AXA's plans create rod for own back
AXA’s plans to extend the use of its Wealth.Net platform, which its North product currently sits on, has acted as the catalyst for the ACCC to block a proposed acquisition of the group by the National Australia Bank.
AXA announced last month it would move its existing Generations, Summit and iAccess clients to the Wealth.Net system in a staged three-year process. At the time of the announcement AXA’s general manager, platforms, Steve Burgess, said the new Wealth.Net technology is cheaper and more efficient to run and develop than existing systems. Wealth.Net is the name AXA gives to the Bluedoor platform owned by DST Global Solutions.
Some analysts considered the ACCC's strong focus on competition in the wrap market as strange, with Citi analysts questioning whether the judgement was a cover for "broader political considerations". These positions, however, fail to acknowledge the strategic value of platforms.
According to research conducted by Investment Trends, in 2009 financial advisers placed 79 per cent of all new client inflows into investment platforms. Additionally, advisers placed 72 per cent of those inflows into their preferred platform.
AXA North, while described by many as a platform, is actually a product that sits on the Wealth.Net platform. North, while attracting $1.3 billion since its launch in November 2007, is not yet profitable. It is, however, considered by many to have a strong strategic position. Standard & Poor's analyst Rodney Lay said hedging costs during the crisis had been one factor that affected the profitability of the product.
The group is now preparing to leverage off North by launching a guaranteed income annuity product, similar to ING's Money For Life.
Meanwhile an AMP acquisition of AXA might see Westpac lose ground on its platform position through any resulting outflows from Asgard platforms. AMP has its own master trust, but not a wrap platform. In 2003 AMP signed a five-year white-label wrap deal with Asgard, now owned by Westpac. The group also has a similar arrangement in place with Macquarie.
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