St. James's Place Plc · LSE:STJ
St. James's Place — Investor Presentation (March 2021)
64 slides from St. James's Place's investor presentation, Mar 12, 2021
Slide 1: Investor Pack March 2021
I N V E S T OR PAC K M A RC H 2 021 PA RT N E R S I N M A NAG I NG YOU R W E A LT H
Slide 2: Contents
CONTENTS PART ONE – BUSINESS MODEL 3 PART TWO – FINANCIALS & OTHER 51 OUR STRATEGY 4 CASH & DIVIDEND PROFILE 53 THE PARTNERSHIP 14 OUR SHAREHOLDERS 59 INVESTMENT MANAGEMENT 27 ANALYST FOLLOWING 61 OUR CLIENTS 36 CLIENT SURVEY 40 UK MARKET FOR FINANCIAL ADVICE 43 2
Slide 3: Part One – Business Model
PA R T O N E – BUSI N E SS MODEL 3
Slide 4: St. James's Place Overview
ST. JAMES’S PLACE OVERVIEW • Leading UK Wealth Management Company – Established 1991 – UK listed with market cap of c.£6 billion – Over £125 billion in funds under management – Target market £50k to £5 million free investable assets • Differentiated advice led business model – Dedicated advice distr
Slide 5: Factors Driving Demand for Advice
FACTORS DRIVING DEMAND FOR ADVICE Growing demand for face-to-face advice, despite UK Retail wealth market large and growing proliferation of low touch, on-line offerings Flexibility and complexity presented by Advice gap and diminishing number of pensions freedom qualified financial advisers Complex
Slide 6: Strategic Context – The Growth Model
STRATEGIC CONTEXT – THE GROWTH MODEL NEW BUSINESS Number of Gross Inflows Qualified Advisers per Qualified Adviser Experienced Adviser recruitment Personal and business development Academy Broadening Investment Portfolio Next Generation Business/Technical Support Asia Discretionary Fund Management D
Slide 7: Number of Qualified Advisers
NUMBER OF QUALIFIED ADVISERS 4,500 8% 1.6% ears 4,000 10 y 8% 4,338 5 and last 7% the ver 3,500 o w th o 10% d gr oun 10% mp 3,000 .a. co 10% 9%p 13% 2,500 10% Number 7% 6% 2,000 8% 9% 1,500 1,000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 7
Slide 8: Gross Inflows by Quarter
GROSS INFLOWS BY QUARTER £bn 4.5 4.1 4.0 4.0 4.0 4.0 4.0 3.9 3.9 3.8 3.8 3.7 3.7 3.6 3.6 3.5 3.2 3.2 3.3 3.1 3.0 2.8 2.8 2.5 2.5 2.0 2016 2017 1.5 2018 1.0 2019 0.5 2020 0 Q1 Q2 Q3 Q4 2016 over 2015 +16% +23% +21% +30% 2017 over 2016 +32% +29% +28% +26% 2018 over 2017 +21% +10% +7% -5% 2019 over 201
Slide 9: Gross Inflows
GROSS INFLOWS 16 +8% +29% -4% -5% 14 14.3 12 +23% 10 +17% £ billion +16% 8 +21% 6 +9% +9% +35% 4 +15% -9% 2 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 9
Slide 10: Quarterly Net Inflows 2009–2020
10 Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 QUARTERLY NET INFLOWS 2009–2020 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q
Slide 11: Net Inflows
NET INFLOWS 11 +8% 10 +40% -13% 9 -8% 8 8.25 7 +17% 6 +14% £ billion +20% 5 +28% 4 +10% +4% +30% 3 +31% 2 -11% 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 11
Slide 12: Funds Under Management
FUNDS UNDER MANAGEMENT 17% p.a. compound growth over the last 5 years and 17% p.a. over last 10 years (at 31 December 2020) +11% 130 129.3 120 +22% 110 100 +5% +20% 90 80 +28% £ billion 70 60 +13% +17% 50 +27% 40 +22% +26% +6% 30 +31% 20 -10% 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 13: 2020 – Fund Flow Information
2020 – FUND FLOW INFORMATION 12 months ended 12 months ended £ billion 31 December 2020 31 December 2019 Funds under management at start 117.0 95.6 Gross inflows 14.3 15.1 Investment return 4.1 12.4 135.4 123.1 Regular income withdrawals/maturities (1.6) (1.9) Surrenders/part surrenders (4.5) (4.2)
Slide 14: The Partnership
THE PA R T N E R S H I P 14
Slide 15: What Our Advisers Offer
WHAT OUR ADVISERS OFFER “ The first pillar of value, financial planning, starts with building a deep understanding of who the client is, and what they are seeking to accomplish – properly grounded in trust and transparency, it serves as the roadmap to achieving the clients financial goals. The true
Slide 16: What Our Advisers Offer
WHAT OUR ADVISERS OFFER • Holistic financial planning • Understanding a client’s goals and objectives • A personalised tax efficient financial plan and investment strategy • Keep clients informed and review circumstances throughout relationship • Peace of mind – being there at key moments of truth •
Slide 17: Global Investment Management Expertise
GLOBAL INVESTMENT MANAGEMENT EXPERTISE 42 funds 39 fund houses 31 exclusive strategies to UK retail investors 78 lead fund managers Red lines indicate fund managers from whom all the strategies we offer are exclusive to St. James’s Place clients in the UK retail space. 17
Slide 18: Whole of Market Approach
WHOLE OF MARKET APPROACH Although our advice is restricted to the products and services available through St. James’s Place, we take responsibility for the due diligence on all the providers whose products and services we make available to our clients, some of which are shown below. 18
Slide 19: Dedicated Distribution – The Partnership
DEDICATED DISTRIBUTION – THE PARTNERSHIP • High quality self-employed team of 4,338 Qualified Advisers - Average age is 47 - 90%+ per annum retention rate • Highly experienced – average 19 years 19
Slide 20: Geographic Distribution of Advisers & Clients
GEOGRAPHIC DISTRIBUTION OF ADVISERS & CLIENTS 31 December 2020 ADVISERS CLIENTS 7% 6% 2% 2% 23% 21% 24% 13% 14% 14% 4% 4% 3% 4% 4% 4% 4% 4% 21% 22% 22% 9% 10% 15% 12% Overseas Advisers: 4% Overseas Clients: 2% 20
Slide 21: Qualified Advisers by Age Band
QUALIFIED ADVISERS BY AGE BAND 31 December 2020 EXISTING ADVISERS NEW ADVISERS 65+ 65+ 3% <35 3% <35 55-65 17% 15% 55-65 18% 21% 35-45 35-45 29% 31% 45-55 45-55 33% 30% 21
Slide 22: Total Number of Qualified Advisers in UK
TOTAL NUMBER OF QUALIFIED ADVISERS IN UK Bank & Building Society Financial Adviser Other 50,000 40,000 RDR 30,000 20,000 10,000 0 Dec 10 Dec 11 Jun 12 Dec 12 Jul 13 Oct 14 Nov 15 Dec 16 Nov 17 Jun 18 Dec 18 Dec 19 Source: Financial Conduct Authority 22
Slide 23: St. James's Place Asia
ST. JAMES’S PLACE ASIA ASIA • Offices in Singapore, Hong Kong and Shanghai • 132 advisers • SJP Funds under management: £1.2 billion, up 26% 31 December 2020 23
Slide 24: St. James's Place Academy
ST. JAMES’S PLACE ACADEMY • 631 advisers have graduated from the Academy • 272 currently in the programme • 41% from financial services background • 74% male/26% female • 57% referred by Partnership • Average age of 34 24
Slide 25: St. James's Place Academy
ST. JAMES’S PLACE ACADEMY • Reopened in January • Virtual Learning, modular approach and using 23 Locations – removed geographical challenges – removed intake size constraints – created flexibility • Expanding to support c400 p.a from 2022 25
Slide 26: Rowan Dartington
ROWAN DARTINGTON • Specialises in Discretionary Fund Management (DFM) and stockbroking services • Growth model – acquiring and retaining client investments • Strong persistency – long-term retention data similar to SJP – 95% • 15 offices, 277 employees, 50 investment executives • Assets under manage
Slide 27: Investment Management
IN VESTMEN T M A N AG E M E N T 27
Slide 28: Our Approach to Investment Management
OUR APPROACH TO INVESTMENT MANAGEMENT ‘INDEPENDENT EXPERTISE’ THE INVESTMENT COMMITTEE Tom Beal Chairman Chris Win Davina Steven John ‘MANAGES THE MANAGERS’ Ralph Robbins Curling Daniels Betteridge Decisions: Appoints the Sets performance Risk management Change firm? fund managers objectives and str
Slide 29: Independent Investment Consultancies
INDEPENDENT INVESTMENT CONSULTANCIES • Analyse and identify Research fund Access to talented managers manager market whole market • Gather intelligence • Data analysis Monitor managers Qualitative and • Monitor activity and Portfolios quantitative • Workplace analysis Recommend: Advise Investment Fo
Slide 30: Global Investment Management Expertise
GLOBAL INVESTMENT MANAGEMENT EXPERTISE 42 funds 39 fund houses 31 exclusive strategies to UK retail investors 78 lead fund managers Red lines indicate fund managers from whom all the strategies we offer are exclusive to St. James’s Place clients in the UK retail space. 30
Slide 31: Growth Portfolios
GROWTH PORTFOLIOS DEFENSIVE PORTFOLIO CONSERVATIVE PORTFOLIO BALANCED PORTFOLIO Lower-Medium Risk Lower-Medium Risk Medium Risk Portfolio asset mix: Portfolio asset mix: Portfolio asset mix: UK Equities 0.8% Property 0% UK Equities 1.6% Property 0% UK Equities 2.8% Property 8.1% International Equiti
Slide 32: Growth Portfolios (Continued)
GROWTH PORTFOLIOS (CONTINUED ) MANAGED FUNDS PORTFOLIO STRATEGIC GROWTH PORTFOLIO ADVENTUROUS PORTFOLIO Medium Risk Medium Risk Upper-Medium Risk Portfolio asset mix: Portfolio asset mix: Portfolio asset mix: UK Equities 9.4% Property 0% UK Equities 4.3% Property 0% UK Equities 5.9% Property 0% Inte
Slide 33: Income Portfolios
INCOME PORTFOLIOS IMMEDIATE INCOME PORTFOLIO BALANCED INCOME PORTFOLIO DEFERRED INCOME PORTFOLIO Lower-Medium Risk Medium Risk Medium Risk Portfolio asset mix: Portfolio asset mix: Portfolio asset mix: UK Equities 2.7% Property 8.1% UK Equities 13.3% Property 12.1% UK Equities 30.5% Property 0% Inte
Slide 34: Funds Under Management by Asset Class, Region and Wrapper
FUNDS UNDER MANAGEMENT: SHOWN BY ASSET CLASS, REGION AND WRAPPER 31 December 2020 Fixed UK Interest 14% 18% Investments Pensions 25% 47% Alternatives 8% Property 2% Asia & Pacific Cash 5% 15% Other Assets 3% European 11% US 24% Unit Trusts, ISAs & DFMs 28% 34
Slide 35: Benefits of Investment Management Approach
BENEFITS OF INVESTMENT MANAGEMENT APPROACH • No in-house managers, so no conflict of interest • Benefit from Investment Committee experience & expertise • Ability to appoint the best fund managers with wholesale purchasing power • Easy to change manager • Clients free to switch funds • Significantly
Slide 36: Our Clients
OUR CLIEN TS 36
Slide 37: Geographic Distribution of Client FUM
GEOGRAPHIC DISTRIBUTION OF CLIENT FUM 31 December 2020 CLIENTS 5% 1% 23% 21% 14% 13% 3% 4% 3% 4% 4% 25% Male 53% 22% 10% Overseas Clients: 3% Female 47% 15% Average age 56 37
Slide 38: Clients by FUM Value Band
CLIENTS BY FUM VALUE BAND 31 December 2020 <£50k 5% £1m+ 22% £50k-£250k 31% £500k-£1m 20% £250k-£500k 22% 38
Slide 39: New and Retained Clients by Age Band
NEW AND RETAINED CLIENTS BY AGE BAND 31 December 2020 EXISTING CLIENTS BY AGE BAND NEW CLIENTS BY AGE BAND <30 70+ 6% 30-40 65-70 7% <30 70+ 6% 5% 18% 23% 60-65 9% 40-50 16% 30-40 14% 65-70 55-60 11% 15% 50-55 13% 60-65 40-50 11% 50-55 55-60 19% 13% 14% 39
Slide 40: Client Wealth Account Survey
C L I E N T W E A LT H AC C OU N T S U RV E Y – 2 0 19 40
Slide 41: Client Wealth Account Survey
CLIENT WEALTH ACCOUNT SURVEY What is your view of the St. James’s Place proposition in terms of value for money? Excellent 34% Good 46% Reasonable 15% Poor 5% St. James’s Place Annual Wealth Account Survey, 2019 41
Slide 42: Client Wealth Account Survey
CLIENT WEALTH ACCOUNT SURVEY Thinking about your overall experience, would you recommend St. James’s Place services to others? Yes, but I have Yes I would, yet to do so and have already 39% done so 55% No 6% St. James’s Place Annual Wealth Account Survey, 2019 42
Slide 43: UK Market for Financial Advice
UK M ARKET FOR F I N A N C I A L A DV I C E 43
Slide 44: UK Aggregate Wealth
UK AGGREGATE WEALTH 30% 27% £50k to £5m of investable wealth 25% 24% 23% • 11.5 million individuals 20% with £2.4 trillion investable wealth 15% • Projected to grow to 10% 10% 13.2 million individuals 10% with £2.7 trillion investable wealth 5% by 2023 3% 3% 0% • Excluding property and 0 occupationa
Slide 45: Factors Driving Demand for Advice
FACTORS DRIVING DEMAND FOR ADVICE • Intergenerational wealth transfer • The complexity of personal taxation • The decline of defined benefit pension schemes • The flexibilities and complexities afforded to individuals via ‘pension freedom’ • The scale and projected growth of the UK savings gap Altho
Slide 46: Projected Growth in Retirement Income Assets
PROJECTED GROWTH IN RETIREMENT INCOME ASSETS (£BN) 600 400 300 15% 35 200 15 225 210 0% 121 0 2005 2010 2015E 2020E 2025E 2030E Individual Annuities Income Drawdown/Alternative products • In 2015, there were circa 12 million people of retirement age in the UK • By 2030, this figure will be nearly 14
Slide 47: Demonstrating Value – Behavioural Assurance
DEMONSTRATING VALUE – BEHAVIOURAL ASSURANCE Recent FT article – ‘Time in’ the market KEEP CALM AND STAY INVESTED The cost of dipping in and out of the market Trying to be too clever costs money FTSE All-Share returns over the past 20 years (%) • ‘If you had been out of the 300 FTSE All-Share index f
Slide 48: The Value of Advice
THE VALUE OF ADVICE Value of advice Trusted personal Investment Client net including personal tax optimisation relationship returns outcomes ...so much more than just an investment return 48
Slide 49: £2.8 Trillion of Wealth Available for Transfer
£2.8 TRILLION OF WEALTH AVAILABLE FOR TRANSFER OVER THE NEXT 30 YEARS £6.6 TRILLION Total wealth Wealth consumed on £4.2 TRILLION lifetime spending Calculations for total wealth available for transfer over the next Additional wealth spent on £0.2 TRILLION 30 years from united long-term care kingdom
Slide 50: The SJP Opportunity
THE SJP OPPORTUNITY • ISAs – Cash £272 bn (April 2020 – HMRC) – Stocks & shares £316.3 bn (April 2020 – HMRC) • Bank and Building Society deposits £1,556 bn (February 2020 – Building Societies Association) • National Savings and Investment £208 bn (February 2020 – Building Societies Association) (NS
Slide 51: Part Two – Financials & Other
PA R T T W O – FINA NCIALS & OTHER 51
Slide 52: 2020 – Full Year Financial Summary
2020 – FULL YEAR FINANCIAL SUMMARY • EEV new business profit of £766.3 million • EEV operating profit of £919.0 million • Underlying cash result of £264.7 million • Final and full year dividend of 38.49 pence per share • Underlying cash earnings per share 49.6 pence 52
Slide 53: Cash & Dividend Profile
CASH & DIVIDE N D PROF I L E 53
Slide 54: Underlying Post-Tax Cash Result
UNDERLYING POST-TAX CASH RESULT 350 300 309.0 -3% 281.2 273.1 250 264.7 200 £ million 199.5 182.1 150 173.8 139.9 100 84.0 50 63.4 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 54
Slide 55: Estimated Return on Funds in Gestation
ESTIMATED RETURN ON FUNDS IN GESTATION Year Maturing Additional Cumulative annual Invested annual post-tax contribution to post-tax cash (£m) cash result (£m) 2015 2021 38.9 38.9 2016 2022 47.4 86.3 2017 2023 62.5 148.8 2018 2024 77.3 226.1 2019 2025 71.9 298.0 2020 2026 onwards 68.9 366.9 Value of
Slide 56: Gestation FUM – Underpinning Future Returns
GESTATION FUM – UNDERPINNING FUTURE RETURNS Contribution to the Cash result from maturing FUM – £ million £400m • FUM in gestation provides £350m visibility around growth in net income from FUM £300m • By 2026, the annual contribution £250m to the post-tax cash result of FUM currently in gestation £
Slide 57: Dividends Over Time
DIVIDENDS OVER TIME +3%* 50 +12.5% rs ea 0y 45 t1 +30% las he 40 rt -22% ve t ho 38.49p w ro dg 35 +18% un po m 30 . co +20% p.a % Pence 25 27 +46% 20 +50% 15 +33% 10 +33% +33% 5 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 *Includes amount of 11.22p per share that was withheld by the Bo
Slide 58: Conclusion & Outlook
CONCLUSION & OUTLOOK • The advice market is big • Established and well-respected brand/business • Favourable demographics • Experienced and stable management team • The tax burden is increasing • Experienced and stable advisory team – • Move from state to individual ‘The Partnership’ responsibility
Slide 59: Our Shareholders
OUR SHA R EHOLDER S 59
Slide 60: Our Shareholders
OUR SHAREHOLDERS Balance 1 BlackRock (Index) 5.95% 13% 2 BLS Capital 5.76% UK 54% 3 M&G 5.45% 4 Vanguard Group 4.01% Europe 14% 5 Baillie Gifford 3.67% 6 Ninety One 3.57% 7 Aviva Investors (UK) 3.50% 8 RBC Global Asset Management 3.25% North 9 Allianz Global Investors 3.10% America 19% 10 Legal & Ge
Slide 61: Analyst Following
A N A LY S T F O L L OW I N G 61
Slide 62: Analyst Following
ANALYST FOLLOWING • Trevor Moss Agency Partners • Ashik Musaddi JP Morgan Cazenove • Andrew Crean Autonomous • Charlie Beeching KBW • Thomas Howarth Barclays Capital • Fahad Changazi Mediobanca • Andrew Sinclair BoA Merrill Lynch • Jon Hocking Morgan Stanley • Andrew Baker Citi • David McCann Numis
Slide 63: Investor Relations Contacts
INVESTOR RELATIONS CONTACTS If you have a query or require more information, please get in touch with one of the contacts below: Craig Gentle Tony Dunk Hugh Taylor Chief Financial Officer Director, Investor Relations Director, Investor Relations Telephone: 0207 514 1963 Telephone: 0207 514 1963 Tele
Slide 64: March 2021
MA RC H 2 021 64 SJP6001 Q4 (03/21)
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