We Welcome t lcome to Schroders Schroders Inv Investor Da estor Day 2019 y 2019 Peter Harrison, Group Chief Executive 15 May 2019
Investin sting for growth Closer proximity Expand Grow Private to consumer core business Assets and Alternatives Rebalance business towards Grow Wealth offering Target client longevity private markets Technology 1
Moving ng close ser r to our end d cust stomer mer Start End Speaker Presentation Peter Harrison Introduction 09:00 09:10 09:10 09:40 Peter Hall Wealth Management at Schroders James Rainbow An introduction to Schroders Personal Wealth 09:40 10:10 Susan Soh Schroders in Asia: a business strategy for a digital age 10:10 10:40 10:40 10:55 Break Graham Kellen The digital asset manager 10:55 11:25 11:25 11:55 Jessica Ground Sustainability at Schroders Peter Harrison and Richard Keers Summary and Q&A 11:55 12:15 2
Wealth Wealth Managem Management at ent at Schrod Schroders ers Inves estor or Da Day Peter Hall, Global Head of Wealth Management 15 May 2019
Th The We Wealth Management ment se sector r has a s attractive ctive features ures Longevity (yrs) Revenue margin (bps) Growth 7% 14 80 70 6% 12 60 5% 10 50 4% 8 40 3% 6 30 2% 4 20 1% 2 10 0% 0 0 Wealth Management Asset Management Source: Schroders and Oliver Wyman “Trends and Opportunities in UK Financial Advice” March 2019. Growth rates are CAGR projec tions to 2023 and exclude passive and alternatives. 4
A s A strong g franchis chise across ss the UK w K wealth h management ement spectrum… Charities HNW Affluent £65bn client assets with 705 advisers £32bn client assets £13bn client assets £20bn client assets 135 advisers 320 advisers 250 advisers Source: Schroders. Press release announcing joint venture of 22 October 2018. 5
…generating significant profits… Full year 2018 Annualised proforma 2019 Schroder Schroders £m Benchmark Capital Wealth Management Wealth Personal Wealth 2 Net income 268.9 20.9 289.8 68 Costs (182.4) (14.0) (196.4) (51) Profit before tax 1 86.5 6.9 93.4 17 Source: Schroders, correct to 31 December 2018. 1 Before exceptional items. 2 49.9% of 2019 proforma figures. 6
…and achieving a turnaround in growth Net new business and annualised net Net new business as percentage of average AUM new revenue NNB ANNR £bn £m 6.0% 1.6 16 1.4 14 5.0% 1.2 12 4.0% 1.0 10 3.0% 0.8 8 0.6 6 2.0% 0.4 4 1.0% 0.2 2 0.0% 0.0 0 (0.2) (2) -1.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -2.0% 2015 2016 2017 2018 2017 2018 Net new business Annualised net new revenue 2017 – 2018 Source: Schroders. 7
Unique ue st strengths gths across ss the sp spectr ctrum um – Differentiated, aspirational Charities HNW Affluent brands – Unique distribution access – Benchmark technology LBG client referrals – Schroders multi-jurisdiction Multi-jurisdiction capability Benchmark platform booking – Schroders institutional asset Schroders global investment expertise management expertise Source: Schroders. 8
Cazenove nove to build ld upon on exist stin ing g strong franchises… …and capture new opportunities Private client City Charities Family offices Entrepreneurs lawyers/ professionals accountants Winner 2019 Total Wealth Number one in One in four SME 101 families with Solutions HNW UK charities banking £10.6bn AUM relationships at LBG Source: Schroders. Charity Finance November 2018, based on data as at 30 June 2018. 9
Schrod oders ers Pe Perso sona nal l We Wealth de desi signed ned as a s a st standa dalone one JV, drawing upon LBG’s customer base and Schroders’ investment expertise and technology Targets growing need for financial advice in the UK, particularly in pensions for affluent individuals Standalone business with independent Board and entrepreneurial approach, drawing on strengths of two parents Open architecture approach Challenger mentality leveraging digital opportunities Source: Schroders. 10
Benchma hmark rk Capita tal l to offer r award-winning inning techno hnolog logy y to the JV and d a co complementa plementary ry channel nel targeti eting ng the affluen uent t se segment nt SEI Fusion Enable Custodian Investment Core advice platform and platform front end Visualisation to SEI Winner Client portal Professional Adviser Awards 2018 Best Network Azure cloud hosted Source: Schroders. 11
Pr Priority ity 1: Strengthen organic growth further Recruitment Freeing up Culture Retention capacity Source: Schroders. 12
Pr Priority ity 2: Offer institutional quality investment proposition Segregated Sustainable Private Funds at portfolios investing Assets Institutional rates Cumulative performance to 31 December 2018 (%) 1 year 3 years 5 years Cazenove Capital Sterling -1.4 15.7 27.9 Balanced Portfolios – Direct Equity ARC Sterling Balanced Asset -5.1 10.0 17.1 Private Client Index Source: Schroders. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested. Source: Asset Risk Consultants PCI (ARC) www.assetrisk.com. The Cazenove Capital performance numbers are in sterling and net of all fees including our annual management charge, trading commissions and underlying fund fees – including any in-house fund fees. It should be noted that historical performance previous to the merger is based on individual investment processes for Schroder & Co. Limited and Cazenove Capital Management Limited respectively. 13
Pr Priority ity 3: Leverage digital as competitive advantage through scalable and efficient platforms Client Prospecting Onboarding Client reporting management Scalable and efficient multi-jurisdiction platform Source: Schroders. 14
Pr Priority ity 4: Build a unique model in Asia Independent asset Bank partnerships managers HNW Affluent Source: Schroders. 15
Priority Pr ity 5: Pursue acquisition opportunities selectively Good track record of successful acquisitions Criteria for potential acquisitions: and integrations: – C.Hoare & Co – Provide a new capability or enable long-term growth – Discretionary assets from long-established UK wealth manager – Have a good cultural fit – Benchmark Capital – Generate attractive returns – Technology-driven business focused on UK affluent market – Be consistent with delivering organic growth in existing business and strong digital capability – ThirdRock – Singapore-based independent wealth manager Source: Schroders. 16
Our goal “ Become a top 3 player across charities, HNW and affluent financial planning in UK Wealth Management, drawing upon our: – unique sources of growth – leading brands – global institutional investment expertise. Be known in our target client segments as the best people to ” help as trusted advisers. Source: Schroders 17
Any questions?
Sc Schroders roders Per ersonal sonal Wea ealth lth – launch unching ing June e 20 2019 19 Inves estor or Da Day James Rainbow, Chief Executive of Schroders Personal Wealth 15 May 2019 For professional investors only. Not for retail clients
Communications 20 Th The new busi siness ness has g s gener erat ated ed a l lot of interest erest In the press… On social cial... ... 2,183 3,47 3, 475 5 1, 1,35 358 700 00 positive itive artic icles les men entions tions twe weet ets 1,463 463 neut utral ral online line Source: Kantar Media and Brandwatch 1 October 2018 – 7 May 2019.
Market background 21 There Th e has s never er been en a gr greater er need d for financia cial l adv dvice e Changin ing g approa oach ch Pensi nsions ons Great t An ageing ng to retirement rement complex lexity ty wealth h transfer fer popula lation ion In 2018, the percentage of 1.25m people working today Annual inheritance forecast to For the first time in history, people aged 50 – 64 in work forecast to breach the rise 66% from £69bn in 2017 there are now more people was 72.4% Pensions Lifetime Allowance to £115bn in 2027 over 65 than under 5 In 2010, the same number was 65% Source: Centre for Ageing Better, Royal London Policy Paper 31, CEBR and Kings Court Trust, Rise of the Inheritance Economy 2017, World Economic Forum, Deutsche Bank.
The advice market in numbers 22 Adviser iser num umber ers grad adua ually ly rebuilding uilding af after RDR – but ut the pictu ture re remai ains s very frag agmented ted Number of staff advising Average number of advising staff per firm 30,000 6.00 27,080 25,997 26,339 26,311 25,611 5.11 5.12 5.08 5.00 4.77 25,000 23,865 23,640 23,864 4.66 4.62 4.53 4.53 22,168 4.40 20,000 4.00 15,000 3.00 10,000 2.00 1.00 5,000 0 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: PIMFA The Financial Advice Market In Numbers, 2018.
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