desired client outcomes? </li></ul></ul>Platform adoption - selecting a platform
    17. 17. Platform adoption - Due Diligence What are the nine key areas identified by the regulator?
    18. 18. <ul><li>Platform reputation and financial standing </li></ul><ul><li>T&Cs of using the platform </li></ul><ul><li>Cost, charging structure and transparency of charges </li></ul><ul><li>Range of funds and tax wrappers </li></ul><ul><li>Range of asset classes </li></ul><ul><li>Functionality </li></ul><ul><li>Accessibility </li></ul><ul><li>Additional tools such as Risk Profiling and Asset Allocation </li></ul><ul><li>Training and support services </li></ul>Platform adoption - Due Diligence
    19. 19. <ul><ul><li>Will each client be in a better position? </li></ul></ul><ul><ul><li>Are you able to illustrate the benefits clearly? </li></ul></ul><ul><ul><li>Has the process for selecting a platform for each client been impartial and objective? </li></ul></ul><ul><ul><li>Is cost the only consideration? </li></ul></ul>Platform adoption – client outcomes
    20. 20. <ul><ul><li>Transparency of charges and of their investment portfolio </li></ul></ul><ul><ul><li>Ease of access with all information in one place </li></ul></ul><ul><ul><li>Access to wide range of product wrapper types and investments </li></ul></ul><ul><ul><li>Up-to-date valuations </li></ul></ul><ul><ul><li>Ability to act promptly can minimise exposure in rapidly </li></ul></ul><ul><ul><li>changing market </li></ul></ul><ul><ul><li>Opportunity to focus on longer term goals and asset allocations </li></ul></ul><ul><ul><li>Efficiency to adviser services should hopefully deliver cost </li></ul></ul><ul><ul><li>savings to customers </li></ul></ul>Platform adoption – client benefits
    22. 22. Future-proof <ul><li>Next-generation technology </li></ul><ul><li>Operate a commercially sustainable business model </li></ul><ul><li>Aligned strategy to support you and your business </li></ul><ul><li>Long term business partnership </li></ul><ul><li>Ability to adapt as your business adapts </li></ul>
    23. 23. Summary <ul><li>What are your drivers? </li></ul><ul><li>How are you meeting regulatory requirements? </li></ul><ul><li>How are you ensuring quality outcomes for your clients? </li></ul><ul><li>What is an effective and attractive business proposition for you and your clients? </li></ul><ul><li>Effective technology integration is key to business efficiency </li></ul><ul><li>Selecting the right platform/s is crucial </li></ul><ul><li>Understand what success looks like and how it will be measured </li></ul><ul><li>Technology, like your business, is not just here for today – how are you future-proofing your business? </li></ul>
    24. 24. QUESTIONS