Zurich new model adviser jan 2012 final

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TECHNOLOGY, AN EVOLVING WORLD

New Model Adviser Conference13th & 14th January 2012

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Agenda

• Adviser drivers and pressures

• The regulator’s view

• An industry in transition

• An evolving proposition

• Technology driving efficiency

• Platform adoption

• Measuring success

• Future-proofing

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Adviser drivers

Competitor Competitor PressurePressure

New Model - raising their

game

Segmented approach

Using technology well

Consumer Consumer PressurePressureBetter informed

More demanding

Less loyal

Regulatory Regulatory PressurePressure

An industry in transition

Retail Distribution Review

Treating Customers Fairly

Adviser DriversAdviser Drivers

Build sustainable business value

Consistent earnings over the lifetime of the client relationship

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PLATFORM PAPER

GOOD PRACTICE#

RISK PAPERS

The view of the FSA

•‘The high number of unsuitable investment selections we see in the pensions and investment markets is still a significant concern’*•‘It is important that firms put plans in place sooner rather than later… to ensure the future sustainability of their business model’*

•Due Diligence•Client

suitability

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GOOD PRACTICE#

RISK PAPERS

POOR PRACTICE#

The view of the FSA

•‘The high number of unsuitable investment selections we see in the pensions and investment markets is still a significant concern’*

* Financial Risk OutlookRetail Intermediaries Sector Digest 2010# Investment adviceand platforms: Good and poor practice report March 2010

•Due Diligence•Client suitability•On vs Off platform

•One size fits all• Inconsistent

approach•Cost implications

•‘It is important that firms put plans in place sooner rather than later… to ensure the future sustainability of their business model’*

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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 oneplatform 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’ Page 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’ Page 18, paragraph 2

Cash Rebates‘We have decided that we would ultimately like to move to a position where cash rebates are banned.’ Page 22, paragraph 2

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An industry in transition

Time

No.

of

Advis

ers

New Model

Transactional

indicative market trend

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An evolving proposition

Investment Strategy

DFMsMoM / FoFInvestmentCommittee

Breadth ofassets

Segmentedapproach

ReviewProcess

Engage with all clients?

Who does what?

Client support model

Initial adviser charge?

Ongoing adviser charge?

Adviser switch charges?

Adviser transactional

charges?Cash flow

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An evolving proposition

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Delivering an evolving proposition

• Where you are now and where you want to be

• Managing costs

• Managing for profit

• Driving efficiency

o Robust and repeatable process

o Business risk reduction

o Use of technology

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Platform adoption - selecting a platform

• Start by defining outcomes required

• Is a platform appropriate?

• Single or multiple solutions?

• Long term strategy

o Independent / restricted

o Relationships with platforms?

o Input into platform proposition?

• Include key personnel in selection process

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Platform adoption - selecting a platform

• Potential benefits of using a platform

o Implement and execute the client’s plan

o Practice management / efficiency

o Integration with review process

o Investment choice - whole of market?

o Delivery and control mechanism for investment

service

o Client access

• Potential pitfalls of using a platform

o Increased efficiency?

o Driving down costs?

o Ownership of clients?

o Meeting regulatory requirements?

o Achieve desired client outcomes?

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Platform adoption - selecting a platform

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Platform adoption - Due Diligence

What are the nine key areas identified by the

regulator?

• Platform reputation and financial standing

• T&Cs of using the platform

• Cost, charging structure and transparency of

charges

• Range of funds and tax wrappers

• Range of asset classes

• Functionality

• Accessibility

• Additional tools such as Risk Profiling and Asset

Allocation

• Training and support services18

Platform adoption - Due Diligence

• Will each client be in a better position?

• Are you able to illustrate the benefits clearly?

• Has the process for selecting a platform for each

client been impartial and objective?

• Is cost the only consideration?

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Platform adoption – client outcomes

• Transparency of charges and of their investment

portfolio

• Ease of access with all information in one place

• Access to wide range of product wrapper types and

investments

• Up-to-date valuations

• Ability to act promptly can minimise exposure in

rapidly

changing market

• Opportunity to focus on longer term goals and asset

allocations

• Efficiency to adviser services should hopefully deliver

cost

savings to customers

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Platform adoption – client benefits

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Measuring success

WHAT DO WE DO?

HOW DO WE DO IT?

WHAT DOES IT COST US?

WHAT WE GET

+ + =

WHAT DO THEY DO?

HOW DO THEY DO IT?

WHAT DOES IT COST THEM?

WHAT THEY GET

+ + =

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Future-proof

• Next-generation technology

• Operate a commercially sustainable business

model

• Aligned strategy to support you and your business

• Long term business partnership

• Ability to adapt as your business adapts

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Summary

• What are your drivers?

• How are you meeting regulatory requirements?

• How are you ensuring quality outcomes for your

clients?

• What is an effective and attractive business proposition

for you and your clients?

• Effective technology integration is key to business

efficiency

• Selecting the right platform/s is crucial

• Understand what success looks like and how it will be

measured

• Technology, like your business, is not just here for

today – how are you future-proofing your business?

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QUESTIONS

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TECHNOLOGY, AN EVOLVING WORLD