2. A New Investment Dawn – A New Investment Age! Michael Beveridge Head of Wholesale Sales, Standard Life Investments

3. Agenda Market Environment Industry Trends How can Standard Life Investments help you?

4. UK Wholesale Distribution Regulation Retail Distribution Review (RDR) implements changes in Commission and, labelling and professional standards from Jan 1st 2013 Commission - No significant direct back book impact for SLI as true wholesalers Education – Greater requirement for education of IFAs Long term asset class trend away from UK equities continue Asset Class Trend Ongoing strong movements into bond funds A sustained recovery in risk appetite A focus on yield – various asset classes Growing interest in tracker funds Continued interest in Absolute return investing Increasing sales in managed solutions Whilst there has been evidence of a decade of decline in sales in UK Equity Funds, they still account for circa 20% of gross sales How it’s changing?

5. UK Wholesale Distribution Outsourcing opportunities Risk rated managed solutions (MyFolio) Increased discretionary fund management leads to opportunity to dedicate focused resource to DFMs Target ratings agencies/ research groups who are developing model portfolios Execution only opportunities Working with various partners to ensure well positioned Future Opportunity for SLI Appropriate Distribution Model

6. Recent FSA Consultation and Policy Papers Distributor influenced funds Dear CEO letter Assessing Suitability - Establishing the risk a customer is willing and able to take and making a suitable investment selection RDR adviser charging - treatment of legacy assets Independent and Restricted Advice Replacement business and centralised investment propositions Retail conduct risk outlook

7. The Unanswered Questions Independent versus restricted Consumer education Segmentation - what do clients truly value? The articulation of services Advice gap and execution only Risk profiling tools and due diligence on fund selection Development of people talent within your organisation

8. UK Demographics – changing investors’ needs During the period 1901 to 2010 the number of people aged over 60 has grown 544% - 2.8m in 1901 vs 18.5m in 2010 The number of people in the >60 age bracket has grown from 7.5% of the total population in 1901 to 22.6% in 2010 This trend will continue but moderate. By 2035 the number of people aged over 60 will hit 20.1m By 2035 people in the >60 bracket will account for 28.6% of the population, from 7.5% in 1901

9. Industry trends

10. Understanding your business challenges? As the UK financial market evolves both in terms of client expectations and the changing regulatory landscape, firms have many different challenges to understand and overcome They now need to consider all of the following:

11. Adviser Concerns for 2012 MAIN AREAS FOR CONCERN MOST IMPORTANT DRIVERS FOR CHANGE The fragile macro-economic environment is clearly a concern for advisers. The weak economic recovery, the sovereign debt crisis, inflation and the euro-zone crisis are all key concerns The most important drivers for change among advisers is unsurprisingly legislation/RDR.

12. “It is clear that investors are becoming increasingly aware that they have been ripped by their fund managers for years.” “The investment industry has been ripping customers off for far too long.” “After paying layers of fees investors don’t know what they will get and when they will get it.” “As an industry we’re now ranked as low as banks.” Fidelity has become the first manager to back calls for a more comprehensive review of investment charges in an attempt to “restore trust.” “Only greater transparency will allow fund managers to earn clients respect.” “The mutual fund model is flawed with few sale recommendations, hidden charges, and no big switch to cash when necessary.” “The industry is suffering from a lack of trust and consumers tell us.” “More than a decade of poor returns and high fees have eaten into investors faith in mutual funds.” The industry is suffering from a lack of trust Source: Standard Life Investments

13. The industry is experiencing a return to risk aversion Investor sentiment is reflected in product choice. Equities have recorded net outflows in 5 out of 6 months in the second half of 2011, recording their highest outflow on record in November. Global, Emerging Market and Japanese Equities continue to record positive inflows In contrast, flows into bond funds have accelerated in H2 2011, hitting £634m in Dec-11, the highest since October 2010. Source: IMA

14. Sector (Net Sales) Sector Sales £m FoF Sales £m Cautious Managed £3,114m £1,880 m Balanced Managed £2,043m£1,403 Active Managed£221m£237m Growing demand for balanced/multi- asset funds Source: IMA & Lipper FMI Relative demand for balanced/multi-asset funds has grown sharply in recent years On a gross basis, balanced funds now account for circa 13% of industry gross sales Demand has been largely been driven by strong sales into Fund of Funds Source: IMA

15. Source: Cerulli Associates, FPA Principal Member Survey What matters most to your clients

16. Increasing regulation Managing risk Reducing costs Drivers for IFA outsourcing of investment decisions According to a recent report completed for Standard Life by NMG Consulting, there’s a growing trend for advisers to outsource aspects of their investment process Investment Outsourcing Source: Standard Life Investments

17. According to a recent report completed for Standard Life by NMG Consulting, there’s a growing trend for advisers to outsource aspects of their investment process Investment Outsourcing A few key findings: from NMG Research IFAs continue to migrate to more structured and consistent approaches for client portfolio delivery In 2006, 63% of advisers used discretion to create their clients’ portfolio construction – compared to just 27% in 2010 The use of bespoke portfolios (such as Standard Life Wealth’s discretionary portfolios) by external specialists grew from 0% in 2006 to 7% in 2010 Source: Standard Life Investments

18. How can Standard Life Investments help you?

19. Focused on delivering superior performance Learning Gateway Working in partnership with our distributors Continuing Professional Development has always been important, but in the run up to RDR and beyond, it has become essential to all advisers - whether they are offering independent or restricted advice The regulatory requirement for ongoing training therefore encompasses banks, wealth managers, IFAs and stockbrokers Our research has shown that many of our clients do not have a solution as to how they will facilitate the increased burden on their in-house training from 2013 It offers advisers free access to a comprehensive range of 136 investment, business and compliance related online courses* All tutorials are suitable for CPD purposes with a number of leading trade bodies including the CISI, PFS, CII and CFA We are partnering with Intuition, a leading and established provider of eLearning * See Appendix for list of launch content

20. Login Page  Accessed at www.standardlifeinvestments.com/ training www.standardlifeinvestments.com/ training  Introduces the Learning Gateway  Sign in & Registration buttons  Links to Intuition Support for technical queries 20

21. Sample content available at launch Risk Management Risk Management - an introduction Risk - Measurement & Management Interest rate risk - Identification & Measurement Interest rate risk - Management Market Risk - Identification & Measurement Market Risk - Management & Regulation Liquidity Risk - Identification & Measurement Liquidity Risk - Management & Regulation Credit Risk - Identification & Measurement Credit Risk - Management & Regulation Operational Risk - Identification & Measurement Operational Risk - Management & Regulation VaR VAR - an introduction VAR - Variance-Covariance approach VAR - Monte Carlo simulation VAR - Historical Simulation & other Issues Custody Role of a Custodian Role of a Custodian in Trade Processing & Settlement Corporate Actions - An introduction Corporate Actions - Major Types Registrar & Transfer Islamic Banking & Finance Key principles Deposit & Financing Instruments Introduction to Macroeconomics Gross Domestic Product Inflation Unemployment Balance of Payments Fiscal Policy Monetary Policy Economic & Technical Analysis Economic Indicators - an introduction Economic Indicators - National Accounts Economic Indicators - Business Cycles Economic Indicators - Inflation & Employment Technical Analysis - An Overview Technical Analysis - Charting Technical Analysis - Tools & Techniques Collective Investment Schemes CIS (UK) Investment Trusts (UK) Unit Trusts (UK) Open Ended Investment Companies (UK) Alternative Assets Alternative Assets - An introduction Hedge Funds - an introduction Hedge Funds - Investing Hedge Funds- Styles Private Equity – Part I Private Equity – Part 2 Real Estate - an introduction Real Estate - Investing ETFs Corporate Governance Corporate Governance - An introduction Corporate Social Responsibility - an introduction Socially Responsible Investing SRI - an introduction Green Investing Regulation Financial Crime (Europe) Market Abuse (Europe) Bribery Act (UK) UK Anti-Money Laundering Data Protection UK Data Protection Data Protection (Ireland) Portfolio Theory Performance Measurement Models Passive & Active Strategies Asset Allocation Asset Management - An introduction Asset Allocation - An introduction Asset Classes - Part I Asset Classes - Part II Strategic Asset Allocation Tactical Asset Allocation Deriving the Optimal Portfolio Plus various Business Skills tutorials eg. Effective Time Management, Cost Management, Effective Objective Setting Fixed income Bonds - an introduction Bonds- Primary & Secondary Markets Bond Prices & Yields Fixed Income - Credit Risk Bond Futures Zero Coupon Bonds High Yield Debt Bond Hedging with Options Bond Hedging with Swaps Relative value trading - an introduction Relative value trading - strategies & risk Equities Equities - an introduction Estimating Volatility Correlation & Regression Analysis UK Equity Market US Equity Market European Equity Markets Japanese Equity Market Hong Kong Equity Market Derivatives Inflation Swaps Credit Default Swaps Interest Rate Swaps Futures Options Inflation Linked Instruments Inflation Linked Instruments - an introduction Inflation Linked instruments - pricing Securitization Securitization - an introduction Securitization - mortgage backed securities Securitization - Commercial mortgage-backed securities Securitization - Asset Backed Securities Securitization - CDOs – an introduction Portfolio Theory

22. Mutual Fund Matrix Strategic (Investment Solutions) Single Strategy Funds GARS MyFolio MyFolio Income Global Smaller Companies Global Index Linked Bond Global Equity Unconstrained Global Equity Income European Equity Income UK Equity High Income UK Equity Income Unconstrained UK Equity Unconstrained UK Smaller Companies UK Property Select Property Strategic Bond Japanese Equity Growth AAA Income Corporate Bond Higher Income UK Equity Recovery UK Equity High Income

23. MyFolio Funds Establishing a quantitative and qualitative decision framework Select asset classes Strategic asset Allocation framework Tactical asset allocation Fund selection Portfolio construction Rebalancing & ongoing review

24. The MyFolio Fund Range Enabling advisers control of risk, investment style and cost Three ‘styles’ of funds – Each available at five risk levels – 25 funds in total MyFolio Multi-Manager Income MyFolio Multi-Manager Fund Income Options Risk level V Growth Options Risk level II Risk level IV Risk level III Risk level I MyFolio Managed Income MyFolio Managed Fund MyFolio Market Fund

25. A New Investment Dawn – A New Investment Age! Investment Paths To Retirement Ronnie Binnie Head of Business Development, Standard Life Wealth

26. Insight At Retirement Customers At or reaching retirement in the next 10 years (age 50 – 70) Accumulated a £100k plus pension pot Require an income from their fund Want/require more flexibility than is available through an annuity 11.9 million individuals currently in retirement with £1.1 trillion of assets a further 9.7 million individuals approaching retirement with £700 billion 500,000 retired people p.a. for the last ten years over 800,000 p.a. will be retiring over the next ten years (impact of Baby Boomers)

27. Insight Client Characteristics These customers need ongoing advice A client segment that is well aligned to many IFAs business model This is wealth management, not product provision Regulations strongly suggest that SIPP Drawdown is an advised sale In 2010, 40% of IFA clients were secured at the point of retirement Changes to IFA business models as a result of RDR favour relationship based solutions

28. 5. Control 4. Flexibility 3. Death benefits 2. Access to additional income 1. Sustainable retirement income Source: Scott Porter, Customers at retirement, February 2012 28 An Annuity provides sustainability, but none of the other requirements “Delivering greater sustainability in drawdown is the objective” Focus on customer Client Priorities

29. 29 Portfolio performance over 30 years 30 years Portfolio A 6.1% return p.a. Portfolio B 5.0% return p.a. Performance is illustrative only Volatility vs. performance

30. 30 Portfolio performance over 30 years 30 years Portfolio A 6.1% return p.a. Portfolio B 5.0% return p.a. Performance is illustrative only Portfolio values after 30 years of annual drawdown* £500,000 initial portfolio value, £29,000 annual withdrawals Volatility vs. performance

31. 31 Portfolio performance over 30 years 30 years Portfolio A 6.1% return p.a. Portfolio B 5.0% return p.a. Performance is illustrative only Portfolio values after 30 years of annual drawdown* £500,000 initial portfolio value, £29,000 annual withdrawals Portfolio A = £0 !!! Portfolio B = £281,000 In drawdown, your ability to ‘bounce back’ from a market fall is considerably reduced Volatility vs. performance In drawdown, volatility is as important as performance

32. 32 Data is illustrative only – examples starts at age 65 and assumes 9% income is drawn per year and the portfolios have a repeating three year return sequence as shown above. Sequencing of returns “Ruin age” analysis of portfolios with same volatility Portfolio I Portfolio II Return sequence 27%, 7%, -13% …-12%, 8%, 28% … Average return 6% p.a. 7% p.a. Volatility 20% Ruin age?? Source: Moshe Milevsky Is the solution purely lower portfolio volatility?

33. 33 Data is illustrative only – examples starts at age 65 and assumes 9% income is drawn per year and the portfolios have a repeating three year return sequence as shown above. Sequencing of returns “Ruin age” analysis of portfolios with same volatility Portfolio I Portfolio II Return sequence 27%, 7%, -13% …-12%, 8%, 28% … Average return 6% p.a. 7% p.a. Volatility 20% Ruin age9484 Source: Moshe Milevsky

34. Retirement clients have specific requirements 34 Defining difference The impact of Market Volatility  Accumulation clients may have the choice to ‘wait out’ market volatility whereas,  Drawdown clients cannot afford to ‘take a hit’ arising from market volatility  ‘Path dependency’: The ‘retirement investment journey’ is as important as the total return earned over the period.  The impact of short term losses can devastate the portfolio value.  Focus should be on finding an investment solution that:  exhibits low volatility,  avoids short term losses,  while still generating sufficient growth.

35. How the super-diversified approach can support retirement investment strategies Through the active management of investment risks, Standard Life Wealth, MPS and the Dynamic Drawdown Funds aim to provide :  a positive return over a rolling 12 month period  the target return over a rolling 3 year period 35

36. Drawdown Investment Solutions Approach has delivered strong performance, low volatility and minimised portfolio losses 36 SLW Medium Risk Portfolio UK Equities (total return) The data in the illustration shows the representative performance of a SLW medium risk portfolio targeting a Libor +3% return after fees and charges. The index is the APCIMS Balanced Total Return Index and the data shown is for the same periods as the SLW data. The APCIMS and FTSE® All Share index returns do not include fees. Past performance is not a guide to future performance. Source: SLW, Bloomberg, BBH, TDW (31/07/2008 to 31/07/2012)

37. 37 Past performance is not a guide to future performance Cumulative returns # SLW 3 31.4% (after fees) FTSE® All-Share (TR) 23.2% (no fees) Volatility * SLW Portfolios 5.5% FTSE® All-Share (TR) 18.3% Source: Standard Life Wealth # 31/7/08 to 31/07/12 * Standard deviation of monthly returns, annualised Drawdown Investment Solutions Approach has delivered strong performance, low volatility and minimised portfolio losses

38. 5. Control 4. Flexibility 3. Death benefits 2. Access to additional income 1. Sustainable retirement income Source: Scott Porter, Customers at retirement, February 2012 38 Helping retirement client achieve more of their priorities through: the provision of ongoing monitoring and financial advice combined with a more sustainable drawdown investment strategy. Focus on customer Client Priorities

39. 39 Investor Risks Past performance is not a guide to future performance. As with any investment, the value of your client's fund can go down as well as up and may be worth less than they invested. The SIA Fund The SIA Fund is designed to be used as part of a strategic approach to individual client wealth objectives and should not be considered as a stand-alone investment. The SIA Fund is only suitable for those investors who require a separate asset allocation fund to be used in conjunction with their existing investments, primarily global equities, to achieve an overall objective of a total return. The fund is designed to generate an absolute return when viewed with other assets in the client’s portfolio. As a result, if other assets in the portfolio are performing well, this fund may not produce a positive return. The use of derivatives in the fund may result in increased volatility in the fund’s price. Due to the leveraged nature of derivatives, gains and losses can be greater than associated with traditional investment instruments. The fund will have the ability to hold short derivative positions. This means that the fund will not necessarily follow market trends i.e. if stock markets rise the fund may not do so at the same rate, or at all. *"FTSE" is a trademark of the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited ("FTSE") under licence. Standard Life Wealth is licensed by FTSE to redistribute the FTSE All Share and FTSE 100. All rights in and to the FTSE All Share and FTSE 100 vest in FTSE and/or its licensors. All information is provided for reference only. Neither FTSE nor its licensors shall be responsible for any error or omission in the FTSE All Share and FTSE 100. Standard Life Wealth Limited, registered in Scotland (SC317950) at 1 George Street, Edinburgh EH2 2LL is the discretionary investment manager and Standard Life Savings Limited, registered in Scotland (SC180203) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH is the ISA plan manager. Both companies are authorised and regulated by the Financial Services Authority. www.standardlifewealth.comwww.standardlifewealth.com 2012 © Standard Life, images reproduced under licence Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Standard Life Assurance Limited is authorised and regulated by the Financial Services Authority. www.standardlife.co.ukwww.standardlife.co.uk 2012 © Standard Life, images reproduced under licence