T. Rowe Price Group, Inc. · NASDAQ:TROW
T. Rowe Price — Investor Day (February 2018)
69 slides from T. Rowe Price's investor day presentation, Feb 21, 2018
Slide 1: T. Rowe Price Investor Day
T. ROWE PRICE Investor Day | February 21, 2018
Slide 2: Investor Relations and Agenda
TROW Investor Day February 21, 2018 New York, New York INVESTOR RELATIONS Céline Dufétel Teresa Whitaker Chief Financial Officer Head of Investor Relations Celine_Dufetel@troweprice.com Teresa_Whitaker@troweprice.com 1 (410) 345-2008 1 (410) 345-6586 AGENDA Time Agenda 1:30 p.m.–2:00 p.m. Registrati
Slide 3: Speakers
SPEAKERS SCOTT B. DAVID Head of Individual & Retirement Plan Services Scott David is the head of Individual & Retirement Plan Services (IRPS) at T. Rowe Price. He is also a member of the firm’s Management Committee. Prior to his current role, Mr. David led the U.S. intermediary business for the firm
Slide 4: Speakers
SPEAKERS ROB SHARPS, CFA Group CIO and Head of Investments Rob Sharps is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. He is head of Investments and group chief investment officer. Mr. Sharps serves on the firm’s Management Committee, International Steering Commit
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Slide 6: T. Rowe Price Investor Day
T. Rowe Price Investor Day • February 21, 2018 1
Slide 7: Important Information
Important Information This material, including any statements, information, data and content contained within it and any materials, information, images, links, graphics or recording provided in conjunction with this material are being furnished by T. Rowe Price for general informational purposes onl
Slide 8: T. Rowe Price Investor Day • February 21, 2018
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Slide 9: We are pleased that we have been able to deliver strong and consistent results
We are pleased that we have been able to deliver strong and consistent results over a long time period. All figures through December 31, 2017. T. Rowe Price Investor Day • February 21, 2018 4
Slide 10: Our vision, as presented at our 2017 Investor Day, largely remains the same
Our vision, as presented at our 2017 Investor Day, largely remains the same. Maintain our position as a premier active asset manager, delivering durable value to clients. Become an ever more integrated investment solutions provider, leveraging firmwide investment capabilities to meet changing cl
Slide 11: We are investing in:
We are investing in: products and investment strategies that drive alpha. ways to help us find and better serve clients. technology and transformation to improve client experiences and drive operating efficiency. T. Rowe Price Investor Day • February 21, 2018 6
Slide 12: We feel good about our execution in 2017
We feel good about our execution in 2017. Delivered strong investment performance across our active strategies. Achieved solid, well-diversified organic growth. Outpaced industry growth across most of our core businesses. Executed strategic priorities to extend beyond our core businesses, wi
Slide 13: Investment performance is critical to our success
Investment performance is critical to our success. In 2017, we continued to deliver strong results for our clients in our U.S. mutual funds—relative to peers and to benchmarks. Results for our institutionally oriented portfolios are substantially similar to those for our funds. Source for Mornin
Slide 14: Strong investment performance, combined with growing distribution reach
Strong investment performance, combined with a growing distribution reach, helped us to extend our leadership positions in a number of core businesses, and further diversify our business by asset class and geography. T. Rowe Price Investor Day • February 21, 2018 9
Slide 15: We extended our leadership position across our core businesses
We extended our leadership position across our core businesses and into new growth segments. T. Rowe Price’s flows are shown in blue, and the active mutual fund industry flows—re-weighted to T. Rowe Price’s asset mix between equity and fixed income—are shown in grey. The light blue line shows that o
Slide 16: The diversity of our AUM helps sustain a strong core business
The diversity of our AUM helps sustain a strong core business; however, we know that future growth will depend not only on maintaining the core of our past success but also expanding into new opportunities for revenue growth. T. Rowe Price Investor Day • February 21, 2018 11
Slide 17: We executed on a number of priorities to extend beyond our core
We executed on a number of priorities to extend beyond our core, with some early and encouraging signs of success. T. Rowe Price Investor Day • February 21, 2018 12
Slide 18: We made a significant number of hires in 2017
We made a significant number of hires in 2017—especially across our multi-asset class investment teams, U.S. and international distribution teams, and technology—three areas at the center of our strategic priorities. T. Rowe Price Investor Day • February 21, 2018 13
Slide 19: We see multiple points of pressure for the business in 2018 and beyond
We see multiple points of pressure for the business in 2018 and beyond, and we are proactively addressing them: We will continue to approach pricing from a strategic and long-term perspective. We have worked to extend our available investment strategies in multiple vehicle types where we continu
Slide 20: We have a focused plan to grow and diversify our business
We have a focused plan to grow and diversify our business over time while driving efficiency throughout the organization. T. Rowe Price Investor Day • February 21, 2018 15
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Slide 22: T. Rowe Price Investor Day
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Slide 23: Investment performance is our top priority
Investment performance is our top priority. T. Rowe Price has demonstrated truly unique investment excellence versus peers and benchmarks: Over long-term time horizons Across asset classes Around the globe Our outperformance is enabled by our investments in people, process, and culture and our
Slide 24: Delivering net-of-fee returns that exceed market benchmarks
With investors focusing on passive, we understand the importance of delivering net-of-fee returns that exceed market benchmarks. In a T. Rowe Price study of 18 diversified active U.S. equity mutual funds over 20 years, or since inception for newer funds: The majority of funds generated positive ex
Slide 25: Active approach in our target date portfolios
T. Rowe Price uses an active approach in our target date portfolios that includes tactical asset allocation, strategic portfolio design, and active security selection. A T. Rowe Price study of 11 Retirement Funds that has at least a 10-year track record found that these portfolios outperformed their
Slide 26: We have purposefully built our global investment team over time
We have purposefully built our global investment team over time. While we continue to invest in talent, we do so through a long-term lens and have maintained our high standards. This puts us in the position to be able to offer a suite of investment strategies to investors around the globe in vehicle
Slide 27: Our global investment platform delivers a broad range of capabilities
Our global investment platform puts us in position to deliver a broad range of investment capabilities in vehicles that best meet client demand. T. Rowe Price Investor Day • February 21, 2018 21
Slide 28: Investment strategies that are performing well and have potential to scale
We have developed and launched a number of investment strategies that are performing well and have potential to scale. Last year, we highlighted the Global Focused Growth Strategy, which continued to deliver excellent returns in 2017 and has had inflows of over $1.5 billion over the last two years
Slide 29: A long runway of opportunity with additional strategies
We have a long runway of opportunity with additional strategies and capabilities that are building track records. T. Rowe Price Investor Day • February 21, 2018 23
Slide 30: Global product offerings expanded to meet client needs
Our global product offerings are being expanded to meet the unique needs of our clients and the broader marketplace. We are committed to bringing our best investment thinking forward and to making changes in the investment lineup. We have significantly expanded our multi-asset research team, inc
Slide 31: Sustaining investment excellence at scale
Sustaining investment excellence at scale. We have deepened our global leadership team over the past several years, including the formation of our CIO group who help promote investment thought leadership across our global platform. We actively manage the capacity of our key strategies to perform at
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Slide 33: T. Rowe Price Investor Day
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Slide 34: T. Rowe Price Investor Day
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Slide 35: Global distribution footprint: built with discipline over 25 years
T. Rowe Price’s global distribution footprint: Built with discipline over 25 years. Unique institutional approach to both global institutional and intermediary distribution. Long-term track record of above-market active management asset growth. Well aligned to capture the growth in fiduciary m
Slide 36: Delivering solid, diversified results
Delivering solid, diversified results. Strong positive active management net flows across all major asset classes. Active equity turned positive, with U.S. equity mitigated by strong global equity net flows. Net flows by channel in line with AUM base, acceleration diversified across client seg
Slide 37: Well positioned to execute against areas of market demand
We are well positioned to execute against areas of market demand and future growth. Leading market share in U.S. intermediary market segments, U.S. platform No Transaction Fee (NTF) momentum. Retirement leader across intermediary and institutional channels in the U.S. Leveraging scale and lead
Slide 38: Strategic importance of vehicle and coverage expansion strategies
Strategic importance of vehicle and coverage expansion strategies. Critical to be global, deliver and execute local. Key requirement to balance and diversify our global distribution net flows. Ensures our ability to remain a preferred partner with our key global financial institutions clients.
Slide 39: We believe that winners will...
We believe that winners will: Balance cost of sales and create distribution “operating leverage.” Have leading professional buyer coverage strength, depth, and preferred placement. Foster a fiduciary culture. Intelligently deploy intermediary and financial advisor coverage models. Deliver
Slide 40: Extending our core global distribution franchises
Extending our core global distribution franchises. Commercializing our multi-asset franchise and retirement market leadership. – Custom target date mandates with Korea and leading U.S. insurers. – Custom managed volatility mandates with leading subadvisory partners. – Expanding regional multi-asse
Slide 41: Our execution priorities
Our execution priorities. Extend Core Market Leadership Positions. – Continue market-leading institutional engagement distribution approach. – Deliver commercial multi-asset solutions and insights. – Optimize our U.S. platform relationships so that we are “frictionless” to do business with. – Depl
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Slide 45: Our Individual Investors business and Retirement Plan Services
Our Individual Investors business directly connects our investment capabilities to clients: We help individuals meet their retirement, college savings, and taxable savings needs, serving them through web, mobile, mail, and phone channels. Retirement Plan Services serves the full spectrum of client
Slide 46: Strong performance and quality service drive stable business results
We believe that delivering strong investment performance paired with innovative offerings and quality service, over long periods of time, drives stable and consistent business results. Net Promoter Score (NPS) We believe that NPS is one of several ways to gauge customer satisfaction and loyalty. I
Slide 47: Individual Investors and Retirement Plan Services offerings
Individual Investors Offering additional products and services to enhance the relationship we have with our clients. – Deployed a 50+ person relationship management team across the country to clients with assets of $1M+. – Expanding our product capabilities, including the official launch of T. Row
Slide 48: Combining technology with design to enhance client experience
Combining technology with design to enhance client experience, increase sales and client retention, and realize operating scale. Deploy Lean Management practices Reengineer client journeys Rapidly deploy modern technology Work on our transformation has begun to deliver positive results for our
Slide 49: Transforming the broader ecosystem and ways of working with clients
We are in the process of transforming the broader ecosystem and shifting toward new ways of working with clients. Our intended business results include: Continue to deliver steady business results through sustained client satisfaction and loyalty. Continue to make targeted investments following
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Slide 52: Strong business results allowed us to maintain strong financial health
Strong business results, combined with rising markets, allowed us to maintain strong financial health in 2017, positioning us well going into 2018. Our business model and financial health remain very strong, as reflected in our operating margins and ability to generate strong free cash flow. Our
Slide 53: Sustainable, profitable, diversified organic growth remains a priority
Sustainable, profitable, and diversified organic growth remains an important priority for us. We continue to direct investments into our investment capabilities, new vehicles and products, distribution capabilities, and client experience. Going into 2018, we feel good about continued client dema
Slide 54: 2017 was a year of strong investment in the business
2017 was a year of strong investment in the business. The 2018 non-GAAP operating expense growth guidance is driven by higher market and performance driven expenses, continued regulatory driven expenses and continued implementation of our strategic plan in light of tax reform, strong markets and e
Slide 55: Cost optimization efforts based on three large-scale programs
Our cost optimization efforts are based on three large-scale programs—all designed to drive operational effectiveness. Efforts are already underway and will continue into 2019. We expect to use the results of these optimization initiatives to continue to reinvest in the business. We are focuse
Slide 56: Potential uses of U.S. tax reform benefits
Potential uses of U.S. tax reform benefits are already contemplated in our expense growth guidance. Factors that impact our effective tax rate could include: The level of tax benefits recognized from stock based compensation that are affected by market fluctuations in our stock price and the timin
Slide 57: Returning capital to stockholders while reinvesting in the business
We have been returning capital to stockholders consistently, while also reinvesting in our business for the long term. T. Rowe Price Investor Day • February 21, 2018 48
Slide 58: Our capital management approach remains consistent over time
Our capital management approach remains consistent over time. We expect to continue to: Reinvest in the business for diversified growth and operational leverage. Maintain our strong track record of dividend growth. Remain opportunistic in our share repurchase program but with a long-term goal
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Slide 69: Invest with Confidence
INVEST WITH CONFIDENCE® C3K2HOFNN