2. The evolution of adviser charging models in practice Dennis Hall – Yellowtail Financial Planning Adam Young – Dragonfly Planning

3. Objectives for the Business To develop a valuable client centric proposition To provide services that a client wants and needs at a commercially viable price

4. Understanding your target market Positioning your suite of services (and skills) around opportunities and threats that your target market are facing Becoming the “go to” specialist in that sector/market Building a trusted relationship and community to enhance your services

5. The Solutions...... Avoiding product noise.......

6. Dragonfly Evolution

7. Attributes for Success VALUEVALUE Source: JP Morgan

8. Dragonfly’s Journey & Perspective The world is changing, and we must adapt to survive Working on a pure fee basis has removed perceived conflict of interest Our primary operational model is based on flat fees renewed annually

9. Yellowtail story – fees version 1.0 Single (value based) fee - our wish list Easy to understand Rewarded us for advice on other assets Removed any product biases Alignment of interests Attractive to long term client relationships Sustainable RDR ready Market advantage Removed from commission model

10. Yellowtail story – fees version 1.0 Single (value based) fee - results Lasted less than a year Existing clients initially accepted it Prospective clients sceptical Nobody liked it (including us) Raised more questions than it answered ‘Horse’ trading over value of other assets

11. Yellowtail story – fees version 2.0 Range of tiered fixed fees Sign on fee Negotiate from £5,000 Annual fees based on AUM Broadly 0.5% or less Focus on Financial Planning Annual or more frequent reviews Capped Calculated on an underlying hourly rate

12. Yellowtail story – fees version 2.0 Range of tiered fixed fees – the results Easier to explain Too much negotiating on the initial fee Too much emphasis on Financial Planning Sold lots of financial plans Didn’t build AUM quickly Difficult cash-flow position Trouble with value proposition during credit crunch Doing more work than we were being paid for

13. Yellowtail story – fees version 3.0 Fixed, Hourly and Value Based Fees. Financial Planning Fee 50% up front - 50% on completion £2,500+VAT initial Implementation fee based on hours spent (VAT exempt) Value based fee 0.5% AUM (+VAT) Introduced Satisfaction Guarantee Created value proposition for financial planning Sample menu of charges for implementation

14. Yellowtail story – fees version 3.0 Fixed, Hourly and Value Based fees – Results Attracted financial planning work A barrier to people wanting long term relationship Better cash-flow but long time before AUM increased Clients nervous about hourly fees Happy to pay fees for each stage Still not making decent profit

15. Yellowtail story – fees version 4.0 Fixed, Value and Value Based Fees Kept the initial fee the same Changed to value based fees for implementation Increased the ongoing AUM from 0.5% to 1% on first £1m 0.35% funds in excess of £1m Additional project fees for planning

16. Yellowtail story – fees version 4.0 Fixed, Value and Value Based Fees – Results Increased revenue – best ever half year results Lost some clients who wanted cheap work Appeals to our HNW clients Better client engagement Moved everybody across

17. Yellowtail story – fees version 4.1 Fixed, Value and Value Based Fees – next Reduce the costs of entry Speed up the pace of engagement Refine the menu of additional services Sell higher value planning

18. Professional Partnering

19. Freedom....