CAPITAL MARKETS BRIEFING 31 st OCTOBER PDF Free Download

CAPITAL MARKETS BRIEFING 31 st OCTOBER 2016

Gross Inflows by quarter 2013 2014 2015 2016 1.6 2.4 1.9 2.1 1.7 1.9 2.8 2.8 2.3 2.3 2.0 1.6 1.9 2.1 2.5 Q1 Q2 Q3 Q4 2013 over 2012 +28% +22% +27% +11% 2014 over 2013 +15% +17% +19% +12% 2015 over 2014 +12% +17% +20% +20% 2016 over 2015 +16% +23% +21%

Net Inflows by quarter 2013 2014 2015 2016 0.9 1.71 1.66 1.48 1.32 1.36 1.35 1.19 1.25 1.26 1.03 1.05 1.19 1.39 1.63 Q1 Q2 Q3 Q4 2013 over 2012 +29% +26% +41% +9% 2014 over 2013 +26% +20% +23% +14% 2015 over 2014 +9% +14% +17% +17% 2016 over 2015 +3% +25% +12%

Gross Inflows YTD up 20% at 8.1bn 10bn 8bn 6bn +35% +9% +9% +21% +16% +17% +20% 4bn 2bn 0bn 2010 2011 2012 2013 2014 2015 2016 Sept

Net Inflows YTD up 14% at 4.73bn 6bn 4bn 2bn +34% -11% +31% +30% +10% +4% +28% +20% +14% +14% 0bn 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sept

Funds under management 22%p.a. compound growth over the last 5 years and 17%p.a. over 10 years (at September 2016) 80bn +22% 60bn 40bn 20bn +25% +18% -10% +31% +26% +6% +22% +27% +17% +13% 71.4 0bn 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sept

People & Culture Admin Platform Academy IMA Asia / Middle East Clients & Value Products & Services Recruitment Risks & Regulatory Environment Marketplace Opportunities & Threats Cash-flow & Dividends Partnership & Capital Management Development

TONY DUNK Investor Relations Director

Gross inflows 10bn 8bn 6bn 4bn 2bn 0bn -9% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Sept

A PEOPLE BUSINESS EMOTIONAL VS ARTIFICIAL

The price is what you pay value is what you receive

Don t have the time inclination, confidence or knowledge to make their own financial decisions

Pension freedom Brexit Property funds

Opening funds under management Year Ended 31 December 2008 billion Year Ended 31 December 2007 billion 18.2 15.4 New money invested 3.0 3.1 Investment return (3.6) 0.9 Regular income withdrawals/ maturities 17.6 19.4 (0.4) (0.3) Surrender/part surrenders (0.9) (0.9) Closing funds under management 16.3 18.2 Implied surrender rate as % of average funds under management 5.2% 5.1% WE WERE PARTICULARLY PLEASED TO RETAIN 95% OF CLIENTS EXISTING FUNDS DURING 2008. RETENTION OF FUNDS UNDER MANAGEMENT IS NOT ONLY A GOOD MEASURE FROM A PROFITABILITY POINT OF VIEW BUT IS ALSO A GOOD INDICATOR OF THE STRENGTH OF RELATIONSHIPS THE COMPANY HAS WITH ITS CLIENTS.

Client wealth account survey Do you feel the St. James s Place proposition provides value for money? Excellent Good Poor Reasonable

Things our clients value Working with someone they trust Dealing with complexity Taking away the worry Having a plan managing the risks Getting things done Dealing with life s uncertainties Peace of mind

What s important about SJP Highly respected Big FTSE100 71 billion of client funds under management Resources to do vital things well Suitability of advice guaranteed Access to advice throughout the UK (and now Asia)

Geographic Distribution Partners Clients 5% 6% 2% 2% 23% 24% 12% 4% 4% 14% 3% 4% Overseas Partners: 3% 9% 21% 17% Overseas Clients: 2% 10% 22% 13% 19

Global Investment Management Expertise

Benefits of investment management approach Above average investment returns (net of charges)

Annualised 3 year performance St James s Place Portfolio vs ARC Private Client Investment peer groups 10% St. James's Place ARC PCI Peer Group Average 8% 6% 4% 2% 3.5 5.8 3.7 3.7 6.8 5.3 7.8 6.4 9.1 7.1 6.3 6.4 6.4 6.3 5.3 6.4 0% Defensive Conservative Balanced Managed Adventurous Immediate Income Source: FE Analytics, Asset Risk Consultants (ARC) Private Client Indices and SJP internal data. Data to 30 September 2016 Balanced Income Deferred Inome

Benefits of investment management approach Above average investment returns (net of charges) Exclusive funds and top fund managers Rigorous selection and ongoing monitoring Lower investment management fees Seamless change

Client wealth account survey Knowing everything you know of the St. James s Place proposition, would you recommend it to others? Yes I would, and have already done so 58% Yes, but I have yet to do so 37% No 5%

TONY WICKENDEN Technical Connection

Tax alpha Investment Performance Tax Optimisation Optimised Client Outcomes

Tax alpha Aggressive tax avoidance Acceptable tax planning and tax structuring

So where does this leave us? BORING IS THE NEW EXCITING

The boring list Pensions ISAs Collectives Bonds BPR Schemes VCT /EIS Gift trusts /Loan Trusts /DGTs Life Insurance You get the picture?

Comparison grid INVESTMENT / ACCUMULATION PERIOD WITHDRAWAL Diversified spread of underlying investments possible Tax relief on investment Investor access Tax on income Tax on Capital Gains IHT Tax on income Tax on Capital Gains IHT on death Other tax on death REGISTERED PENSION YES YES YES NO NO NO YES NO NO POSSIBLE (DEATH 75+) ISA YES NO YES NO NO YES NO NO YES NO UK COLLECTIVES YES NO YES YES NO YES YES YES YES NO OFFSHORE REPORTING FUND OFFSHORE NON- REPORTING FUND UK INVESTMENT BOND OFFSHORE INVESTMENT BOND YES NO YES NO NO YES YES YES YES NO YES NO YES NO NO YES NO INCOME YES YES NO YES NO YES YES YES YES NO INCOME YES YES NO YES NO YES NO NO YES NO INCOME YES YES NO VCT NO YES YES YES NO YES NO NO YES NO EIS NO YES YES YES YES NO YES NO NO NO AIM STOCK NO NO YES NO YES NO YES YES NO NO PROPERTY NO NO YES NO NO YES YES YES YES NO CASH NO NO YES NO NO YES YES YES YES NO

1996 2016 Timeline of industry events Barclays launches Web ETFs, rebrands to ishares (sold to BlackRock) Bank of England given independence over monetary policymaking Married couples allowance withdrawn for couples under 65 The Sandler Report CP121 depolarisation DOTAS regime; special income / capital gains tax Whole sale reform of the taxation of trusts for IHT CGT reforms: entrepreneurs relief/single 18% rate of CGT Extension of DOTAS to IHT and UCITS IV adopted Intro: GAAR and Statutory Residence Test Intro: dividend allowance for individuals; higher rates of SDLT for 2 nd homes Securities Investment Board (SIB) becomes Financial Services Abolition of Advance Corporate Tax and repayable tax credit; on dividends reduced to 10% UCITS III adopted; stakeholder pension introduced Introduction: Stamp Duty Land Tax Introduction: pre-owned Asset Tax Introduction: transferable nil rate band Intro: 50% additional rate of income tax / 28% rate of CGT for trustees and higher /additional rate tax payers Reduction in rate of income tax from 50% to 45% Introduction: new rules on sameday additions for trusts; 10% rate on savings income abolished 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Welfare Reform and Pensions Act: created stakeholder pensions and pension-sharing on divorce Child Support, Pensions and Social Security Act: reworked SERPS into S2P Finance Act: pensions simplification Finance Act: amends to simplified regime Pension Act: legislates for end of money purchase contracting out Pensions Act: autoenrolment from 2012 Finance Act: Special annual allowance for income over 150,000 Pensions Act: state pension age reforms / indexation move to CPI Finance Act: cut lifetime allowance by 20% to 1.5m from 2012-13 / annual allowance by 80% to 50,000 from 2011-12 Start of NEST and autoenrolment Finance Act: Lifetime allowance cut to 1.25m and annual to 40,000 from 2014 Finance Act marks the start of pension flexibility ; implementation from 2015 Cut in lifetime allowance to 1m from 2016-17 Finance (No.2) Act Reform of annual allowance calculation and taper from 2016-17

..And there s no let up in sight 2016/17 Personal Savings Allowance CGT change Dividend tax change Residence nil rate band: downsizing provisions..and consultations including Domicile Investment bond taxation Salary Sacrifice Disguised remuneration Personal Portfolio Bonds

Helping our clients to make hard choices Where to invest company or personal money when caught by the annual or lifetime allowance How and when to take money from your pension investments Whether and how to wrap your lump sum investments

Helping our clients to make hard choices How best to effect employer paid life cover to minimise net cost? How to invest tax effectively for children while retaining control? Which estate planning solution can deliver IHT efficiency with investor control (and access)?

Tax alpha delivered 100 Get it wrong Get it right 60 100 +66%

OUR TEAM SUPPORTING PARTNERS Technical Connection Division

TCD key suppliers T C D Knowledge Know how Pro activity (ideas) Availability P A R T N E R S Confidence Creativity Credibility Clarity C L I E N T S * Financially detrimental if you get it wrong ** Readily self service answers Complex Consequences * Can t **

T C D What do we deliver? Answers to questions Access to knowledge Business class CPD Consultations Business Generation PQ Support P A R T N E R S H I P

The Value delivered by technical excellence Excellent client outcomes Reduced risk Increased productivity/profit Partner attraction/retention

JONATHAN MCMAHON Joint Chief Operating Officer

Overview Our community Employee engagement Apprentices and Graduates Our work in our communities The Foundation Corporate Social Responsibility

The SJP community Number of Practices 2,320 Number of Advisers 3,259 Number of Partner Support Staff 4,645 Number of Employees 1,472 Number of Employees in our key third party providers 1,608

The SJP employee community 21 Locations in UK and 3 in Asia Supporting advisers in these areas: Client Services & Administration Legal Marketing Risk & Compliance Tax & Trust etc. Technology Training & Development Average age of employees 41.8 Average length of service of employees 5.4 years

Physical investment in our premises

2016 survey headlines EMPLOYEE ENGAGEMENT INDEX 86% -1 vs. 2014 Some key scores % positive 53. I feel proud of the work SJP does to help others through the SJP Foundation 96% 4. I understand how my work contributes to the success of the organisation 94% 45. I believe the fair treatment of clients is central to our culture 94% Engagement levels have remained high since 2014, with SJP employees understanding how their work contributes to SJP s success and believing that the fair treatment of clients is central to the culture.

Vs. financial services benchmark 0 31 questions were comparable 13 19 Questions most above Benchmark % positive Vs. benchmark 62. I would recommend SJP as a great place to work 88% +21 63. I feel a strong sense of belonging to SJP. 83% +17 37. I am satisfied with the total benefits package 93% +17 61. I feel proud to work for SJP 92% +15 Question score 86% 5 or more points above Benchmark Question score within 5 points of the Benchmark Question score 5 or more points below Benchmark 4 of the top 5 results relative to the norm were engagement questions indicating high levels of engagement relative to other Financial Services companies. 64. I intend to still be working for SJP in 12 months time. 88% +13 32. During my last performance appraisal my manager helped me to focus on developing my performance. 78% +12 48. I believe I am valued for what I can offer SJP. 77% +12 40. I have confidence in senior managers to lead us effectively through the good times and the bad. 82% +12

Vs. Financial services benchmark EMPLOYEE ENGAGEMENT INDEX 86% Sustaining high levels of engagement can be a challenge and although questions in the engagement index all perform above the Financial Service benchmark there has been a declining trend since 2014. Diff vs. 2014 Diff. vs. Financial Diff. vs. Best in Class I feel proud to work for SJP 92% -1 +15 +2 I would recommend SJP as a great place to work 88% -1 +21 +1 I feel a strong sense of belonging to SJP I feel a strong sense of belonging to SJP 83% 0 +17 +4 I still intend to be working for SJP in 12 months time 88% -1 +13 +3 I still intend to be working for SJP in 12 months time 79% -3 - +3 This organisation motivates me to go the extra mile at work Working here makes me want to do the best I can 87% -2 +8 +1

Graduate and Apprenticeship schemes at SJP Graduates Started in September 2014 with 3 year rotational programme - six 6-month placements across SJP 15 rotational graduates on programme. 12 more planned for 2017 100% retention to date Apprentices Started in September 2012 with 5 apprentices. 19 new apprentices joined in September 2016 Annual programme with broad range of specialisms Accounting, IT, Marketing, Business Administration, Financial Services, Investments 2016 launch of new higher level Para-planning Apprenticeship with University of Gloucestershire Wider outreach apprenticeship programme planned for 2017 to support and attract socioeconomically disadvantaged young people

Higher education partnerships Loughborough University Tailored MSc in Wealth Management now in its third year. First intake complete and graduate in 2017 Leadership programmes Some bespoke training with the Field University of Gloucestershire Paraplanning apprenticeship higher-level programme providing skilled apprentices for our business, tailored for SJP Potential for degree level apprenticeship delivery

Corporate social responsibility Our Approach to Corporate Social Responsibility We understand that responsible management is important to all our stakeholders shareholders, clients, Partners, suppliers and the communities we operate in St. James s Place is committed to growing our business in a way that considers the economic, social and environmental impacts of what we do

Corporate social responsibility Our Approach to Corporate Social Responsibility We understand that responsible management is important to all our stakeholders shareholders, clients Partners, supplies and the communities we operate in St. James s Place is committed to growing our business in a way that considers the economic, social and environmental impacts of what we do

Corporate social responsibility Strategic approach Focused long-term partnerships Local to SJP offices Supporting people in need Promote staff skills based engagement

Corporate social responsibility Four core deliverables Employability and Financial Awareness Local charity partnership Individual & team community support Input, output & impact measurement and benchmarking

Corporate social responsibility Financial Education Y9 & 6th form, non-branded, non-sales, free to schools and SJP staff led 15 sessions delivered YTD: in 11 different schools and 2 charities, 1196 students with 85 SJP staff delivering Year total expected to be over 3000 students with 190 staff, running 28 sessions in 20 different schools

CSR measures Key public CSR measures we report into are: FTSE4Good Business in the Community London Benchmarking Group Carbon Disclosure Project Energy Savings Opportunity Scheme Carbon Reduction Commitment We also subscribe or adhere to these CSR standards: The Living Wage Foundation The Prompt Payment Code

St. James s Place Foundation Formed in 1992 it is a grant making charity with a difference with all funds raised and donated by the SJP community (including for matching) All expenses related to the Foundation are covered by the Company The majority of our support is focused on children and young people (split between disability/illness & social and economic disadvantage) Our next largest theme is focused on Hospices and we donate approximately 10% of our funds through Hospice UK each year (the umbrella organisation for all independent hospices)

St. James s Place Foundation Over 51 million raised and donated since 1992. A total of 5 million raised year to date (July) against a full year target of 7.5 million Currently 89% of Partners & employees give generously each month to a total of 1.3 million per year

St. James s Place Foundation An example of Giving Effectively Is the Foundation s Sport for Good Project (launched in 2012 and is ongoing) Over 2.4 million donated to 7 charities, operating across the UK, over the last five years Charities helping young people under the age of 25 and split between those focused on disability/illness & Social & Economic Disadvantage All 7 Charities utilise participation in sport to empower and inspire young lives and so they can reach their full potential

Just some of our Major Grants St. James s Place Foundation

An engaged community St. James s Place Foundation

Summary An engaged community Significant investments being made for the future Corporate Social Responsibility as part of business as usual The Foundation - part of who we are and what we do Doing these (and other) things helps to maintain and develop our culture Maintaining our culture is, of course, a key part of delivering our business objectives

IAN GASCOIGNE Managing Director

Strategic context the growth model NEW BUSINESS CAPACITY Number of Advisers PRODUCTIVITY New Business per Adviser

Number of Partners x Average Productivity = New Business 71

PARTNER PA

Number of Multi-Member Practices 480 183 2006 2016

Sole Trader Business Partner PA PA Paraplanner

Sole Trader Productivity 5m by length of Service 4m 3m 2m 1m 0m Gross inflows p.a. Yr1+ Yr2+ Yr3+ Yr4+ Yr5+ Yr6+ Yr11+

A Multi-Member Practice Partner Adviser Adviser PA PA Paraplanner

A Large Multi-Member Practice Practice Principal Practice Manager Adviser Adviser Adviser Adviser Adviser Paraplanner Paraplanner PA PA

Sole Trader Productivity 5m by length of Service 4m 3m 2m 1m 0m Gross inflows p.a. Yr1+ Yr2+ Yr3+ Yr4+ Yr5+ Yr6+ Yr11+

Partner Productivity 7m by length of Service 6m 5m 4m 3m 2m 1m 0m Gross inflows p.a. Yr1+ Yr2+ Yr3+ Yr4+ Yr5+ Yr6-10 Yrs11+

Average Age by Partner Type 50 40 49 45 41 40 30 20 29 10 0 Partners Advisers Academy Graduates Academy Students Next Generation Academy

Productivity 6m By recruitment vintage 5m 4m 3m 2m 1m 0m Gross inflows p.a. Original Academy Academy 2014 Academy 2015 Advisers 2013 Sole Traders Graduates Advisers

Productivity Gross Inflows per Partner Practice 5m 4m 3m +26% +3% +1% +11% +6% +9% +9% 2m 1m 0m Gross inflows p.a. 2010 2011 2012 2013 2014 2015 2016 June

4m 3m 2m Productivity Average Gross Inflows +9% +4% +26% +3% +0% +6% +5% 1m 0m Gross inflows p.a. 2010 2011 2012 2013 2014 2015 2016 June

Strategic context The growth model NEW BUSINESS CAPACITY NUMBER OF PARTNERS PRODUCTIVITY NEW BUSINESS PER PARTNER Experienced recruitment Asia Academy Next Generation Discretionary Fund Management Personal development Broadening investment portfolio SJP Money Management Discretionary Fund Management Technical Connection Intergenerational Mortgage range

Summary Continuing strong performance Combining value added advice with excellent investment returns Committing to CSR and maintaining our culture Creating a platform for sustainable growth