26 June 2007
June 20 2007: Winterthur today has called for advisers to carefully consider the so-called ‘Factory Gate Pricing’ model outlined in the FSA’s Review of Retail Distribution (RRD) because it believes that this will be the future model for the industry.
Winterthur, which already offers its own version of factory gate pricing called ‘Flexible Adviser Remuneration (FAR), believes that whilst advisers and providers might be concerned the reality is they shouldn’t worry about the impact it will have on their business.
David Thompson, managing director at Winterthur, comments, “Winterthur’s FAR system proves that advisers can successfully adapt their business model. Whilst this might not be appropriate for every adviser at this current time I do think that advisers need to plan ahead and to try out this model.
”I do not believe there is anything inheritantly wrong with commission – for decades it has provided a valuable and affordable model for millions of consumers to access financial services. For many consumers, however, commission feeds the perception that the industry is cloaked in secrecy and unable to break away from practices of the past. Factory gate pricing can help improve the transparency around the advice given, distinct to the sale of the product.“
The concept of FAR:
- Allows advisers to structure remuneration in order to build value in their businesses
- Enables clients to develop relationships with advisers in the knowledge the adviser is only acting in the client’s best interests and not as an agent for a provider
- Providers do not have any influence on the level of remuneration paid, which effectively removes the potential for any commission bias (a non provider funded remuneration system)
David Thompson continues, “This is the chance for advisers to put themselves on a truly professional footing and our experience shows that advisers and clients have welcomed the open and transparent arrangements set out for them. Independent financial advice should have a value and models like Winterthur’s FAR and the ABI’s proposed CARIS (Customer Agreed Remuneration for Intermediary Services) can help advisers demonstrate this.
“I would urge any advisers who are concerned about the impact of factory gate pricing on their business model and cash flow forecasting to contact Winterthur for advice on how these models can work for them, in order to prepare for the probable introduction of factory gate pricing as a result of the RRD.”
-End-
For further information:
Paul Riddell Winterthur Life, Press Office +44 (0)1256 798099
Christine Wood FD +44 (0)20 7269 7253
Notes to Editors
About Winterthur Life UK Limited
Winterthur Life UK Limited is part of AXA Group, one of the largest financial institutions in the world.
Winterthur Life UK Limited is a provider of focused investment and retirement solutions and support services predominantly distributed through quality IFAs to their high net worth clients.
The company is recognised as having an innovative approach to financial products and its products feature simple, transparent charging with access to a wide range of carefully selected investment funds and fund managers via its Tailored Selection fund platform. Winterthur is also differentiated in the market through its focus on service excellence.
Winterthur Life UK Limited has a B+ financial strength rating from AKG, which denotes “very good financial strength”. At the end of 2006 Winterthur had assets under management exceeding £10 billion, and grew its new pensions business by 125% to £1.45 billion.
www.winterthur-life.co.uk
