30 April 2008
Winterthur is sharpening its Flexible Adviser Remuneration model (FAR) to reflect the model expected to be created following the FSA Review of Retail Distribution and its interim report, which was published yesterday.
By enabling the adviser to separate initial and ongoing remuneration, Winterthur's enhanced remuneration model, which launches in May, allows advisers and clients to agree a system of payment for advice, which is transparent and easy to understand and which can be aligned to the changing levels of advice required over the life of a policy.
Frank Parsons, director of sales, Winterthur, says: "I believe Winterthur's new Flexible Adviser Remuneration will be the first in the industry to embrace the principles of the FSA favoured Customer Agreed Remuneration model (CAR). The changes introduced will result in a win-win, with customers paying only for the amount of advice they require and IFAs being able to offer transparent pricing. Whilst our remuneration model has been highly successful so far for high net worth clients, we felt it was critical to continue to respond to consumers' concerns, and support IFAs, over commission-led advice."
Key benefits delivered by the enhanced Winterthur FAR model are:
- Alignment to the principles of the CAR model suggested by the FSA
- Distinct remuneration for initial advice and ongoing services, which better reflects the amount of work undertaken on behalf of clients and gives IFAs greater control
- Flexibility for IFAs to be paid for additional services in relation to the contract via FAR
- Greater transparency around the cost of advice, which counteracts consumers' perceptions of biased commission-focused IFAs
Winterthur used research findings from both its independently commissioned survey amongst IFAs* and the recent ABI consumer study** to develop the features of the innovative new FAR model, with statistics underlining that most parties were supportive of the CAR concept.
According to the Winterthur survey, eighty per cent of IFAs believed CAR would help demonstrate their independence from providers when working with solicitors and accountants and ninety-five percent considered that it would be important to their business.
ABI focus groups revealed that over four out of five consumers agreed that the concept of CAR was easy to understand. In addition, two fifths felt that using it would increase their trust in the financial industry.
Frank Parsons comments: "Developments with Winterthur's FAR model come hard on the heels of solid research which shows both advisers and consumers to be highly receptive of remuneration models inspired by CAR. We are confident our new model will be well received and become instrumental in helping IFAs grow their business."
"Winterthur has a history of offering some of the most flexible remuneration terms on the market and was therefore well placed to move fast in response to new demands. We have refreshed our FAR model, which broke ground when it was first introduced, and will break ground today. Other providers are likely to follow suit with their own variation on the model. We believe we are paving the way as the use of CAR is set to spread within the industry."
-End-
* The survey was conducted amongst 103 IFAs during January – February 2008.
** http://www.abi.org.uk/BookShop/ResearchReports/CRA%20Final%20CAR%20Report.pdf ABI research paper 6: Customer Agreed Remuneration Research into the market impact of encouraging Consumer Agreed Remuneration. January 2008.
For further information:
Paul Riddell, Press Office, +44 (0)1256 798099
Becky Holmes, Press Office, +44 (0)1256 798310
Christine Wood, FD, +44 (0)20 7269 7253
Notes to Editors
Winterthur Life UK Ltd
An AXA UK company, Winterthur Life UK Limited is a specialist producer of wealth management solutions to the high net worth marketplace.
Winterthur Life UK Limited provides focused investment and retirement solutions and support services predominantly distributed through quality IFAs as part of AXA Life's AXA & Winterthur Wealth Management business proposition.
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, which was reflected in the company winning Company of the Year and two Five Star service awards at the Financial Adviser Service Awards 2007.
Winterthur Life UK Limited is authorised and regulated by the Financial Services Authority.
www.winterthur-life.co.uk
AXA
AXA UK is a part of the AXA Group. AXA Group is a worldwide leader in Financial Protection. AXA's operations are diverse geographically, with major operations in Europe, North America and the Asia/Pacific area. IFRS revenues amounted to €94 billion for the full year 2007.
The AXA ordinary share is listed on Compartment A of Euronext Paris under the ticker symbol CS (ISIN FR0000120628 - Bloomberg: CS FP - Reuters: AXAF.PA). The American Depository Share is also listed on the NYSE under the ticker symbol AXA.
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