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Paul McMahon

It has been four years in the planning but this week sees the formal launch of the Elevate wrap under the stewardship of Axa Distribution Services managing director Paul McMahon.

McMahon joined Axa as strategy director in 2004 with the aim of changing the way that financial services are run in the UK. Even then, he saw wrap as a key area for the industry’s development.

McMahon, a former semi-professional footballer, started his financial career as a banker with Barclays. He says the more he learned about the financial services business, the more interested he became and he was intrigued by how disorganised things were.

He moved from banking to join British American Financial Services, which became Zurich Financial Services and after several years working in different parts of the business, he joined Axa.

With chief executive Henri de Castries on record as saying he aimed to write a new page in financial services, McMahon says he wanted to be part of things at Axa. “Part of the attraction was the opportunity to do something different in the UK.”

He says despite its size, Axa was not really punching its weight in the UK market. It was writing solid amounts of business but not doing itself justice.
“Elevate has come out of the recognition that we want to be a market leader in the UK and to do that there are things we need to change in the UK and things we want to do differently.”

Once the decision had been taken to launch a wrap, McMahon was determined to run the new business. In January 2007, he was in a hotel in Bristol with the first three employees of the new business and a blank sheet of paper.

“We sat down and said if you want to design a business around investment services and distribution support services, what would it look like?”

Despite Axa’s experience of running a platform in Australia, McMahon says they decided to start from scratch rather than import the Australian version. Elevate is launched this week but since the beginning of this year it has been under trial with several IFA firms as consultative partners.

The core IT system comes from wrap technology provider FNZ but McMahon says a significant amount of bespoke technology has been designed for Elevate. Central to the offering is the collective investment business which offers over 1,500 funds from over 50 fund management houses and can also hold individual securities.

It has a dual-pricing structure, showing either a bundled cost or full breakdown to meet the needs of businesses with different remuneration models. Another differentiator is Elevate’s ability to hold pension assets through its pension investment account.

“Fundamentally, it brings the best pension proposition available,” says McMahon.
He says the size of the market is more than enough to support another new entry and wrap is more than a tool for the management of assets for high-net-worth customers.
“We are tickling the surface. If you look at what the potential capacity would be, this is not simply a high-net-worth proposition that will serve a certain segment of the population. Supported by the right sorts of distribution and I guess aspiration, we can go a lot further.”

With analysts identifying up to £3trn of wrapable assets in traditional savings and investments, McMahon says there is room for four to eight players in the market but his intention is for Elevate to become the market leader in terms of size and quality.

He says the industry is on the verge of substantial changes and he sees wrap as a central part in that process. As consumers become more engaged, he says they are demanding more information about their finances and a more professional service.

“Wrap is not the entirety. You need to have the right mindset and you need the professional calling but wrap gives the capability to reach further into the market, give more information and put accessibility into advisers’ hands and ultimately into consumers’ hands. It offers the capacity to make the whole business model more efficient and more effective in the way it is run. It gives flexibility and variety for different segments of population to engage in the market. I think it is fundamental but I do not think it works on its own.”

The wrap market has seen a number of companies dip their toes in the water, only to reconsider their position, but McMahon says there is no danger of this happening with Axa.
He will not reveal how much Axa has put into the new business, saying only that it has invested a considerable amount to back what is seen as a core strategy for the company. “There is no question of strategic reconsideration, this is a fundamental part of Axa’s strategic agenda.”
The last few weeks have seen a stream of high profile visitors at the Elevate offices. There have been visits by De Castries and Denis Duverne, chief financial officer of the global company, and McMahon says continental Europe could be the next destination for Elevate.

He says Axa has substantial expectations for UK business although he will not divulge his targets. “I have got reasonably aggressive targets but I think they are very achievable. In the context of potential in the marketplace, they are not ones I lose sleep about. What we have got is pretty damn good and there is a market to serve.”

Born: Durham
Lives: Wiltshire
Education: BA (Hons) Politics from Durham University, various executive education courses including Harvard and Wharton School
Career: Barclays Group, BAFS, Zurich Group, Axa
Likes: Soccer, rugby, golf, modern cinema, crime and mystery novels
Dislikes: Dishonesty, people who politic for self-interest, poor service, liver
Drives: BMW 6 series
Favourite book: The Van by Roddy Doyle
Favourite film: Field of Dreams (placed a pin in short list of six)
Favourite album: Hats by Blue Nile
Career ambition: To run a business quoted as a benchmark for quality, that staff are proud to be part of and that customers refer to their friends
Life ambition: To see my son stay free from further leukaemia and pursue his ambition to be an actor
If I wasn’t doing this I would be…Chief football writer for the Daily Telegraph

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