Following the sale of the Axa Life back book to Resolution, the new-look Axa Wealth has refocused its business on three core areas and it targeting significant growth.
These are the Elevate platform, the Achitas multimanager business and the tax-wrapper business. Alongside these business areas sits the advisory business Bluefin.
Managing director (UK distribution) David Thompson says the business has ambitious plans to grow its assets from the current £18bn to £45bn in the next four years.
Currently, the fastestgrowing parts of the business is the investment business. Elevate was the fastestgrowing platform in the market in 2010. But Thompson says that although the platform is designed to be the core of the business, the tax wrapper business, which includes all the Axa
Wealth pension lines, has an important part to play in the business’s future.
Axa Wealth’s main offering remains its Sipp, the One from Winterthur, and this is supported by the Family Suntrust, the family Sipp offering scheme pension. In addition, in October 2010, the company launched Secure Advantage, a variable annuity product.
Thompson says the Sipp remains the biggest part of the retirement business and is being driven by the usual factors such as the full flexibility
Sipps offer, as well as a general increase in awareness across the market.
But it is the other two products that are being driven by the current market changes. Thompson is bullish about the Family Suntrust and says the changes to the post-age 75 annuity rules should significantly boost its popularity.
He says: “With the changes that are going to come in from April, income from scheme pension will count towards the MIR, so we see that as
a big opportunity.”
At one point last year, the change to the IHT rules for assets remaining in drawdown after death was predicted to have killed off the market for family Sipps but Thompson says the new income withdrawal rules have more than offset the tax changes.
He says: “At one point, we thought that may be an issue, however, we didn’t really see a drop in demand. Then, as the latest legislation has come out, we have seen quite a big increase in interest in the Family Suntrust. So yes, some of the benefits in the recent legislation outweigh
some of the changes in the death benefits.”
Thompson says the latest addition to the retirement tax wrappers the company offers is also offering opportunities for growth. With many third-way annuity providers pulling out of the market, there is very little competition and Thompson says Axa’s size and brand recognition should be
a major advantage.
Thompson: ’There is no plan to just have a platform-only business or a tax wrapperonly business as we don’t think that is strategically the right thing to do’
Thompson cites recent figures from Towers Watson that show the market grew by 20 per cent in 2010 and he hopes the business will be
well placed to capitalise on this growth. “It has to be positioned appropriated against annuities and drawdown and it isn’t for everybody but our experience is that when it is positioned appropriately, then people are very interested.”
Thompson says the one thing the three pension products as well as the other tax wrappers, including the onshore and offshore bonds, have in common is they offer high quality products for specialist advice. “We won’t offer commodity-based products.
We don’t see value in commoditised tax wrappers, which only compete on price.” He also says companies such as Axa will have to ensure
that the quality of their admin and support are up to scratch. “Most businesses are very similar. Most businesses have a platform and a number of tax wrappers.
And how do you differentiate? Most of the charges are very similar but you differentiate through service.”
This is particularly important for companies such as Axa which are still almost entirely intermediated. This strategy could present problems for the business, such as if the RDR severely reduces IFA numbers.
But Thompson says the segmented nature of the business means that the RDR holds no fear. He says: “If there are 20,000 individuals in the
market, we have a close relationship with around 5,000 and we expect that quarter to be very healthy and resilient post-RDR.”
A lot of responsibility rests with Thompson to deliver the targeted growth. The biggest area of growth is currently coming from the investment businesses, and the Elevate platform in particular.
Elevate has grown from £0.2bn to £1.8bn of assets in a year but if growth continues at such as pace, is there not a danger that Axa Wealth will be seen purely as an investment business?
Thompson says: “There is no plan to just have a platform-only business or a tax wrapper-only business as we don’t think that is strategically
the right thing to do.
But the market will lead this evolution. While we are positioned with a good range of specialist tax wrappers and a good platform, we seek to
benefit from whichever way the market develops.
“There is a market for both spaces and that is our strategic hedge. We want to operate in both spaces but we will not operate in the very commodities, lowvalue, low-margin tax wrapper space. We don’t see any value in that.”