1. Understanding the Sunset Clause Karl Dines : Implementation Consultant FOR PROFESSIONAL FINANCIAL SERVICES INTERMEDIARIES ONLY – NOT TO BE RELIED UPON BY ANY RETAIL INVESTORS.

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8. Learning Outcomes Understand the content of Policy Statement PS13/1 Understand the consequences of PS13/1 Recognise the need to develop a robust system which will facilitate a move to adviser charging for existing clients Recognise the importance of developing a solution and best practice regime to deal with the run up to The Sunset Clause

9. We’ve seen this before 1990s :Hard disclosure 1994:Abbey Wrap, Cofunds and others 2007:RDR discussion paper 2013:Adviser Charging 2016:Sunset Clause 2 lessons learned 1 question to answer

10. Legacy Commission Policy Statement PS12/3 No further commission on new investments Trail continues No change to product Automatic changes Fund switch within a product

11. PS13/1 high level Rebates cease Logistical issues April 2016 : Sunset Clause

12. PS 13/1 in more detail Issued April 2013 Consultation Paper 12/12 : FCA intent to prevent platforms from being funded by payments from product providers

13. PS 13/1 in more detail FCA response to CP12/12 consultation : We continue to believe that the best way of improving transparency in the platform market and removing the potential for bias is by ensuring the consumer pays a platform charge to the platform for the service provided. Consumers currently pay for platform services, albeit in some cases through their annual management charge. Making this clear to the consumer should help both consumers and advisers to compare different platforms and make a value-for- money judgement on whether a particular service is suitable. It will ensure platforms design their offering with the consumer paying for the service in mind, rather than designing a service that best meets the needs of advisers or product providers. And that means.... The customer pays for the Platform services they use, the platform provider designs an offering for the customer

14. PS 13/1 in more detail S2.4 states platforms can only receive remuneration from the retail client For legacy business there are ‘operational challenges’ Retain these payments subject to a two year Sunset Clause, after which platforms cannot retain rebates 5 April 2016

15. The fund charge shift : Pre Sunset Fund charge to fund manager Rebate to Platform Commission to Adviser Client Charge

16. The fund charge shift : Post Sunset Fund charge to fund manager Client Charge Platform charge to Platform Adviser charge to Adviser Adviser’s responsibility

17. Platform commission Non platform commission INCOME RDR Pre RDR income model

18. SUNSET Platform commission Non platform commission Platform adviser charge INCOME RDR Post RDR income model

19. SUNSET Non platform commission Platform adviser charge INCOME Post Sunset income model Platform commission ceases INCOME

20. SUNSET Non platform commission Platform adviser charge INCOME NOW Discovery assets adviser charge The Opportunity INCOME 140 DAYS

21. Working with the Sunset Clause Panacea snapshot poll Dec 2013* Will the removal of trail commission have a negative effect upon your business? * Preparing for Life After Trail : May 2014. 1749 IFAs surveyed

22. Working with the Sunset Clause Panacea Spring Survey January 2014* Is your business ready for Trail? * Preparing for Life After Trail : May 2014

23. Where to begin FOUR STAGE PROCESS Discovery Identification Comparison Implementation FOUR STAGE PROCESS Discovery Identification Comparison Implementation Focus on what is urgent Are you prepared? Four Stage Process

24. 4 Stage Process : Discovery Record value of assets from all sources Contact existing providers for MI and charge and non-charge information, including fund values and surrender values FOUR STAGE PROCESS Discovery Identification Comparison Implementation FOUR STAGE PROCESS Discovery Identification Comparison Implementation

25. 4 Stage Process : Identification Segment client data. Priority may be given to those assets affected by The Sunset Clause. Prepare client contact plan FOUR STAGE PROCESS Discovery Identification Comparison Implementation FOUR STAGE PROCESS Discovery Identification Comparison Implementation

26. 4 Stage Process : Comparison Prepare client specific comparison Identify those that will benefit from migration, those that require further research, those that would not benefit from migration Construct a pre approach written document Arrange meetings FOUR STAGE PROCESS Discovery Identification Comparison Implementation FOUR STAGE PROCESS Discovery Identification Comparison Implementation

27. 4 Stage Process : Implementation Obtain client consent to proceed Use Existing Practices to: record factfind analyse client’s attitude to risk recommend a move to adviser charged platform apply your Centralised Investment Philosophy Execute move to adviser charge Suitability report and document. FOUR STAGE PROCESS Discovery Identification Comparison Implementation FOUR STAGE PROCESS Discovery Identification Comparison Implementation

28. Consider a streamlined approach Project Planning Export and import client data Efficient risk profiling Build team of suppliers to match investment philosophy Reduce administration by integrating platforms Financial Planning and Suitability reports

29. Case Study Established Wealth Manager 6 advisers / 2 Paraplanner Cofunds main platform, a few secondary platforms Client proposition in place Centralised Investment Proposition in progress Platform due diligence work in progress Limited use of Dynamic Planner

30. Case Study Support from Verbatim Designing a Centralised Investment Proposition and support on platform due diligence Stress testing Client Proposition Hands on support to fully utilise Dynamic Planner Practical support in all areas

31. Practical Support

32. Case Study Outcome Discovered £3.5m pre-RDR assets on platform Identified potential income loss of £17,500pa Designed project plan to move to adviser charging Established robust, repeatable and independent process for future platform cases Risk/quote/apply/trade within Dynamic Planner

33. Learning Outcomes Understand the content of Policy Statement PS13/1 Understand the consequences of PS13/1 Recognise the need to develop a robust system which will facilitate a move to adviser charging for existing clients Recognise the importance of developing a solution and best practice regime to deal with the run up to The Sunset Clause

34. In Conclusion The Sunset Clause could reduce income to your business. Protect your income, but remember the discovery element. There isn’t much time, act now. Concentrate on what is most urgent.

35. Contact for support Complete your feedback form and hand in to a Verbatim representative Contact Adviser Services: 0844 967 0945 or info@verbatim-am.co.uk Contact your Regional Development Manager

36. Understanding the Sunset Clause FOR PROFESSIONAL FINANCIAL SERVICES INTERMEDIARIES ONLY – NOT TO BE RELIED UPON BY ANY RETAIL INVESTORS.