Q1 2009 Adviser Forum Guy Peters – Head of Sales & Distribution

1. Q1 2009 Adviser Forum Guy Peters – Head of Sales & Distribution

2. Economic Summary Challenging times for advice? Finding the opportunities Agenda

3. NATIONAL INSTITUTE OF ECONOMIC AND SOCIAL RESEARCH “Britain's economy will shrink by 2.7 per cent this year and stage only a "feeble" recovery in 2010, one of the country's most respected economic forecasters warned yesterday. The National Institute of Economic and Social Research is the latest independent forecaster to warn that the Government's current economic projections – for a recession that is over by the third quarter of this year and is followed by a strong recovery – are over-optimistic”. Economic views 2 1 DIGEST OF INTERNATIONAL FORECASTS “Consensus forecast suggest a more pronounced recession, but of shorter duration, than that experienced in early 90s” 3

4. Challenging times for IFAs • IFA numbers to shrink to 10,000 by 2013 – Ernst & Young • AIFA director general Chris Cummings says: "We disagree with the conclusions reached by Ernst & Young. The IFA profession is robust and dynamic.“ • FSA Financial Risk Outlook 2009 -Net fall of 769 mortgage firms • (80% of mortgage firms reported negative impact on cash flow). Meanwhile back at the Regulator………….

5. Concerned about inadequate levels of oversight and control given the increased pressure firms are experiencing Important that resources dedicated to oversight and compliance are maintained Firms should consider if these resources need increasing!! FSA Financial Risk Outlook 2009

6. Concerned that network firms are increasing their size when already under pressure Networks relying too heavily on distant supervision Networks should be increasing their resources FSA Financial Risk Outlook 2009

7. Extension of Expenditure Based Requirement to all firms – proposed at ¼ of annual expenditure……………. Increase of minimum capital level to £20k Transitional provisions prior to full implementation in December 2012 Additional capital requirements for PII exclusions Limit on subordinated loans of 200% of share capital & reserves Prudential Requirements Proposals

8. Automated back office Product Research Tool Professional Indemnity Insurance IDEAL IFA LTD High Quality Admin (Qualified) Needs Analysis Resource Para Planning

9. Could This Be You? • ABC Financial Advisers Ltd is a firm with 4 advisers and an administrator. They have permission to advise on Investments, Mortgages and Non-Investment Insurance. Their expenditure for a typical year of trading is as opposite: • In this example the firm’s ‘fixed annual expenditure’ is £208,900, 3 months of this would be £52,225 – and this is the amount the firm would be required to hold to meet their capital resources requirement. - More than a 400% rise!!

10. FSA periodic fee - Dependant on permissions as at 01/04/09 - Mortgage & GI work becomes t/o related! FSCS Levy - Part 1 “The Pot” - no consultation - Part 2 MELL = £1 Billion FOS - Overall cost up from £64.4m to £92.8m! FSA funding requirement up from £321m to £438m – who pays? Use the fee calculator on FSA website and cancel unnecessary permissions – 200 – 250% rise for some firms Annual Regulatory Fees

11. The kind of behaviour incentivised - Regulatory/Consumer obligations - Productivity/Sales Incentives to consider profit not just T/O - Quality of business as opposed to volumes - Non-financial results included (TCF etc) Will be used to assess firms - What behaviour do incentives encourage? - Competitor comparisons a secondary consideration, unless….. FSA has concluded it’s staff have fallen behind and is awarding raises! Consultation begins in March ’09. Code of Practice on Remuneration

12. “The rumours of my demise are greatly exaggerated!” - Oscar Wilde - Networks “ Just 1% of all directly authorised advisers said that they will “definitely” or are “very likely” to join an IFA network or national IFA Partnership” Source: NMG Consulting Jan. ‘09

13. What can you do to best ensure growth in your business?

14. New Business Trends

15. Cost the public £100bn in rescue funding? Been forced to accept the government as a shareholder? Conduct your relationship with customers via BBC2 and a government select committee? Overseen the biggest loss in UK corporate history? Been caught doing your job without appropriate qualifications? Just retired on a pension of £700k pa? ~ How many of you have…

16. Consumer demand for advice ABI Consumer survey December 2008: 47% said they would be making it a New Year’s resolution to save more 51% said that the current economic climate made it more likely that they would resolve to save more Cohn & Wolfe Financial Confidence Survey January 2009 “Which words best describe your financial institution”? Greedy - 49% Impersonal – 36% Distant – 34%

17. “Furthermore, the survey shows that financial providers are neglecting consumers in these testing times. Almost three quarters (74 per cent) of consumers have not been contacted by their financial providers with advice on financial planning” Cohn & Wolfe Financial Confidence Survey January 2009 So IFAs will be taking advantage of this……..?

18. Newsletters available via Techlink Access this FREE through Bankhall Online

19. Basic Marketing objectives Marketing material Client communication Referrals Professional Connections PR The 5 minute basic Marketing appraisal We’ll send you a link to the quick online assessment questionnaire

20. You can’t ignore the Internet Britons are turning their attention to saving as predictions for a deepening of the economic recession through 2009 make worrying headlines. A recent survey by Alliance & Leicester found that 29% of people questioned had been cutting back on their spending to save more. The research also revealed that 48% of savers use the Internet to find the best rates.

21. Whitehall Financial Independent Ltd Winner of the 2008 award ‘Best Bankhall member website’ • Chosen because: • Clean design • Easy to navigate • Clear about its objectives • Clear about the types of customers it serves • Easy to find on Google search engine • Compliant

22. How easy is your website to find? What does it say about you to your customers? Do you make it easy for people to contact you from your website? What does it say about you to your customers? Website basics Look in Issue 1 of Bankhall News to read more about Website basics

23. Short and longer term actions • IMMEDIATE • Set up a regular newsletter • Targeted mailings • Telemarketing • Financial reviews • LONGER TERM • Contact Strategy and plans • Build and maintain an effective website • E-mail marketing set up CUSTOMERS • IMMEDIATE • Revisit professional connections • LONGER TERM • Marketing plans and budget • Build and maintain an effective website PROSPECTS * Post-event microsite will provide tools, tips and links

24. Prudential & M&G Creating client demand Partnership Accessing clients at retirement Bright Grey Developing business clients Clerical Medical Securing new and existing income arrangements Today’s Presentations

25. COFFEE BREAK

26. 5 MINUTE COMFORT BREAK