FOR INTERMEDIARIES AND INVESTMENT PROFESSIONALS ONLY. NOT FOR PUBLIC DISTRIBUTION. FOR...

FOR INTERMEDIARIES AND INVESTMENT PROFESSIONALS ONLY. NOT FOR PUBLIC DISTRIBUTION.FOR INTERMEDIARIES AND INVESTMENT PROFESSIONALS ONLY.

NOT FOR PUBLIC DISTRIBUTION.

Santander Asset Management

Simon DurlingInvestment Product Specialist

Enabling Savers and Investors to Understand Risk

April 2014

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Learning outcomes

Understand the key lessons identified from the Pensions Institute report

Identify the key opportunities and responsibilities for advisers following the recent budget announcements

Appreciate the benefits of recommending risk targeted investment solutions to meet savers needs

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Pension Institute report (December 2013)

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The Pension Institute report – Summary of Findings

Help savers focus on their savings goals

Provide better information to help savers understand if their plans are adequate to achieve their savings goals

Explain how investment risk helps achieve savings goals

Clear mismatch between risk score and actual risk tolerance

Savers would benefit from products with clearly communicated risk objectives

Lesson 3

Lesson 4

Lesson 5

Lesson 1

Lesson 2

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The Pension Institute report – What this means for investors

‘Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value’

Warren Buffet

Savers appear more concerned with what might happen rather than what will happen

Most are prepared to miss their goal rather than take on sufficient investment risk

Most people prioritise rainy day funds over specific savings goals

The evidence suggests there is a stronger need to seek investment advice and education to help savers make better long term decisions

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The Pension Institute report – What this means for providers

Before Today

Clearer product solutions – simple and transparent with clearer risk objectives

Clarifying the potential outcomes – provide material to articulate investment paths

Articulating the risks of investment – support advisers to educate investors

Highlighting the risks of not investing – provide Advisers with support material to assist with the education process

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The Pension Institute report – What this means for advisers

Good news! – evidence suggests in the report that investors still need professional investment advice and education

Robust risk profiling and education is the key to recommending an appropriate solution that the investor understands

Providing investors with projected investment paths supports validating the education process

Investor outcome models enables advisers to manage their clients future expectations and “contract” with them over risk decisions

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“Budget Bombshell!” Question for you – Is this a budget bonanza or a potential budget booby trap?

Daily Mail 20 March 2014 400,000 annuity clients

looking to make investment decisions

Greater need for investment advice

15K Super ISA and the ability to transfer to and from cash and stocks and shares

Opportunity Challenges

Difficult for advisers to free up time to take on the large numbers of additional clients

Clients seeking alternatives to annuities still require secure income

Greater responsibility on getting investment advice right

Potential liability for adviser business if solution inappropriate

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Risk Targeted Investment Solutions

Huge increase in the use of risk targeted investment solutions

Provide greater piece of mind for advisers and offer investors an insight to their future investment journey

Enable advisers to spend more time in front of existing and new clients

New propositions designed to drive the costs down offering investors better value

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Santander Atlas Portfolios - Client outcomes & transparency

Client journey and outcome

• Partnership with Moody’s Analytics to outline the possible ‘outcomes’ for each portfolio

• Guide to the investment journey with potential ups and downs

• Translation of the ‘volatility’ story into something more meaningful for clients

Transparency

• Our aim is to be open and transparent, and disclosing all charges and costs for investing

• Our disclosures are consistent with the guidelines from the Investment Management Association (IMA)

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Summary of learning outcomes

Understand the key lessons identified from the Pensions Institute Report

Identify the key opportunities and responsibilities for advisers following the recent budget announcements

Appreciate the benefits of recommending risk targeted investment solutions to meet savers needs



Santander ISA Managers Limited (Company Registration No. SC151605) and Santander Asset Management UK Limited (Company Registration No. SC106669) are both registered in Scotland at 287 St Vincent Street, Glasgow G2 5NB, United Kingdom. Both are authorised and regulated by the Financial Conduct Authority. FCA registered numbers 171448 and 122491 respectively. www.santanderassetmanagement.co.uk Telephone 0845 6000 181.Calls may be recorded or monitored. Santander and the flame logo are registered trademarks.

For intermediaries and professional investors only. Not for public distribution.

The value of investments may go down as well as up and investors may not get back the full amount invested. Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. The responsibility for assessing the suitability of financial products remains solely with the financial adviser. The opinions expressed here are subject to change and do not necessarily reflect the views of Santander Asset Management as a whole or any part thereof.

FOR INTERMEDIARIES AND INVESTMENT PROFESSIONALS ONLY. NOT FOR PUBLIC DISTRIBUTION. FOR...

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