Managing Risk for Profit

1. Managing Risk for Profit Graham Taylor Key Account Director

2. RDR PREPARATION OPERATING MODEL BRAND CLIENT PROPOSITION VALUE

3. 10,000 20,000 30,000 V40 £ £ £ V50 £ £ £ V70 £ £ £ OPERATING MODEL • Expectation set with manual • Additional pricing for additional work • Complex work can be outsourced

4. CLIENT NEED ONE & DONE ? ? ROLLS ROYCE COMM COMM/FEE FEE/COMM FEE THE CASE FOR SEGMENTING ADVICE CLIENT COMPLEXITY SOLUTION MULTI ASSET MODEL PORTFOLIO GUIDED ARCHITECTURE OPEN ARCHITECTURE ADVISER INCOME • A clear explanation of services and charges • Ability to move up and down the scale to suit

5. CLIENT NEED ONE & DONE ? ? ROLLS ROYCE COMM COMM/FEE FEE/COMM FEE DELIVERY RISK CLIENT COMPLEXITY SOLUTION MULTI ASSET MODEL PORTFOLIO GUIDED ARCHITECTURE OPEN ARCHITECTURE ADVISER INCOME • Are you managing resource within the business? • Are you offering too much for the basic price? • Resource management impacts TCF and Profit

6. CLIENT NEED ONE & DONE ? ? ROLLS ROYCE PRODUCT CHARGE PRODUCT CHARGE OR FEE FEE OR PRODUCT CHARGE FEE MARGIN RISK POST-RDR CLIENT COMPLEXITY SOLUTION MULTI ASSET MODEL PORTFOLIO GUIDED ARCHITECTURE OPEN ARCHITECTURE 3% + 1%? 3% + 0.5%? ADVISER INCOME • Net profit is the key point • Wrong client in wrong proposition = potential loss • How robust is your charging proposition in current markets?

7. RISK MANAGED PORTFOLIOS • Generic Description • The asset mix of each portfolio is actively managed to stay within the relevant risk “corridors” • Monitored to ensure that they continue to meet their objectives • Adviser manages outputs and monitors client Attitude to Risk Initial portfolio matched to client Attitude to Risk RISK LEVEL Specific details of Pru Dynamic Portfolios: www.pruadviser.co.uk FOR ADVISER USE ONLY – NOT APPROVED FOR USE WITH CLIENTS

8. ISA OEIC/UT BOND WRAPPER DIVERSIFICATION TAX EFFICIENT INCOME & GROWTH LIFE FUND TAXATION TAX DEFERRED INCOME CGT ALLOWANCES TOP SLICING OF GAINS AGE ALLOWANCE TAXATION OF INCOME WRAPPER MANAGEMENT UNIQUE FUNDS CAPITAL GUARANTEES ONSHORE V OFFSHORE

9. ISA Platform OEIC/UT BOND Packaged Product Back Office System INTEGRATION

10. PORTFOLIO MANAGEMENT GROUP Active Fund Management Independent decision-making Active asset allocation Portfolio Management Group PMG believe that investment success should be built on clear philosophy, demonstrable processes and a team based approach. They believe that this will not only deliver superior returns, but also provide greater continuity and dependability* * Source: www.pruadviser.co.uk/content/acrobat/INVP11431.PDF

11. OBSR AND THE DYNAMIC PORTFOLIOS • PMG • Interpret output from various analytical teams • Target a long term investment strategy • Daily asset allocation monitoring and control • Regular communication with OBSR on portfolio holdings • OBSR • Funds recommended by OBSR are rated and reviewed based on factors such as: - market capitalisation - style bias - each funds’ risk and return objectives - risk characteristics of the portfolio involved - how fund manager investment approaches would blend together • PMG • Invest in the funds selected and recommended to them by OBSR

12. ONGOING SUPPORT

13. ISA OEIC/UT BOND THE OVERALL PICTURE • The same Dynamic Portfolio funds available to all three wrappers- paper or platform- efficient proposition to some clients • Capital Guarantee available through bond wrapper- with or without other funds- e-commerce links to back office and/or platform • Ability to support your proposition as you define it to the client of the future FOR ADVISER USE ONLY – NOT APPROVED FOR USE WITH CLIENTS

14. NEXT STEPS • Support to your transition in 2012 • Aligned to Sesame Bankhall developments • Follow-up from your local contact FOR ADVISER USE ONLY – NOT APPROVED FOR USE WITH CLIENTS

15. FINALLY This presentation may contain certain “forward-looking statements” with respect to certain of Prudential'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 uncertainty because they relate to future events and circumstances which are beyond Prudential's control including among other things, UK domestic and global economic and business conditions, market related risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities, the impact of competition, inflation, deflation, the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation and other regulations in the jurisdictions in which Prudential and its affiliates operate. As a result, Prudential's actual future financial condition, performance and results may differ materially from the plans, goals, and expectations set forth in Prudential's forward-looking statements. "Prudential" is a trading name of The Prudential Assurance Company Limited, which is registered in England and Wales. This name is also used by other companies within the Prudential Group, which between them provide a range of financial products including life assurance, pensions, savings and investment products. Registered Office at Laurence Pountney Hill, London EC4R 0HH. Registered number 15454. Authorised and regulated by the Financial Services Authority. FOR ADVISER USE ONLY – NOT APPROVED FOR USE WITH CLIENTS