MAY 2016
PART ONE – BUSINESS MODEL Strategy 2 The Partnership 17 Investment Management 31 Our Clients 43 Client Wealth Account Survey 2015 47 Our Market 50 Costs and charges 63 PART TWO – FINANCIAL RESULTS Solvency II 70 Cash & Dividend Profjle 71 Our Shareholders 80 Analyst following 82 1
PART ONE Business Model
Strategy 2
St. James’s Place: Overview • Leading UK Wealth Management Company - Established 1991 - UK listed with market cap of c.£5 billion - £62 billion in funds under management - Target market £50k to £5 million free investable assets • Difgerentiated business model - ‘‘Vertically integrated’’ - Own dedicated distribution – the Partnership - Distinct investment management approach • Well positioned to benefjt from long-term market growth - Favourable demographic trends - Increasing tax burden 3
Global Investment Management Expertise 35 funds 34 fund houses 14 exclusive to UK retail investors 65 lead fund managers 8 asset classes/ strategies 14 cities 4
Whole of Market approach We take responsibility for the due diligence on all the products and companies we make available to our clients. SIP SERVICES 5
Strategic context – the growth model NEW BUSINESS CAPACITY PRODUCTIVITY Number of Partners New Business per Partner Experienced recruitment Personal development Asia Broadening Investment Portfolio Academy SJP Money Management Next Generation Discretionary Fund Management Discretionary Fund Management Technical Connection Intergenerational Mortgage Range 6
Growing number of Partners 8% p.a. compound growth over the last 5 years and 7% p.a. over the last 10 years 2,500 6.2% 8.8% 2,264 9.5% 2,000 8% 6% 6% 9% 1,500 7% Number 8% 1% 1,000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 7
Productivity (gross infmows per Partner) 4.50 + 9% + 6% 4.00 4.20 + 11% 3.50 + 1% + 3% + 26% 3.00 £ million 2.50 2.00 1.50 1.00 0.5 0.0 2010 2011 2012 2013 2014 2015 8
Partnership, including Advisers 10% p.a. compound growth over the last 5 years and 8% p.a. over the last 10 years 10% Advisers Partners 3,000 3,113 10% 13% 2,500 10% 7% 6% 8% 2,000 9% Number 10% 10% -4% 1,500 1,000 500 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 9
Productivity (gross infmows per Adviser) + 6% + 4% + 9% 3.00 3.13 + 3% 0% + 26% 2.50 2.00 £ million 1.50 1.00 0.5 0.0 2010 2011 2012 2013 2014 2015 10
Gross infmows by quarter £bn 3 2.5 2.45 2.5 2.3 2.3 2.1 2.1 2.0 1.9 1.9 1.9 2013 2 1.7 2014 1.6 1.6 2015 1.5 2016 1 0.5 0 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% 11
Gross infmows £9.2 9 + 17% £7.9 8 £6.8 7 6 £5.6 £5.2 £ billion £4.7 5 4 £3.3 £3.1 £2.9 3 £2.5 £2.4 + 16% 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 12 March
Consistent net infmow of funds under management + 14% 6.0 5.8bn +20% 5.0 +28% 4.0 +4% +10% £ billion +30% 3.0 +31% +34% 2.0 -11% + 3% +60% 1.4bn 1.0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 March 13
Fund fmow information £ billion 31 Mar 2016 31 Dec 2015 31 Dec 2014 Funds under management at start 58.6 52.0 44.3 Rowan Dartington Acquisition 1.2 Gross infmows 2.5 9.2 7.9 Investment return 0.8 0.8 2.6 63.1 62.0 54.8 (0.4) (1.1) (0.9) Regular income withdrawals/maturities (0.7) (2.3) (1.9) Surrenders/part surrenders Funds under management at close 62.0 58.6 52.0 Net infmow of funds under management 1.4 5.8 5.1 Implied surrender rate as % of average 4.5% 4.3% 4.0% funds under management 14
15 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Net infmows 2006–2015 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Q3 2008 Q2 2008 Q1 2008 Q4 2007 Q3 2007 Q2 2007 Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 £bn 2.0 1.5 1.0 0.5 0
Funds under management 17% p.a. compound growth over the last 5 years and 17% p.a. over the last 10 years (at Dec 2015) + 6% + 13% 60 62.0 + 17% 50 + 27% 40 + 22% £ billion + 6% 30 + 26% + 31% + 18% 20 - 10% + 25% 10 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 March 16
The Partnership 17
Dedicated distribution – the Partnership • High quality self-employed team of 2,264 Partners - Average age is 48 - Above average productivity - 90% + per annum retention rate • Total number of qualifjed Advisers 3,113 • Aim to grow Adviser numbers by 5% to 7% per annum • Aim to increase productivity each year • Average industry experience is 18 years 18
Geographic Distribution 31 December 2015 Partners Clients 5% 6% 2% 2% 23% 23% 24% 14% 12% 14% 4% 4% 3% 4% 4% 3% 4% 4% 21% 22% 22% 9% 10% Overseas Partners: 3% Overseas Clients: 2% 17% 13% 19
Partnership (including Advisers) by age band 31 December 2015 Existing Partnership New Partnership 65 + 65 + <35 <35 55-65 55-65 4% 2% 9% 25% 22% 13% 35-45 35-45 25% 29% 45-55 45-55 31% 40% 20
Partnership development Business Business Transition Establishment Development Risk Acquisition Processing FIELD MANAGEMENT TEAM ST. JAMES’S PLACE PARTNER PRACTICE CIRENCESTER SUPPORT FUNCTION Private Technical Business sale Training & Marketing Technology Risk Clients Support & purchase Development 21
Field management team Types of development undertaken Business Acquisition (48) Transition Management Business process (31) support (8) Understanding the individual Client advice and service Build our relationship Doing buisiness at St. James’s Place Desire goals and motivators Business plan ‘The cornerstone of our Business quality qhecking development’ Integretion Establishment (30) Development (121) Risk Management (45) Knowledge skills Post integration Keeping our Partners ‘safe’ Business plan Client service strategy Consultation Ongoing personal develoment Partner compliance visit General risk management 22
Total Adviser numbers FSA FSA FCA FCA FIGURES FIGURES FIGURES FIGURES TYPE OF ADVISER 31 DEC 2012 31 DEC 2013 31 OCT 2014 31 OCT 2015 * 20,453 21,881 21,496 22,557 Financial advisers 4,809 3,556 3,182 3,672 Bank advisers Discretionary fund 3,718 5,783 6,475 4,371 managers/stockbrokers Total number of Advisers 28,980 31,220 31,153 30,600 * Latest update from Financial Conduct Authority. 23
• Over 150 currently in programme • In addition, there are 81 ‘Next Generation’ participants • Three Regional Academies (London, Manchester, Solihull) • Opening Regional Academy in Edinburgh – 2016 • Typical intake 15 – 20 per programme • 49 graduates in 2015 • Expect 60 graduates in 2016 23
St. James’s Place Academy • 51% Financial background • Average age 38: previous earnings c£74,000 • 82% under age 46 • 23% women • 87% degree holders • 17% Masters/Pofessionally qualifjed • 61% are Partner referrals 24
ASIA The Opportunity • Offjces in Singapore, Hong Kong and Shanghai • 83 advisers • Estimated 120,000 UK ex-pats with circa £12 billion of investible wealth (£100k each) – projected to grow to over £44 billion by 2020 • Our global investment proposition and relationship based approach is well suited to this market 25
• Trusted relationships – a people business, built on trust and long- term reliationships, face-to-face • Specialises in Discretionary Fund Management (DFM) • Complimentary service • Growth model – acquiring and retaining client investments • Strong persistency – long-term retention data similar to SJP – 95% • 10 offjces, 100 employees, 35 investment executives • Assets under management in excess of £1.25 billion • Capital lite – capital requirements and regulatory risk profjle in line with our existing business 26
Complementary service • Managing clients assets – making all investment decisions • Open-architecture capability – access to direct equities and bonds • Bespoke portfolios – for example stripping out banking or oil stocks or having a more tactical asset allocation • Execution capability – e.g. liquidation of existing portfolios or managing down legacy lines of stock • HNW investors – average portfolio sizes ~£500,000 • Legacy stocks – stocks or lines of stock from employment or entrepreneurship become part of the SJP estate • Tax management – CGT and IHT management ...adds to our business – does not compete for it. 27
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