AXA advisers prefer NAB

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Opinions within the financial industry point to a preference of National Australia Bank (NAB) taking over AXA rather than AMP.

Wednesday, December 23rd 2009, 5:39AM 1 Comment

by Jenha White

AXA Advisers Association (AAA) spokesperson John Wood says he believes NAB is the most acceptable choice as it would have less impact on business than an AMP merger.

"AXA advisers have traditionally had a very open relationship with freedom of choice to operate their businesses independently of the AXA agreement, whereas AMP has a more closed door agency agreement."

He says AXA aligned advisers may not support a new AMP QFE if it brings in a strong set of restrictions under a new agency agreement.

Wood is also concerned that if AMP took over AXA that its management would lose jobs, there would be product rationalisation and potential for the AMP head office to move to Australia.

This would mean a loss of New Zealand onshore management and a loss of products and services unique to New Zealanders.

Wood says a NAB deal would be business as usual as the bank doesn't already have an adviser force and may be happy to continue with the status quo of AXA's agency adviser agreement.

He also suggests that this brings in a bank mentality which may be a cultural change as ANZ has taken on ING and the Commonwealth Bank of Australia which also owns ASB has Sovereign, leaving Westpac out on a limb.

"I'd be watching this space for Westpac now, who would it target, Tower, Asteron?"

 Nigel Tate, director of the board of the Institute of Financial Advisers says there is synergy for AMP and AXA to merge as AMP has a good history, a licence into China and would benefit from AXA's online systems.

He says the real benefit if NAB takes over AXA is that it would probably pick up the AXA range and develop it whereas if AXA merged with AMP there would be a loss of products.

He believes if NAB's bid is successful, business won't be affected as no-one will be taken out of the New Zealand market.

However if AXA and AMP merge, Wood suggests it would change the dynamics of the market place and he's not sure how that would sit alongside the other big player in the market Sovereign.

"It would be a shame to go from three providers competing for the top spot to two, because the more strong players there are in the field then the better and stronger the market place is with evolution of products. If you reduce the numbers, you reduce the competition."

Phil Jones director of Phil Jones Insurance Services however says he would prefer AMP to get AXA as he is concerned about the growing influence of banks and he would like to see life insurance staying as independent as possible.

"People go to the bank to get a mortgage and then they end up with life cover all in one place.

"It's not necessarily the best protection, but it's simple and it looks okay at the time, whether it's ultimately the best for you as the consumer is another question."

Jones' first preference would be for AXA to remain as it is but if it's to be purchased, he'd prefer it to be bought by another life company (AMP) so it stays independent even though it means there's a net loss of another company.

"In an ideal world it would be bought by someone not trading here in New Zealand so we'd end up with fresh names and competition in the market."

Wood says this is a distraction AXA and aligned advisers could do without considering the major legislative changes coming in next year.

Jenha is a TPL staff reporter. jenha@tarawera.co.nz

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