David Lamb St. James’s Place

1. David LambSt. James’s Place 8 December 2010

2. How we see the RDR opportunity benefiting St. James’s Place

3. Agenda • Introduction to St. James’s Place – a truly integrated wealth management business • How we see RDR playing out in our space and in the wider market • St. James’s Place post RDR • Questions?

4. St. James’s Place: overview • Leading UK Wealth Management Company • Established 1991 • UK listed with market cap of c.£1.3bn • Over 200,000 clients and £24.8bn in FUM • Differentiated business model • Own dedicated distribution - the Partnership • Distinct investment management approach • Manufacturer and distributor • Well positioned to benefit from long-term market growth • Favourable demographic trends • Increasing tax burden (on individuals)

5. Our Client Proposition • We provide financial advice to mass affluent /high net worth investors • How do we differ from others? • Emphasis on long-term relationship-based approach • Provision of face-to-face advice • Not just a fund platform • Both manufacturer AND distributor of investment products • Outsource investment management

6. Our products and services Comprehensive range • of Pension, Investment and Savings ‘wrappers’ Our focus • is on our own products and funds • but we also distribute non-core products of others Whilst avoiding • capital intensive products • guarantees and options • overly complex, fashionable or high risk structures

7. St. James’s Place is (or will be) Whole of market in: • Protection (Term and Whole Life) • Annuities • Mortgage lending • Employee Benefits Whilst selecting our investment managers from the whole market (not restricted to the UK)

8. The SJP model - Two USPs • Dedicated distribution • The Partnership • Investment Management • Products manufactured in-house • Investment management outsourced

9. Dedicated Distribution – the Partnership • High quality self-employed team of c.1500 advisors • Average experience 17 years • High productivity • 90%+ per annum retention rate • Previous backgrounds • IFA • Bank • ML, Goldman Sachs

10. The Growth Model Target 15 – 20% pa New Business CAPACITY No of Partners PRODUCTIVITY New Business Per Partner

11. +3% +9% +7% +8% +5% Number of Partners 30 June Growing Number of Partners 7

12. 20% 15% Compound APE Growth – rolling five years Growth 25.5% 22.7% 18.8% 17.4% 17.4 Jul 02 - Jun 07 Jul 03 - Jun 08 Jul 04 - Jun 09 Jul 05 - Jun 10

13. Funds under management 18%p.a. compound growth over the last 5 years and 17%p.a. over 10 years +5% +31% +18% -10% +25% Funds £’bn +29% +20% +34% +11% -6% (30 June)

14. Benefits of our own distribution • New business and expenses are more predictable • Spread of production • Less exposed to market pressures • Greater control over quality of new business • Ability to build and maintain distribution led culture • Better retention of business • Ability to build stronger client advocacy

15. Investment Management

16. Our approach to investment management Input / advice from Stamford Associates Investment Committee 'Manages the Managers' Decisions: Appoint the Fund Managers Sets Performance Risk Management & Strategy Change Firm? Objectives Change Manager? Aim for Top 25% No Change?

17. Stamford AssociatesIndependent Investment Consultancy Research Fund Monitor Managers Advise Investment Manager Market and Portfolios Committee Access to Whole Market Qualitative & Quantitative Focus on Future Outperformance • Analyse & Identify • Number Crunching Recommend: Talented Managers • Potential changes • Monitor Activity • Gather Intelligence • New Managers • Behavioural Psychology • Workplace Analysis

18. The Investment Committee Sir Mark Weinberg Sarah Bates Michael Sorkin Vivian Bazalgette Peter Dunscombe David Lamb Andrew Humphries Chris Ralph Andrew Croft

19. Evolving our fund range 2008 launches and managers Alternative Asset Fund - BlackRock High Octane Fund - Oldfield/Thornburg Cash Unit Trust - State Street 2009 launches and managers Corporate Bond Fund - Invesco Perpetual Gilt Unit Trust - Wellington Income Unit Trust - Axa Framlington New managers - Burgundy/Liberty Square/JO Hambro 2010 launches and managers Global Emerging Markets - First State International Corporate Bond - Babson Capital UK Absolute Return - BlackRock UK & International Income - Artemis Global Managed Fund - Artisan Global Unit Trust Fund - Artisan UK Equity Income UT - RWC

20. Our fund managers

21. Relative investment performanceFunds under management – rolling 5 years 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile

22. 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 • Continuous monitoring plus quarterly reviews • Easy to change manager – reduced churn • Free switching for clients • Significantly improved retention of funds

23. How do we see RDR playing out in our space and in the wider market?

24. Retail Distribution Review • Professional standards • Status disclosure • Adviser remuneration

25. RDR – What do the FSA want to achieve? • Raise the standards of all advisers • Clear disclosure of adviser status • Removal of product and provider bias (influencing the adviser) • Information on cost of advice to explain advice isn’t free and to show how the cost of advice relates to the cost of the product • Any ongoing adviser charges to be supported with ongoing service

26. Status Disclosure • Broader market test for Independence • If not Independent, then Restricted

27. What is Independent? • Whole of market • All retail investments, including Investment Trusts, passive funds (ETFs) • National Savings • Structured Products • etc

28. Adviser Charging • Remove provider bias – prevent product providers from paying commission • Remove product bias – required tied offices to remove product bias

29. Adviser Charging • Adviser remuneration agreed between IFA and client • Can take many different forms • Must be clear • Cannot be influenced by product providers • Can by paid by cheque • Or ‘bundled’ with product charges, but no factoring

30. Life after RDR - Distribution • Fewer advisers, but better qualified • Continued demand for advice (for those who can pay) • Client/Adviser relationship key • Fewer Independent Advisers, some become Restricted Advisers … access to distribution will be important

31. Small firms with less than five sales staff dominates the UK IFA market Source: Datamonitor, Matrix-data

32. Turnover of IFA Firms (2009) Source: Data Monitor

33. Life after RDR – Asset Managers • Greater competition for distribution • Brand important • Price will matter • But margins intact? Price Pressure? • Rebates may disappear? • Further consolidation?

34. Life after RDR – Insurers • Greater competition for distribution • Can no longer buy business • Brand important • Factory Gate Pricing • margins intact (?) but much more visible? • More consolidation in the industry • Product commoditisation

35. Life after RDR - Platforms • Major route to market • Inevitable consolidation among Platform providers • Transparency and unbundling will impact margins – today fund charges can vary by 80% between platforms (Citywire 26 April 2010) • Restrictions likely on some of the current payments (unbundling)

36. Life after RDR - Clients • Better quality advisers (?) – but fewer advisers • Less transparency on total costs • Cost of advice may increase • Cost of product may reduce • Impact of tax on advice costs (VAT, Pensions Relief)

37. What about SJP?

38. “… but opportunities to capitalise on market disruption – especially vertically integrated companies and companies with the right types of tied model.” Towers Watson. April 2010