Quilter Plc · LSE:QLT
Quilter — Investor Presentation (2022)
56 slides from Quilter's investor presentation, 2022
Slide 1: Investor introduction
Quilter Basic rBand Guidelines Our b rand a ssets 1 Investor introduction Spring 2022
Slide 2: Investment overview and Quilter's journey to date
Investment overview and Quilter’s journey to date
Slide 3: UK Wealth: a secular growth opportunity
UK Wealth: a secular growth opportunity UK wealth management market growth and forecast¹ AuA, £tn c.2.2-2.5 CAGR +6 to 10% c.1.8 ➢ Strong market growth as flows consolidate onto CAGR Retail Advised² Platforms 0.7 +13% ➢ Retail advised market continues to be a high growth Our focus market c.0.9 0.3 0
Slide 4: Industry dynamics: Retirement demographics continuing advice demand
Industry dynamics: Retirement demographics continuing advice demand UK England & Wales Population¹ (‘000 by age year, 2018) Turned 60 in 2019 1,000 – potentially requiring retirement advice 925 900 Baby boomers born in 1947 800 787 700 600 700k+ people turned 65 and 925k+ turned 50 in 2019 – potenti
Slide 5: Industry dynamics: regulatory and fiscal changes driving disruption
Industry dynamics: regulatory and fiscal changes driving disruption ➢ Provides customers with opportunity for consolidation and flexibility to manage retirement assets Pension reform ➢ Demand and complexity driving need for advice ➢ Increased longevity of client relationships for wealth managers ver
Slide 6: Industry dynamics: fiscal changes driving complexity, changing client behaviour and need for advice
Industry dynamics: fiscal changes driving complexity, changing client behaviour and need for advice Annual pension allowance ISA annual allowance £’000 Allowance £’000 tapered for over Junior ISA CAGR 255 £150k earners 235 245 ISA -13% 20.0 20.0 20.0 20.0 20.0 50 50 50 40 40 40 40 40 40 40 40 CAGR +
Slide 7: Industry dynamics: continued strong demand for Advice as cost of delivery increases
Industry dynamics: continued strong demand for Advice as cost of delivery increases ➢ Adviser trend to serve fewer active clients continues: Market total revenue from adviser charges¹ Revenues on investment advice and related charges ➢ Compensation model from commission to fees £5.6bn £5.5bn ➢ New m
Slide 8: Industry dynamics: Business models adapted to changing regulation and evolving value chain
Industry dynamics: Business models adapted to changing regulation and evolving value chain Typical older / Pre-RDR Insurance Modern Wealth Manager models Customers • Product driven sales, ‘pushed’ • Customer driven solutions through incentive driven distribution channels • Commission models driving
Slide 9: Quilter is at an inflection point
Quilter is at an inflection point Quilter at Listing in 2018 Quilter in 2022 c.£3.1bn¹ Our focus Our focus since Listing … today … c.£0.3bn ordinary dividends² ➢ Driving flow and revenue Market cap: £2.7bn growth c.£1bn special capital returns ➢ Refining perimeter Non-core: ➢ Business simplification
Slide 10: Quilter: a differentiated model with clear benefits to clients and shareholders
Quilter: a differentiated model with clear benefits to clients and shareholders Model Benefits Customer High Net Worth segment Quality assured choice Affluent Advice Quilter Breadth and strategic control of distribution IFA channel² channel¹ Platform Platform Scale and operating leverage Investment
Slide 11: Quilter: a value-adding integrated model
Quilter: a value-adding integrated model What we do? IFA¹ £89bn ➢ Originate client assets: £107bn total assets £107bn £45bn Advice Assets under management and Administered and administration Managed² ➢ Administer client assets: £98bn under administration Quilter £18bn ➢ Manage client assets: £45bn u
Slide 12: Business segments
Business segments Quilter
Slide 13: New Quilter: simpler business, organised around two core client segments
New Quilter: simpler business, organised around two core client segments Two new client reporting segments Affluent High Net Worth Benefits and synergies from the new segmentation £50-£500k investible From £250k investible ➢ Client-centric approach assets assets Steven Levin Andy McGlone ➢ Improved
Slide 14: Dual distribution channels: our strategy for advice
Dual distribution channels: our strategy for advice Advice Platform Investment Affluent High Net Worth ➢ Return to adviser growth in 2022. Mid-single digit medium-term growth target ➢ Grow numbers of client-facing individuals Quilter ➢ Capture greater share of flow onto our Platform channel ➢ Build
Slide 15: New Platform: a best in class proposition for advisers
New Platform: a best in class proposition for advisers Advice Platform Investment Tools and solutions to help adviser firms grow Cost effective and scalable Delivering a differentiated intuitive user experience and ease of use proposition for adviser firms Support advisers to deliver Exceptional cli
Slide 16: Our solutions strategy to meet client needs
Our solutions strategy to meet client needs Advice Platform Investment Fee to client Higher Potential 1. Premium product growth Discretionary portfolio Cirilium Active service 2. Price/value trade-off WealthSelect Managed 3. Value-based Cirilium Blend portfolio solutions service WealthSelect Income
Slide 17: Affluent – bringing the proposition together: a customer-centric, integrated approach
Affluent – bringing the proposition together: a customer-centric, integrated approach Quilter Financial Planning Helping Helping advisers Quilter Platform customers feel Quilter to run a more more secure Affluent Segment successful about their future advice business Quilter Investors ➢ Simple and cl
Slide 18: Affluent: distribution economics
Affluent: distribution economics Advice Platform Investment Investment Advice Platform AuA solutions AuM Indicative revenue c.£30m c.£12bn ➢ Generate advice c.£90m Quilter channel revenue c.£13bn c.£80m ➢ Manage advice risk c.£200m p.a. c.£40m ➢ No advice revenue c.£13bn IFA channel ➢ No advice risk
Slide 19: Affluent proposition: two strong distribution channels
Affluent proposition: two strong distribution channels Advice Platform Investment Expected net flow Quilter channel growth rate ➢ Grow advisers and continue productivity increases high single ➢ Strategic alignment with proposition digit ➢ Digital solutions IFA channel ➢ Attracting firms to a market-
Slide 20: Adviser numbers: returning to mid-single digit net growth
Adviser numbers: returning to mid-single digit net growth Advice Platform Investment Unique, dual pronged approach to adviser recruitment ➢ Focused growth through organic recruitment ➢ Attractive propositions Advisers who want to Advisers who want to focus on delivering grow their business ➢ Optiona
Slide 21: Advice: capturing client assets back-book opportunity
Advice: capturing client assets back-book opportunity Advice Platform Investment Quilter channel advisers’ client assets¹ AuMA ~£27bn ~£5bn ➢ Client assets on other platforms due to legacy Platform capability ~£11bn ➢ New Platform provides opportunity for back-book migration to Quilter ➢ Quilter alr
Slide 22: An integrated approach to adviser relationships
An integrated approach to adviser relationships Advice Platform Investment Differentiated ability to support advisers across the market unique to Quilter Quilter advice firm Potential eventual exit via practice buyout Adoption of Quilter brand and marketing Regulatory compliance outsourced to Quilte
Slide 23: IFA channel growth strategy: broaden, deepen, retain
IFA channel growth strategy: broaden, deepen, retain Advice Platform Investment Accessible market opportunity by targeted adviser firm Firms’ market flows £bn, annually “Retain”: Core supporters ➢ Smaller IFAs where Quilter is principal Platform 15 Broaden ➢ Service well in a cost efficient manner “
Slide 24: New Platform: a scale business supporting two strong channels
New Platform: a scale business supporting two strong channels Advice Platform Investment Advised by Managed by Quilter Advice Channel: £12bn Quilter investment solutions¹ c.75,000 customers £15bn IFA Channel: ~3,000 funds from c.375,000 customers £59bn £51bn ~220 fund managers MPS capability from 75
Slide 25: New Platform: a best in class proposition
New Platform: a best in class proposition Advice Platform Investment We help advisers to deliver an exceptional service to clients Exceptional ➢ The most comprehensive suite of products and trusts client service ➢ 75% of funds are at the best available price in the market¹ ➢ Complete flexibility for
Slide 26: Growing with our customers: broadening the offering to meet client needs
Advice Platform Growing with our customers: broadening the offering to meet client needs Investment Breadth of client and adviser-relevant investment solutions Investment product lifecycle management ➢ Strong and consistent asset growth CAGR £25bn +9% £23bn ➢ Continued growth in Cirilium range throu
Slide 27: High Net Worth - bringing the proposition together
High Net Worth - bringing the proposition together: aligning expertise, resources and services Quilter Cheviot Quilter High Net Worth segment Quilter Private Client Advisers Managing the financial needs of clients through a tailored approach ➢ Seamless combination offering investment management, ➢ B
Slide 28: High Net Worth: strong distribution channels
High Net Worth: strong distribution channels Rationale Advice Flows Revenues ➢ Strong growth from c.20% low base ➢ Revenue c.£30m p.a. 2021: Quilter channel ➢ Higher persistency ➢ Operates at breakeven ➢ Gross flows £0.5bn ➢ Integrated client ➢ Manage advice risk ➢ Net flows £0.4bn experience c.£40m
Slide 29: High Net Worth: getting back to growth
High Net Worth: getting back to growth Steady contributor to Group net flows In-house advice proposition growing quickly from a low base Net flows, £bn AuM by channel 1.5 £17.8bn £28.7bn 100% 90% 1.0 80% 47% 0.5 70% 60% 0.0 50% 40% -0.5 30% 44% 20% -1.0 10% 9% -1.5 0% 2017 2018 2019 2020 2021 2015 2
Slide 30: Integrating new in-house advice capability to drive growth
Integrating new in-house advice capability to drive growth Advice Platform Investment ➢ Client-centric integrated advice and investment service proposition ➢ Priority to grow number of client-facing individuals PCA ➢ Organic-led growth supplemented by targeted PCA inorganic additions PCA PCA PCA PCA
Slide 31: Performance
Performance Quilter
Slide 32: Flows: marked improvement year-on-year, building momentum into 2022
Flows: marked improvement year-on-year, building momentum into 2022 Gross flows Net flows £bn £bn 2020 2021 2020 2021 Affluent £7.7bn Affluent £10.5bn +36% Affluent £1.2bn Affluent £2.9bn +142% High Net Worth £2.2bn High Net Worth £2.7bn +23% High Net Worth £0.3bn High Net Worth £1.1bn +267% 4.0 Tot
Slide 33: FY 2021: Building revenue momentum, controlling costs
FY 2021: Building revenue momentum, controlling costs Business and segment y-o-y revenue growth Affluent segment High Net Worth segment +14% +13% +11% +10% +10% +5% (2%) Platform Quilter Investors Quilter Financial Planning Affluent Quilter Cheviot Private Client Advisers High Net Worth Group revenu
Slide 34: FY 2021: Financial results demonstrating strong growth
FY 2021: Financial results demonstrating strong growth Net inflows Average AuMA Revenue £bn £bn £m Revenue +17% 49 48 margin (bps) +167% +10% 4.0 105.3 618 1.5 90.2 564 2020 2021 2020 2021 2020 2021 Expenses Adjusted profit before tax Adjusted diluted EPS £m £m Pence 19% 22% Operating +42% margin +2
Slide 35: FY 2021: Solid operating margin and EPS progression
FY 2021: Solid operating margin and EPS progression Positive operating margin trends ➢ Operating margin increase ahead of expected trajectory in 2021 30% ➢ Expect broad stability in 2022 before reaching 25%+ target 25% 19% 22% in 2023 2020 2021 2022 2023 2024 2025 EPS momentum: indicative trajectory
Slide 36: IFRS profit to increasingly converge with adjusted profit
IFRS profit to increasingly converge with adjusted profit ➢ £22m cost to achieve in respect of Optimisation initiatives 2021 ➢ £2m final costs from Managed Separation in respect of Platform rebrand below the line expenses ➢ £28m final costs to achieve the Platform Transformation Programme taking tot
Slide 37: Business initiatives
Business initiatives Quilter
Slide 38: Delivering the next stage of efficiency improvements
Delivering the next stage of efficiency improvements Optimisation (2019 launch): Benefit – £65m¹ Simplification (2021 launch): Benefit – £45m £45m cost saves £15m cost saves £50m cost saves 2019 2020 2021 2022 2023 2024 Phase: 1. Operational efficiencies Phase: 2. Enhancing efficiency • Operational
Slide 39: Investing for the generations of tomorrow
Investing for the generations of tomorrow Hybrid advice Digital accessibility Digital solutions 39
Slide 40: Building a responsible wealth manager
Building a responsible wealth manager Targets¹ ➢ Every client ESG profiled as part of advice process ➢ ESG preferences embedded in advice process ➢ ESG and carbon-rating tools Our offering to clients ➢ Platform provides visibility across ESG metrics available on Platform ➢ Solutions aligned to ESG v
Slide 41: Cash and capital
Cash and capital Quilter
Slide 42: Continued strong solvency and holding company cash position
Continued strong solvency and holding company cash position Solvency II ratio 275% 11% (55%) 220% 217% 83% ➢ Pro forma Solvency II ratio broadly stable (3%) (10%) (23%) after Quilter International net sale proceeds capital return ➢ Provides capacity for strategic investments T2 bond: T2 bond: 35% 35
Slide 43: Capital management philosophy
Capital management philosophy ➢ Current year dividend On-going cash needs ➢ Group capital requirements ➢ Working capital & interest Investing ➢ Investing in the growth of the business organically ➢ Optimisation programme Capital allocation ➢ To accelerate growth through bolt-on acquisitions Investin
Slide 44: Investment case
Investment case Quilter
Slide 45: Quilter 2025: delivering a high-quality earnings compounder
Quilter 2025: delivering a high-quality earnings compounder Expect to deliver mid-teens EPS growth and to more than double adjusted profit by 2025 More than double £108m 6%+ net flow per annum Increased flow into our solutions 30%+ operating margin FY 2020 FY 2025 continuing business adjusted profit
Slide 46: Cohesive and balanced business model meeting all stakeholder needs
Cohesive and balanced business model meeting all stakeholder needs Revenue In-segment synergies Stakeholder outputs Quilter channel c.£200m ➢ Full-spectrum of adviser support ➢ Advisers: technical and cultural Affluent ➢ Scale benefits from shared Platform experience in advice management ➢ Single in
Slide 47: Quilter: catalysts for growth
Quilter: catalysts for growth Return to net growth in advisers, greater flow into Quilter investment solutions Accelerating Platform flows across both distribution channels Strong investment performance and enhanced sustainable investment proposition Digital hybrid advice to be launched in 2022 Enha
Slide 48: Delivering growth and efficiency: our investment case
Delivering growth and efficiency: our investment case Revenues: improving net flows and higher proportion of Quilter-managed flows Costs: enhancing efficiency through Simplification Operating leverage: from growing Platform and investment solutions Moving up dividend pay-out ratio, £328m capital ret
Slide 49: Appendix
Appendix Quilter
Slide 50: Affluent Administered & Managed: revenue margin dynamic
Revenue margin dynamic Revenue margin an output rather than an input (bps) 60% below group average 40% above group average 75 4 Affluent Administered & Managed 3 HNW Administered 1 Group & Managed 2 50 revenue Assets margin 3 2 Assets £17bn 4 Affluent £28bn Managed Assets 25 1 £9bn Affluent Administ
Slide 51: How we manage costs
How we manage costs As a percentage of Cost analysis (£m) revenues Medium-term expectations¹ 2020 2021 2020 2021 Support staff costs 126 127 Operations 35 27 Technology 30 42 Property 43 31 Other base costs² 28 25 Sub-total base costs 262 252 46% 41% Trending down as a result of Simplification Reven
Slide 52: 2023 and 2025 operating margin target drivers
2023 and 2025 operating margin target drivers 2021 revenue contribution 66% 34% Affluent High Net Worth Operating margin: 2021: 27% Operating margin 2021: 26% Target 2025: high-30s% Target 2025: mid-20s% Business blend 2021: 27% Target: c.35% Head office 2021: (c.5%) Target: (c.4%) Group 2023 target
Slide 53: Next phase of Optimisation: Simplification
Next phase of Optimisation: Simplification FY18 FY20 Addressable Contribution to Simplification: Total costs Total costs costs Simplification 555 Phase: 2. Enhancing efficiency 456¹ 18 • Initiatives to reduce complexity 113 Programme Targeting ~15% of activity: • IT, Operations & operating reduction
Slide 54: Nearly 50% of market cap at Listing returned to shareholders
Nearly 50% of market cap at Listing returned to shareholders Capital returned to shareholders since 2018 £m Ordinary dividends¹ £325m 325 International £480m sale 350 c.£1.3 billion Quilter Life Assurance 375 £425m sale Old Mutual Global Investors 220² £580m sale 2018 2019 2020 2021 1. Ordinary divi
Slide 55: Disclaimer
Disclaimer This presentation may contain certain forward-looking statements with respect to certain Quilter plc’s plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncerta
Slide 56: Quilter Basic r B and Guidelines Our b rand a
Quilter Basic rBand Guidelines Our b rand a ssets 1