Pressure is being exerted on all firms and increasingly there is an acceptance that the days of the traditional network model are surviving on borrowed time. Publicised failures in recent times are a stark reminder of where the control lies and the pain that can be felt by advisers and their clients.

But what if you could start with a blank piece of paper, how would you design your own perfect network? What would you include?

Would the following be on your wish list?

• Experienced senior executives adding real member value
• Flexibility and freedom of complete direct network protection
• Full sensible supervision tailored and personal to your business
• Debt free
• No legacy business
• Due diligence before entry to ensure elite members
• No outside or provider influence
• Profitable business model
• Extremely competitive fixed monthly fee
• AR principals on executive board for complete transparency
• RDR ready
• Direct commission payable to members from providers
• Highly cost-effective PI cover
• New firms grandfathered to provide the immediate ability to trade
• Comprehensive file checks with open contact to the support team
• Investment committee linked to third-party independent experts
• Tax Brief SPS tailored solutions
• State of the art RDR technology – (including all platforms, off-platform, DFM analysis)
• Automated suitability reports
• No contractual ties

A new breed of network offers the best of both worlds

Nearly three years ago an up and coming new breed network implemented precisely all of the points listed above. Our name is Network Direct Ltd and we’ve created a unique service proposition that offers financial advisers the best of both worlds.

Specifically designed for RDR requirements, Network Direct is impeccably placed to take clear advantage of the competition offered by any other type of supporting organisation.

The importance of finding the right partner

These recent headlines reinforce why Network Direct believes its time for change:

• FSA fines for £26 million of high-risk products
• National firm posts losses in the millions
• Ex-banker jailed for five years over fraud
• Asset managers enter into administration
• SIPP bio fuel firm in SFO freezing orders
• Large national adviser firm agrees multi-million debt package

Les Lee, Managing Director, Network Direct

New regulator intends to reverse the rules

The new FCA regulator has used the words ‘shoot first and ask questions later’, explaining that historically problems were analysed, draft rules set, consultation followed, for the industry then to inform the regulator it was wrong and more rules published to discover a year later that the regulator was right the first time. Now the FCA intends to fully reverse this.

Rules that must be met for RDR

This future regulatory stance and current rules must be met for RDR, emphasising the importance for firms to ensure certain compliance is met. This includes flexibility to trade profitably with client centric propositions remaining attractive and easy to deliver.

Supporting quality firms by organically growing elite members

Network Direct is well established across the UK and supports quality firms by organically growing elite members. We personally know all of our membership and fully support them. Unlike our competitors we never adopt the usual broad brush approach forced by legacy issues.

Network Direct continues to keep quality at the forefront of our approach by undertaking thorough due diligence and examining key issues such as financial strength, future strategy, leadership, long-term commitment and investment in services.

Talk in confidence with Network Direct today

We want to talk in confidence to quality firms. To find out more please call Les Lee, Managing Director, Network Direct on M: 07866316817 email: info@networkdirect.uk.net  , or visit our website: www.ifanetworkdirect.com

Denominated in Euro the Henderson Horizon Euro High Yield Bond Fund is a sophisticated UCITS fund and its investment objective is to provide a high overall yield and potential for capital growth.  It will invest at least 70% of its net assets in sub investment grade corporate debt securities with a credit rating equivalent to BB or lower and denominated in Euros and Sterling.

Stephen Thariyan, head of credit and co-manager of the fund says, “Our entire team has long covered the full spectrum of the corporate bond market from investment grade through to the high yield and we have just hired two highly experienced credit analysts to ensure we become even stronger. Now that clients have seen our capability in the corporate bond area it is logical to launch of a Euro High Yield Bond Fund to provide them with the opportunity to access the High Yield market.”

Greg Jones, director of wholesale distribution, continental Europe and Latin America adds, “Fixed Income is a core competence of Henderson. The Euro High Yield Bond Fund complements the Euro Corporate Bond Fund. With the support of a 15-strong team of portfolio managers and credit analysts they have beaten the Euro Corporate Bond’s benchmark (iBoxx Euro Corporates Index) by over 10 per cent† since its launch in December 2009. The strong growth of the fund this year from around €100million in January to €680 million in August indicates the belief clients have in Chris and Stephen’s skill.”

On 06 September 2012 Henderson announced the appointment of Rob Orman and Pieter Staelens as senior credit analysts. Rob joins Henderson from Royal Bank of Scotland where he was head of investment grade strategy and Pieter joins from James Caird Asset Management where he was a senior credit analyst for the European high yield strategy team. Pieter joined late in August and Rob will start later this month.

Source

*98% of Henderson’s fixed income funds under management, totalling €20.1bn, met or outperformed their benchmarks over three years as at 30 June 2012.

**As at 31 August 2012

†Henderson Horizon Euro Corporate Bond Fund
percentage growth from 18 Dec 2009 to 31 August 2012: 27.02% vs iBoxx Euro Corporates Index 15.93%

Aviva’s platform has experienced growth of 53% in AUM since the beginning of 2012, despite the challenging economic environment. It has achieved this by offering mainstream wrappers and investment choices to clients who are looking for cost-effective and straightforward solutions.

Aviva’s intermediary director Andy Beswick said: “Our decision to focus on mid-market customers has come at exactly the right time, as we’re finding an increasing demand for mainstream platform solutions such as pensions, ISAs and general investment accounts (GIAs).

“We took a conscious decision to focus on this mid-market after listening to IFAs’ concerns about how they can continue to offer affordable but profitable advice in a post RDR world. In doing so we’ve been very clear about the types of clients our Aviva Wrap is suitable for, and those it is not, and that’s good for the customer and the adviser.

“We know that advisers are looking for sustainable platform solutions that will help them keep their costs down as they manage the transition from commission to adviser charging. The inherent functionality in a platform helps with this by offering bulk and individual switching, rebalancing and model portfolios.

“We’re delighted with the response we’ve had, particularly at a time when there is such a strong regulatory focus on advisers’ platform selection and use, and how they meet the needs of each client.”

Holly Mackay, Managing director of The Platforum

Managing director of The Platforum, Holly Mackay, said: “I think that the Aviva platform is refreshingly clear about what customer segment it wants to support and it is undeniably competitively priced for a particular type of customer. It certainly won’t suit everyone but I expect adoption to grow and growth rates to accelerate next year.”

Most advisers are likely to hit some legacy triggers, under the RDR rules, in the first six months of go live date which will require them to move some remuneration over to adviser charging.

“We’ve built a clear, practical process which we hope will help advisers protect their revenue streams during this transition period.”

Standard Life is aiming to help advisers be aware of – and prepare for – any impact this transition to adviser charging will have on their cash flow. Advisers need to compensate for a post-RDR commission revenue dip, caused by an unpredictable need for advice from clients which may trigger the switch off of commission under RDR legacy rules, with an increase in ongoing adviser charging revenue.

Bold says: “The move over to adviser charging will not happen over night and for most advisers it will be a steady transition over some time. For most clients it is likely to be business as usual initially, with no immediate need for advice which could trigger the switch over. For those clients advisers deal with on a transactional basis, for example, the need to move over to adviser charging is unlikely to be pressing.

“It’s also worth remembering the different treatment of ‘life’ and ‘non-life’ products under the FSA legacy rules. The risk of SIPP customers, for example, triggering advice events will be much lower than those invested in ISAs or mutual funds.

“But for some clients the need to switch over to adviser charging will be immediate, triggered by events like portfolio rebalancing or end of tax year planning. It’s vital that advisers are aware of when the triggers are likely to occur, with which clients, and plan accordingly.

“We’ve built a clear, practical process which we hope will help advisers protect their revenue streams during this transition period. We’re working with advisers to examine the types of clients they have, products they are invested in and the type of advice they require to assess when they are likely to hit an advice event which will trigger the move over to adviser charging. We’ll then be able to help them plan for that transition in advance.’
Risk rating clients

Standard Life is helping advisers prioritise clients by risk category in terms of how often advice is likely to be given – or requested – over the course of a typical year. From this a clear plan can be put in place to deal with clients in each of these categories.

•     High Risk: Significant revenue risk ahead of the next review. High demand for advice, sometimes outside a regular review (e.g. business owner with complex affairs, employee receiving regular bonuses)
•     Medium Risk: Limited revenue risk until the next client review. Ongoing need for advice, activity usually triggered by the regular review or a predictable event (e.g. tax year end).
•     Low Risk: Revenue risk outweighed by cost of delivering ongoing service. Currently, a profitable transactional client, but assets unlikely to deliver enough revenue to support an ongoing service. Limited ongoing need for advice, although life events or market conditions may trigger contact or self-service activity.

Prioritised Client Engagement Plan

Graeme Bold, Standard Life Director UK Retail RDR

“We’ve developed a template to help advisers create a prioritised client engagement plan,’ said Bold. “This looks at when an adviser should consider moving clients in each ‘risk’ category to an adviser charging basis and the action that should be taken to engage with those clients. This could be an immediate face-to-face meeting to explain the changes, writing in advance of the next client review, or developing a process for reacting to revenue risk events and assessing what criteria a client should meet to qualify for an ongoing service. Alongside this, we’ve drafted a series of client engagement letters/emails that can be customised by the adviser as appropriate.’

Standard Life has a dedicated area on Adviserzone with details and support for advisers in the run up to RDR – www.adviserzone.com/rdr

Switching to gender neutral rates ahead of the legislation enforcement provides certainty for advisers, and ensures applications in the pipeline by 1 December can be processed on gender specific rates ahead of the 21 December deadline.

If by 1 December an application has further medical evidence outstanding, LV= will offer a ‘G Day Guarantee’ to ensure the business can still be placed on gender specific rates in time.

LV= will underwrite the application based on the medical information provided by the client at application, and using normal underwriting standards will offer them a premium and terms. If accepted by the client, the application will be put on-risk for the full cover applied for on gender specific rates, to beat the 21 December deadline. LV= will then seek the additional medical evidence as normal, which must be received within three months of the cover start date.

In the unlikely event that the medical evidence received is materially different to that given at application, LV= will inform the adviser that the terms of the policy will be reviewed, but importantly cover will remain on gender specific rates. To provide as much certainty as possible for advisers, policies will not be adjusted for small differences in medical disclosure.

LV= won’t apply the ‘G Day Guarantee’ to female income protection business, as premiums are set to decrease under gender neutral pricing, or where an adviser instructs LV= not to do so.

Mark Jones, LV= Head of Protection

Mark Jones, LV= Head of Protection said: “Announcing how we will deal with our pipeline business means advisers can plan with confidence ahead of the gender directive. They can now be certain of securing gender specific rates for their clients if they want them, for applications received by LV= between now and 1 December. Given the expertise of our underwriters, we are confident fewer than 1% of policies put on-risk will need to be altered once we have received any further medical evidence retrospectively.

“We’ve listened to adviser’s requests to provide a clear, simple and common sense approach to pipeline business, and switch to gender neutral rates ahead of 21 December to avoid any last minute uncertainty. Advisers are now guaranteed not to miss the gender deadline or see clients face an enforced increase in premiums if they act now.”

Advisers do not need to request that the ‘G Day Guarantee’ is applied to protection applications received before 1 December. LV= will update the adviser on the progress of the application as normal, and automatically inform the adviser if the guarantee needs to be activated.

LV= recently launched a website dedicated to helping protection advisers ahead of the gender directive and I minus E tax changes. www.LV.com/nomoreguesswork

For further details on LV=’s range of flexible protection and retirement products go to www.LV.com/adviser

1. LV= will switch to gender neutral pricing from 1 December 2012, for all quotes requested and applications received by LV= for:
* Flexible Protection Plan income protection, critical illness and life cover
* LifeTime+ (underwritten whole of life)
* Family Income Assurance
* Gift Inter Vivos
* Mortgage & Lifestyle Protection.

2. For applications received by LV= between 1 September 2012 and 30 November 2012 inclusive LV= will offer the guarantee for pipeline applications where medical evidence is still outstanding on 1 December, for:
* Flexible Protection Plan – income protection, critical illness and life cover
* LifeTime+ (underwritten whole of life)
* Family Income Assurance
* Gift Inter Vivos
* Mortgage & Lifestyle Protection.

Behavioural finance guru Joe Jordan to host six events

MetLife is continuing its commitment to supporting advisers in developing their businesses with plans for six IFA events run by behavioural finance guru Joe Jordan.

The former senior vice-president with MetLife in the US is to run seminars in London, Norwich, Aberdeen, Glasgow, Cardiff and Bristol building on the success of previous events he has hosted for advisers across the UK.

“MetLife is committed to providing as much support as we can to advisers in developing their businesses for the long-term.”

Nearly 1,000 IFAs attended a series of seminars he ran in 2011 which focused on the role of behavioural economics in managing client behaviour and how products offering guarantees translate into long-lasting client relationships.

He will be speaking at events starting in London’s Glaziers Hall before moving on to Dunston Hall in Norwich, Marcliffe Hotel in Aberdeen, Hampden Park in Glasgow, Vale Resort at Hensol Park and the Holiday Inn, Bristol Filton.

Further seminars are planned for November when he will host the Personal Finance Society Annual Conference in Birmingham.

Dominic Grinstead, Managing Director of MetLife UK

Dominic Grinstead, Managing Director of MetLife UK said: “MetLife is committed to providing as much support as we can to advisers in developing their businesses for the long-term.”

“Joe Jordan’s series of seminars have proved a huge success with IFAs and his insights and advice are highly valued by everyone who attends.”

Single interface – assessing employees eligibility for automatic enrolment, calculating contributions, dealing with opt outs, opt ins and re-enrolment.

The platform can interface with existing pay roll systems and handle varying payroll periods.

Easy to configure to the needs of the individual business, AssistMe is intended to simplify employers’ management of their pension scheme post auto enrolment.

Compliance – provides employers with the mandatory communications templates they require as well as generating the necessary reports to show compliance with their duties under new pensions reform legislation.

Segmentation – for employers who require a segmented approach AssistMe enables use of the People’s Pension or NEST for auto enrolment purposes alongside employers Scottish Widows group personal pension.

“Much of the concern amongst employers regarding the introduction of auto-enrolment has been with the potential cost and complexity of the associated administration to maintain compliance.

Lynn Graves, Head of Business Development, Corporate Pensions for Scottish Widows said:

“The introduction of auto enrolment is just weeks away and we recognise the challenge this will bring to employers and advisers. Technology and employer flexibility are crucial to making auto enrolment a success and we have built these into the very heart of our new solution. We know from our market research that employers are
concerned about the administrative requirements of auto enrolment and the Scottish Widows AssistMe solution directly addresses this concern. Many employers have diverse workforces and our new AssistMe solution can address this challenge by offering choice of providers through the combined expertise of Scottish Widows, The People’s Pension or Nest depending on the needs of their own organisation. This will also ensure employees are enrolled into an appropriate scheme and making the right decisions for their financial futures.”

The new solution is powered by SBC Systems, a global leader in employee benefits technology.

James Markham, Managing Director, SBC Systems (UK)

James Markham, Managing Director, SBC Systems (UK) commented:

“Much of the concern amongst employers regarding the introduction of auto-enrolment has been with the potential cost and complexity of the associated administration to maintain compliance. Scottish Widows’ new AssistMe solution – powered by SBC technology – will not only remove that concern but will open the door to enriching the range of additional services provided to employers. The AssistMe solution will bring to the pensions marketplace the fully automated, online experience we have grown accustomed to in our everyday lives as consumers but which until now has been absent from pensions administration. The potential for transformation through this hub solution is substantial”

According to data from Aviva’s latest Family Finances Report, 38% of people stay within a five-mile radius of their parents’ home when flying the nest, with one in 10 (10%) going less than a mile away and three per cent moving no further than the next street.

• Typical distance moved is less than four miles

The most common distance moved when people leave home for the first time is just 3.5 miles.

People in the north east are the most likely to stay close to home, with 42% remaining within a five mile radius. One in eight (13%) in the north east move no more than a mile and four per cent remain on the same or next street.

At the opposite end of the spectrum, people in Wales are most likely to go further afield with almost half (44%) moving more than 20 miles away, compared to the national average of 29%. Around a quarter (26%) of Welsh residents stay within a five-mile radius of their family home.

Louise Colley, head of protection sales and marketing for Aviva says: “Our latest Family Finances Report showed that multi-generational living is fast becoming the norm in the UK with many young adults living with family for longer as they find their feet financially.

“We’ve also found however that even when people do leave home for the first time, many are still keen to stay close to family. This could be because they need to stay local due to work, or simply because they love the area they grew up in. But we also know that around half of the young people interviewed said they enjoy ‘being looked after’, so it’s quite possible that apron strings are playing a part too!”

The new team within the Individual Protection business will proactively contact advisers, their clients and third parties to help gather evidence to complete applications as quickly as possible, helping to secure gender specific premiums. This will be great news for advisers and customers who will be keen to get the best possible premiums before the deadline. Legal & General will work with advisers to ensure they make the most of the online quote and apply system OLP Connect (OLPC). 78% of applications on OLPC receive an immediate decision using the interactive route.

Legal & General also confirm that they will support any applications with gender specific premiums that need a start date after 20 December 2012, subject to certain conditions. *Advisers should contact their usual service team to find out how to arrange this as it’s not something they’ll be able to do automatically on OLPC.

These latest announcements show that Legal & General will be supporting advisers and customers all the way in the run up to the changes. The key is to get those applications in early and keep up to date on latest countdown news via their adviser websites which be regularly updated each week.

Stuart Welch, Actuarial Director for Individual Protection, Legal & General said;

“We’ve been working on gender response solutions for over a year and have had the interests of customers in mind at all times. Our new gender response team has a single objective – to ensure the completion process is effective. By coupling this with the use of Subject Access Reports to confirm medical evidence, we aim to give as many customers as possible the cover they need by the deadline and get commission payments to advisers. We want advisers and customers to know exactly where they stand on midnight on 20 December 2012.”

A lack of clarity about risk free interest rates makes it harder to determine the expected return required to invest in more risky assets. This has implications for the relative value of growth versus mature stocks. A higher required rate of expected return reduces the present value of cash flows received far into the future relative to cash flows received more imminently. This in turn reduces the value of growth stocks, which promise high future cash flows, relative to mature stocks, where cash flows are more evenly distributed across time.

Uncertainty about what the true risk free rate should be and the resulting potential for inefficient pricing within the market, provides ample opportunities of which active portfolio managers can take advantage.