Aj Bell Plc · LSE:AJB
Aj Bell — Investor Day (October 2022)
46 slides from Aj Bell's investor day presentation, Oct 20, 2022
Slide 1: Investor & Analyst Head Office Site Visit
Investor & Analyst Head Office Site Visit Presentation and Q&A 20 October 2022 Presenters: Michael Summersgill, Chief Executive Officer Billy Mackay, Managing Director (Advised) Kevin Doran, Managing Director (D2C)
Slide 2: CEO Introduction
CEO Introduction Michael Summersgill
Slide 3: Platform propositions and dual-channel strategy
Michael Summersgill, Chief Executive Officer • Our platform propositions are the strategic focus, including our in-house investment products • We are committed to our dual-channel, single operating model, which maximises our growth opportunity in the advised and D2C segments of the UK platform marke
Slide 4: Sustained organic growth since IPO
Michael Summersgill, Chief Executive Officer • We have delivered sustained organic growth since IPO in December 2018 across both segments of the platform market, with c.250k new customers since IPO, all choosing or being advised to join AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 5: Investment case consistent since IPO
Michael Summersgill, Chief Executive Officer • Our investment case is presented in a very similar way to when we came to market in 2018, evidencing delivery and continuity • We have proven all the key pillars to be true since IPO – still as relevant today as they were 4 years ago AJ Bell Site Visit
Slide 6: Employee engagement and share ownership
Michael Summersgill, Chief Executive Officer • Best Companies ranking is important, however the process is equally as important – it has provided the framework for our HR strategy which has been very successful for many years • One key aspect of our staff engagement and our culture is employee share
Slide 7: Succession and ExCo
Michael Summersgill, Chief Executive Officer • Succession has been well planned and carefully executed – recent changes have been a long time in the making • We’ve got new names in key roles, but this is still very much an AJ Bell team • There has been a good blend of internal and external hires. We
Slide 8: Market opportunity and net inflows
Michael Summersgill, Chief Executive Officer • £2 trillion of assets held off-platform. Whilst there is an inflationary environment and cost of living squeeze, net inflows are not solely dependent on customer contributions, lots of opportunity to consolidate money already in the financial system • S
Slide 9: Changing customer expectations
Michael Summersgill, Chief Executive Officer • We have observed changing customer expectations in recent years, particularly in the D2C market but also within the advised market too • Developments to our platform have been increasingly focused on meeting these changing needs, such as investment solu
Slide 10: Brand architecture and investment
Michael Summersgill, Chief Executive Officer • In the coming weeks we will be retiring the Youinvest sub-brand and our full-service D2C proposition will become AJ Bell • In the past we have complicated our brand architecture by externalising our internal structure, resulting in D2C customers landing
Slide 11: Single hybrid technology model
Michael Summersgill, Chief Executive Officer • We operate a single, hybrid technology model that sits behind our single operating model to deliver our propositions in both the advised and D2C market • We moved to this model from a proprietary model, and it has served us very well – we are committed
Slide 12: Revenue streams and resilience
Michael Summersgill, Chief Executive Officer • The strength of the mix of revenue streams has shown through in recent years, particularly during the pandemic when the impact of falling interest rates was offset by increased customer dealing activity and increased asset values • We are now seeing the
Slide 13: Interest rates and revenue margin guidance
Michael Summersgill, Chief Executive Officer • Since we provided our revenue margin guidance alongside HY22 results, interest rate expectations have gone beyond where they were in May • This provides some potential upside to revenue margins and profit, but not a significant uplift as we expect the v
Slide 14: Spotlight on Advised
Spotlight on Advised Billy Mackay
Slide 15: Advised market health and consolidation
Billy Mackay, Managing Director (Advised) • Despite continual speculation that advised market will slowly decline, it remains in good health with adviser numbers continuing to tick up • Consolidation activity often seen as a key risk, but it presents opportunities – new firms tend to spin out from t
Slide 16: Market share growth and Consumer Duty
Billy Mackay, Managing Director (Advised) • We have grown market share organically whilst the overall market has also grown strongly • A lot of the money flowing into the market is accumulated wealth, so the money is already invested – the key decision is whether the assets can be invested more effe
Slide 17: Key factors for winning and retaining business
Billy Mackay, Managing Director (Advised) • These are the key factors for winning new business and retaining existing business • Price is the most important factor when choosing a platform, however service is the main reason that IFAs move platforms – we are strong on both price and service, drives
Slide 18: Investcentre proposition
Billy Mackay, Managing Director (Advised) • Our reputation, built over many years, for offering an award-winning service with broad, easy-to-use functionality and highly competitive pricing is the recipe for success for Investcentre • We have long-term, sticky relationships with Investcentre, and we
Slide 19: Touch: new adviser proposition
Billy Mackay, Managing Director (Advised) • Touch is our new proposition being developed for the adviser market • Designed to cater for the part of the market which is currently underserved – sub-£150k portfolios • 92% of the UK population now have a smartphone – existing apps in the advised market,
Slide 20: Touch differentiator
Billy Mackay, Managing Director (Advised) • The key differentiator of Touch is the seamless interaction between the adviser, platform and client, who interacts with their adviser directly though the app • Touch makes all the various touchpoints in the advised process far easier and more streamlined
Slide 21: Touch increases advised footprint
Billy Mackay, Managing Director (Advised) • Touch increases our footprint in the advised market • Initially targeted at lower value customers but no reason why the technology won’t gain traction over time in the parts of the market already served by Investcentre AJ Bell Site Visit Presentation and Q
Slide 22: Adviser events and sales support
Billy Mackay, Managing Director (Advised) • Our conferences, events and educational materials are highly values by advisers – builds trust in AJ Bell and presents new business opportunities • Over the last 10-15 years, we have increased from 5 to 7 regional areas. However, sitting behind that in our
Slide 23: Billy Mackay, Managing Director (Advised)
Billy Mackay, Managing Director (Advised) • Refer to slide AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 24: Spotlight on D2C
YWAJBell Spotlight on D2C Kevin Doran
Slide 25: D2C growth and market share since 2017
Kevin Doran, Managing Director (D2C) • Since 2017 we have increased our D2C customers by 4x, AUA by 3x, doubled market share, and this has all been delivered organically • Market has consolidated in the last five years – we are now a Big 4 provider • There are some newer entrants included in ‘others
Slide 26: D2C market change and new entrants
Kevin Doran, Managing Director (D2C) • Market has changed dramatically in the last 5 years • We have seen the profile of our customers change – more first timers – and have evolved our platform accordingly (such as more content and offering AJ Bell investment solutions) • We are in a fast-growing ma
Slide 27: UK adults, households and capital accumulation
Kevin Doran, Managing Director (D2C) • 55 million adults in the UK across 29 million households • Capital accumulation is the result of income exceeding expenditure, with wealth accumulation increasing over time AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 28: Cost of living impact by income
Kevin Doran, Managing Director (D2C) • Lower income households massively impacted by cost of living squeeze as a far higher proportion of their income goes on essential expenditure • Higher income households far less impacted – either displaces discretionary expenditure or ability to accumulate capi
Slide 29: Targeting higher income deciles
Kevin Doran, Managing Director (D2C) • No coincidence that the people in the highest income deciles accumulate the most wealth over their lifetime, by investing over the long term • We will not talk about democratising finance – unfortunately nearly half off the population will never accumulate enou
Slide 30: Dodl simplified D2C proposition
Kevin Doran, Managing Director (D2C) • Dodl is a simplified D2C proposition which leverages our existing infrastructure with a streamlined investment universe, delivered via a different distribution model • It allows us to expand our footprint in the D2C market AJ Bell Site Visit Presentation and Q&
Slide 31: Dodl account and features
Kevin Doran, Managing Director (D2C) • You can easily set up a Dodl account, fund and invest easily within a few minutes • Launched less than six months after being announced • Dodl is not a trading app, it is targeted at investors • We are continually looking to add new features – transfers and US
Slide 32: Kevin Doran, Managing Director (D2C)
Kevin Doran, Managing Director (D2C) • Refer to slide AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 33: Dodl customer profile
Kevin Doran, Managing Director (D2C) • Dodl has enabled us to attract a different type of customer – younger, investing more in funds and a high propensity to buy AJ Bell funds AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 34: Full-service D2C proposition
Kevin Doran, Managing Director (D2C) • Our full-service D2C proposition is highly valued by customers, evidenced by the multitude of awards including Which? Recommended Investment Platform for the last 4 years • It continues to be the main growth engine for our D2C business • We continue to develop
Slide 35: Investment solutions performance
Kevin Doran, Managing Director (D2C) • Our investment solutions are a key part of our platform offering across both advised and D2C markets • Our performance record across 1,3 and 5 years speaks for itself – we are now seeing reverse enquiries, particularly in the advised market AJ Bell Site Visit P
Slide 36: D2C growth opportunities
Kevin Doran, Managing Director (D2C) • Whilst the market is currently tough due to weak markets and pressure on household finances, there are ~9 million D2C accounts in the UK. With industry attrition rates of around 5%, this means there are hundreds of thousands of customers looking for a new platf
Slide 37: Customer decision drivers and brand awareness
Kevin Doran, Managing Director (D2C) • AJ Bell performs very well for customers who research multiple platforms before choosing one, however that represents less than half of the new customers coming into the market • For most new customers entering the platform market, brand recognition, friend ref
Slide 38: Kevin Doran, Managing Director (D2C)
Kevin Doran, Managing Director (D2C) • Refer to slide AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 39: Closing remarks
Closing remarks Michael Summersgill
Slide 40: Closing summary
Michael Summersgill, Chief Executive Officer • To sum up, we are in the right market, with the right business model and propositions, and we have the right people to execute our strategy AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 41: AJ Bell Site Visit Presentation and Q&A, October 2022
40 41 AJ Bell Site Visit Presentation and Q&A, October 2022
Slide 42: Q&A: Touch time savings
Q&A 1. Touch – how much time can Touch save the adviser and client throughout the year, in terms of hours spent, and how much more quickly can an adviser take a new client from initial meeting to investing their money compared to AJ Bell Investcentre? Billy Mackay: We haven’t done the detailed analy
Slide 43: Q&A continued
can think about how we pass that benefit back. Naturally it will make it easier to use, offered at a competitive price and with a comprehensive range of investment solutions. Michael Summersgill: Years ago, advised platforms spent a lot of time developing tools to help advisers run their business. T
Slide 44: Q&A: Brand and marketing
9. Brand and marketing – when searching for ‘investment platform’ on Google, AJ Bell is down in 5th or 6th place, excluding sponsored links. Is this something you are looking to address? Kevin Doran: We acknowledge that we have probably not invested enough when it comes to brand recognition and acqu
Slide 45: Q&A: Dodl
14. Dodl – why did you go with this name and how does Dodl brand tie in with the AJ Bell brand? Kevin Doran: The product is “Dodl by AJ Bell” and that is how it is marketed. Linking it back to cash converters, the people holding excess cash that the FCA is focused on moving into investing, some of t
Slide 46: Q&A: AJ Bell Investments performance
solutions. Across multi-asset world there is around £220 billion of AUM. Our sweet spot is multi- passive, a £52bn market, with Vanguard the market leader in that space with around £32 billion in Vanguard Lifestrategy. Year-to-date, Vanguard Lifestrategy20, their most cautious fund, is down around 1