Standard Life Leading the post-rdr adviser platform market. Eddy Reynolds Head of Adviser and Investment Propositions

Standard Life Leading the post-rdr adviser platform market Eddy Reynolds Head of Adviser and Investment Propositions

This presentation may contain certain forward-looking statements with respect to certain of Standard Life's plans and its current goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements containing the words believes, intends, expects, plans, pursues, seeks and anticipates, and words of similar meaning, are forward-looking. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond Standard Life's control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, and the performance of financial markets generally; the policies and actions of regulatory authorities, the impact of competition, inflation, and deflation; experience in particular with regard to mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; and the impact of changes in capital, solvency or accounting standards, and tax and other legislation and regulations in the jurisdictions in which Standard Life and its affiliates operate. This may for example result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. As a result, Standard Life s actual future financial condition, performance and results may differ materially from the plans, goals, and expectations set forth in the forward-looking statements. Standard Life undertakes no obligation to update the forwardlooking statements contained in this presentation or any other forward-looking statements it may make. Bernstein Research Seminar March 2014 2

Agenda Retail business already a winner in post-rdr adviser market Regulatory and market influences Opportunities Q&A Bernstein Research Seminar March 2014 3

First mover advantage - we already have a successful RDR ready business

Retail business a winner in the adviser market Stronger relationships with more advisers Increasing assets Growing profit contribution 1,300 1,236 40bn 39bn 100m 80m 1 Adviser firms 750 820 2010 999 1,137 2011 2012 2013 AUA 20bn 21bn 2010 24bn 29bn 2011 2012 2013 Contribution ( 20m) ( 14m) 2010 10m 54m 2011 2012 2013 Adviser firms on Wrap up 9% to 1,236 Deeper relationships with the most successful advisers Firms with assets on Wrap over 20m up 41% to 228 firms Benefiting from regulatory and market changes Platform AUA up 33% 19.4bn MyFolio AUA up 82% to 4.0bn Standard Life Wealth AUM now 5.8bn following acquisition of Newton Private Clients 1 Fund manager discounts support premium pricing Clear record of growth in profit Increasingly benefiting from transfer of customers originally secured through workplace Additional margin secured by SLI (manage c25% of platform AUA) 1. Standard Life Wealth will be reported within Standard Life Investments from 1 January 2014 Bernstein Research Seminar March 2014 5

Platforms are an important driver of UK retail growth UK retail new AUA 40bn 38.6bn Assets under administration 21.0bn 44% 9.3bn 23.7bn 11.4bn 48% H1 25m 28.7bn 51% 14.6bn 50% 19.4bn 0bn H1 nil 2010 2011 2012 2013 UK retail new total AUA Platform AUA Bernstein Research Seminar March 2014 6

Regulatory and market influences helping to shape the adviser landscape

Giving adviser flexibility and control leading support for investments Adviser-managed investment solutions Investment manager solutions Fund picker 32% Advisory models 41% Discretionary managers 9% Risk-rated fund solutions 17% Basic platform functionality Custody Dealing Tax wrappers Standard Life Wrap Investment Hub Clear segregation of investment activities Bulk management of switches/rebalances Programmed & ad hoc rebalancing Client exclusions/cgt Management COBS compliant reporting MyFolio reporting Personalised private client investment report Lookthrough to underlying assets Leading the post-rdr adviser platform market December 2013 10

Standard Life Investments MyFolio reporting example Bernstein Research Seminar March 2014 11

Strong and ongoing demand for MyFolio 5bn MyFolio AUM MyFolio assets under management 0.9bn 2.2bn 4.0bn 0bn 0.1bn H1 nil 2010 2011 2012 2013 Bernstein Research Seminar March 2014 12

Capturing assets across the value chain 1 Core platform revenue Investment manufacture Investment solution construction Client, tax wrapper & investment admin Client acquisition & advice services 2 SLI single asset class funds 3 4 SLI MyFolio risk-based funds, and SLW discretionary portfolios Leading the post-rdr adviser platform market December 2013 13

Demand for advice and adviser platforms 1 billions 350 300 250 200 150 100 50 0 Demographic split of UK financial wealth 1 16-24 25-34 35-44 45-54 55-64 65-74 75-84 85+ 2/3rds of financial wealth, totalling 700bn, is owned by over 55s. 3 Case law Complexity of problem drives requirement for advice Customer s needs 7.4m seek occasional advice Investment solutions Trusts Legislation Tax wrappers Regulations Economy 2 Propensity to seek advice increases with wealth, age and complexity 4 Complexity of solution drives requirement for platform 55k income tipping point where people become significantly more interested in seeking professional financial advice. 150k+ income where interest in advice peaks. 2 100% 80% 60% 40% 20% 0% % of market which is independently advised, 2012 est. 3 Annuity Drawdown Trust Trust 7.4m seek occasional advice Tax wrapper Customer Tax Wrapper Investment 4.3m self directedinvestment solution solution 2m purely advised Tax wrapper Investment solution Platform custody, management and reporting 1. Office for National Statistics: Breakdown of property, physical and financial wealth, by age band of HRP: Great Britain, 2008/10 2. JP Morgan: Winning propositions: The consumer market post-rdr 3. MINTEL: Pensions Intermediary Focus UK, January 2013 Bernstein Research Seminar March 2014 15

Our proposition addresses all adviser needs Third Party Administrator Increasing complexity/sophistication Investment platforms Full service Wrap Platform 1. Genuine business partner model 2. Gives advisers flexibility and control 3. Progressive view of regulatory change creates competitive advantage 4. Focus on adviser business efficiency Premium client service Strategic commitment and financial strength Extended DFM capability Specialist Investment Hub Outsourcing and model portfolio support Advisers can focus on business growth, not on regulatory compliance Shorter, more efficient adviser journeys, integration with adviser systems Support in the field Expert business support Enhanced tools and reporting Extended investment range Full wrapper selection Progressive adoption of new regulations simple clean unbundled transparent Simpler, clearer reports & statements/mobile technologies Underpinned by the strength of the Standard Life Group Bernstein Research Seminar March 2014 16

Persistency of wraps and fund platforms 2013 net sales as % of gross sales 81% 78% 75% 68% 54% 55% 51% 46% 9.80 46% 25% Standard Life Wrap B Wrap C Wrap D Wrap E Platform A Platform B Platform C Platform D Platform E 1. Standard Life: actual 2013 results. Other companies: 2013 Fundscape Platform Report (March 2014) Bernstein Research Seminar March 2014 17

Regulatory influences on advisers and platforms 2008 Global Financial Crisis MyFolio 1 st Theme Growth of Centralised Investment Propositions (CIPs) 2012 FCA CIP Guidance Validation of risk based solutions e.g. MyFolio, SLW 2 nd Theme Rise of ongoing advice propositions 2012 FCA The RDR Professionalism and Adviser Charging 2013 FCA Platform Payments and Rebates 2013 HMRC brief Tax treatment of fund rebates Key delivery dates: 2014, and then 2016 sunset clause Rebate based platforms at big disadvantage 3 rd Theme Requirement for transparent pricing structures Bernstein Research Seminar March 2014 18

Fund price transparency Clean pricing has material impact on perceived value Perception Reality Bundled share class Net Rebate Net SL enhanced rebate 150bps 75bps 66bps Clean share classes Clean SL clean Perception = Reality Simplification and buying power together make it easy to demonstrate value Leading the post-rdr adviser platform market December 2013 19 19

Anticipating and dealing with regulatory change Early adoption of RDR Committed to move to fully unbundled and clean Committed to meet clients tax liability for 2013 Uploaded 2,000 clean funds Bulk conversion of all assets to clean Super clean negotiations Fully unbundled and simplified platform charging No further transition required 31/12/13 RDR Helping advisers move from trail to fees 6/4/14 PS13/01 compliance 6/4/16 sunset clause No requirement for unit rebating No client tax liability, no tax collection, no tax reporting Move to clean funds mean simplified reporting and no future tax liability 2016 ready in 2014 Clean fund deals gives price advantage Fully unbundled clean platform Leading the post-rdr adviser platform market December 2013 20

Platforms net sales 2013 4bn 3,648m Sales 1 2,248m 2,198m 1,792m 1,744m 1,708m 1,328m 1,280m 4.90 685m 0bn Standard Life Skandia Fidelity AJ Bell AXA Ascentric Transact Nucleus J Hay 1. Standard Life: actual 2013 results. Other companies: 2013 Fundscape Platform Report (March 2014) 2. Cofunds do not disclose split of institutional and advised business Leading the post-rdr adviser platform market December 2013 21

Significant opportunities for growth

Significant opportunities in the Retail market Growing market and our market share Concentration among fewer providers Focused multi-channel approach 600bn 3 231bn 1 19bn Market share: 65bn c3% Market share: 2bn c7.5% 2 2008 2013 2018e Assets on advised platforms Assets on SL platforms 33 platforms operate in today s market 2013 2018 Advised Workplace Direct Growing retail customer base Advisers are looking for more than third party administrators Full service wrap platforms are winning vs fund supermarkets Our advisers will be meeting clients not managing regulatory change Only largest platform providers have scale required to succeed Requirement for ongoing investment in proposition Enabled by re-registration Enables customers to stay with us as they move between channels Sharing core infrastructure for further operational leverage Largely untapped potential in the direct space (currently c1 million direct customers) 1. Platforum Platform Guide Q2 2013 2. As at 30 September 2013 3. Deloitte Recognising RDR Reality Bernstein Research Seminar March 2014 23

Multi-channel approach addresses customer needs Advised Only 20% of population have financial needs which are complex enough to warrant advice IFAs are increasingly using platforms to meet these needs effectively and efficiently Our platform is growing in size and market share with AUA up 33% in 2013 to 19bn Direct No conflict with advised channel 80% of customers have simple financial needs They primarily need: Pension for retirement Tax efficient savings product such as an ISA Protection product Home, car and possibly health insurance Workplace Efficient means of attracting new customers 300,000 in 2013, around 400,000 in 2014 Younger customer demographic often starting their first savings product Employee marketing rights and major source of future direct business Bernstein Research Seminar March 2014 24

Simple solution for our customers - MyFolio 5bn MyFolio AUM 4.0bn 2.2bn 0.9bn 0bn 0.1bn 2010 2011 2012 2013 Carefully constructed risk-based portfolios managed by Standard Life Investments Simple to understand and select all you need is 5 clicks of a mouse Five risk levels to suit different client risk preferences and needs No expert needed to pick from thousands of funds or determine asset allocation Simple for the long-term Optimum strategic asset allocation actively monitored and maintained Performance delivered through ongoing fund research/selection and tactical asset allocation Premium investment content including absolute return investment strategies Bernstein Research Seminar March 2014 25

Ready to win in the post-rdr market Benefit to advisers and clients 1. Price transparency supports quality ongoing advice 2. Wide range of unique fund discounts 3. No legacy: simple, consistent client treatment 4. Rich Centralised Investment Proposition support 5. Regulatory change complete back to BAU Focussed on creating client value, not managing regulatory change Leading the post-rdr adviser platform market December 2013 26

Ready to win in the post-rdr market What this means for Standard Life 1. Secure revenue streams from explicit charges 2. Unique fund manager discounts support premium proposition 3. No legacy reduces ongoing maintenance costs 4. CIP support creates group revenue opportunities 5. Regulatory change complete back to BAU Focussed on creating shareholder value, not managing regulatory change Leading the post-rdr adviser platform market December 2013 27

Thank you Q&A