Close Brothers Group plc · LSE:CBG
Close Brothers — Investor Presentation (May 2011)
45 slides from Close Brothers's investor presentation, May 4, 2011
Slide 1: Asset Management Division
Asset Management Division Presentation to Investors and Analysts 4 May 2011
Slide 2: Cautionary Statement
Cautionary Statement Regarding information in this presentation Certain statements included or incorporated by reference within this presentation may constitute “forward-looking statements” in respect of the group‟s operations, performance, prospects and/or financial condition. By their nature, forw
Slide 3: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 4: Introduction
Introduction Creating a leading UK Wealth and Asset Management business • Close Brothers has strong attributes and significant experience in private client arena and investment management • Building on these to create a leading wealth and asset management business • Currently in a period of transfor
Slide 5: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 6: Vision
Vision New model Private Client business Close Brothers vision IFAs Discretionary managers • Core capabilities – Advice – Investment management Investment – Efficient platform technology Advice management • Client centric model – Choice of services New model – Control over pricing and value for mone
Slide 7: Clarifying the growth strategy
Clarifying the growth strategy External drivers of growth opportunities • Implications of Retail Distribution Review – IFA consolidation – Demand for outsourced discretionary investment management – Demand for lower cost advice • Shift to personal responsibility for retirement • Changes in investor
Slide 8: Our differentiated business model
Our differentiated business model Building a scalable, profitable business focussed on UK wealth and asset management Affluent HNW Institutions Clients £100k to £1 million £1 - £5 million Personal Corporate Intermediary Distribution Direct Advisers Advisers sales Advice Propositions Client Execution
Slide 9: Clarifying the growth strategy
Clarifying the growth strategy A differentiated business model Close Brothers model New world Affluent HNW Institutions £100k to £1 million £1 - £5 million • Boundary lines Personal Corporate Intermediary Direct Advisers Advisers Sales blurring rapidly Advice • Clients demand Current flexible combin
Slide 10: Progress in transforming Asset Management
Progress in transforming Asset Management Progress • Clarified strategy • Disposed of non-core businesses • Completed market research and defined new propositions • Selected and implementing IT platform solution • Launched £1 billion range of risk-graded collectives • Made strategic private client a
Slide 11: Acquisition rationale
Acquisition rationale Acquisitions provide base for future organic growth • Acquisitions accelerate development of distribution capability – Presence in strategic locations – Rapid creation of national adviser force to drive organic growth – Strengthening brand • Focus on high-quality businesses whi
Slide 12: Acquisition progress
Acquisition progress Over £2.6 billion of client assets acquired in current financial year Acquisitions announced to date Chartwell Allenbridge Cavanagh1 Total FuM (£ million) 705 440 1,5002 2,645 Advisers 16 - 61 77 Acquisition cost 17 6 26 49 (£ million) Expect to acquire further £1 – £2 billion F
Slide 13: Transformation timeline
Transformation timeline Transformation Delivery FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 • Clarify • Exit non core • Focus on • Organic strategy businesses core growth businesses • Investment • Investment • Operational spend spend • End non gearing recurring • Build investment • Achieve propo
Slide 14: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 15: Developing our propositions
Developing our propositions Market research • Target UK market – 1.6 million people have investable assets between £100k and £5 million – Total market size £650 billion • Surveyed 2,500 people in this market • 6 distinct segments with different attitudes • 34% want an execution-only service plus adv
Slide 16: Developing our propositions
Developing our propositions Good brand awareness Brand awareness (%) Coutts 62 Hargreaves Lansdown 40 Cazenove 37 UBS 37 St James Place 25 Close Brothers 20 Brewin Dolphin 19 Towry 14 Rathbones 12 BestInvest 10 FundsNetwork 9 Smith & Williamson 4 Ruffer 2 0 10 20 30 40 50 60 70 Source: McKinsey prom
Slide 17: Proposition rationale
Proposition rationale Full range of services from advice to execution-only 1. Advice 2. Execution-only • Sustained demand • Growing demand • • Few national / scale players Building multiple revenue streams + • • Scalability and operating margins Leverage Employer relationships 3. Linking Advice with
Slide 18: Advice proposition
Advice proposition A financial planning service built on six key principles • Protection • RDR compliant • Investment • Simple to articulate, • Pension & retirement easy to understand • Estate planning • Specialist services 6. 1. • Holistic or modular Transparent Financial pricing planning • Award-w
Slide 19: Advice proposition generic pricing
Advice proposition generic pricing Pricing structure change driven by RDR RDR will force transparency by 31 December 2012 • Client agreed remuneration • Unbundling of advice, investment and platform fees Pre RDR Client Adviser Fund Manager Platform Post RDR Client Adviser Fund Manager Platform 19 19
Slide 20: Execution-only proposition
Execution-only proposition A service built around six key elements • Research • Calculators • Tools • Call centre • Risk modelling • Education 6. 1. Exceptional Knowledge service centre • View net worth at any time across all accounts 5. 2. • Mutual funds • Covers non-Close • Equities Brothers custo
Slide 21: Platform overview
Platform overview Leverage leading technology to create a strong platform Benefits to client Benefits to Close Brothers • Consolidated view of all assets • Capture flows from existing clients • Real time valuation • Economies of scale • Both execution only and advised assets • Client retention • Wid
Slide 22: Platform retailing
Platform retailing Close Brothers is not moving into the platform business Platforms IFAs End clients “Platform “Platform wholesaling” retailing” • Unbundled • Bundled with advice and • Price competition investment management • High fixed IT costs • Less price competition • Low fixed costs • Variabl
Slide 23: Distribution
Distribution Multi-channel approach across multiple client propositions Direct Channels Personal Advisers Corporate Advisers Intermediary Sales (non advised) Route to • Online / telephone • 110 advisers • 17 advisers • Sales team of 10 access • National – currently • National – currently market 7 hu
Slide 24: Regional hub strategy
Regional hub strategy Building local distribution Existing strategic hub location1 Area for potential strategic expansion • Local distribution network allowing face to face advice nationwide • Acquisitions accelerate development of local distribution network – Chartwell: Bristol – Cavanagh: South Ea
Slide 25: Multiple sources of lead generation
Multiple sources of lead generation Several sources of lead generation drive our advised channels and execution-only Multiple sources of lead generation feed our distribution channels Employer seminars Direct marketing New Client referrals clients Existing clients Partnerships 25 25 Strictly private
Slide 26: Client website screenshot
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Slide 27: Strictly private and confidential
27 27 Strictly private and confidential
Slide 28: Close Brothers competitive advantage
Close Brothers competitive advantage Why we will succeed 1. Compelling flexible proposition – Combining advice and execution only offerings – Based on extensive market research – At competitive price levels 2. Market leading platform – Outsourced platform build – Insourced client experience/content
Slide 29: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 30: Close Brothers investment capabilities
Close Brothers investment capabilities Resources configured for multi-asset portfolios Asset Allocation Achieving optimal risk adjusted returns through superior investment management Alternatives Fixed Hedge Real Equities Credit Cash Income funds assets Structured investments & solutions: Improve re
Slide 31: Integrated products and solutions vision
Integrated products and solutions vision Spectrum of delivery option and investment content to suit clients and intermediaries Asset Allocation Direct Bonds Multi Manager Passive and Equities Collectives Separately managed accounts Bespoke 31 31 Strictly private and confidential
Slide 32: Bespoke investment portfolios
Bespoke investment portfolios Close Brothers‟ High Net Worth proposition is competitive on many dimensions Bespoke investment offering – individually crafted investment portfolios Seniority of relationship – senior portfolio manager is the relationship, their role is to anticipate and understand cli
Slide 33: Performance Analysis – Active/Direct
Performance Analysis – Active/Direct Absolute and relative annualised performance is strong 1 year risk and return 3 year risk and return 10 10 CBAM Growth CBAM Balanced APCIMS Growth CBAM Income APCIMS Balanced APCIMS Income CBAM Income Return % Return % CBAM Balanced CBAM Growth 5 5 APCIMS Income
Slide 34: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 35: Key financial benefits of repositioning
Key financial benefits of repositioning Transitioning to more sustainable earnings stream • Focus and simplicity – Disposed of private equity, property and administration businesses • Higher quality earnings – Recurring revenue streams from client assets – Disposed businesses generated volatile reve
Slide 36: Diversified client asset and revenue
Diversified client asset and revenue Full range of services from advice to execution-only Multiple sourcesCurrent Medium Term of lead generation feed our distribution channels Discretionary Management Principally FuM Funds under Advice discretionary Execution-only Management fees Principally Advice
Slide 37: Transformation timeline
Transformation timeline Transformation Delivery FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 • Clarify • Exit non core • Focus on • Organic strategy businesses core growth businesses • Investment • Investment • Operational spend spend • End non gearing recurring • Build investment • Achieve propo
Slide 38: Key performance indicators
Key performance indicators From today to the future Key performance Drivers indicator 31 July 2010¹ Today² Future • £1 – £2 billion planned acquisitions Private Client Assets £3.3 billion £6.4 billion FuM • Organic growth • Driver of client and asset growth Number of Advisers 50 127 • Incentivised t
Slide 39: Summary
Summary • Developed clear strategy to build a leading UK wealth and asset management business • Transformation and investment well underway – complete by end of FY 2012 – Disposal of non-core businesses – Acquisitions to accelerate scale – Investment in propositions and platform • Commenced proposit
Slide 40: Agenda
Agenda 1. Introduction – Preben Prebensen, Group Chief Executive 2. Strategy and progress – Martin Andrew, Asset Management Division Chief Executive 3. Propositions and distribution – Steven Mendel, Head of Wealth Management 4. Discretionary multi asset investment solutions – Nancy Curtin, Chief Inv
Slide 41: Appendices
Appendices 1. Biographies 2. Movement in Funds under Management 41 41 Strictly private and confidential
Slide 42: Biographies
Biographies Asset Management Division Martin Andrew, Asset Management Division Chief Executive Martin has been Chief Executive of Close Brothers Asset Management Division since May 2008. He joined Close Brothers in 2005 as head of the Private Client Business. There, he expanded the High Net Worth bu
Slide 43: Biographies
Biographies Asset Management Division Paul Chambers, Finance Director Paul joined Close Brothers in January 2010 as the Chief Financial Officer of the Asset Management Division. He previously worked with the administrators at Lehman Brothers where prior to administration he was the UK CFO for their
Slide 44: Biographies
Biographies Asset Management Division Gill Clarke, Head of Compliance legal and risk Before Joining Close Asset Management, Gill headed up International Compliance at BlackRock (having joined Barclays Global Investors Limited) overseeing BlackRock‟s International Compliance Team (EMEA), as well acti
Slide 45: Funds under Management
Funds under Management Adjusted for recent transactions Funds under Management £ million Private Clients Institutional Total 31 January 2011 (as reported) 4,5451 3,772 8,317 Allenbridge2 440 440 Cavanagh3 1,5004 1,500 Property2 (554) (554) Cayman5 (85) (85) FuM adjusted for transactions 6,400 3,2186
Close Brothers Group — Investor Presentation (May 2011) on 6ix