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Zurich builds a new portfolio

Zurich has been a com-pany that, when it came to e-commerce, delivered a great deal less than could be reasonably expected of such a global financial services provider.

However, 2008 has seen a radical transformation of its services and the company is now making up for lost time.

A good example of this is the latest iteration of its portfolio planning tools which, although it has only been live for a few months, has already attracted over 2,500 individual IFA users.

I have not had any direct involvement in the development or design of the tool but, when it was launched, Zurich made it clear that, in building the new service, it was following FTRC’s Adviser Forum Good Practice guidelines for such services. These were developed last year with leading adviser and provider firms. They can be found at

The service has clearly adopted many of the features identified in this work as important to improve the transparency of tools of this nature. Also, the appropriate supporting factsheets recommended in the guidelines to make the content of portfolios and the way the tools work clear to advisers are available for download from the Zurich site underlying asset allocations of port- folios and the service.

This offering, based on a new iteration of the Towers Perrin CAP:Link stochastic modelling tool, is a significant step forward from the previous service. It puts the company up among the market leaders in this impor-tant area of adviser support.

Most readers will be aware of the primary workings of tools of this type, so this summary will concentrate on the areas where Zurich is seeking to differentiate itself from other providers’ similar services as well as looking at where it might improve further.

The planning tool now incorporates fund links to over 26,000 investment funds through a link with Financial Express, enabling advisers to use the service in conjunction with products from other providers, not just Zurich. Limiting the range of funds included to just their own was previously a common mistake among insurers. From a practical perspective, it severely limited the value for advisers.

Although Zurich is not the first to launch a service with this ability, it is refreshing to see more and more providers recognising that advisers have to be able to examine the full range of a client holdings, not just the products with them in isolation.

In addition, where the adviser cannot identify an individual asset mix via the Financial Express feed, there is a manual mechanism for this information to be entered.

This service has been built so it can be used by an adviser either as part of the process to invest new money or simply for reviewing the ongoing suitability of existing investments.

With this in mind, it is also structured in such a way that the adviser might use the service in an exercise to identify how they might invest money that was being transferred from an existing product wrapper into a different vehicle.

Given the recent changes to the tax treatment of bonds, this is clearly a well-time feature and, although wrapper suitability is not covered in this software, another package on the Zurich extranet is available.

The current Zurich wrapper tool compares UK bonds and collectives. I believe it would be more appropriate from the adviser perspective to include offshore options for both products as well and I am planning on looking at a service with exactly these extra options in this column in the near future.

For new business, the service can accommodate nine generic product wrappers from the Zurich investment and pension range, although it does only allow for contributions into new Zurich products.

I can understand why Zurich would do this from a commercial perspective but I believe it should recognise that, especially where clients may have big sums to invest, advisers may want to split new contributions over a number of providers, including increments to existing contracts.

This is a stage further it could go to make the service even more valuable to advisers. Without this ability, I suspect that some adviser will look for other tools for bigger cases so Zurich could be inhibiting its share of such business.

In producing suitable portfolios, the service allows advisers to select portfolios based on three different time horizons – five to seven years, eight to 14 and 15 years plus. In addition, users can decide to include or exclude commercial property from any portfolios.

Towers Perrin reviews investment returns on each asset allocation on a quarterly basis, and default portfolios on an annual basis. Importantly, the asset allocations of portfolios have been entirely independently constructed by Towers Perrin with no influence from Zurich to angle it towards the life company’s strengths. This was a major concern among advisers when the good practice notes were created.

As part of the process, advisers can explore five specific objectives with clients – wealth creation,that is, investing an amount of money; targeting as specific; amount of saving; targeting a specific income; as well as both pre- and post-retirement planning.

As part of the income planning process, non-pension incomes can also be included in projections. Under each of these objectives, advisers can set up an unlimited number of individual goals and existing investments can either be reviewed both as part of the individual portfolio or in the context of meeting a specific goal.

The output of the analysis can be delivered in a range of different reports for both the adviser and the client. Generally, the content is excellent but the company could make the report for the review-only process, where no new money is invested, slightly slicker.

Overall, Zurich has delivered a well constructed tool that has a lot to offer in helping advisers meet the challenges of moving to a service-based advice model and build deeper ongoing client based relationships that are not just driven by new sales.

I have seen many different implementations of generic tools from people such as Towers Perrin and, in my experience, the additional functionality that the provider deploys around such tools is essential in delivering value to advisers.

Against this measure, the Zurich tools are worthy of serious consideration by any adviser firm looking to review their portfolio construction process. The software can be found at www.


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