PRINCIPAL AN OVERVIEW BY HUGH TITCOMB CHIEF EXECUTIVE OFFICER Principal - A Summary ● A leading discretionary portfolio management specialist ● Founded in 1987 ● 90 employees: 30 Investment Managers ● Providing investment management services to: i. Private individuals ii. Trusts iii. Pension funds iv. Charities v. Institutions ● Acquired by the Sanlam Group in 2008 ● Authorised and regulated by the Financial Services Authority Principal - Service Proposition Private Client Division Retail Investment Management Division Institutional Division • Distribution via IFAs and direct • IFA partnerships / joint ventures • Sanlam Group mandates • Sales team / asset gatherers • Model portfolios • External mandates • Cross selling • Use of in-house and third party platforms • Wealth management opportunity • Distribution via SUK sales team Shared services •Common asset allocation / stock / fund selection processes •Common compliance, finance and operational support Assets Under Management: 2009 – 2010 (£m) 1200 1000 800 600 400 Dec 08 Jun 09 Dec 09 Jun 10 Sept 10 Wealth Management - Strategic Rationale ● Increasing requirement for individual ownership of financial affairs. ● Tarnished reputation of some existing service providers. ● Poor investment/advice experience suffered by some in recent past. ● RDR will result in reduced number of financial advisors – but increase the opportunity for those remaining. ● Estimated market size (UK) Affluent (£100k+) 1.8m+ HNW (£500m+) 500,000+ UHNW (£5m+) 150,000+ Wealth Management Proposition Investment Management - Pensions Other wrapped monies Taxable portfolios Execution only Private equity/property investment Estate planning Trust advice/structures Holistic, integrated financial solutions Banking - Tax planning Client Debt management advice C/F advice Credit facilities Deposits/FX Philanthropy Protection products - Life cover - Critical illness - Health UK Wealth Management – competitor landscape Wealth Management Proposition – Sanlam UK In-House Out-Sourced ● Investment Management ● Banking/credit facilities. ● Protection products. - Pension monies incl drawdown portfolios; ● Access to bespoke/club - Other wrapped monies; investment opportunities eg - Taxable portfolios incorporating CGT mgt. private equity/property - Execution only. Client ● C/F advice. ● Tax planning. ● Trust structures. ● Estate planning. ● Offshore UK booking centres. ● Trust advice. ● Debt management advice. Service Model ● Fee based. ● Relationship, client centric approach based on trust and quality service. Target market • HNW with investable assets of £500k+ or income of £150k+ pa. • Affluent with investable assets of £100k+ • Sanlam’s offshore private clients. investment. Critical Success Factors ● ● ● ● People Strong relationship management capabilities; Strong business development/distribution capabilities; Experienced and credible; Appropriate incentive/retention mechanisms. Service offering Quality and trusted products and service - offering value for money; Robust and reliable investment performance; Transparent pricing. Operational Service excellence; Systems capability including consolidated reporting. Communication/positioning Avoiding concerns amongst existing IFA introducers re “encroaching on their patch”.