1. 1 Important information This presentation is provided to you by Zurich Intermediary Group in your capacity as a financial services industry professional. It must not be made available or copied or otherwise quoted or referred to in whole or in part in any way, including orally, to any person without our express written permission, which we may, at our absolute discretion, grant or withhold or grant subject to conditions, including conditions as to our responsibility. We accept no duty or responsibility, and we disclaim all liability whether in contract, tort (including negligence) in respect of this material but this sentence does not exclude any liability which by law cannot be excluded.

2. The Role of Platforms in the New Retirement Landscape Dave Clapham Dip PFS Strategic Partner Specialist

3. 3 The savings gap – why does it exist? How technology can clarify clients’ true position How platforms can streamline adviser businesses and make them more efficient How platforms can manage mortality risk for clients and advisers How platforms can aid inter-generational planning Learning outcomes…

4. The Savings Gap What was that……….? TP Savings Gap Survey – Jan 2014

5. The Savings Gap Why? TP Savings Gap Survey – Jan 2014

6. The Local Picture Saving Nothing At All TP Savings Gap Survey – Jan 2014 Quarterly Net Savings

7. Consolidation?

8. Consolidation

10. 10 PLATFORM PAPER GOOD PRACTICE # RISK PAPERS The view of the FCA ‘The high number of unsuitable investment selections we see in the pensions and investment markets is still a significant concern’* ‘It is important that firms put plans in place sooner rather than later… to ensure the future sustainability of their business model’* Due Diligence Client suitability

11. 11 What are the nine key areas identified by the regulator? Platform adoption - Due Diligence

12. Platform reputation and financial standing T&Cs of using the platform Cost, charging structure and transparency of charges Range of funds and tax wrappers Range of asset classes Functionality Accessibility Additional tools such as Risk Profiling and Asset Allocation Training and support services 12 Platform adoption - Due Diligence

13. Day to day efficiencies New Investments Switching and rebalancing Transferring between tax wrappers Pension Tax Relief Withdrawals

14. Platform reputation and financial standing T&Cs of using the platform Cost, charging structure and transparency of charges Range of funds and tax wrappers Range of asset classes Functionality Accessibility Additional tools such as Risk Profiling and Asset Allocation Training and support services 14 Platform adoption - Due Diligence

15. Day to day efficiencies New Investments Switching and rebalancing Transferring between tax wrappers Pension Tax Relief Withdrawals

16. The cost of missing the best days Source: Fidelity/Datastream, annualised return from 30/10/1997 to 30/10/2012. Returns based on the performance of the FTSE All Share with lump sum investment of £1,000, on a bid to bid basis with net income, excludes initial charge Fully invested throughout Missing 10 days Missing 20 days Missing 30 days Missing 40 days “Time in the market, not timing the market!”

17. New Investments? Payment by cheque to a platform How long before funds are available to invest? 3 days £500,000 x 7% = £35,000/365 = £95.89 X 3 = £288£500,000 x 7% = £35,000/253 = £138.34 X 3 = £415£500,000 x 5% = £25,000/365 = £68.49 X 3 = £205 £500,000 X 5% = £25,000/253 = £98.81 X 3 = £296

18. Switching and Rebalancing? Annually/Half-Yearly/Quarterly Sale followed by purchase Processing time/pricing points/settlement periods Average waiting time? 4 days

19. Transferring between tax wrappers? Some platforms pre-fund switches and rebalancing transactions Most don’t when moving funds between wrappers Treated the same as fund switches Same timescales out of the market Retirement’s not just about pensions!

20. Pensions Tax Relief? Payment made net, tax relief delay? 6-11 weeks (48-78 days) And then what? Procedures and processes? Monitoring?

21. Pensions Tax Relief

22. Withdrawals

23. Case Study 23 James and Janet £250,000 each onto a platform 10 years ago Plus £50,000 gross each year 10 equally weighted funds, 4 switches each year Janet’s platform pre-funds, James’ doesn’t Assumptions: 4 day cheque clearance, 4 day fund settlement period, 78 days to claim and invest tax relief, 7% net growth per annum Advantage Janet: £10,485! Every Transaction! Every Client!

24. Adviser time? 24 Estimated time per activity Every Transaction! Every Client!

25. Adviser Time? 25 Mrs McGlinchey Has an ISA, General Investment Account and a SIPP Adds to all three once a year Rebalances twice a year Receives tax relief once a year Ad-hoc withdrawals twice a year Pre-funding admin saving 2hrs 40 minutes £200 Every Transaction! Every Client! 100 clients?£20,000!

26. Platform prefunding Source: The lang cat

27. 27 What are the nine key areas identified by the regulator? Should there be ten? Platform adoption - Due Diligence

28. Managing Risk….. Investment Life Cover Source: Yahoo Finance On death, ILC would have covered these losses

29. Zurich Investment Life Cover option

30. Types of client All clients under age 65 worried about loss Older clients age 60+ near to or at retirement (in drawdown) Cautious clients (or those worried about stock-market volatility) Clients using higher risk investments Possibly those in ill-health or impaired lives Clients wishing to protect large accumulated gains Ex-Sterling clients – replacement for no loss on death benefit

31. Pensions/drawdown for clients aged 60+ Why wouldn’t you use for clients near the end of the accumulation phase and close to retiring.... ….to protect the accumulated value for them and their families, against the two things they can’t control – the markets and death! Includes pension tax relief (which is prefunded!) The proportion of the population over age 65 is rising Over 16% of the people that died in 2012 in England & Wales were between ages 65-75 - source: ONS – Mortality statistics – October 2013 And don’t forget to consider the use of a Spousal Bypass Trust

32. The cost of protecting your client and their family Based on age at entry and charged for the term of the cover: –below age 65 attained = 0.1%pa –age 65 – 69 attained = 0.25%pa For a £100,000 investment this equates to: –below age 65 = £1.92 a week – less than a lottery ticket –age 67 = £4.80 a week – less than a daily newspaper For a £250,000 investment for someone age 67, this equates to: –£12 a week…..or the cost of a night at the bingo! Accrued daily and taken monthly from Platform Cash Account (care – if not enough money, taken from elsewhere) Underwriting?

33. Do your clients insure the following? So why not insure your invested funds on death?

34. 34 Spousal Bypass Trust Inter-generational Planning

35. Nominate one or more dependants or any individual or body (e.g a trust or charity), via a non-binding “Expression of Wish” If none of the above, the death benefits are payable at the discretion of the trustees of the scheme No IHT on your death as the pension scheme trustees have discretion over the payment of the death benefits But what happens on the death of your beneficiaries? Usual PP lump sum death benefit options/IHT

36. Death pre-75 uncrystallised lump sum benefits 36 F r o m 6 t h A p r i l 2 0 1 5 + c r y s t a l l i s e d b e n e f i t s

37. 37 Death post-75 uncrystallised lump sum benefits 45% From 6 th April 2015 Any beneficiary

38. Spousal bypass trust example David dies leaving his entire estate to his wife Victoria as follows: 50% share of house£300,000 David’s investments£200,000 Personal pension death benefit£400,000 Total estate£900,000 Victoria’s own estate is worth£400,000 No IHT payable

39. How does the Spousal Bypass Trust help? On death the surviving spouse/partner or other beneficiaries can benefit from your lump sum death benefit but: it will not form part of any beneficiary’s estate for IHT purposes, be assessed as capital for long term care protect capital and retain within the family

40. How does the Spousal Bypass Trust help? The Spousal Bypass Trust has a wide class of potential beneficiaries including spouse/civil partner and children The trustees decide who will benefit from the Spousal Bypass Trust fund taking into consideration any letter of wishes which may been have given to them Trustees can invest the lump sum and pay income, capital or even make loans to trust beneficiaries

41. What happens when Victoria dies? Without spousal bypass trust With spousal bypass trust Estate inherited from David £500,000 Death benefit from David’s PP plan £400,000£0 Victoria’s own estate£400,000 Total estate£1,300,000£900,000 Less NRB*2£650,000 IHT payable£260,000 (£650,000@40%)£100,000 (£250,000@40%) £160,000 IHT saving on Victoria’s estate Inside of estate for IHT purposes Outside of estate for IHT purposes Victoria has access to the trust fund at the trustees’ discretion

42. What next? Victoria would like £100,000 from the trust fund to buy a top of the range limited edition Range Rover Evoque (list price £85,000 plus options!) The trustees lend her the money and this is repayable upon the event of her death

43. What happens when Victoria dies? With spousal bypass trust Estate inherited from David£500,000 Death benefit from David’s PP plan£0 Victoria’s own estate£400,000 Total estate£900,000 Less loan repayment to SBT£100,000 Less NRB*2£650,000 IHT payable£60,000 (£150,000@40%) Further IHT saving of £40,000

44. In conclusion…..  Member can choose own trustees rather than rely on the scheme trustees/administrators to follow their wishes  Trust beneficiaries can receive income, capital or loans at the trustees’ discretion without having the value of the trust fund forming part of their estate  Capital is retained within the family  The trust fund is protected from assessment as capital for long term care or state benefit purposes  CARE – proposed new relevant property trust legislation!!

45. In conclusion…..  Spousal Bypass Trust ensures that the surviving spouse has access to an income when their partner pre-deceases them  It allows tax efficient passing of wealth down the generations  Assets never leave the platform  Adviser retains control  Potential new clients

46. 46 Next steps….. Speak to clients where consolidation of assets will add clarity Speak to a platform provider where pre-funding is available for most day to day activities Speak to clients who would benefit from investment life cover Speak to clients who need the Spousal Bypass Trust

47. 47 The savings gap – why does it exist? How technology can clarify clients’ true position How platforms can streamline adviser businesses and make them more efficient How platforms can manage mortality risk for clients and advisers How platforms can aid inter-generational planning Learning outcomes…

48. Your Zurich Consultant Visit: www.zurichintermediary.co.uk Call: 0500 546 546

49. 49 Thank you for listening. Zurich Intermediary Group Limited. Registered in England and Wales under company number 01909111 Registered Office: The Grange, Bishops Cleeve, Cheltenham, GL52 8XX. Telephone no. 0500 546 546. We may monitor or record calls to improve service. For use by professional financial advisers only. No other person should rely on, or act on any information in this advertisement when making an investment decision. This advertisement has not been approved for use with clients. Important information Any tax and legislation information is based on Zurich’s current understanding and may change in the future.