Positively different investments. For investment professionals only. 1
Learning Objectives By the end of this session, attendees will be aware of: • The problems that clients need to overcome to save effectively, given the changing demographics in the UK and people’s natural behavioural biases • How the health of a client should be taken into consideration when putting together any financial plan • How Vitality’s unique product features can help clients achieve positive outcomes into retirement 2
Our core purpose Members Improved health, better value through improved price and benefits To make people healthier, and enhance and protect their Society Insurer lives Healthier society Lower claims Improved productivity Higher margins Reduced healthcare Positive selection and burden lower lapses 3
The challenges facing the investment market 1 People are living longer 2 People are not saving enough in today’s environment 3 Existing products are not addressing the issues in society today How do we live healthier and fund a longer retirement? 4
Key trends shaping the agenda on long term savings and retirement 5
Key trends shaping the agenda on long term savings and retirement 1. Asset management Increased choice Increased sophistication Reduced costs Authorised funds Asset weighted expense Fund innovation ratios 3458 Increased use of DFM Risk 2010s 2010s profiled Rise of funds passive investing Hedge funds and absolute 2000s 2000s return funds “Modern” mixed asset funds Thematic bond 1990s 1990s funds 493 Thematic equity funds Traditional 1980s 1980s managed 1990 1995 2000 2005 2010 2015 2017 1980 2018 funds Increased choice at reducing costs Sources: Investment Association, Morningstar Inc 6
Key trends shaping the agenda on long term savings and retirement: 2. Life expectancy Life years added through Changing drivers of mortality managing risk factors 4 Risk factor Male Female poor nutrition, choices Smoking 3.20 2.39 inactivity, smoking, alcohol abuse High blood pressure 2.50 2.92 Excess body weight 2.30 2.21 4 High blood sugar 1.57 1.38 conditions CV disease Diabetes High cholesterol 1.33 0.92 Chronic lung disease Low physical activity 1.27 1.39 Various cancers Poor nutrition* 2.97 2.57 60% Alcohol intake 0.58 0.40 of deaths Total 9.59 8.98 *Nut, veg, fruit and omega-3 intake Source: Oxford Health Alliance; S. Lim et al Validation of a new predictive risk model: Life expectancy can be modifiable through behaviour change measuring the impact of the major modifiable risks of death for patients and populations 7
Key trends shaping the agenda on long term savings and retirement: 3. Individual responsibility for financial provision in retirement Behavioural biases prevent people from Saving sooner, or retiring later saving enough and being healthy Percentage of salary that should be saved to maintain a 70% income replacement ratio For life expectancy Retirement age Benefits are Benefits are of 83 immediate, hidden, and and guaranteed uncertain 65 28% INSTANT LONG-TERM 70 15% GRATIFICATION HEALTH AND SAVINGS 75 6% Assumptions: • 40 year old with £30,000 saved • Current monthly salary £2,500 • Investment return 5% • Wage inflation 3% The choice - save more today or retire later 8
Key trends shaping the agenda on long term savings and retirement: 4. Technology Yet, financial planning tools still take a blunt Technology is driving approach to incorporating life expectancy increasing personalisation Recommendation Smart voice assistants algorithms Targeted advertising Wearable devices Real-time navigation Technology has driven changes in every industry 9
Shared value can create additional economic value to help people live better for longer Save smarter Live healthier Save sooner, live healthier Clients Member incentives Society VitalityInvest Earn fees for longer, Healthier society, better persistency stronger savings culture, reduced dependence Enhanced savings and retirement outcomes 10
VitalityInvest Positively different investments. 11
VitalityInvest – Positively Different UP TO UP TO UP TO 100 % 15 % 50 % OFF PRODUCT BOOST BOOST CHARGES SAVE SOONER, MANAGE HEALTH STAY MORE AND FOR AND WEALTH IN HEALTHY LONGER RETIREMENT T’s and C’s apply. 12
VitalityInvest UP TO UP TO UP TO 15 % 50 % 100 % OFF PRODUCT BOOST BOOST CHARGES BEHAVIOURAL MANAGE SAVE SOONER, MORE SAVE SOONER, MORE STAY WELLNESS HEALTH AND WEALTH AND FOR LONGER AND FOR LONGER HEALTHY PLATFORM IN RETIREMENT RETIREMENT PLAN PRODUCTS Stocks and Shares ISA JUNIOR ISA Accumulation and drawdown TECHNOLOGY PERSONALISED PERSONALISED ADVISER PLATFORM LIFE EXPECTANCY SAVINGS ROADMAP HUB ASSET MANAGEMENT VITALITY FUNDS THIRD PARTY FUNDS “Vanguard” is a trade mark of The Vanguard Group, Inc., and has been licensed for use by Vitality Life Limited. 13
VitalityInvest UP TO UP TO UP TO 15 % 50 % 100 % OFF PRODUCT BOOST BOOST CHARGES BEHAVIOURAL MANAGE SAVE SOONER, MORE SAVE SOONER, MORE STAY WELLNESS STAY HEALTHY HEALTH AND WEALTH AND FOR LONGER AND FOR LONGER HEALTHY PLATFORM IN RETIREMENT RETIREMENT PLAN PRODUCTS Stocks and Shares ISA JUNIOR ISA Accumulation and drawdown TECHNOLOGY PERSONALISED PERSONALISED ADVISER PLATFORM LIFE EXPECTANCY SAVINGS ROADMAP HUB ASSET MANAGEMENT VITALITY FUNDS THIRD PARTY FUNDS “Vanguard” is a trade mark of The Vanguard Group, Inc., and has been licensed for use by Vitality Life Limited. 14
Investment Booster Cumulative • Receive a boost to money invested Investment term Boost boosts in Vitality funds, on top of any growth, every 5 years 5 years 2% 2.0% • Boosts compound over time 10 years 2.5% 4.5% • Future contributions will also receive boosts every 5 years 15 years 3% 7.7% 20 years 3.5% 11.5% 25 years 4% 15.9% Every 5 years 4% after 25 years 15
Case study: Impact of the Investment Booster Assumptions: £19,221 • £50,000 invested in Vitality Retirement Plan • 100% in Vitality funds • 4% investment growth £119,732 5 10 15 20 25 Years Fund with growth Investment Booster An additional 15.9% return at no extra cost 16
VitalityInvest UP TO UP TO UP TO 15 % 50 % 100 % OFF PRODUCT BOOST BOOST CHARGES BEHAVIOURAL MANAGE SAVE SOONER, MORE STAY WELLNESS STAY HEALTHY HEALTH AND WEALTH AND FOR LONGER HEALTHY PLATFORM IN RETIREMENT RETIREMENT PLAN PRODUCTS Stocks and Shares ISA JUNIOR ISA Accumulation and drawdown TECHNOLOGY PERSONALISED PERSONALISED ADVISER PLATFORM LIFE EXPECTANCY SAVINGS ROADMAP HUB ASSET MANAGEMENT VITALITY FUNDS THIRD PARTY FUNDS “Vanguard” is a trade mark of The Vanguard Group, Inc., and has been licensed for use by Vitality Life Limited. 17
Healthy Living Discount Healthy Living Discount charge structure Charges • Clients with a qualifying Investment No Bronze Silver Gold Platinum VitalityLife or VitalityHealth Vitality status status status status policy pay discounted <£30k 0.5% 0.5% 0.4% 0.25% 0% charges based on Vitality £30-75k 0.4% 0.4% 0.3% 0.2% 0% status £75-250k 0.3% 0.3% 0.25% 0.15% 0% • Discount is applied monthly £250k-500k 0.2% 0.2% 0.15% 0.1% 0% to money invested in Vitality funds £500k+ 0.15% 0.15% 0.1% 0.05% 0% No charges on Platinum Status 18
Case study: Combined impact of the Investment Booster and the Healthy Living Discount Assumptions: • £50,000 invested in Vitality Retirement Plan £21,214 • 100% in Vitality funds £34,788 • 4% investment growth £13,574 • Platinum Vitality Status £119,732 5 10 15 20 25 Years Fund with growth Healthy Living Discount impact Investment Booster An additional 29% return at no extra cost 19
VitalityInvest UP TO UP TO UP TO 15 % 50 % 100 % OFF PRODUCT BOOST BOOST CHARGES BEHAVIOURAL MANAGE SAVE SOONER, MORE STAY MANAGE HEALTH AND WELLNESS HEALTH AND WEALTH AND FOR LONGER HEALTHY WEALTH IN RETIREMENT PLATFORM IN RETIREMENT RETIREMENT PLAN PRODUCTS Stocks and Shares ISA JUNIOR ISA Accumulation and drawdown TECHNOLOGY PERSONALISED PERSONALISED ADVISER PLATFORM LIFE EXPECTANCY SAVINGS ROADMAP HUB ASSET MANAGEMENT VITALITY FUNDS THIRD PARTY FUNDS “Vanguard” is a trade mark of The Vanguard Group, Inc., and has been licensed for use by Vitality Life Limited. 20
Retirement Booster Boost as proportion of income taken Withdrawal Bronze Silver Gold Platinum Example: prior year status status status status • £300,000 invested in 0 - ≤1% 10% 20% 40% 50% Vitality funds 1 - ≤2% 7.5% 15% 25% 35% • Platinum Vitality Status 2 - ≤3% • Income of £9,000 (3%) 6% 12.5% 15% 20% 3 - ≤4% 4% 7.5% 12.5% 15% taken last year • VitalityInvest pays a 4 - ≤5% 0% 5% 10% 12.5% boost of 5 - ≤6% 0% 2.5% 5% 7.5% 6 - ≤7% £1,800 (20%) 0% 0% 2.5% 5% 7 - ≤8% 0% 0% 0% 2.5% >8% 0% 0% 0% 0% 21
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