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1 David Lamb St. Jamess Place 8 December 2010. 2 How we see the RDR opportunity benefiting St. Jamess Place.

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Presentation on theme: "1 David Lamb St. Jamess Place 8 December 2010. 2 How we see the RDR opportunity benefiting St. Jamess Place."— Presentation transcript:

1 1 David Lamb St. Jamess Place 8 December 2010

2 2 How we see the RDR opportunity benefiting St. Jamess Place

3 3 Agenda Introduction to St. Jamess Place – a truly integrated wealth management business How we see RDR playing out in our space and in the wider market St. Jamess Place post RDR Questions?

4 4 St. Jamess Place: overview Leading UK Wealth Management Company –Established 1991 –UK listed with market cap of c.£1.3bn –Over 200,000 clients and £24.8bn in FUM Differentiated business model –Own dedicated distribution - the Partnership –Distinct investment management approach –Manufacturer and distributor Well positioned to benefit from long-term market growth –Favourable demographic trends –Increasing tax burden (on individuals)

5 5 Our Client Proposition We provide financial advice to mass affluent /high net worth investors How do we differ from others? –Emphasis on long-term relationship-based approach –Provision of face-to-face advice –Not just a fund platform –Both manufacturer AND distributor of investment products –Outsource investment management

6 6 Our products and services Comprehensive range of Pension, Investment and Savings wrappers Our focus is on our own products and funds but we also distribute non-core products of others Whilst avoiding capital intensive products guarantees and options overly complex, fashionable or high risk structures

7 7 St. Jamess Place is (or will be) Whole of market in: Protection (Term and Whole Life) Annuities Mortgage lending Employee Benefits Whilst selecting our investment managers from the whole market (not restricted to the UK)

8 8 The SJP model - Two USPs Dedicated distribution –The Partnership Investment Management –Products manufactured in-house –Investment management outsourced

9 9 Dedicated Distribution – the Partnership High quality self-employed team of c.1500 advisors –Average experience 17 years –High productivity –90%+ per annum retention rate Previous backgrounds –IFA –Bank –ML, Goldman Sachs

10 10 The Growth Model Target 15 – 20% pa New Business CAPACITY No of Partners CAPACITY PRODUCTIVITY New Business Per Partner PRODUCTIVITY New Business Per Partner

11 11 Growing Number of Partners Number of Partners +5% +8% +7% +9% 30 June +3% 7

12 12 Growth 25.5% Jul 03 - Jun 08 18.8% Jul 04 - Jun 09 22.7% Jul 05 - Jun 10 17.4 Jul 02 - Jun 07 17.4% 15%20% Compound APE Growth – rolling five years

13 13 Funds under management -6 % +11 % Funds £bn +34 % +20 % +25 % +29 % +18 % 18%p.a. compound growth over the last 5 years and 17%p.a. over 10 years -10 % +31% (30 June) +5%

14 14 Benefits of our own distribution New business and expenses are more predictable Spread of production Less exposed to market pressures Greater control over quality of new business Ability to build and maintain distribution led culture Better retention of business Ability to build stronger client advocacy

15 15 Investment Management

16 16 Our approach to investment management Appoint the Fund Managers Sets Performance Objectives Aim for Top 25% Risk Management & Strategy Decisions: Change Firm? Change Manager? No Change ? Input / advice from Stamford Associates 'Manages the Managers' Investment Committee

17 17 Stamford Associates Independent Investment Consultancy Analyse & Identify Talented Managers Gather Intelligence Research Fund Manager Market Behavioural Psychology Monitor Managers and Portfolios Recommend: Potential changes New Managers Advise Investment Committee Number Crunching Access to Whole Market Qualitative & Quantitative Focus on Future Outperformance Monitor Activity Workplace Analysis

18 18 The Investment Committee Sir Mark WeinbergMichael SorkinSarah BatesVivian Bazalgette Peter DunscombeDavid LambAndrew CroftChris RalphAndrew Humphries

19 19 Evolving our fund range 2008 launches and managers –Alternative Asset Fund - BlackRock –High Octane Fund- Oldfield/Thornburg –Cash Unit Trust- State Street 2009 launches and managers –Corporate Bond Fund - Invesco Perpetual –Gilt Unit Trust- Wellington –Income Unit Trust- Axa Framlington –New managers - Burgundy/Liberty Square/JO Hambro 2010 launches and managers –Global Emerging Markets- First State –International Corporate Bond- Babson Capital –UK Absolute Return- BlackRock –UK & International Income- Artemis –Global Managed Fund- Artisan –Global Unit Trust Fund- Artisan –UK Equity Income UT- RWC

20 20 Our fund managers

21 21 Relative investment performance Funds under management – rolling 5 years 1 st Quartile 2 nd Quartile 3 rd Quartile 4 th Quartile

22 22 Benefits of investment management approach No in-house managers so no conflict of interest Benefit from Investment Committee experience & expertise Ability to appoint the best fund managers with wholesale purchasing power Continuous monitoring plus quarterly reviews Easy to change manager – reduced churn Free switching for clients Significantly improved retention of funds

23 23 How do we see RDR playing out in our space and in the wider market?

24 24 Retail Distribution Review Professional standards Status disclosure Adviser remuneration

25 25 RDR – What do the FSA want to achieve? Raise the standards of all advisers Clear disclosure of adviser status Removal of product and provider bias (influencing the adviser) Information on cost of advice to explain advice isnt free and to show how the cost of advice relates to the cost of the product Any ongoing adviser charges to be supported with ongoing service

26 26 Status Disclosure Broader market test for Independence If not Independent, then Restricted

27 27 What is Independent? Whole of market All retail investments, including Investment Trusts, passive funds (ETFs) National Savings Structured Products etc

28 28 Adviser Charging Remove provider bias – prevent product providers from paying commission Remove product bias – required tied offices to remove product bias

29 29 Adviser Charging Adviser remuneration agreed between IFA and client Can take many different forms Must be clear Cannot be influenced by product providers Can by paid by cheque Or bundled with product charges, but no factoring

30 30 Life after RDR - Distribution Fewer advisers, but better qualified Continued demand for advice (for those who can pay) Client/Adviser relationship key Fewer Independent Advisers, some become Restricted Advisers … access to distribution will be important

31 31 Small firms with less than five sales staff dominates the UK IFA market Source: Datamonitor, Matrix-data

32 32 Turnover of IFA Firms (2009) TurnoverFirms% £1m to £50k2472% £50k - £100k3,34232% £100k - £500k4,71445% £500k - £1m5846% £1m - £5m3103% >£5m771% Unknown1,09711% 10,371100% Source: Data Monitor

33 33 Life after RDR – Asset Managers Greater competition for distribution Brand important Price will matter –But margins intact? Price Pressure? –Rebates may disappear? Further consolidation?

34 34 Life after RDR – Insurers Greater competition for distribution Can no longer buy business Brand important Factory Gate Pricing –margins intact (?) but much more visible? More consolidation in the industry Product commoditisation

35 35 Life after RDR - Platforms Major route to market Inevitable consolidation among Platform providers Transparency and unbundling will impact margins – today fund charges can vary by 80% between platforms (Citywire 26 April 2010) Restrictions likely on some of the current payments (unbundling)

36 36 Life after RDR - Clients Better quality advisers (?) – but fewer advisers Less transparency on total costs Cost of advice may increase Cost of product may reduce Impact of tax on advice costs (VAT, Pensions Relief)

37 37 What about SJP? Pre RDRPost RDR No Provider Bias No Product Bias Tied Advice Guaranteed Advice Trusted and Professional Highly Capitalised Control of Distribution Competitive Charges Investment Approach Adviser Remuneration No Provider Bias No Product Bias Restricted Advice Guaranteed Advice Trusted and Professional Highly Capitalised Control of Distribution Competitive Charges Investment Approach Adviser Charging

38 38 … but opportunities to capitalise on market disruption – especially vertically integrated companies and companies with the right types of tied model. Towers Watson. April 2010

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