Sanlam Limited · JSE:SLM
Sanlam — Sanlam Benchmark Symposium 2019
36 slides from Sanlam's conference presentation, 2019
Slide 1: Megatrends
Megatrends Viresh Maharaj Chief Executive: Corporate Sales and Marketing
Slide 2: The most reliable way to anticipate the future is by understanding the present
“The most reliable way to anticipate the future is by understanding the present”
Slide 3: The Megatrend Continues
THE MEGATREND CONTINUES Standalone 4 17 Umbrella 55 78 Incepted in the past 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 years
Slide 4: Changing the Face of the Industry
CHANGING THE FACE OF THE INDUSTRY 13,000 in 2005 < 2,000 members 1,500 in 2019 350 in process of transfer < 500 members
Slide 5: Key Considerations
KEY CONSIDERATIONS Governance – King IV Member Engagement Information Security Default strategies Professional and Independent Trustees Scale How to best enable financial resilience?
Slide 6: Next Stage – Umbrella Reviews
NEXT STAGE – UMBRELLA REVIEWS 33% Never Reviewed 48% Review 1-3 Years 36% Considered Switching 2019 Sanlam Benchmark Umbrella Survey
Slide 7: Most Capable of Enabling Financial Resilience for Members
MOST CAPABLE OF ENABLING FINANCIAL RESILIENCE FOR MEMBERS Sanlam Umbrella Fund A B C D Other 2019 Sanlam Benchmark Consultant Survey
Slide 8: How Admin Fees Are Charged
HOW ADMIN FEES ARE CHARGED Standalone 7 Umbrella 3 R pmpm % of salary % of AUM
Slide 9: Average Admin Fees
AVERAGE ADMIN FEES R pmpm % of salary % of AUM Standalone R52 0.58% 0.78% Umbrella R40 0.59% 0.74%
Slide 10: Group Risk Averages
GROUP RISK AVERAGES Approved Life Unapproved Life Disability Income Standalone 1.44% 1.22% 1% Umbrella 1.29% 1.24% 1% Cover 3.3x 3.1x 75%
Slide 11: Top Advice Themes re Group Risk
TOP ADVICE THEMES RE GROUP RISK Increase Increases in Introduction funeral cover insurance of Severe rates Illness Benefits 2019 Sanlam Benchmark Consultant Survey
Slide 12: Top Advice Themes re Group Risk
TOP ADVICE THEMES RE GROUP RISK Increase Increases in Introduction funeral cover insurance of Severe rates Illness Benefits 52% indicated that their clients experienced large rate increases over the past 3 years 19% have experienced a trend towards more claims being declined
Slide 13: Average Contributions
AVERAGE CONTRIBUTIONS Total 16% 16.6% 9% Employer 10% 7% 6.6% Employee Standalone Umbrella
Slide 14: Gross Contribution to Net Contribution
Gross Contribution 16.3% Risk Costs: Life 3x + PHI 2.3% Administration Fee 0.6% Consulting Fee* 0.4% Net Contribution 13.0%
Slide 15: Term Replacement Ratio
Term Replacement Ratio 40 56% 30 36% 20 21% 10 9%
Slide 16: Term No Admin or Consulting Fees
Term No Admin or Consulting Fees 40 61% 30 39% 20 22% 10 10%
Slide 17: Term & No Investment Fees
Term & No Investment Fees 40 74% 30 45% 20 25% 10 11%
Slide 18: Term Income Uplift
Term Income Uplift 40 18% 30 9% 20 4% 10 2%
Slide 19: Price Is What You Pay, Value Is What You Get
“PRICE IS WHAT YOU PAY, VALUE IS WHAT YOU GET” Warren Buffett • #1 issue that EB Consultants wish would change •Fixation Costson Coststo be competitive & reasonable need • Marginal differences do not move the needle • Megatrend here to stay
Slide 20: Impact of Healthcare
IMPACT OF HEALTHCARE • Medical inflation > CPI • Healthcare need is immediate, regular & visible • Medical debt • Sandwich generation Compete with Retirement Fund Contributions/ Preservation/ Attention
Slide 21: Do Clients Regard Healthcare as More Important Than Retirement Funding?
DO CLIENTS REGARD HEALTHCARE AS MORE IMPORTANT THAN RETIREMENT FUNDING? Yes 38% No 36% Unsure 26% 2019 Sanlam Benchmark Consultant Survey
Slide 22: Integration of Retirement Funding, Insurance & Healthcare Enables Financial Wellness
INTEGRATION OF RETIREMENT FUNDING, INSURANCE & HEALTHCARE ENABLES FINANCIAL WELLNESS A great degree Uncertain No impact 2019 Sanlam Benchmark Consultant Survey
Slide 23: Default Regulations Timeline
DEFAULT REGULATIONS TIMELINE Implementation 1st Draft 2nd Draft Published Guidance notes by July December August 2015 2016 2017 2018 March 2019
Slide 24: Default Regulations Timeline
DEFAULT REGULATIONS TIMELINE of EB Consultants believe that the Default Regulations will help to improve financial resilience for members 2019 Sanlam Benchmark Consultant Survey
Slide 25: Readiness for D-Day
READINESS FOR D-DAY Likely Unsure Unlikely Investments 94 1 4 Preservation 68 8 24 Annuitisation 82 4 14 2019 Sanlam Benchmark Standalone Survey Counselling 88 4 8
Slide 26: Key Considerations
KEY CONSIDERATIONS Governance – King IV Member Engagement Information Security Default strategies Professional and Independent Trustees Scale How to best enable financial resilience?
Slide 27: Investments
INVESTMENTS 66% Lifestage 56% 25% Balanced 27% 7% Guaranteed 16% 7.8% Expectations 6.8% Standalone Umbrella
Slide 28: Investments
INVESTMENTS 66% Lifestage 56% 45% 100% Cash 38% Standalone Umbrella
Slide 29: Annuities – Standalone
ANNUITIES – STANDALONE With Profits Inflation Linked Hybrid Guaranteed Living Annuity Combination 9% 33% 26% 8% 23% 1%
Slide 30: Retirement Benefits Counselling
RETIREMENT BENEFITS COUNSELLING Standalone Written 51% HR 20% Administrator 47% EB Consultant 25% 2019 Sanlam Benchmark Consultant Survey IFA 22% 88% believe that RBC will assist in improving retirement outcomes
Slide 31: Advice
ADVICE 63% Advice Strategy 62% 66% Preferred Panel 67% 30% Subsidised Advice 24% Standalone Umbrella
Slide 32: Transformation
TRANSFORMATION Standalone Funds 24% unaware of voluntary FSC B-BBEE Scorecard 7% would consider B-BBEE status when considering Umbrella Fund Providers EB Consultants 60% of EB Consultants do not consider B-BBEE Level when recommending Service Providers 33% believe that Employers do not place any wei
Slide 33: Governance: Directive 8 Standalone
GOVERNANCE: DIRECTIVE 8 STANDALONE No Gifts 40% Declare All Gifts 54% Whistle Blow 53% Engage First 35% 2019 Sanlam Benchmark Standalone Survey
Slide 34: Governance – King IV
GOVERNANCE – KING IV 62% Yes 7% No 33% Unsure 2019 Sanlam Benchmark Consultant Survey
Slide 35: Best Governed Umbrella Fund
BEST GOVERNED UMBRELLA FUND Sanlam Umbrella Fund A B C D Other 2019 Sanlam Benchmark Consultant Survey
Slide 36: Megatrends
MEGATRENDS Governance & Regulation Consolidation Review of Umbrella Providers Integration with Healthcare Group Risk Disruption Technological Innovation Fixation on Costs Transformation Cyber Risk Individualisation