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Ian McKenna: How ready is Zurich ahead of RDR?

In the latest of a fortnightly series assessing provider readiness for the RDR (see right for related articles), Ian McKenna takes a look at Zurich.

I have seen many organisations doing a great deal to support adviser firms in preparing for the retail distribution review but when it comes to reviewing the list of activities Zurich can claim credit for, it is hard not to be impressed.

In the qualification area, not only is it working closely with the CII in sponsoring the R0 qualifications but it is also producing a series of talking books and R06 case studies in conjunction with the CII and Patterson.

For those working towards AF5, further training collateral is being created with fellow Money Marketing columnist Technical Connection.

In the academy area, it is one of three supporters of SimplyBiz’s New Model Business Academy, it has held two national roadshows to help advisers understand how to value their business and is a patron of the Money Marketing Academy.

In terms of practical assistance with transition, it sponsors the production of the Aifa business transformation toolkit, Fast Forward, which covers, among other things, how to do a business audit, segment customer data, define a proposition and a fee structure. Its sales consultants have recently all been trained to support IFAs in the use of this material.

When it comes to products, Zurich retail pensions and investment proposition director Mark Peters told me recently the company was one of the first providers to adopt a version of factory-gate pricing and its flexible investment bond in the sterling bond sector was able to support customer-agreed remuneration via an establishment charge as early as 2005.

This product has allowed for indemnifying adviser charges, which will not be authorised in the future, but the company believes its experience in delivering factory-gate products will be valuable as it delivers a fully RDR-compliant bond in 2012.

This will be offered as a standalone packaged product as well as being made available on the new platform, the launch of which has been rescheduled for the first quarter of 2012.

The equivalent factory-gate charged pension product will also be revised for standalone and platform use. In the pension market, Zurich products are built on supporting the near or at-retirement market. No regular-premium-only pension contract is currently offered, although the lump sum and consolidation product, which targets the pension transfer market, can be topped up with regular premiums if desired.

The current product has features such as loyalty bonuses that it will not be possible to continue and, again, a revised version will be needed in 2012, although there are no public statements yet about precise timings.

Even with the new platform launched early next year, it will still not be entirely RDR-compliant from day one as the FSA has yet to make all the necessary regulations public.

When it come to servicing legacy products, Zurich, despite having moved relatively late to deliver online valuations via its contract enquiry service, now operates what I understand to be one of the most reliable contract enquiry services in the market.

A wide range of information is also available via its extranet. This has not yet been extended to support mobile devices but it is an area being investigated.
A commitment has been provided to include contract enquiry messages for its products via the platform.

This is important but I believe the packaged product provider and platform market as a whole needs to come to a wider agreement to see how all service manufacturers of whatever shape can support advisers consistently . This will need support across a wide range of life companies and platforms if it is to succeed.

Another area where Zurich is distinguishing itself is the commitment to deep, two-way integration between advisers’ client management systems and their platforms. The merits of this are the subject of much discussion among the provider community but I increasingly find this is a function adviser firms see as valuable.
By making such a commitment, Zurich is increasing the pressure on other platforms, many of which are far less comfortable with this prospect.
Right now, Zurich is saying it is going to deliver such services and is clear that it will build integrations to extract data from client management systems to its platform with the return path being built later.

I have heard others make such promises in the past only to come up short when it came to delivery.

From my discussions with Zurich, I believe it is genuine in its commitment and that is recognises the commercial pressure this will put on its peers. I will be scrutinising how it rolls out and evolves its platform next year.

Zurich has quietly grown a significant market share in the UK over the last few years. Given its considerable financial strength in such volatile financial times, it has a compelling story to tell .

Having put together an impressive pedigree in terms of its contribution to RDR-readiness – in training, business transformation and previous products – with so many new product launches, together with corporate and individual platforms, Zurich is going to be a fascinating company to watch in 2012.

Ian McKenna is director of Financial Technology & Research Centre


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Great article, very insightful. It is all in the delivery for me, so I will be interested to see how much they get over the line. Great commitment though 🙂

  2. Why dont you do a series after implementation and compare what actually happened in each case?
    As you say ‘I have heard others make such promises in the past only to come up short when it came to delivery’.

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