Axa elevates quality of new platform service

Martin Jennings, director of marketing for Axa Distribution Services, talks to Frances Hughes.

Q. When and why was it decided to develop Elevate?


We started this journey about 15 months ago. Axa has been monitoring and evaluating the wealth management market continually and [looking at] how platforms have developed. Axa thought now was the right time to develop these plans and for us to bring a leading platform to market. Platforms are starting to gain a foothold.

Q. The Elevate platform is available to six IFA groups who act as consultative partners. Why did you take this approach rather than launch to the whole of market?


This is about an evolving offer. It is a soft launch to the market. We need to test it and get the quality right. We need to make sure we deliver what the market wants.

Platforms have a huge potential to change the way business is done in the IFA market. We listen to customers all the way along. We have tied up with six firms whom we have an ongoing dialogue with. Platforms will touch every part of [an IFA] business. Understanding the make-up of these businesses is vital. It is critical for our development.

Q. How did you select the six groups?


Based on their make-up, they cover a range of the IFA market in terms of what propositions they offer, for example. It is a broad spectrum.

Q. How will Elevate differentiate itself from other platforms?


We have engaged broadly with the IFA market and done several pitch presentations. The way we talk about the offer and get under the skin of the IFAs’ needs, wants, issues and goals is about supporting the IFA. We look at people, process and technology.

The heart of it is helping them to achieve their client service proposition. A dual pricing strategy is key. The next step is a fee-based financial planning model. That is where we are really positioning it. The proof of the pudding is the new service experience.

Q. Can you explain the importance of dual pricing?


Dual pricing offers both a composite (bundled) and explicit (unbundled) pricing structure, allowing adviser’s wishing to operate different advice models on one platform. Composite pricing clients see the initial charge and annual management fee, while with explicit pricing the breakdown of the charges is more transparent with the client able to see the cost for advice, administration and investment management individually. Jumping to an explicit model immediately can pose issues with cash flow and fee structure for advisers used to a composite model.

Q. What is the platform able to do?


2008 is a development year for us and we will roll out pension and bonds, financial planning tools, asset management programmes, training programmes and financial awareness. There is a whole spectrum there. It is service-led, not product-led.

The offer at the moment is mutual funds trading. We will provide not just people to train you but management consultant grade people to help. We will have dual pricing: wrap platform pricing and fund supermarket pricing. There will be continual developments.

Q. Which functions will be added to the platform first?


We will bring to market the unbundled pricing variant and then the pension product, and a comprehensive set of financial planning tools. We want to bring continual capability throughout the year.

Q. Do you have a separate identity from Axa Investment Managers?


We have built a completely separate business unit. It is not within the wealth management business. We have our own managing director and work out of a separate office and location. Axa Distribution has an entrepreneurial aspect to it. I think trying to build it from within an existing infrastructure, that any big corporation would have, would strangle the baby at birth.

Q. How many people work within Axa Distribution Services?


We are at about 160 people at the moment. Some are permanent and some are project-based.

Q. Are you marketing Elevate to IFAs only or will investors use it directly?


It is a wealth management product and we are targeting wealth management IFAs. The proposition is centred on the propensity to change business models. The heart of the proposition really looks at businesses that want to adopt a new model and way of doing things.

Q. Are particular types of IFA more likely to use Elevate than others?


We want to do business with IFAs of a certain size and scale and [those that] want to move or change the way they run their business. Size and scale, propensity to adopt platforms and their relationship with Axa is how we would categorise the market.

Q. Do you expect different aspects of Elevate to attract a certain type of client?


Every installation is bespoke to that individual IFA. Each IFA and each client is different. It is about getting a holistic view of a client’s assets.

Q. How will you decide what funds to include on the platform?


We want to be completely open architecture with a full range of asset classes. We are looking to have breadth. We have a pretty comprehensive and compelling fund range as we stand today. We will look to add new funds as we go. That is part of the process in 2008.

Q. Will you include funds of funds, funds of hedge funds and offshore funds on the platform?


Yes. Everything is open. We already have some offshore funds and funds of funds. The vision is to have a full range of asset classes and vehicles. It is about selling an investment strategy and investment planning.

Q. Will you introduce individual stocks and shares on the platform?


Yes, throughout 2008 we will add stockbroking.

Q. What do you think the growth potential is for the platform market?


Last year there was £75m funds under management in platforms. The different industry reports that are published all quote between £150-250m by 2012. My personal view is those numbers should be easily achievable. Once IFAs have gained trust in the platform market it will grow rapidly.

Q. Do you think the platform market will be dominated by a small number of big players in the future?


I think you’ll see a number coming to market in the short term and that will rapidly consolidate to a few key players. I think over the next two to three years you will see people selling out. It costs a lot to develop a platform and it needs on-going investment.

ELEVATE is Axa Distributions’ new wrap platform service, which was launched two weeks ago. Initially, six IFA groups are using the platform on a consultative basis, before the service is offered to the whole of market