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NU answers IFAs&#39 concerns

1 With previous major mergers we have seen it take up to six months before the administration service is back to normal and administration was not greatly improved when GA and CU merged. The fact that we are going through this again is of concern to IFAs. What assurances can you give that this merger will be different?

We recognise the importance of service to IFAs and understand the concerns they have. Our experience of previous mergers and the feedback from IFAs has enabled us to target those areas critical to effective service delivery. We have adopted the best from both NU and CGU existing customer service models.

We have over 300 IFA sales consultants across 38 regional offices supported by 220 IFA support staff. We also have 3,000 IFA customer service staff in five service centres across the UK. This, I believe, shows our commit-ment to provide IFAs and their clients with a first-class service.

2 I want to know what the company is proposing to do about business to business and consumer communications – how is NU going to help my company communicate and deliver to consumers electronically?

The future is about developing common components and standards, which help IFAs, deploy product propositions within their own services.

Clearly, we will also be looking for solid business plans to support these new initiatives. Our new IFA extranet will allow greater access to information about our new organisation and propositions, together with the functionality for IFAs to service clientpolicies online.

The eIFA is a relatively new phenomenon and one we aim to cater well for. By the middle of next year we will have 50 per cent of our offerings online.

3 How do you think new technology portals and services you provide will affect the industry?

Norwich Union will have an industry-leading e-commerce capability. By this time next year, we will be able to process as much as 50 per cent of all business electronically.

We already offer our pre-stakeholder phase pension – Your Pension @ Norwich Union – online. We are also providing links to all our main third-party service providers as well as to our major business connections.

Our IFA extranet service createsa platform for much greater interactive servicing, providing IFAs with enhanced access to Norwich Union information about products, our serv-ices and structure together with the functionality for IFAs to service client policies online. We will rapidly expand our e-commerce capabilities so we will be offering additional services such as group enquiry services for pension contracts, remote publishing, bulk data downloads and links to business television seminars. New technology will enable us to progress product development in a profitable way, giving IFAs speed of service and a competitive edge in the marketplace.

4 What are you doing to update your internal operating systems to deal with industry changes especially stakeholder? NU has fallen behind with technology. What developments are proposed and when and how do IFAs position themselves to integrate your offering into their services?

We have already launched our pre-stakeholder proposition electronically, with substantial support for IFAs through our extranet service.

I place a high emphasis on ensuring that our internal systems meet the needs of our business, our customers and IFAs. We are continuing to invest in them to ensure that we are strongly placed for industry changes such as stakeholder, developing new generation systems to position us best for the future.

We do not see ourselves as being behind. It is vital that we launch into the stakeholder environment using e-commerce solutions. Both CGU and Norwich Union were at the forefront of a number of industrywide developments – for example the New Business submission initiative, which enables proposal details to be copied online and sent from the IFA to the provider.

We will continue to invest heavily in these developments across the whole range of propositions and to develop a new breed of e-enabled products.

The challenge for IFAs is to ensure that their systems are fully integrated so the e-commerce element is merely a by-product of the overall process.

5 Does NU intend to support IFAs solely or will it develop its direct salesforce?

Norwich Union is the leading IFA provider in the UK and we value the business we get from our IFAs highly. Our involvement in other channels can only enhance our ability to serve the IFA market by providing us with the opportunity to develop our experience. NU will continue to have a multi-distribution capability with sales from all channels supporting our ability to offer market-backing value for money products. Nonetheless, the IFA channel, which generates almost 80 per cent of all our sales, continues to be a high priority. We have the UK&#39s biggest IFA consultant salesforce in place ready to do business. We are not complacent and realise we have a lot to do in terms of addressing IFA requirements going forwards.

6 We continue to hear that organisations are IFA-focused. What are the three top priorities for the new NU team to focus on?

First, to ensure we continue to provide fast, efficient and hassle-free service, through our regionally based sales support and customer service teams.

Second, to support IFAs with strong consumer-led products which are e-enabled and to assist IFAs in moving to the 1 per cent environment.

Third, to help IFAs grow their business by developing existing and new marketing opportunities through our highly trained broker consultants and specialist teams.

7 What will happen to the CGU brand after all the time and money spent on building it up after the last merger?

We made a decision at the time of the merger, to focus our efforts on developing one brand – quickly making this as strong as possible. Our decision to adopt the Norwich Union brand was based on the fact that it is undeniably more established and better known to customers.

This does not in any way undermine the importance of the work done to establish the CGU brand. Indeed, the growing awareness of the CGU name has been an important element in the positioning of this merger as it contributed to the understanding that this represents the joining of two established and powerful forces in the financial services sector.

Together we will become the clear market-leader. The familiarity of the Norwich Union name in people&#39s minds is a tremendous asset for us to take forward.

Brands do not stand still but inevitably evolve over time to respond to changes within the business and marketplace. Post-merger, our objective is to redefine the Norwich Union brand to reflect the larger, powerful business we have become.

8 Will you have different brands for different distribution channels? How might this have an impact on the business, in particular, how much consideration has been given to public confusion?

We are committed to the development of the Norwich Union brand as our core brand within the UK. As such we will be investing in building this brand across our entire mainstream customer facing business. The development of a separate brand will only be considered when business or market conditions are such that this course of action is appropriate and we are confident that there will be no conflict with our existing brand.

9 How are you going to differentiate your brand in a highly competitive marketplace to give yourself an edge? What do you feel are the key product areas in order to get commercial success?

A strong brand will help us to stand out in the marketplace. By establishing a position as market-leader – and delivering on this – we shall be notably different from the increasing number of competitor brands keen to steal market share.

Clearly, there are a number of factors that will ensurethat we stand out from the crowd and providing best in class products will be an essential part of delivering against our brand promise.

The key product areas will be stakeholder, investment bonds and annuities. The strongest brands, however, are brought to life inside organisations. The attitude and behaviour of employees determine the type of experience our customers have when they come into contact with our brand. We believe that in our staff, we have the expertise, experience and above all commitment needed to deliver a differentiated brand.

10 The past few years have seen a reorganisation of NU investment, which is now feeding through to top performance. What is going to happen with the two fund management arms?

The two fund management arms of Norwich Union and CGU formally merged on July 10 this year to create one operation. The company is now the second-biggest UK-based asset manager and is truly a global operation with investment offices based worldwide. The other unit-linked funds chosen willbe the Norwich Union funds. We will have the CGU funds and the Norwich Union funds.

Our new investment process and philosophy has been clearly defined and has brought together the best qualities and strengths of the previous companies. The fund objectives and risk controls as agreed with the life company will not only ensure that we are client-focused but they will also ensure there is continued focus on providing excellent fund performance.

11 What are your views on the future of the industry as a whole, as it is no longer so clearly defined – there are big overlaps with pensions, banking, unit trusts?

This is a very big question. We know the IFA proposition isgetting stronger and stronger, therefore IFAs will play amajor role for many years by providing advice and choice and for stimulating competition.

12 CGU has a variety of offices we have to contact when we have a client with former GA or Provident Mutual policies. There are different offices, depending on where the policy originated. Where and who will we be dealing with in the future?

IFAs have been provided with a single point of contact for customer service. We appreciate the advantages to some IFAs of retaining current contact for existing business and those will remain.

13 IFAs are concerned that, with plans to cut broker consultant numbers, the standard of administration and quality of contact will decline. How will you address these concerns?

All the research and feedback tell us the vast majority of IFAs still prefer to deal with local consultants and local sales support staff. That is why we have decided to invest in one of the biggest salesforces of broker consultants in the industry. It was also a key factor in deciding to retain over 230 locally based sales support staff who are often cited as the real heroes in any sales organisation.

14 The first point of contact is indicative of the service on offer – what can we expect from Norwich Union Life? Are you going to do something about the front line where the IFA meets the company, because at present it is frustrating and time consuming trying to get through?

We have made a significant investment in local sales support. We will have 230 sales support staff in place within five service centres. This represents a very strong local service proposition. In addition we have 280 sales consultants across 34 regional offices to ensure a bespoke local service of the highest standards that will meet individual IFA needs.

The award-winning Norwich Union sales support service model has been retained so that this major asset can be enhanced going forwards.

15 What is your perspective on the current polarisation debate. Can the status quo be maintained or is change inevitable?

A review of the current polarisation rules should be undertaken to establish whether, after 12 years, they are still appropriate for today&#39s circumstances. However, any change to the status quo should only be undertaken after serious consideration and research. Of the four alternatives suggested by London Economics, the only option with potential to offer widespread improvements to the industry is Retaining the Essentials in my view. I strongly believe the introduction of multi-tied advice carries with it serious risks both of consumer confusion and a reduction in the availability of independent advice. We believe gap-filling will improve competition and value through tied channels without in any way undermining the IFA.

16 Do you believe the Saltr initiative will succeed in increasing consumer confidence in providers and have IFAs&#39 interests been given a high enough priority?

Everyone is only too well aware that the reputation of the industry has been damaged over recent years despite the fact that, for the overwhelming majority of consumers, it has provided real benefits. The Saltr initiative is a major step forward in terms of product design and clarity and improving communications with customers.

It will raise standards in the industry and when consumer confidence improves all will benefit. Both through the Association of IFAs and direct contact with a number of IFAs, the views of the IFA market have been sought and acted upon. It is very important for product providers and IFAs to work together to gain the benefit from Saltr.

17 Do you expect to maintain a market share which is the combined share of former CGU and NU? How will you work out which part of the new organisation has the strongest product in a particular area, will this be solely decided on market share?

Our objective this year is to make one plus one equal two. Next year we will grow and by the end of 2002 I believe that you will see a very strong performance from NU as a world-class company with very significant market share above what we have now. Great care has been taken over the product selection, taking account of many issues, for example, product features as well as market share. In some cases, propositions have been developed further as part of the merger process.

18 IFAs are concerned that they will be left with a choice of only four or five giant providers. Will this lead toa scenario of multi-ties by default? What can you as the biggest company do to assuage these fears?

There has obviously been significant consolidation in the industry and this will continue. However, there is a fundamental difference between the consolidation that is taking place now and the move to multi-ties.

With the continuing downward pressure on margins, those providers who intend to compete across most segments of the market will need to achieve significant economies of scale. We believe there will still be an important role for specialist providers who focus on specific sectors.

We do not believe this will lead to a situation of multi-ties by default. All research with consumers, including the recent London Economics report on polarisation, shows that consumers understand, trust and like independent advice. This is reflected in the fact that IFAs have consistently grown their share of the market over the past four years. We expect this trend to continue.

19 In a situation where IFAs feel that an inferior product has been adopted for the merged organisation and the stronger product dropped, how can you hold on to IFA business in this case?

Any successful and volume-related product from either Norwich Union or CGU has been taken forward in the new range. There will be no case where an IFA will get an inferior product and in many cases products have been substantially enhanced.

We are launching a compelling range of competitive products – the best of breed from both companies. I believe that the new range of product offerings will be regarded as innovative and as representing real value for money. We have looked at the marketplace very carefully. IFAs will be able to trade quickly and easily on the back of our offerings, which are designed to promote strong business opportunities.

We always welcome feedback from IFAs. Our product range is not static and we will continue to evolve the propositions to meet the needs of the marketplace.

20 What are your plans for your supermarket because IFAs are concerned that the new direct service could encroach on their territory?

We have announced our intention to launch a wealth management proposition in the first quarter of 2001 that will include share-dealing services and a supermarket of funds together with a range of financial planning and management tools. Further information will be available later this year. A large proportion of customers prefer to deal with IFAs and this proposition will not undermine that relationship. What we are doing is offering choice – catering for those customers who want to buy online.


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