The restructuring of Axa’s UK business in 2010 left behind a loss-making wealth management firm with enormous start-up costs, the chief executive of Axa Wealth has revealed.
According to Mike Kellard, after French parent Axa sold its closed UK business and protection and corporate business to Resolution in 2010, creating Axa Wealth on 15 September 2010, the nascent firm was a loss-making entity.
It is understood Axa Wealth was running with more than £100m start-up costs.
Mr Kellard admitted he had set some tough targets for Axa Wealth, especially given the regulatory hurdles such as RDR in January 2013 and the pension freedoms in April this year.
In September, an insider claimed the French parent initially gave Axa Wealth a five-year target of £45bn assets under management which was lowered in 2012 to £34bn.
Mr Kellard refused to comment on speculation, but pointed out that any market weakness, such as that caused by China’s woes, affected AUM.
He said profitability was more important: “We agreed with Axa Group to break even in 2014 and move into profitability through 2015, as well as getting our wrap platform and Architas to scale. We are now ahead of that plan”.
Its August results show AUM grew 9 per cent, to approximately £29bn, with another £20bn in Architas.
It will also add another €30bn (£21.7bn) of multi-managed assets as it leads a pan-European hub, combining Axa Wealth Architas with the private management businesses in France and Belgium and Axa Investment Managers’ multi-manager business.
Axa Wealth has also seen growth on the back of the pension freedoms. “We had expected to lose £300m when the freedoms came in. In the end, we had just £40m redemptions and are writing net new business of £5bn a year,” Mr Kellard said.
Ahead of the pension freedoms, the firm created 1,500 additional hours of service training to support the high call volumes, and hired 35 short-term staff to help field these.
When asked if Axa Wealth was committed to working with UK advisers, Mr Kellard said: “We have already injected £2m into our systems to improve the overall experience for advisers, but there is still plenty to do before I am happy that our service is meeting the expectations of all of our advisers.”
Adviser view
Trystan Lewis, a financial planner with Cheshire-based Griffin Wealth Management, said: “I have used Axa Wealth in the past and they have worked well with advisers.
“I hope they maintain some UK focus because they are a company we would want to work with.”
