Nucleus user sessions

May 2011

AgendaOverview• Where are we?• Recent developments• Development roadmap• Customer service update• DFMs

Session 1: New Business changes

BREAK

Session 2: Hands-on training:

• Model portfolio self-service• New Business• Transfers & Re-registrations• Top-ups

• Wrap-up

Cash

AssetsMutual fundsEquitiesGiltsBonds

ETFs / other

General Isa PensionOffshore

bond

IFA platform

Analytical and support tools

Onshore bond

Clientplatform

• Transparent• IFA control• Open architecture• Cost effective• Clear charging

structure• Wide range of tax

wrappers

Nucleus proposition

1.

2.

3.

Growth since inception (AuA)

Current status

• £2.7bn under administration• 30,000 clients• 54,000 accounts• 60% of accounts in model portfolios• 31% of accounts use rebalancing (majority

quarterly)• 4,000 open assets• 25,000 trades / month (nominee level)• 200,000 trades / month (client level)• £220m trades / month

Platform developments

Recent developments

• Client site• Exclude cash from rebalance• Bulk valuations• Trade aggregation• Pensions changes• Auto selldown• Jira• Paperless top-ups• Model portfolio self-service• Back-office integration

Client site - permissions

Set permissions for client site functionality on a client by client basis

Permissions will include:• Transaction history• Performance analysis• Reporting Click to enable clients to

access Transaction history from the client site

Exclude cash from rebalance

e.g. To rebalance £50K of assets within a £100K account

1. Move cash to be excluded (£50K) from rebalance into Cash Deposit Account (completes automatically)

2. Exclude the cash from the rebalance (on Account summary page)3. Next rebalance will rebalance model portfolio for £50K only

Can also be used for phased investments

Bulk valuations

Provide reports for all clients for regular reviews

In Bulk Report tool:

1. Select client / accounts to be printed

2. Select Generate Report3. A PDF report will be created

of all clients clients / accounts

Note – this report takes time to produce. An email is sent to you when report available for collection

Trade aggregation

• Unit trusts / OEICs– Daily cut-off typically 10.30am– Cash reserved until purchase complete– Order confirmed t+1, settles t+4 typically

• Listed securities– Buys: each buy for minimum 1 unit– Note some securities (ETFs) have £100+ unit

price!– Sells: sells are by unit– Dealing fees charged in proportion across

aggregated accounts

Pensions changes

• As of 6th April 2011

• Pension (accumulation): – A reduction in annual contribution to £50K from the end of the pension input

period in the next tax year– For current Pension Input Period (PIP): Payments made before 14-Oct-10 are

subject to current annual allowance of £255K, but payments after 14-Oct-10 are subject to £50K limit, and overall limit is £255K

– For accounts with no explicit PIP, new contribution limit of £50K applies

• Pension (USP / Benefits and Income) account:– a reduction in the  maximum drawdown limit to 100% GAD (from 120% for USP)

for next period– a reduction in the periodic review requirement from 5 years to 3– an increase in the tax charge on death lump sums to 55%– removal of the age 75 limit– >75, any uncrystallised assets have a tax charge

• Distinction between ASP / USP no longer applicable

Pension contributions report

Pension input period info

Contribution info

Remaining entitlement

within current pension year

Report provide pension contribution levels available in current pension year.

Key fields:Pension commencement dateTax yearPIP contribution limitSingle / regular contributionsAmount available to invest

Account number Account type Account opening date

PIP commencement date Tax year PIP contribution limit Contribution limit Single contributions Regular contributions Available

N106961 Pension 21.07.2008 06.04.2010 - 05.04.2011 50000.00 50000.00 0.00 0.00 50000.00

N119158 Pension 14.10.2008 06.02.2011 06.04.2010 - 05.04.2011 50000.00 50000.00 0.00 7800.00 42200.00

N104951 Pension 27.05.2008 06.04.2010 - 05.04.2011 50000.00 50000.00 25000.00 0.00 25000.00

N113096 Pension 04.02.2008 06.04.2010 - 05.04.2011 50000.00 50000.00 0.00 0.00 50000.00

N103098 Pension 30.01.2008 06.04.2010 - 05.04.2011 50000.00 50000.00 35000.00 0.00 15000.00

Pension income report

Account typeAccount opening

datePension commencement

dateAnnual review

dateNext review

date

Minimum income amount

Maximum income amount

Regular gross payment Period

Unsecured Pension 07.09.2009 07.09.2009 06.09.2011 06.09.2014 0.00 1478.97 0.00

Unsecured Pension 25.03.2009 25.03.2009 24.03.2012 24.03.2014 0.00 6779.51 564.95 Monthly

Unsecured Pension (Protected Rights) 25.03.2009 25.03.2009 24.03.2012 24.03.2014 0.00 1098.44 91.53 Monthly

Unsecured Pension 07.05.2010 11.07.2007 10.07.2011 10.07.2012 0.00 954.36 0.00

Unsecured Pension 07.05.2010 20.04.2011 07.05.2012 07.05.2014 0.00 6133.27 6133.27 Annual

Unsecured Pension 03.12.2010 26.01.2011 13.11.2011 13.11.2012 0.00 10423.86 500.00 Monthly

Unsecured Pension 20.01.2009 26.01.2009 19.01.2012 19.01.2014 0.00 2210.49 0.00

Next review date

Max / min income limits

Current income levels

Provide information on current income levels. Use to determine opportunities for changing income levels across client accounts

Key fields:Pension commencement dateAnnual review dateNext review date (3 year)Maximum income amountRegular gross payments / period

Auto Selldown

• To enable accounts to have enough cash to pay fees• Process

– For each account where auto-selldown is triggered, the feature will sell down accounts in order to create 0.17% (i.e. 2% /12) in cash; that is, enough to fund the next fee run (2% being the required minimum on each account).

– Assets will be sold down in proportion to the holdings on the platform– Flagged assets will not be sold down– Runs monthly - one week before fee run

• For example– £100K valuation but with £20 in cash– Process will sell down £150 to ensure there is 0.17% in the account. The account

would have a sell transaction on the relevant funds showing which assets had been sold down. 

Paperless top-ups

• Introduced for tax-year end• Top-ups now only require online

submission

• Paper applications still required for:– Inter-account transfers– New business– This will go away once New Business changes

implemented!

Third-party systems links

Upcoming developments

2011 development schedule

• Model portfolio self-service• Discretionary fund management (DFM)• Revised New Business • Sub-accounts• Gross general account• Illustrations engine replacement• Revised Valuations / trading pages• IFA self-service (inc. payments, DDs, client details)• Portfolio performance reporting• Improved Management information• Drawdown tools• Inter-account transfers

Test

Test

Q3

Q3

Q3

Q3

Q4

Q4

Q4

June

Gross general account

• Account holds:– Interest bearing assets paying gross interest distributions– Standard dividend paying assets

• Interest and distributions paid on gross basis• To open an account:

– Using standard new business process– Your responsibility to ensure client eligibility

• Some existing assets may be better suited to this General gross account– Use an inter-account transfer form to do this

• Suitability– Non UK taxpayers– Corporates / trusts– 3rd party products (e.g. Pensions)

• FAQ will contain guide on how to use

Discretionary Fund Management (DFM)

IFANew businessClient management

DFMModel portfolio mgtRebalancingTrading

For IFAs-Investment management outsourced-Transparent fee structure-Retain control of client

For DFMs-Easily offer model portfolios to multiple parties with single login- direct remuneration with transparent fee

For clients- Cost effective mechanism of achieving best of breed IFA and DFM services

DFMs. Responsibilities for IFA firms:

1. Tri-partite agreement – between Nucleus, IFA, DFM– completed once per 3 parties– Provides terms and conditions for service

2. DFM client authority– completed once per client account– Specifies date DFM service starts and fees

3. Link client account to model portfolio– Typically IFAs will be able to see model portfolios

4. Reconcile model portfolio usage with DFMs– Use reporting tool to reconcile usage

Customer services

Dedicated client relations team

FATCA (and other matters)

• Foreign Account Tax Compliance Act– Requires firms to provide info on US individuals– US citizens cannot be on platform

• Accepted nationalities / residencies– UK, EEA, Aus / NZ citizens resident in UK– For non-resident UK citizens

• IFA must have necessary regulatory permissions • Possible enhanced AML evidence• Tax wrapper limitations (Pension, Isa)

Investment operations

New Fund Managers this year

• Alliance Trust Asset Management Limited• Barclays Wealth Funds Limited• Best of Breed Capital Limited• Carbon Footprint Investments Plc• Cheviot Asset Management• Distinction Asset Management Plc• Emerging Market Property Limited• Franklin Templeton Investments (Direct)• Gilliat Financial Solutions• Ignition Investments Limited• IM Caerus Portfolio Managers• Incapital Europe• JPMorgan Asset Management - Offshore• M&G (Guernsey) Limited• Mordaunt Estates Limited• Morgan Stanley & Co International Plc• Orchard Wealth Management Limited• Prudential (M&G)• Redmayne Bentley LLP• Smith & Williamson Fund Administration Ltd• Stratton Street Capital LLP• T1ps Investment Management (IoM) Limited• The Protected Capital Currency Fund

Improved terms this year

Agenda

Overview• Where are we?• Recent developments• Development roadmap• Customer service update• DFMs

Session 1: New Business changesSession 2: Hands-on training:

• Model portfolio self-service• New Business• Transfers & Re-registrations• Top-ups

• Wrap-up

New Business Project

• Objective: make new business submission straightforward for all users

• Usability testing results (users liked):

• Project has multi-phase rollout of features

Usability sessions - Who took part?

Sarah Bond

Christine Stevens Arron Raiker

Hugh Morton Kellie Barrett

Wendy Taylor

Liz Porter Stella Swepston

Sarah Rodrigues

What do you LIKE about the current tool?

Participants praised the overall simplicity of the current tool

Although it is regarded as a complex tool, participants thought that it was easy to learn and relatively straightforward

What do you DISLIKE about the current tool?

•

Although there were a number of complaints about the current system, the three main problems raised were:

• It is difficult and time-consuming to select funds/assets

• The process is drawn out and slow

• It is not possible to jump back to a specific point in the process, necessitating an inefficient process of stepping back though pages.

What you would like to see changed?

Unsurprisingly, the main requests were resolutions of the perceived issue with the existing tool.

Participants also talked about a desire to have more flexibility in the tool, both in the processes they can perform and the ability to navigate within those processes.

New Business Project Phases

• Phase 1 – Add Client - Live• Phase 2 – New business application• Phase 3 – Enhanced new business• Phase 4 – Illustrations

Phase 1 – Already live

• Add client– Separating the client from the application– Add a client and submit new business a later

point– Add multiple clients– Set client platform access– Add memo assets– Edit client information

• Edit client– Client information before you submit application – Email address, telephone number and client

platform access for existing clients

Add a new client

Phase 2 - In Test

• New design• Clickable navigation• Streamlined process – no need click through

pages you don’t want• Label accounts with alias e.g School fees• Submit joint accounts online• Enter fees as a monetary amount• Pre-populated Transfer and Re-registration forms• Improved asset selection tool• Capture lives assured online

Phase 3 – In development

• Multiple bank accounts per client• Building society accounts including:

– Nationwide, Skipton , Yorkshire, Halifax

• Revised correspondence • Multi-client multi account

Phase 4

• New illustrations engine and link to new business

• AML online – no paper required• Paperless Direct Debit • Capture and update pension beneficiary

information

Agenda

Overview• Where are we?• Recent developments• Development roadmap• Customer service update• DFMs

Session 1: New Business changesSession 2: Hands-on training:

• Model portfolio self-service• New Business• Transfers & Re-registrations• Top-ups

• Wrap-up

Over next few months….

• New business changes• Valuations / trading / management info

changes• IFA self-service• Portfolio performance changes

• Read Nu-speak for weekly operational / platform updates

• NUGs for new developments• Become involved in helping with new

features