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Ian McKenna: How Axa is getting ready for RDR and beyond

As part of a regular series, Ian McKenna assesses the way Axa Wealth is positioning itself for regulatory change. (see right for his assessment of other firms).

Axa is, in many respects, in a stronger position than many other life companies when it comes to preparing for the RDR. Having disposed of virtually all of its heritage business to Friends Life two years ago, the present Axa Wealth packaged product range owes much of its genealogy to the old Winter-thur products which, it could be argued, were far more aligned to the future regulatory model than those of their peers 15 or even 20 years ago.

Over the last few years, the company has also built a platform proposition with both bundled and unbundled charging structures. Managing director David Thompson says 90 per cent of the platform’s new business is received on an unbundled basis.

When it comes to helping advisers with the RDR transition, the company spent a significant amount of time last year creating resources to help advisers to evolve their businesses.

Thompson observes that when this material was originally launched in the winter, possibly not all IFA firms were as focused on the RDR transition as they might have been but his team has seen a substantial increase in such activity during the first half of this year. This has resulted in a major increase in the level of business transformation support being provided to firms by Axa’s team of platform consultants who are working with advisers in the evolution of their businesses to be able to operate profitably in the new environment.

Having looked at the documentation produced by Axa, I am impressed by the range and depth of the analysis. It is clear the company has taken an even-handed approach to the issues of independent and restricted advice and the differences between each. Axa says it believes the matter of independent versus restricted is a question for individual adviser firms. A range of valuable guidance, covering among other things, the future of financial advice, business transformation and the implications of independence can be downloaded from its website.

As one would expect, the company says it as important to assist advisers in their platform due diligence, so an extensive range of documents to support such decisions can also been downloaded from the website.

Currently, the various RDR support documents are populated across the Axa Wealth website, although a dedicated area to bring these together is, I understand, being created as part of an overall RDR toolkit.

When it comes to its existing packaged product range, the company believes it will only need to make minor changes to the existing products, putting them in a strong position to focus on future business development areas, such as where to take the business and how to help adviser firms after the RDR, with a number of significant new initiatives due to come to market in the next few months.

One example is the Self Investor proposition, a direct-offer platform which is to be made available to advisers who may want to use it as a home for clients who will no longer be economically viable after the RDR.

David Thompson tells me this is a very different proposition to Elevate and the new platform has been designed to deliver a clean and simple experience to users. It is anticipated that consumers will be able to set up their own Isa in under five minutes.

Axa believes this will be a popular option with advisers, allowing them to move suitable customers to a different relationship.

As part of its RDR toolkit, the company is also providing significant guidance on customer segmentation. It believes there will be an appetite for an arrangement where Axa operates the Self Investor platform with the consumer but the adviser is available to provide further advice in the future when it is necessary.

The new proposition will include around 180 funds offering geared investment account and Isa capability.

Axa sees the launch of this service as a demonstration of the way in which it will be looking to work even more closely with advisers as it says in the future relationships will be far more of a partnership between organisations.

The Self Investor platform is intended to be a demonstration of the extent of resources and support Axa can provide to such partnerships.

It is clear from conversations with Axa Wealth that the company is taking a highly innovative approach to the RDR. Some firms may find the prospect of passing over clients to a platform provider for day-to-day administration as alien but one of the main challenges is for businesses to find new ways to collaborate.

This approach may not suit all advisers but it is encouraging to see a provider recognise the extent of the transformation that may be necessary for customer propositions due to the need to keep costs down while maintaining some method for supporting clients for whom traditional ongoing advice is no longer affordable.

The harsh economic reality is that many clients who advisers have wanted to help will not be able to afford the cost of an ongoing service as advisers’ ability to cross- subsidise previously provided by commission, is removed.

If these clients are not to be left without support, it is essential to find new ways to provide services to them.

I think Axa has taken a brave position in being prepared to put forward a very different operating model and it may well be that the most different propositions are the most successful.


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