Impact of regulation on the shape of IFA distribution and strategic opportunities pursued by Sanlam
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Impact of regulation on the shape of IFA distribution and strategic opportunities pursued by Sanlam. Regulation will change significantly. Overview of RDR Implications. How RDR affects Product Design. RDR – the direct impacts: Remove commission bias Transparency and disclosure

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Impact of regulation on the shape of IFA distribution and strategic opportunities pursued by Sanlam


Regulation will change significantly


Overview of RDR Implications


How RDR affects Product Design

  • RDR – the direct impacts:

  • Remove commission bias

  • Transparency and disclosure

  • Increase professionalism of advice

CONSUMER AWARENESS & TRUST

  • AND Indirect impacts:

  • Capital and Value flow

  • Use and role of Platforms

  • New routes to market

  • From Products to Propositions

RE-ENGINEER

THE

MARKET


Advice models and standards

Product design must be tailored to the channel & the advice model


Changing Business Models


Product to Proposition

  • Proposition

  • Focus on life cycle needs

  • Distributor and Customer needs

  • Whole value chain, how is the product generating its return and how is the distributor generating theirs?

  • ‘Marry’ the product with the advice

  • Stay focused on needs

  • Product approach

  • Focus on acquisition

  • Distributor versus Customer needs

  • Only part of the value chain, focussed on product returns

  • Narrow definition

  • Leads on features and benefits

  • Products supplemented with commission and wider support to distributors


Focus on acquisition


What do IFAs want?

  • To deliver on promises to clients

  • Cost efficiency

  • Sustainability

  • Building value

    • Demonstrate assets under influence

    • High proportion of reoccurring income

    • Profitability

  • De-risking

  • Guarantees

  • Expertise

  • Training

  • Marketing

  • Business support

  • IT support


What will be the drivers moving forward?

  • Guarantees

    • At a sustainable cost

    • That are safe

    • Reduce risk not increase it

    • Post retirement market

    • With profits? Will the Pru win?

  • Cost

    • Building the scale


What will be the drivers moving forward?

  • NMG Survey

    “The lack of ‘cost leader’ in the UK Wealth market demonstrates the difficulty of achieving cost efficiency with complex legacy books”

  • Barriers to entry

  • Transparency

  • De-risking

    • Building process with IFAs

    • Managing funds to risk categories

    • Sharing risk


What will be the drivers moving forward?

  • Value

    • Recognising the shift in the value chain

    • Proctor and Gamble to Tesco

    • Effect of regulation

  • Distribution

    • Different channels

    • Value of independence

  • Specialisation

    • Tax planning

    • Differentiation


How Sanlam are positioned to respond

  • De-risking

    • Building process with advisers

    • Managing funds to risk categories


Recognising the shift in the value chain

  • Joint venture discretionary fund management businesses

  • Investment partnerships

  • Product design


Specialisation

  • Technical

  • Tax

  • Business consultancy


Cost

  • Lack of legacy

  • New entrants

  • Niche

    • Self select

    • Section 32


Brand


Ambitions

  • Partner with up to 50 FA businesses in the post RDR world

  • 10 joint ventures building to £500m per relationship

  • 40 investment partnerships

  • Niche products – app on iphone


The winners will be…

  • …“Those that align closest to distribution”


Energising Together


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