Lawrence Emm Business Change Specialist

1. For financial advisers only MOVING BEYOND THE PRICE FORMULAHow to ensure you are fully remunerated by your clients for your value and worth Lawrence EmmBusiness Change Specialist

2. TODAY’S AGENDA • Review of last session • Establishing price • Value and worth • Positioning value and worth with clients • Next session

3. For financial advisers only THE COMPLETE PICTURE CLIENT NEEDS PROPOSITION SERVICE CONTENT PRICING PROCESSANDIT PEOPLE CAPABILITY ARTICULATING VALUE, WORTH AND EXPERTISE CLEARLY

4. For financial advisers only ADVICE AND SERVICE PROPOSITIONS Financial Wealth Management ”We provide financial consultancy for business and private clients with complex affairs – we will work with other professionals to create and manage a comprehensive and evolving strategy on a bespoke basis” Financial Planning “We provide straightforward financial advice to make sure you have the right advice and product solutions for your immediate and future needs” Financial Advice “We will arrange to transact particular financial products at your request”

5. For financial advisers only A CHOICE OF SERVICE PACKAGES

6. FROM CONCEPT TO PRICE

7. For financial advisers only THE CLIENT EXPERIENCE

8. PRICING • Keep it simple – will clients understand it? • Provide clients with clarity • Apply your pricing consistently – use exception reports for MI • Highlight client benefits – WIIFM • Consider case study scenarios to highlight expertise Clients want clarity on price and everything else

9. For financial advisers only TIME, EFFORT, EXPERTISE AND EXPENSE Engage Meet and Gain Commitment Recommend and Implement Review and Retain 1 hr 8.5 hrs 9 hrs 13 hrs

10. For financial advisers only TIME, EFFORT, EXPERTISE AND EXPENSE Engage Meet and Gain Commitment Recommend and Implement Review and Retain 1 hr 8.5 hrs 9 hrs 13 hrs £125 £850 £650 £1100

11. For financial advisers only PRICE NEEDS TO BE BASED ON PROFITABILITY

12. For financial advisers only … WHICH SHOULD INCLUDES ONGOING SERVICES

13. For financial advisers only ASSESSING BUSINESS CAPACITY AND CAPABILITY The business currently has in the region of 3000 clients accrued over the last 22 years. There are 2 Principals, 1 Adviser and 2 full time support staff. We will assume that all staff operate at 75% effectiveness and that the Principals spend an additional 25% of available time undertaking other responsibilities within the business such as compliance, strategy and planning, performance management and business development. Similarly, we will assume there are 220 working days and that staff work 7 hours during each working week.

14. For financial advisers only ASSESSING BUSINESS CAPACITY AND CAPABILITY

15. For financial advisers only EXAMPLE CHARGING SCALE – TIERED APPROACH £ INVESTMENTAMOUNT INITIAL CHARGES £min or % ANNUAL SERVICE CHARGE £min or % 0 – 99,999 3% - Min £1000 1% - Min £750 100,000 – 249,999 2% 0.8% 250, 000 – 499,999 1.37% 0.75% 500,000 – 999,999 1% 0.5% 1 mn + 0.85% 0.375%

16. For financial advisers only LIKELY REMUNERATION MODELS Example C: project fees and % - unbundled Example A % of monies invested – bundled Example B: hourly rates Engagement £ fee Understanding X% of fund (tiered) Analysis £/hour £ fee Presentation £ fee Implementation % of fund % of fund or fee Ongoing Reviews £/hour Adapted from Business of Advice

17. For financial advisers only

18. ESTABLISHING VALUE AND WORTH

19. WHY GOING BEYOND PRICE COST IS IMPORTANT

20. For financial advisers only THE CLIENT’S PERSPECTIVE “Price is what you pay, value is what you get … … and the value of anything is the difference it makes”

21. CLIENT PERCEPTIONS AND ISSUES • I thought advice was free • The bank doesn’t charge me • Would I be better doing it myself online? • What sort of discount will you offer me? • I want to compare and shop around • How do I know you will deliver what you promise?

22. CLIENT RESEARCH • J P Morgan, Ernst and Young, Legal and General • Mixed responses • L&G highlighted £150 v £67 Clients want clarity on price and everything else

23. CLIENT RESEARCH Two essentials clients will pay for … • A clear financial plan – route map • Face to face meetings with advisers who focus on client

24. PRICING • Keep it simple – will clients understand it? • Provide clients with clarity • Apply your pricing consistently – use exception reports for MI • Highlight client benefits – WIIFM • Consider case study scenarios to highlight expertise Clients want clarity on price and everything else

25. For financial advisers only THE RIGHT TOOLS FOR THE JOB

26. For financial advisers only A DISTINCT CLIENT ENGAGEMENT PROCESS

27. For financial advisers only THE LANGUAGE OF VALUE AND WORTH OLD WORLD FREE NO OBLIGATION SALES COMMISSION ADMINISTRATION SUPPORT STAFF “EASY 5 MINUTE JOB” UNSTRUCTURED SERVICING

28. For financial advisers only THE LANGUAGE OF VALUE AND WORTH OLD WORLD FREE NO OBLIGATION SALES COMMISSION ADMINISTRATION SUPPORT STAFF “EASY 5 MINUTE JOB” UNSTRUCTURED SERVICING NEW WORLD “AT OUR EXPENSE” COMMITMENT ADVICE FEE – SERVICE CHARGE CLIENT MANAGER - EXECUTIVE “USING OUR COMPREHENSIVE AND SPECIALIST TOOLS AND EXPERTISE WE WILL SORT THIS OUT FOR YOU” ROUTINE AND AGREED CONTACT

29. For financial advisers only HOW DO WE WANT TO BE SEEN BY CLIENTS GOLD FINANCIAL CONSULTANTS What do we do? Expert financial and tax planning to enable the long term management of investments through a detailed plan that is regularly reviewed Who do we do it for? Private clients with over £500k How do we do it? Working with other professional advisers from a consultancy perspective to use our in-house technical skills and expert software to pro-actively manage clients’ affairs Where do we do it? In traditional style offices in the “professional quarter” BRONZE INSURANCE ADVISERS What do we do? Streamlined advice in one meeting to make sure people have the right policies for their needs Who do we do it for? Families and working people between the ages of 30 and 50 How do we do it? Straight forward fact find and product/fund selection software – automated reports and other documents Where do we do it? In our high street “shop-front” office or in people’s homes

30. For financial advisers only We will show you what is required to make it work for you We will support our advice by agreed service levels to keep in touch We will ensure we understand what each of our clients want We will explain our approach to planning, research and analysis We will always explain to you the choices and options you have We will help you to think about what is important - what you want to achieve, fix or avoid We will do the complex research necessary to ensure that you get the best advice – suited to your personal circumstances – we will draw up a plan to make everything crystal clear and logical We will explain all the choices of levels of advice and service available and help you make the right decision We will do what you have asked us to do and meet as often as you have agreed and provide other ways of keeping in touch to keep you and your plan up to date We will only act on your instructions and do what is right for you – we will ensure you have a choice of levels of service and a range of ways to remunerate us for our expertise and work undertaken on your behalf CERTAINTY so that you can sleep at night CHOICEFlexible options CLARITY A succinct picture of where you stand CLEARroute to follow

31. For financial advisers only THE CRITICAL POINT • The initial engagement meeting will become the most important opportunity to establish: • Value and worth • Clear expectations • Gain client commitment

32. For financial advisers only SELLING THE SIZZLE

33. For financial advisers only SELLING THE SIZZLE

34. For financial advisers only SELLING THE SIZZLE

35. For financial advisers only UNBUNDLING THE CLIENT EXPERIENCE • Information gathering • Present and negotiate client propositions • Agree basis for working together • INITIAL 30/40 Minutes “AT OUR EXPENSE” Client Engagement Stage 1 • Information gathering – Risk Analysis etc., • Analysis and Product research • Lifestyle analysis and report • FIXED OR MINIMUM FEE OR HOURLY RATE Strategy and Planning Stage 2 • Present recommendations • Agree asset allocation • Applications - Reasons why • FIXED OR MINIMUM FEE Implementation Stage 3 • Update Lifestyle analysis • Recommend change (or no action) • FIXED OR MINIMUM FEE OR HOURLY RATE Service Stage 4

36. For financial advisers only A CLIENT SERVICE AGREEMENT - EXAMPLE

37. For financial advisers only CLIENT SERVICES MENU - EXAMPLE

38. SUMMARY • Price is important – but value and worth are critical • Keep it simple • Make it clear and accessible • Apply consistently • Ensure capacity and capability to deliver your promises • Validate your new pricing structure against real cases • Document and review your strategy Next session – 24 May 2012 “Ensuring we have the right processes, IT and people skills to be able to offer our services, consistently, efficiently and profitably”

39. For financial advisers only

40. For financial advisers only • This presentation is designed for and directed at professional financial advisers. It should not be relied on by consumers. • This document is based on Skandia’s interpretation of the law and the HM Revenue and Customs practice as at January 2012. We believe this interpretation is correct, but cannot guarantee it. Tax relief and the tax treatment of investment funds may change.

41. For financial advisers only www.skandia.co.uk Calls may be monitored and recorded for training purposes and to avoid misunderstandings. Skandia provides you with access to its investment platform, known as Skandia Investment Solutions. Within this platform you can open an ISA and Collective Investment Account provided by Skandia MultiFUNDS Limited, and a Collective Retirement Account and Collective Investment Bond provided by Skandia MultiFUNDS Assurance Limited . Skandia Life Assurance Company Limited, Skandia MultiFUNDS Limited and Skandia MultiFUNDS Assurance Limited are registered in England & Wales under numbers 1363932, 1680071 and 4163431 respectively. Registered Office at Skandia House, Portland Terrace, Southampton SO14 7EJ, United Kingdom. All companies are authorised and regulated by the Financial Services Authority with FSA register numbers 110462, 165359 and 207977. VAT number for all above companies is 386 1301 59.