Assuring alliances

Roxane McMeeken reports from Luxembourg on Lombard’s sale techniques.

Leading Luxembourg life assurer Lombard International is advocating a sometimes neglected distribution model for Europe. The firm’s executive chairman John Stone said at the recent Luxembourg fund industry association (Alfi) conference that private banks and fund managers could sell more funds by teaming up with life assurance companies – a model he calls privatbancassurance. Lombard has formed alliances with multiple partners throughout Europe in order to distribute products. This has led to the creation of tax-efficient vehicles. Simple investments in hedge funds, for example, are often subject to heavy taxation – 48 per cent in some countries – but this can be mitigated if the product is set up through an insurance vehicle. Mr Stone claimed that while fund sales in Europe have dipped in line with stock markets, sales of insurance products are continuing to rise. This is because wealth managers’ typical reaction to poor markets is to “avoid talking to clients”, Mr Stone said. He said advisers and private bankers should keep talking to their customers but use a different approach, talking about “wealth preservation”, “wealth restructuring” or “estate planning” instead of straight investment.