SanlamConnect

Media Launch – November 2007

What will we talk about today?

● Introduction to SanlamConnect

● Demonstration

● Comment

● Conclusion

South Africa, a country of rapid change● Increased freedom ↔ increased personal responsibility:● Catalyst behind changing realities in South Africa

Socio-economic realitiesTransparency / Access to informationConsumerism / Protection of the individual → Increased regulationEmpowerment

Economic realitiesLow inflation environmentIncreased market volatilityShorter time horizons → Flexibility and mobility

Other influencesProliferation of technologyExpectations created by other industriesExpectations from Government

Need for a successful financial services industry

● Entire financial services industry, not only life insurance● South Africa depends on a thriving financial services industry;

On the individual level, we provideProtection via pooling of risksWealth accumulation and preservation via pooling of assetsCapital to bridge the various life stages that individuals go throughFinancial advice

On a macro economic level, we are a critical component in the economic engine

Through pooling, we fund economic growthBy providing protection, we contribute to socio-economic stability

● Everybody wants to see this industry thrive; clients, government, employees and shareholders

● Business model needs to adapt to be able to keep track with these changes

Some of our challenges● Need for improved communication between those involved in the

solution:ClientIntermediaryProvider

● Providers differentiate through “product innovation” – difficult to answer to a call for simplification

● Difficult to introduce technology into the entire process● Advice increasingly provided only to the wealthy ● Unit cost of sale too high in lower middle market● International experience – UK

Desertion of the middle marketInterventions so far failed – protection gap

We cannot afford the UK approach

A two year journey

● These requirements and challenges are not new

● (More than) two years ago, initiated the investigation into an additional business model

Mindset of a new entrant

Intensive client research

International best practice

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Value innovation

● Unpacked all the components in the value chain● Rigorous client research to identify the components that clients:

Put high value on

Are neutral about

Perceive to detract from the total proposition

● Numerous and diversified focus groups

Results of the focus groups

A new process

A new process

● Key characteristics

Empowerment

Quality advice

Value for money solution

Process designed to facilitate on-going advice

● Best described by walking you through the process

Client

Retail sites

Worksites

Online

Flexible

Flexible

Initial advice Sanlam

Connect process

● Picture of retail office

● Screenshot of homepage

A new role for the SanlamConnect Consultant

● SanlamConnect consultants in retail offices and worksites● Criticality of face-to-face advice

● Introduce a transparent and intuitive web-based system into the process

Used by clients and SanlamConnect consultant together

Clients need not do everything face-to-face

● Retain face to face advice, but with new attributes

Coaching role

Continuity between different consultants

Different remuneration model

Client registration

Needs analysis

Advice and recommendation

Implementation

Client

Retail sites

Worksites

Online

Flexible

Flexible

Initial advice Sanlam

Connect process

● Screenshot of registration page

Needs analysis● All planning in “today’s money” - Focusing on real returns will improve:

UnderstandingAccuracyOngoing advice

● Robust approach towards understanding investment risk:Stochastic modelingFocus on variability of outcome around client’s goal

● Focus on primary (wealth accumulation) needs:Protection (death and disability)Retirement provisionSavings

● Future phases will include wealth preservation and others● For the rest of the walk-thru, assume the client has a retirement need

● Screenshot of needs analysis, perhaps the retirement analysis will be most appropriate

Advice and recommendation● Include existing products and provision in the process

Astute

Client input

● Projections of range of potential future outcomes:

Not focused on one single number

Underline uncertainty of likely outcome

Importance of ongoing advice

● Advice generated by Sanlam

● Presented to client in simple, understandable terms

● Intuitive and powerful “what-if” functionality

● Screenshot of what if page

Implementation

● Seamless link from advice process to product implementation

● Simple, value for money products

● Savings and retirement:

Simple charging structure

Simple fund choices :

Building block investment approach

Open architecture for equity

Ongoing advice

Client registration

Needs analysis

Advice and recommendation

Implementation

Client

Retail sites

Worksites

Online

Flexible

Flexible

Initial advice Sanlam

Connect process

Ongoing advice

● Available to the client at any time

● Sanlam will update financial map every six months:

Automatically update the needs for inflation

Redo the projection, showing progress towards the goal

If necessary, point out corrective action to be taken in time

● A flexible solution

Can update and change your financial needs at any stage

Flexible underlying products

● Client education embedded in the process

Other wealth accumulation needs

● Savings - process similar to retirement – focus on lump sum

● ProtectionIntuitive division between income and lump sum requirements

Advice process and underlying products follow this approach

Launch a whole new range of industry-first protection products:

Pays a regular income benefit

Link income payments to inflation

Needs covered (for income and lump sum): Death and Occupational disability (own and similar occupation)

Simplicity: eradicate exclusions

Demonstration

Thank you!Thank you!

Comments and Conclusion

SanlamConnect proposition to Clients

● Empowerment

● Quality advice

● Value for money solution

● Process designed to facilitate on-going advice

SanlamConnect proposition to Clients

● Empowerment

Understandable:Simple solutionIntegrated education

Interactive (two-way communication)

Optimised for different levels of client involvement

● Quality advice

● Value for money solution

● Process designed to facilitate on-going advice

SanlamConnect proposition to Clients

● Empowerment

● Quality advice

Consistent adviceOver timeOver entry points

Scientific approach towards optimal solution

● Value for money solution

● Process designed to facilitate on-going advice

SanlamConnect proposition to Clients

● Empowerment

● Quality advice

● Value for money solution

Retain face to face interactionSeamless and continuous link between advice and products

Cost of advice embedded in the product charges

Competitive charges

● Process designed to facilitate on-going advice

SanlamConnect proposition to Clients

● Empowerment

● Quality advice

● Value for money solution

● Process designed to facilitate on-going advice

Advice plan kept up to dateContinuously manage client expectationsPro-active intervention when needed

SanlamConnect proposition to Sanlam

● Consistent with brand proposition / promise

● New growth opportunities:

Target new clients

Fill the vacuum that is being created

Grow market share

SanlamConnect proposition to Sanlam

● Consistent with brand proposition / promise● New growth opportunities● Tight control over legal liabilities arising from the provision of advice● In line with Government thinking● Improved client retention● Reduced acquisition cost – improved margins and value for money

Improved productivity (FC)Reduced new business support per financial plan

automated processless room for mistakes/omissions

Reduced management requirementsautomated processcompliance burden reduced

Phased approach

● First phase in Johannesburg, Pretoria and

Cape Town

● 60 Consultants

● Open internet in January

● Incorporate lessons learned and expand

In SanlamConnect

Rest of our business

Future of the existing business model

● Already more focused on the higher middle and affluent market

● Will be able to adapt to

New commission regulations

Compliance

● Migration opportunities will be explored

Face to face interaction with clients critical

Attractive process for existing middle market intermediary

Sanlam financial advisers

Lower middle Affluent

Independent brokers

Prevalence of different business models

% o

f bus

ines

s

Sanlam financial advisers

Lower middle Affluent

% o

f bus

ines

s

Independent brokers

Prevalence of different business models

Under-served

Sanlam financial advisers

Lower middle Affluent

% o

f bus

ines

sIndependent brokers

SanlamConnect

Prevalence of different business models

Conclusion

● Clients told us it is imperative to haveValue for money

Security / stability

Advice / guidance

Transparency

Conclusion (2)

● Responded with a intuitive end to end process:Intuitive and simple, yet powerful advice toolFace to face deliverySimple, transparent and flexible productsTransparent end-to-end process designs solution for each clientAccess to the process via retail sites, worksites and onlineSame tool used by clients, as well as SanlamConnect consultantsSame tool used for initial, and ongoing adviceCreates a living financial plan for the client

● A World First!

Thank You