nma january 2011
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Working with Solicitors
New Model Adviser Conference & Awards January 2011
This presentation is directed at professional advisers only and should not be distributed to, or relied upon by retail clients
Drivers of change
Duties of Care Regulation – Financial Services and Markets Act 2000 Legislation impacting on professional work Client expectations – service standards Competition for clients Downward pressure on fees Impact of economic conditions Risk management 2011 new Solicitors Code of Conduct – “outcome focussed
regulation” The Legal Services Act 2007 – England and Wales
Legal Services Act 2007- Background
Need for common standards for professional practice
Office for Fair Trading report 2001 / Sir David Clementi review 2004
Different regulators potentially creating confusion, complexity and inconsistency especially for the public
Identified a need to increase competition, flexibility and choice
Legal Services Act 2007 – Key Provisions
Full implementation October 2011
Creates a single supervisory board - the Legal Services Board
Creation of a single point for consumer complaints – the Office for Legal Complaints
Establishes the Alternative Business Structure (ABS)
Alternative Business Structures
The Act removes restrictions on the ownership and structure of legal services businesses
Up to 100% external ownership
External investment
Listed companies
Ability to create a “one stop shop” for legal and associated non-legal services
No obligation to form an ABS but competitive pressures may influence decisions
Alternative Business Structures
Benefits
- Increased access to finance
- Increased flexibility
- Increased efficiency and economies of scale
- Easier to hire and retain non-legal staff
- New providers should lead to innovation and price reductions
- Increased access to legal services
- Ministry of Justice – Legal Services Reform fact sheet
Implications of the Act
Entry of well known brands – “Tesco Law” Basic services will be commoditised Price will become a basis for competition Revenue streams under pressure Pressure on costs Increasing use of technology End to hourly billing?* Easy alternatives - online services Impact on the number of firms** Legal firms may need to change the services they offer
*Lord Neuberger, Law Society Gazette April 2010 **Money Management February 2008 – 35% high street law firms to disappear
Change is happening
SAGA Legal Services
AA – legal documents
QualitySolicitors – “next generation” of legal services
Co-op – hiring solicitors and predicting £200m turnover in a few years.
The Times - May 2010
Other retail, banking, and insurance brands expected to enter the market
What are the options?
Carry on as now
Adopt different business structures
Mergers/acquisitions
Use technology to raise standards and lower costs
Specialise in certain markets
Compete on price or offer bespoke services
Widen range of services
Provide holistic advice
Work with a network of specialists
Potential for referrals
81% of solicitors see opportunities for more referrals
82% of solicitors refer once a month or less
How IFAs are sourced:
Personal or professional recommendation – 92%
Firms with a strong local profile – 51%
Professional networking – 41%
IFAs who proactively contact - 38%
Source: J P Morgan Asset Management Professional Connections Survey 2010
Referrals
Solicitors Regulation Authority
Ethics Guidance on the meaning of “independent intermediaries”
Where clients require advice etc. on investing in an asset that can rise or fall in value—for example, an endowment policy, life insurance with an investment element, or a pension policy— rule 9.03(6) of the Solicitors' Code of Conduct 2007 (the Code) states that they must only be referred to independent intermediaries authorised to give investment advice.
July 2009
FSMA 2000
Part XX - provision of financial services by members of the Professions
Exempt regulated activities – what professionals are permitted to do without the need for FSA authorisation
Incidental and complementary to professional services
Does not permit the giving of investment advice to clients
Areas of advice
Investment matters are increasingly complex
They are a part of many areas of professional work
Trusts and estate planning
Private clients
Probate
Financial planning and divorce
Personal Injury – investment of settlements
Property department
Corporate department
Adding value
Value IFAs can provide to solicitors
Building long term relationships
Retention of clients
New business from existing clients
Obtaining referrals from clients
Business from new clients
Source: J P Morgan Asset Management Professional Connections Survey 2010
Issues to consider
Be knowledgeable/expert/specialist
Have appropriate/higher qualifications – STEP/SOLLA/Resolution
Understand their regulatory regime for financial services
Understand how they work and their issues
Provide flexibility of remuneration
Provide a service to the professional practice
Have a clear client proposition
In conclusion
Benefits you bring to professional firms
Client management – new and existing
Risk management
Operational/regulatory support
Experience of adapting to significant change
Additional revenue
Wider range of services
Differentiated
Creation of a “new” business
Important information
Information regarding tax and practice is based on AXA Wealth’s understanding of current legislation and HM Revenue & Customs policy/practice. Tax treatment is subject to change and individual circumstances.
The information contained in this presentation does not constitute advice. It is designed for financial adviser use only and is not intended for use with individual investors. Any sample screen shots displayed
are correct at date of issue but may be subject to change.
AXA Wealth, Winterthur Way, Basingstoke, Hampshire, RG21 6SZ. Telephone number: 01256 470707. As part of our commitment to quality service, telephone calls may be recorded.
Architas Multi-Manager Limited (No. 06458717), AXA Portfolio Services Limited (No. 1128611), AXA Wealth Services Limited (No. 02238458), Winterthur Life UK Limited (No. 3116645) and AXA Wealth
Limited (No. 01225468) are all companies registered in England and limited by shares. Their registered office is 5 Old Broad Street, London, EC2 1AD. Each company promotes and distributes its own products
and is authorised and regulated by the Financial Services Authority. AXA Wealth Services Limited also promotes and distributes the products of AXA Isle of Man Limited and AXA Life Europe Limited in the
United Kingdom.
AXA Wealth is a marketing brand used by these companies. Details of the companies offering specific products are contained within product literature.
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