r pofonsesi a ldevelopment v eents2020...sbiz cfirst pde r2 workbook a4 24pp.indd 2 28/02/2020...

ROUND 2 • MARCH/APRIL

PROFESSIONAL DEVELOPMENT EVENTS2020Supporting your businessand professionaldevelopment from theground up

WORKBOOK

SBiz CFirst PDE R2 Workbook A4 24pp.indd 1SBiz CFirst PDE R2 Workbook A4 24pp.indd 1 28/02/2020 13:5928/02/2020 13:59

P R O F E S S I O N A L D E V E LO P M E N T E V E N T S 2 0 2 0 • R O U N D 22

WELCOME

Demonstrates the quality of an event and that it meets CII member CPD scheme requirements

Recognised CPD programmeThis course is recognised by the London

Institute of Banking and Finance as meeting the standards for ongoing CPD required by

retail investment advisers

Good morning and welcome to our second round of Professional Development Events for 2020!

In the current climate, it has never been more important to keep up to date with what is happening within our challenging marketplace and we’re delighted to offer you a well-rounded and topical events agenda, with presentations from some of the biggest names in the business.

It is pleasing to have secured so many first-class partners and to deliver the above we welcome representation from Columbia Threadneedle, J P Morgan Asset Management, Prudential, Schroders, Seneca Investment Managers and VitalityInvest.

No event would be complete without our compliance overview, looking at some of the regulator’s latest thinking and providing hands on practical guidance. From a regulatory perspective, there is much to discuss and debate and we will therefore, as you would expect, take the opportunity to summarise some of the most recent compliance and regulatory developments which could affect your business.

Finally, as we experience challenging times from a regulatory perspective and to provide further support, members of the Compliance First team will be available during the break and over lunch for any specific individual or firm’s queries.

1 Within this workbook, you will find an ‘Agenda’, together with details of each presentation, including the title, full synopsis and key learning outcomes.

1 For each session, we have also provided a set of five ‘Self-Test Questions’ which are optional for you to complete, but these questions are designed to help you focus on some of the key messages from each session, to keep track of the content and to support your CPD requirements.

1 We are passionate about delivering sessions that are relevant to you and your business needs. We would therefore be grateful if you could take time to complete our ‘Events Feedback Form’, which you will find at your place on the tables.

At the end of the event, please make sure that... you hand your completed ‘Feedback Form’ to a Compliance First representative and we will issue you with a signed ‘CPD Certificate’ to keep for your records. Please take all other documentation with you and keep it safe to support the validation of your CPD.

As always, I would like to take this opportunity to thank you for attending today and if you have any queries whatsoever, please don’t hesitate to come and speak to one of our team during the event. Alternatively, you can add commentary or request further information on the ‘Feedback Form’.

Enjoy the event!

Kind regards,

Janice L LaingManaging Director


P R O F E S S I O N A L D E V E LO P M E N T E V E N T S 2 0 2 0 • R O U N D 2 3

08:30 – 09:15 Registration and refreshments CPD hours

09:15 – 09:20 Welcome and introductions –

09:20 – 09:55 Meeting the challenges to adviser business models 35 mins

09:55 – 10:30The value of value investing(and applying this thinking wider than just equities)

35 mins

10:30 – 10:50 Refreshment break and networking

10:50 – 11:25 The Inescapable Truths of Disruption and Modern Life

35 mins

11:25 – 12:00 Delivering good outcomes 35 mins

12:00 – 12:40 Lunch and networking

12:40 – 13:15Decade of delivery:Why the UK stock market offers real investment opportunities for investors

35 mins

13:15 – 13:50 US Update: A health assessmentof the US economy 35 mins

13:50 – 13:55 Break

13:55 – 14:25 Compliance update 30 mins

14:25 Close

CPD hours – Structured 4 hrs

AGENDA



An understanding of health and longevity has always been key to financial planning. With the shape of retirement evolving to encompass a range of activities, advisers are faced with a new set of challenges to help their clients finance a multi-stage life. Along with developments in savings patterns and the economic environment for investing, these changes are putting pressure on existing business models. Advisers are coming under scrutiny by both regulators and clients to justify their charging structure, while at the same time needing to profitably grow their businesses.

To thrive in this emerging era, advisers will need to adopt a more personalised way of addressing their clients’ objectives. This starts with how a client’s lifestyle choices affect their life expectancy. Guiding clients towards a financially secure, fulfilling and healthy future requires planning and a greater focus on cost.

In this session we will suggest ways in which advisers can address some of the main challenges to their business, looking at:

1 Maximising client lifetime value: by controlling investment costs, advisers are able to maximise the value of their assets under advice. This increases the value of their business.

1 Encouraging greater client persistency by increasing client engagement, encouraging them to maintain their adviser relationships for longer

1 Showing more value to clients, no matter the adviser’s investment approach: provider value will be critical when supporting an adviser’s CIP

1 Exploring ways to broaden an adviser’s client base: by appealing to different types of investors on different selling points, advisers will be better placed to manage intergenerational wealth transfer

1 Offering access to a technology-enabled solution is critical in keeping provider costs down and freeing up advisers’ time to spend more time on their client relationships

In the context of the above, we will look at how VitalityInvest can support intermediaries and complement advisers’ business models through cash flow modelling tools and their vast support network, ultimately providing advisers with practical, value-centric solutions for them and their clients.

MEETING THE CHALLENGES TO ADVISER BUSINESS MODELS

Key learning outcomes:By the end of this session, attendees will be able to:

1 Understand how by controlling investment costs, you are able to maximise the value of your assets under advice leading to an increase in the value of your business

1 Look at ways advisers can offset new business strain by improving client retention and reducing up-front fee drag

1 Consider how advisers can broaden their customer base across generations to future-proof their businesses and assist with intergenerational planning

NOTES



NOTES



SELF-TEST QUESTIONS

1. What is the average age band of advised clients in the UK?a. 55–64 years old

b. 65–74 years old

c. Over 75 years old

2. What is the incidence of children firing their parents’ adviser after receiving an inheritance?a. 70%

b. 80%

c. 90%

3. What percentage of new clients switch advisers within the first five years?a. 20%

b. 30%

c. 40%

4. What does the FCA suggest should be a point of reference for total annual client charges in accumulation?a. 75 bps

b. 90 bps

c. 110 bps

5. How much money (according to Sanlam’s research) is expected to pass between generations in the next 30 years?a. £800 billion

b. £800 billion

c. £1.2 trillion



Value investing, has they say, been out of favour for the last decade as growth orientated investments have continued to thrive and deliver, but over the next decade could this style dominate for yield orientated portfolios?

There are clear signs that value is on the return but with only roughly 10% of fund managers operating value principals should you diversify to value and if so how?

In this session Seneca will talk about the key principles of value investing and how simplicity can sometimes be a great rewarding factor when considering this approach.

Value investing can produce strong returns for both Income and growth investors and given value investing often had the potential for higher yielding portfolio assets, this could be advantageous if the next decades investor landscape is markedly different and potentially less rewarding than the previous.

Seneca will look at the underlying factors and principles of the value style as it applies to both equity markets and also to a wider range of real assets exploring where value can be found, the challenges in identifying it and why this approach can be a useful diversifier within investor portfolios.

Finally, they will look at size importance to value managers of size as one of a number of key factors advisers should take account of in their selection.

THE VALUE OF VALUE INVESTING(AND APPLYING THIS THINKING WIDER THAN JUST EQUITIES)

Key learning outcomes:By the end of this session, attendees should:

1 Know the key principles and theory of value investing and how and why this style may work well for yield orientated investors

1 Gain strong insight into where value exists in both UK and global equity markets (and just as importantly where it doesn’t!)

1 Understand how value principles can be applied to real assets to create a diversified portfolio

1 Examine why size matters for value investing, but not in the way you might think

NOTES



NOTES



SELF-TEST QUESTIONS

1. What is the difference between book value and market value?a. They are the same thing

b. Book value is the calculated intrinsic value of the company looking at its assets and liabilities, market value is the value the stock market places on the company, which could be more or less than its true calculated book value

c. Book value is future sales forecasts whereas market value is past sales

d. Book value is the value of assets whereas market value is the value of liabilities

2. What is the definition of margin of safety as it applies to value investments?a. Margin of safety is the difference between the book value and the price paid for the stock i.e. the market price

b. How much an investment can go down

c. How much an investment can go up

d. Calculation of business profits less tax

3. Why do value orientated asset and stock selections have stronger yield potential?a. Value stocks tend to be more generous to their shareholders

b. Value companies have more free capital to pay dividends

c. Value stocks tend to be a little unloved by the market and hence, to encourage investors, mainly offer high dividend levels

d. Their low price means dividends are a higher percentage

4. Which of the following could be classified as real assets for the purpose of diversification? a. Infrastructure projects

b. Property Reits

c. Aircraft leasing

d. All of the above

5. Why and how does size matter in the consideration of value fund managers?a. Value opportunities are oversupplied, so size of fund doesn’t matter

b. Value opportunities by their nature tend to be small and niche, so boutique funds have a better opportunity to access these opportunities and apply relevant capital

c. The bigger the fund the better

d. Larger funds offer greater potential for returns



As we head into a new decade, it would be understandable for your clients to feel trepidation about the future. US-Iran geopolitical tension, trade wars and the spectre of climate change remain, as we witness the passing of the hottest year in Australia’s history and entrenchment at Davos. It seems to us that such continued disruption is inescapable, but there are opportunities to invest in such developments for your clients’ long-term benefit and as a force for good. We shall reflect on our Adviser Survey 2019 results, where it would appear that you agree with us.

Our presentation will focus on areas of investable change and the most powerful and persistent themes transforming our planet and lives, including food, fashion and travel, that will stand the test of time. At the heart of this narrative is the ingenuity which ignites innovation and addresses the many imbalances in the world, such as those between populations and resources, as well as between supply and demand in individual markets.

This interaction of ingenuity, innovation and imbalances creates compelling investment opportunities within long-term, structural themes like urbanisation, climate change, disruption, healthcare innovation and energy transition. It is through the urbanisation investment opportunity that we shall concentrate on Global Cities within the presentation.

But it is all well and good believing that an active, global and unconstrained approach, powered by data and ESG integration, is optimal for your clients, assuming we can cut through the jargon. Global Equity should feature in most balanced advisory client portfolios, but with current levels of concern regarding global disruption, many advisers could be forgiven for hesitation and uncertainty. Ultimately, this presentation offers a chance to embrace global equity and its return-seeking capability through themes that your clients will understand and recognise. It’s like Amazon’s frustration free packaging: there is no need for anyone to be lectured or hectored on climate change, but rather a chance to do something that is good and natural, whilst reassuring clients that you seek the growth (and income) that they need now and in the future.

THE INESCAPABLE TRUTHS OF DISRUPTION AND MODERN LIFE


1 Describe the big changes in the big wide world based on the inescapable investment truths

1 Understand the changes in your world

1 Recognise the constants that influence investment characteristics to meet client objectives

NOTES



NOTES



SELF-TEST QUESTIONS

1. Which country has the eldest population?a. Japan

b. Italy

c. China

d. All of the above

2. Schroders have highlighted Stock Market returns will be potentially challenged and will not

be the same as the last ten years apart from which of the following?:a. UK

b. Japan

c. US

d. Emerging Markets

3. From the Schroders 2019 clients survey, on average what was the expected returns clients

could expect over the next 5 years per annum?a. 20%

b. 10.7%

c. 5–9%

d. 10–20%

4. Schroders have highlighted the change in the world’s population is increasing to nearly nine

billion people by 2035. What will the split be between urban and rural areas?a. 63%–37% rural

b. 37%–63% urban

c. 50–50 split

d. 100% urban

5. Clients are worrying about their financial needs in retirement. Looking at the information

Schroders highlighted, what are their biggest fears?a. Not understanding drawdown

b. How much money they should save

c. How much in total do they need for retirement

d. Running out money during retirement and how long they will live for



What is the single most important factor in determining income levels in decumulation?

In this presentation, Prudential, with the use of external research from Schroders, Blackrock, JPMorgan and Invesco, will look at what investors think about the level of returns they think they can expect moving forward in a “lower for longer world” discussing how these expectations are largely over estimated.

Prudential will look at the expectations for income from investments and how expectations are unrealistically high meaning investors appear to be expecting similar returns in the near future.

Some scenarios will be explored showing the impact of withdrawals on a portfolio which leads into the current market and how different investment strategies can alter the outcome for clients. This will be explored with a run through of three couples who have an identical sum of money to invest, an income requirement, but have a different outlook on markets and volatility. This will give us the answer to the question at the start... The single most important factor in determining income levels in decumulation is... you, the adviser.

DELIVERING GOOD OUTCOMES

Key learning outcomes:To be able to demonstrate an understanding of:

1 Investor views on expectations of return going forward

1 The current market conditions and the impact on potential returns

1 How different strategies can dramatically alter the outcome for investors

1 Understanding our long-term investment strategy

NOTES



NOTES



SELF-TEST QUESTIONS

1. According to the Schroders Global Investor Study, what was the maximum level of income the baby boomers expect to receive?a. 7.50%

b. 2.50%

c. 5.00%

d. 10.00%

2. Looking at long term capital market assumptions, where are investors likely to see the highest returns?a. UK Equities

b. Emerging Market Equities

c. Private Equity

d. Cash

3. What did 52% of expert respondents say they would do in direct response to market volatility?a. Move into cash

b. Move into higher risk assets

c. Move into lower risk assets

d. Nothing

4. How long is it generally recommended you should remain invested in a product?a. 2.5 years

b. 20 years

c. 10 years

d. 5 years

5. With yields on 10 year UK Government Bonds at record lows, what impact does this have on the price of such assets?a. Price will be higher

b. Price will be lower

c. Nothing

d. Will not be able to tell, as price is not linked to yield



At the dawn of the new decade the outlook for the UK economy is cloaked in uncertainty. Growth has stalled and concerns over Brexit alongside a sluggish global economy have all but thwarted investment in UK business. This has not gone unnoticed by global asset allocators who, last year, were as underweight to the UK as they were in the late noughties when UK Banks were going bust.

Was this a true reflection of the risks facing UK companies or an exaggeration of irrational fears perpetuated by the media? Is the recent change in sentiment an indication of improving prospects for UK companies and the UK stock market?

In this interactive presentation, Columbia Threadneedle will attempt to take an objective look at the UK stock market, investigating whether the negative sentiment towards the UK is justified and touching on some of the challenges facing the UK and UK companies over the next decade. To aid their investigation they will revisit the key characteristics of the UK stock market and UK companies before examining whether depressed valuations and a rise in investor activism should be interpreted as signals to allocate to the UK.

Finally, Columbia Threadneedle will cover how an active investment approach can take advantage of current UK stock market opportunities, being mindful of the fact that active investors collectively have struggled to keep pace with the index, and whether the UK stock market is poised to deliver stellar or lack-lustre returns over the next decade.

DECADE OF DELIVERY: WHY THE UK STOCK MARKET OFFERS REAL INVESTMENT OPPORTUNITIES FOR INVESTORS


1 Examine the current headwinds and drivers of UK stock market growth

1 Review the key characteristics of UK listed companies and the UK stock market

1 Understand how an active approach to allocating to the UK can offer significant investment opportunities

NOTES



NOTES



SELF-TEST QUESTIONS

1. What was the ‘record high’ UK employment rate as recorded by the OMS between September 2019 and November 2019?

a. 76.3%

b. 74.2%

c. 82.1%

d. 71.3%

2. The below options detail characteristics of the FTSE 100 index, please select the incorrect option:a. Defensive in nature

b. One of the largest stock markets in the world with a large free float

c. Relaxed regulatory framework

d. Vast majority of earnings generated outside the UK

3. The UK Stock Market can be described as having become a three-tiered market. Which of the following is not one of the tiers?

a. A narrow group of large commodity stocks that has led the market over recent years

b. Commodity exposed international earners that remain disproportionately cheap

c. UK domestics which continue to be buffeted by poor Brexit sentiment

d. International earners, excluding commodity exposed stocks, that remain disproportionately cheap

4. According to research from Oriel Securities, what was shown to be a key factor in determining future returns (over a ten year investment period) when investing in UK Equities?a. Starting valuation (Price/Earnings ratio)

b. Industry sector

c. Leverage

d. Free cash-flow

5. Recent employment growth in the UK, according to a study by the Resolution Foundation, has been:

a. Strongest in the lowest income deciles

b. Strongest in the highest income deciles

c. Equal across all income deciles

d. Strongest in the median income deciles



2020 is an important year for world stock markets, in particular the US, especially with a presidential election taking place in November

The US is currently in the longest economic expansion in history, but with its economy slowing and ongoing global trade tensions, will the US Stock Market continue to outperform?

Predicting recessions is not easy and we do not claim to have uncovered a perfect crystal ball. What we have developed is a framework for tackling the risks, and potential magnitude, of a downturn in the US economy and what that can mean for investors.

We will use our industry-leading Guide to the Markets to provide an update on the issues that matter for the US and global markets and economies. Guide to the Markets illustrates a comprehensive array of market and economic histories, trends and statistics through clear, compelling charts and graphs.

Finally, we’ll discuss what factors investors should be considering when it comes to allocating across sectors and styles in US Equities.

US UPDATE: A HEALTH ASSESSMENTOF THE US ECONOMY


1 Understand the current US market outlook and the issues facing investors

1 Identify and analyse the implications of a US recession and the impact this may have on portfolios

1 Identify investment ideas and insights to share with clients

NOTES



NOTES



SELF-TEST QUESTIONS

1. Between 1992 and 2014, how many recessions have there been around the world?a. 153

b. 62

c. 12

2. In the ’08 Global Financial Crisis, by how much did the S&P 500 fall in percentage terms?a. 64%

b. 70%

c. 57%

3. What is the average duration of bear markets?a. 22 months

b. 12 months

c. 17 months

4. What was household debt as a percentage of GBP at its peak in 2008?a. 70%

b. 100%

c. 85%

5. Which equity market fell by the least during the Global Financial Crisis in 2008?a. MSCI EM

b. S&P 500

c. TOPIX



COMPLIANCE UPDATE

Another meeting, another compliance update. You would think there is nothing left to say about the changing world of regulation. Depending on your regulatory persuasion, you will be either pleased or disappointed to know that these days there is always plenty to for us to talk about. Whether we look to the future, to focus on the upcoming changes within the industry and the effect these will have on your business, or to simply remind ourselves of some of the changes that have happened in the recent past, and what this means to your business at this current time. Either way there will be plenty of exciting news to be told and heard, provided you are of the right regulatory persuasion!

Remember, compliance support will also be available throughout the day for any specific queries that you wish to discuss on a one-to-one basis.

Key learning outcomes:By the end of this session, attendees will have:

1 An overview of the FCA Dear CEO letter and the FCA’s portfolio strategy for financial advisers

1 Awareness of the Regulator’s approach to client vulnerability

1 An understanding of the FCA new annual return on Connect

NOTES



NOTES


Compliance FirstFirst Floor, 2000 Academy Business Park, Gower Street, Glasgow G51 1PR

Tel: 0141 616 4161 • Fax: 0141 639 8390 • Email: [email protected]

Compliance First is a trading style of SimplyBiz Services Limited, registered in England No. 4590781Registered Office: The John Smith’s Stadium, Stadium Way, Huddersfield HD1 6PG

www.compliancefirst.co.uk


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