distribution workshop

8/8/2019 Distribution Workshop

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Distribution Challenges

A Winning Strategy

Simon Clamp


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11 November 2004

UK Distribution Workshop - SC

Agenda

Changing Distribution

Challenges Facing Providers

Friends Provident Progress

Friends Providents Winning Distribution Strategy


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Changing Distribution


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0

2000

4000

6000

8000

10000

12000

2000 2001 2002 2003

m

APE

OtherPost Retirement

Group Pensions

Indiv. Pensions

Investments

Protection

UK Market Changes

Distribution model

Source : ABI

Product mix

0

2000

4000

6000

8000

10000

12000

2000 2001 2002 2003

m

APE

Other

Direct

Tied

IFA


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Future UK Distribution Landscape

SINGLE TIE MULTI-TIE IFA

MODERATE EARNERS

MASS AFFLUENT

HIGH NET WORTH

Source : Friends Provident


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SINGLE TIE MULTI-TIE IFA

MODERATE EARNERS

MORTGAGE

BROKERS

RETAILERS

BANKS

NATIONALS/NETWORKS

EBCs

REGIONALIFAs

PROTECTIONSPECIALISTS

DC PENSION

SPECIALISTS

MASS AFFLUENT

HIGH NET WORTH



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0%

10%

20%30%

40%

50%

60%70%

80%

90%

100%

Pre-depolarisation

Independent

Singletie

Depolarisation +12mths

Singletie

Multi-tievariants

Independent

% ofmarket

APE



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Challenges Facing

Providers


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Key Challenges for Providers

Accessing and managing different routes tomarket whilst maintaining / growing margins

Building and retaining strong, mutually

beneficial distribution relationships

Maintaining product and service focusalongside operational flexibility

Delivering quality service whilst cutting unitcosts is key


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Winning The Distribution Battle

How important is current scale?

Reality is capability to flex capacity

Does a strong consumer brand matter?

Reality is consumer seeking advice

Growth of distributor brand

Is the water-front provider a myth?

Reality is strong proposition in key areas

Coverage of every product not necessary

Is there a requirement to take regulatory responsibility fordistribution?

We believe for certain distribution models only


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Friends Provident

Progress


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FP Share UK IFA Life and Pensions Market

Source : ABI (based on APE)

0%

2%

4%

6%

8%

10%

12%

14%

16%

2001 2002 2003 2004 Q1 2004 Q2

Group DC

ProtectionInvestment

Total L&P


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Growth in FP Market Share with Top Distributors

Source : Touchstone (based on number of cases)

1890Millfield

5500Tenet

1035BBB

6550Sesame

7500Bankhall

RIs

Sources : Bankhall, Financial Advi4%

5%

6%

7%

8%

9%

10%

2002 2003 2004 H1

Bankhall

Sesame

BBB

Tenet

Millfield


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Company Achievements

Financial Adviser Awards

5 star award (AKG)

- 4 star (2003)Life & Pension Gold Awards 2004

- Life Assurance

- Protection

- Health Insurance

- Online Life and Pensions

- Pensions- Individual Pensions

- Group Pensions

Cover magazine 2004 winner for

- Income Protection and Critical Illness

Technology Awards

- Health Insurance Awards 2004 Best Use of E-business

- Bankhall Awards 2004 Technology Company of the Year

Other Awards

- Best Workplaces (26th out of 50)

- Business in the Community Corporate Responsibility Index (22nd out of 100)


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Product Innovation

Broad product range

Innovation in 3 key areas

Protection

E-select

Pensions

Activ / open architecture Individual single premium Q1 2005

Investments

F&C

Safeguard Optimiser Open architecture

Leading product propositions


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The IT Edge

NM FinancialLondon &

Manchester

FriendsProvident

InternationalUK Provident

Single

ScalablePlatform

FP has one core underlying system a great competitive edge

Di ib i D l


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Distribution Deals

Bankhall - preferred protection provider

Sesame - preferred protection provider

Lighthouse - preferred protection provider

St Jamess Place - preferred protection provider

+ preferred stakeholder provider

THINC Group - sole provider for Term and Critical Illness


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Friends Providents

Winning DistributionStrategy


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Winning Distribution Profitably

Reduced unit costs through

Increased volume with level costs

Use of out-sourcing to provide scale atreduced cost

Re-engineered processes

e-commerce and automation

While growing a reputation for excellent service

Operational excellence


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Distribution Strategy

Seek distribution deals

With IFAs, building societies, providers

Banks

Deliver product and service solutions to banks

Strategic partnerships with IFAs

Investment in IFAs

Tied mortgage advisers

Friends Mortgage World


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Distribution Strategy

Focused product range

FP products cover majority of distributor revenue

Scalability

Out-sourcing and straight through processing to manage volume

Bundled and unbundled group pensions platform capability

EBCs want to deal with small number of providers with high qualityplatforms and open architecture

EBC client proposition focused on investment advice

Service quality is key

Technology a significant differentiator

Operational excellence will be our differentiator


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Case Study

An example of a successful agreement between aproduct manufacturer and a distributor

Based on a quality product and service propositionenabled by end to end e-commerce

FP key to SJP move to e-enabled processes

SJP now discussing expansion of proposition


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Case Study

Individual and group stakeholder pensions

Panel of 3

Commenced July 2003

Protection

Panel of 5

Commenced February 2004

FP position 2nd

Overall SJP 15th in FPs top 100 list

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