St. James's Place plc (STJ) Earnings Call Transcript & Summary

Good afternoon, and welcome to the St. James's Place Capital Markets Day. This is the first time we have hosted 1 of these events virtually and all the presentations have been prerecorded, but we will host a live Q&A at 5:00 p.m. Now it's a shame that we aren't able to gather together in person for this session, although we do have a good afternoon planned for you. And from my perspective, it's a great opportunity for us to build on some of what we outlined at our full year results presentation in February which we aim to achieve by 2025. You'll hear from 4 of my executive colleagues who will share insight into areas of activity that will be important to our success over time. Before introducing the main session for today, you will have seen that we provided a short trading update this morning. We were pleased to report that the high levels of new business activities we experienced in the first quarter of the year have continued into April and May. Whilst this remains a tricky year -- will be another good year for St. James's Place. So let's move on. I will start by covering our strategy and business model, which will also encompass our purpose and values. As we look ahead, our objective is to support the U.K.'s leading group of financial advisers with the best technology -- clients' financial futures by making sure our decision-making is centered around this long-term aspiration, we have continued to be successful as we have grown. And this will remain our focus in the years ahead to 2025 and beyond. Looking after these fundamentals will also help underpin the explicit goals through our planning cycle to 2025 that we set out alongside our full year results back in February. Hopefully, these will be familiar to you already, but I want to repeat 3 key headlines. First, that we will deliver 10% per annum growth in new business. Second, that by maintaining our record of strong retention of client investments, together with modest stock market growth, we aim to achieve funds under management of GBP 200 billion. And third, that we will aim to limit growth in our controlled expense base to 5% per annum. We are therefore striving to achieve continued growth in our business, but we've also made a firm commitment that we can do so efficiently, limiting our growth in our expense -- achieving these gains would drive significant growth in the cash result and therefore cash returns to sales in line with the dividend guidance we have given. Now the scale of our business today, market leading position on our proved and record. So St. James places a business with the foundations of success are built on the strength of long-term relationships. We work hard to deliver for clients and advisers. And this is the key to great clients and adviser retention, which then translates -- has helped develop a small life insurance business in 1992 into a GBP 135 billion wealth management business today with a market capitalization of over GBP 7 billion. Long-term relationships mean we benefit long-term industry and SJP experience across our community. That's across the partnership, the executive and our employees. This gives us deep market knowledge, but we also benefit from a rich blend of new talent and joiners to the organization who bring fresh perspective and challenge to the business. You'll see this long-term approach reflected in much of what you'll hear today, whether about the partnership, our IMA or how we are investing in technology. And you will also see in our approach to developing our business and market -- for long-term wealth management business. What sets St. James's Place apart is our distinct business model. The original business plan back in 1991 was known internally as Utopia Life. And many of the founding principles remain true today, but I want to focus on 3 of these, which have and continue to provide significant competitive advantage. One, a long-term mindset. Two, a strong -- developing long-term deep relationships. That's long-term relationships with our advisers, and in turn, with their clients. Long-term relationships with our employees and long-term relationships with our key suppliers. Second, we would have a strong distribution achieved through the partnership. Partners are self-employed business owners who exclusively offer our products and services. And this was at a time when most life and asset management companies were closing down their distribution channels, and therefore, the partnership was a clear differentiator. Today, the partnership is a collection of over 2,500 SMEs, distributed principally throughout the U.K. with over 4,300 highly trained and experienced advisers assisted by 5,000 support staff within those businesses. The partnership is managing trusted face-to-face relationships with some 830,000 clients. The enduring relationships partners have with these clients support the strong retention of client investments that we consistently experience. This does not happen by chance. The partnership has been, remains and will continue to be a key competitive advantage. And in a moment, you will hear from Peter Edwards, our Partnership Director, who will talk about the role of the partnership, how we support it and how we plan to develop and nurture it in order to support our ambition to deliver that 10% annual growth in new business. And finally, the third key principle, which was to offer clients a full, holistic suite of financial products and services to help meet their financial goals where the nature of a product or service include the options or guarantees or were capital intensive or as they were high volume, low margin or indeed very specialist, then we would work with a third-party specialist, for example, annuities, EIS or VCTs and indeed mortgages. This continues to be our philosophy today. At the same time, if we did not believe products were suitable for the retail investors, then we would avoid them. For example, split level investment trust, precipice bonds and the like. But with respect to a client's investable wealth, we believe that it was important to have the right structure in place to manage this wealth by having our own investment funds across unit trust, ISAs, life investment bonds that's both onshore and offshore and pensions. Furthermore, we would identify the best fund managers to manage these funds on a sub-advisory basis. But importantly, they were our funds, and so we would also be a manufacturer as well as a distributor. The structure established allows our clients to switch between individual funds free of charge, and in most cases, free of capital gains tax. And let's just think about this a moment. This is an important benefit in the life cycle of a client. For example, as clients approach retirement, they can reduce the risk of their portfolio by switching between asset categories, importantly, without cost or potential tax implications. Then as clients start to turn their thoughts to mitigating inheritance tax, this structure enables the use of simple trust structures to optimize inheritance tax planning. In addition, the client has the peace of mind that as the funds are SJP manufactured funds, we set the investment objectives of the fund. We hold the assets of the fund on their behalf. We point to carefully selected external manager to manage the fund and then we -- aggravation to the client as the investment management of the fund changes, but the assets to the fund remain with SJP. This compelling proposition also supports the strong retention of client investments. As I said earlier, such market-leading retention does not happen by chance. The ingredients need to be in place. We regard our investment management approach as a key competitive advantage and provides good client outcomes. Rob Gardner, Director of Investments will talk about the unique fundamentals of our approach, how it drives great client outcomes and therefore, supports that 95% retention of funds under management and how we are developing our proposition to support continued growth in the business. So SJP is both a manufacturer and distributor of financial products, and therefore, to use regulatory language, we are known as a vertically integrated wealth manager. This means we have a full end-to-end proposition for clients, encompassing the provision of bespoke and long-term financial planning advice through relationships formed and administration. We are not a fund platform nor an advice network nor a pure asset manager. We are vertically integrated, and our stakeholders are all the better for it. This holistic approach means we take responsibility for all elements of the client proposition and ensures that we never lose sight of our end goal, to provide great client outcomes. This is important as it drives perception of value. But I want to reiterate that great client outcomes are not just about investment performance but also about providing appropriate and timely advice, ranging from utilizing routine tax allowances, to IHT planning, to protection, and to behavioral coaching nudges. It is also about the value of having a personal trusted adviser to help guide you. Clearly, fees are important for clients. But it is a delivery of great client outcomes that matters most to them. So it is, therefore, where we focus our attention as a business. Alongside these competitive advantages arising from the principles of Utopia Life, our culture and shared values have been hugely positive factors in driving our business over the past 30 years or so. And we all take personal responsibility in keeping our values. These will continue to guide us as we grow the business to deliver our 2025 goals and beyond. This is how we will create future success for all of our stakeholders. The founders of SJP also encourage a culture of giving back to those less fortunate and they established a charitable foundation. Today, the foundation is the sixth largest corporate foundation in the U.K. and has supported many great charities, which themselves have had a profound impact on countless lives over the years. Supporting the foundation continues to be a key part of our DNA with many fundraising events around the country and some 80% of our partners and employees contributing every month from their remuneration. 30 years ago, this would have been classed as a best-in-breed as we have broadened our ambition to continue to be regarded as a best-in-breed responsible business. This is personally important to me, the Board, together with a wider SJP community and increasingly our clients. After all, achieving financial well-being only makes sense if the world is worth living in. So we have been doing more and we'll continue to do more to have a positive impact through our client investments. We also have a direct influence on the environment in how we operate as a business. So we will continue to drive down our [indiscernible] you'll support the partnership in taking these same steps, too. A responsible business is one that looks after its employees, one that champions and pushes hard for inclusion and diversity, from the top to the bottom of the organization, and one that looks after the well-being and development of its people. And a responsible business is one that also looks after the local communities in which it operates. Like the majority of businesses, we have more to do and are on our journey. But it was a really, really proud moment for the business on achieving the Business in the Community, Community Mark. One of only 37 companies worldwide today and continue to provide us significant competitive advantage. And leap forward 30 years in the 2020s, and we see a new and exciting competitive advantage emerging, which we fully intend to embrace, technology. We see a future of face-to-face advice empowered by technology and COVID has accelerated this journey. Having already laid the foundations of a modern world-class ecosystem supported by Bluedoor and Salesforce, we are well placed to take advantage. Ian MacKenzie, chief Operations and Technology Officer, will talk about this emerging competitive advantage, how we deploy technology today, how we will embrace the opportunity going forward and how we will see technology supporting our face-to-face advice-led proposition. At the same time, technology is enabling and underpinning our ability to limit cost growth to 5% per annum and delivering greater operational gearing in our business. Leveraging these competitive advantages of our business model, our plan is to drive continued growth in the business in the years ahead. As we look forward to the future, we see enormous opportunity in the U.K. wealth management space for St. James's Place. How we grow our business and increase our funds under management will not fundamentally change. We will continue to increase the scale of the [indiscernible] and advise a growing pool of clients. What's really important, though, is to ensure that we never take our eyes off the ball regarding our support strategy, achieving sustained retention of funds under management through delivering high-quality service to advisers and clients, driving consistently good long-term investment performance and ensuring we remain a robust and resilient business that clients trust. Scaling the partnership and providing it with the tools and support to better advise a growing pool of client investments has been the tried and tested method for building St. James's Place into the GBP 135 billion business it is today. It is [indiscernible] in how we approach adviser recruitment and productivity, by investing behind technology to further support the partnership and clients and build our corporate scale in a more cost-efficient manner, by developing our investment management approach so that we continue to drive great client outcomes. The beating heart of the strategy will see us continue with those original principles of Utopia Life, paying attention to long-term relationships with our partners, and through them, with our clients. The final presentation today will cover our plans in Asia. Iain Rayner, my board colleague with responsibility for Asia, will cover the progress we have made there, how we see the opportunity for our business going forward and our immediate priorities to achieve cash breakeven by 2025. But ahead of that, a few words from me. We purchased Henley, a small distributor in Asia in 2014. Adopting those 3 key Utopia Life principles, which have proved so successful with SJP, the business plan for Asia was to have a long-term mindset of our own distribution, with a focus on building and maintaining long-term relationships and to have a compelling client proposition, to be a manufacturer and distributor. To meet this third principle and become a manufacturer required us to obtain the necessary licenses and build manufacturing capability in both Hong Kong and Singapore. This task proved to be more time consuming than we anticipated, but it's proving to be a very worthwhile investment. We are confident that we now have a fast-growing and disruptive business in the most attractive wealth management markets in Asia, which will, in time, be value enhancing to the group. What I find most interesting, I think, being with SJP since the start of 1993 are the parallels I can see made its first cash profit in 2003, some 12 years after it was established. We have targeted a cash profit in Asia by 2025, 12 years after we purchased Henley and 10 years since we had a fully operationally vertically integrated business. With patience and a long-term mindset, some 30 years later, the business established by the founders in 1992 is now managing funds under management of some GBP 135 billion and has a market capitalization of over GBP 7 billion. We believe we have created together the correct ingredients and established the correct infrastructure in Asia, in line with those principles that have made SJP so successful over the years. That's why we remain totally committed to and excited about the opportunity for SJP in Asia. So a reminder of the agenda today. In a moment, you will hear from Peter Edwards, who will talk about the partnership, followed by Rob Gardner covering our investment proposition, both key competitive advantages. You'll then hear from Ian MacKenzie on our plans in Asia. I hope today's sessions help you better understand some of the detail underpinning our ambitions over the next few years and beyond and illustrate why we remain very confident in the outlook for St. James's Place. I'll now hand you over to Peter to kick off the first detailed session -- starts at 5 p.m.

Good afternoon. I'm Peter Edwards, and I'm the Partnership Director at St. James's Place. Responsible for the growth, management and support to our U.K. partnership, I'm going to talk about why people join [indiscernible] by 10% annually in conjunction with our partners in the future. As an advice-led business, our partnership is the leading edge. It's the entity through which we deliver the great client outcomes that Andrew talked about in his introduction. A strong partnership delivers clients outcomes that create value for all our stakeholders. As a result, we take great care in investing to support and nurture it. And these forms a vital components of our strategy. Before I cover some of that, I want to talk a little more about what the partnership is and why it's so critical to our success. Firstly, and importantly, it's not a single thing. It's a broad church of over 2.5 [indiscernible] over 4,300 financial advisers, our support to it is necessarily differentiated and provides the flexibility to support growth while recognizing and drawing strength from the diversity it represents. Sociocultural, cognitive, gender and racial diversity help the partnership engage with unsupported clients across the country. As an interdependent ecosystem with a common infrastructure, what brings it together as one is the sense of community that exists within it as well as the social cultural link between all of these businesses and St. James's Place. Indeed, we have 21 regional offices around the major population centers of the U.K. And the partnership is represented in almost every city, town and village in the U.K. as well as in Asia, which Iain Rayner will talk about later. It is an ecosystem, which has changed considerably in recent years. Our partner businesses have increased in size and complexity as well as in number [indiscernible] over 800,000 clients, a number that has doubled in the last 8 years. I'll comment on how we manage and support the partnership. But before that, I'd like to reaffirm why people join us. People will want different things when joining the partnership. We pride ourselves in providing the things that would otherwise distract great advisers from being face-to-face with their clients, the activity financial advisers enjoy the most. [indiscernible] help partners support their clients with the backing of a FTSE 100 company. We offer people that do join us a range of suitable and relevant opportunities as partners building their own businesses or financial advisers with an existing St. James's Place businesses. It's because of this flexibility to choose, the journey they take that I believe we are the best place to build a great financial advice [indiscernible] that chose to join unlike elsewhere, where they may have been acquired. The commercial relationship between St. James's Place and the partnership is stronger than ever. This appropriately recognizes the balance between remunerating new business and the provision of ongoing [indiscernible] to enhance the quality of service to clients. To complement this, a unique appeal to the partners has always been the means through which having grown a successful business with us, over time, they can, at some point, transfer the whole or part of their business to another partner with the terms and financial arrangements facilitated by St. James's Place. This process, which ensures continuity of the advice and service for clients is a real competitive advantage. Our corporate support for the partnership is stronger than ever so that they can focus on what they do best, supporting and advising their clients from marketing, investment consultancy, technology, clients administration, HR and finance support to regulatory compliance, business checking and our in-house technical connection team. We aim to deliver support that achieves 2 simple things, to keep partners safe and to facilitate their business growth whilst delivering outstanding value and great outcomes for our clients. Providing support where and when it is required or appropriate, our field management team is a critical differentiator between St. James's Place and our competitors. Continued investment in regionally-based teams whose total focus is to develop and supervise partners and advisers is a key USB. Investing in this team of managers, trainers, coaches and business consultants, complemented by risk managers, operations teams and administration staff helps us differentiate our support to partners based on their needs and motivations, ensuring [indiscernible] that are passionate about delivering on behalf of their clients. Their passion is supported by the strength of our product range and our investment proposition that you will hear about later from Rob. The Academy has delivered over 680 new partners and advisers to the partnership since its inception in 2012. Highlighting the scale of this home batch, the Academy, and it now delivers enhanced training and development to a broader cross-section of the partnership. Unconstrained by geography or intake size, this evolution has shown our ability to adapt to a changing environment and will result in the Academy generating circa 400 new members of the partnership every year from 2022. This notably represents more than 2/3 of our gross recruitment, highlighting the growing importance of the Academy for the future. We help people find success in line with their ambition, skills and preferences, as you will now hear.

With a background as a senior manager in the hospitality industry, I decided in 2012 to change Korea and move into something that I'd always wanted to do, and that was to become a financial adviser and run my own business. I knew that I would only succeed if I've got the very best training, and the St. James's Place Academy provided this to me, ensuring that I treat the industry's required qualifications and providing me with the tools and support to set up my practice. My business would be exactly what I [indiscernible] own successful practice, which grows by my clients' referrals. I've invested further and extended my knowledge and my experience by taking higher qualifications, becoming chartered and going on to become a fellow of the Personal Finance Society. I thoroughly enjoy my work, and I am proud to be the go-to person for my clients' financial planning. Taking my career in a different direction with the Academy was a massive step at the time. But looking back, it's one that I'm incredibly glad that I took.

As Andrew said in his introduction, St. James's Place invests in long-term relationships with the partnership, and they do so with their clients. This is critical to our ongoing success. And these relationships, in a great many cases, remains so strong. Indeed, experience shows us that retention is stronger still when our advisers have been with us for more than 3 years. The average age of the partnership is 46. This, against the market equivalent of 58, gives us comfort in retention and the strength of our Academy, which has an average age on entry of 34, ensures our sustainable pipeline for growth. All of this give us [indiscernible] to the partnership since our inception. I'm confident in our ability to grow the scale of the partnership on a managed trajectory whilst ensuring we are able to devote time and resources to evolving and improving support to those who [indiscernible] this marketplace that is at best, not growing materially. However, the extension and growth of our Academy makes this program an increasingly important. It is natural that Academy advisers take a little longer than experienced recruits to develop their businesses. But data suggests that after 5 years or so, they are on a similar trajectory. And of course, they have time on their side as they have the benefit of generally being considerably younger. Growing numbers in the partnership is an investment in the future, sustainability of our business growth and our focus remains to train and develop people to the point at which they are delivering strong client service as safely as possible. Of course, having selected and recruited people to join us, it is fundamental we manage them to success and retain them as part of St. James [indiscernible] objectives of the management team. To enable the continued growth of the partnership, we continue to evolve our field management team support model. Deployed appropriately, differentiated and consistent support to the partners and advisers based on their specific needs will not only continue to grow the size of the partnership, but relayed further that what is grounded in the needs of and the motivations of our partner businesses. And it helps partners and advisers grow and succeed at every stage -- development, helping partners attract and retain clients, business optimization, creating a more efficient business and business change -- becoming and supporting partners differently across our proposition and deploying targeted corporate support across a range of specialisms, we can make better use of our resources and help to drive best outcomes. Helping partners deliver client service excellence ultimately delivers strong long-term productivity. High-quality service that delivers value leads to referrals by clients. Around 40% of our new riding partners and advisers with the knowledge, tools, trade crack and corporate support to excel in delivering client service. [indiscernible] aimed at our most successful businesses, we also deploy enhanced growth and development support to newer businesses, they particularly targeted [indiscernible] people become busier and to demonstrate expertise when working with new clients. Let me introduce an example of this.

Leaving an employee banking background, I underestimated the difficulty in attracting new clients. I didn't have the luxury of a transferable crime bank or access to existing St James's Place clients. Quite simply, I wasn't creating enough income. St. James's Place provided a specialist manager to me, with whom I could discuss client acquisition opportunities, learn how to develop leads and help me purchase part of the existing St. James's Place business. Once I acquired, the new business improved. I now have funds under management of GBP 30 million, which generates revenue of circa GBP 200,000. In addition, I've recruited my own support staff and an additional adviser that I was able to support through the Academy and is now on track himself to be very successful.

We see the developments of expert managers as being a critical part of the development of expert partners and advisers. We will continue to prioritize these to strengthen our management depth. Beyond developing the support we are able to deliver to the partnership, it should not be forgotten that as a group of self-employed small business owners, the partnership has both the desire and natural tendency to want to build great businesses. We, therefore, do not need to micromanage partners. We achieve growth by harnessing the bottom up energy and drive they generate while delivering the best top down support we can. Of course, the last year has caused us to adapt to a changing environment and to change the way we do things. I'm pleased to be able to say that this has been extremely smooth, and our adaptation has exceeded my initial expectations. The partnership across our field management team, it has managed to pivot from a client engagement model that was almost exclusively a physical face-to-face one to one that has retained the personal aspect of our relationship-based model, but exploited technology and reach to stay in touch and keep businesses flowing throughout the pandemic. All this has been helped through our total focus on supporting partners' ability to engage with our clients. And to be honest, it shifted our perception of what is possible in the future. Having deployed capabilities swiftly to provide [indiscernible] and I am very confident about what the future holds. Provision of systems and technology to make it easier for partners to do business with St. James's Place will be covered in detail [indiscernible] enhanced partners' ability to interact with clients remotely, more responsibly and to process their business more accurately and quickly than before. Greater investments in systems and data analysis is also helping us determine where and for what reason the intervention of our managed growing partnership whilst helping us prioritize that activity. Crucially, we continue to use secured partner business loans as a means of providing business [indiscernible] relationships with St. James's Place are maintained and that their advice needs continue to be met. This process delivers great outcomes for clients, our partners and in St. James's Place. As part of this, agreements to deliver service to clients through continuity of service. 2020 was a year in isolation. We are not planning for the future based on what we experienced then. However, our growth strategy has been positively influenced by that experience. And as increasing freedoms return to the way we work, we will be able to deliver 10% new business growth target introduced by Andrew earlier. This will be achieved through a combination of recruitment of new joiners to the partnership, better and more targeted partner support through our field management team and corporate functions, utilization of technology for clients [indiscernible] and responsible for these core outputs and an outlook have high confidence in all of them. The partnership strategy will deliver a supported and growing partnership that is better equipped to support clients' outcomes. A partnership that is comprised of stronger businesses, able to thrive in the future and provide home [indiscernible] on a planned trajectory, we will create a diverse, optimized partnership, generating productivity growth over the long term. These outputs will positively contribute to the success of St. James's Place in the future. While maintaining a healthy flow of new business, we will retain and continue to strengthen the partnership, which is vital for our business. Through the opportunities provided by our investments in systems and other tools, we will maintain an efficient business and support a growing partnership. We make St. James's Place easier for partners and their clients to do business with, whilst also keeping their own business is safe. And we'll continue to strengthen the community feel and belonging on which the spirit of partnership is built and on which our growth depends. Let me introduce to you Rob Gardner, our Director of Investments. Rob will explain how our investment proposition supports great outcomes for partners and clients.

Thanks, Pete. I'm Rob Gardner, I'm the Director of Investments at SJP. It's my responsibility to run our investment proposition. That's our core investment management approach, our discretionary fund management services and stockbroking. Our goal is really simple. We invest money to help deliver long-term financial security to our clients, and we do that by planning, growing and protecting their wealth over time. I'm going to explain what makes our investment proposition unique, how we contribute to a retention rate of over 95% and why I'm confident that we can grow to GBP 200 billion and beyond by 2025. I'll start by lifting the lid on what you can see at the surface, the funds and how we create smooth returns for them and why we believe our size and scale gives us a competitive advantage. Let's start with the bigger picture. This is our investment management approach, which I'll now refer to as our IMA. It's GBP 135 billion today and growing. Discretionary fund management or DFM for short, DFM enables us to create and manage personalized portfolios, perhaps with stock and sector exclusions that meet very specific client mandates. And finally, our stockbroking services enable clients to buy, sell or hold a percent of our gross inflows. Partners and clients invest in the model portfolios and underlying SJP funds. These funds, as Andrew mentioned, are unique to SJP, designed specifically for us. This means we have complete control and transparency of the underlying funds and can evolve their mandate over time. These funds can then be blended together [indiscernible] investment proposition triangle. We offer DFM and stockbroking by Rowan Dartington, which I now chair. Last year, DFM represented just under 5% of our gross inflows [indiscernible] is to attract investment managers and smaller DFMs to our proposition in the future. And as Iain Rayner will explain later, DFM is a key component in our Asia investment proposition [indiscernible] investment proposition, giving partners something distinctive to offer their clients, which, again, as Andrew said, is one of the founding principles of SJP. We currently have GBP 135 billion invested around the world. We have over GBP 70 billion invested in global equities, excluding the U.K., and around GBP 20 billion [indiscernible] and all of that is deliberately designed to give our 4,000-plus advisers a unique investment proposition. The IMA enables advisers to plan, design [indiscernible] It means that no matter how diverse or specialist the needs of the client, something bespoke can be created. We have a senior and well-resourced team running the IMA. The ingredients that make up the IMA are 9 portfolios, our [indiscernible] retirement funds. And underneath that, we have 39 SJP building blocks and funds underneath [indiscernible] all over the world. And remember, this offering is unique to SJP and gives our partners and clients total confidence that we can meet their needs in the long term. So that's what you see on the surface, but how does it work? Our clients are in it for the long run and the average SJP client has been with us for well over a decade. Their life expectancy is increasing, which explains why we're so focused on meeting their needs in retirement and taking a holistic approach to the way we advise them. Now let's talk about performance. Our average client has seen their wealth grow by over 80% net of all fees in the [indiscernible] our clients doubled their money over the past decade. That's over a 7% return, net of all fees. Outperforming money in the bank by 6.5% and crucially, inflation by 5.2%. However, even with this smooth level of performance, we can't predict the future. You'll never hear me or our CIO, Tom Beal, make predictions about what will hit the headlines next week, what will happen to the S&P 500 next month or what will happen to the FTSE 100 next quarter. But what we do know is in a world where interest rates have fallen over the last 40 years and the risk that inflation will continue to rise in the future, doing nothing will not achieve long-term financial well-being for our clients. Our partners advise clients to take risks and invest to grow their wealth. And what I want to ensure is that we invest for our clients in a safe and controlled [indiscernible] So in this uncertain world, what we can do is ensure every aspect of what we do is in the best possible condition to deliver. And there are 4 key ingredients that make up the perfect recipe for long-term results. These ingredients are fundamental to what we do. i.e., how we build portfolios and how we select, monitor and change our funds. But doing this at scale whilst maintaining the flexibility of our investment proposition is complicated. So let me break it down. In order to manage GBP 135 billion in assets, our first and most important ingredient is to have a well-resourced team of senior individuals with the depth and breadth of experience to oversee what's going on across all our SJP funds and portfolios. We've got in-house specialist investment capability from a team of 39 people with over 300 years of -- over 200 years of experience. Our senior team all have previous investing experience, and they've been selected carefully to ensure we've got specialist input from every angle from equity portfolio strategies, all supported by a team of analysts and researchers. Having this team is key to our disciplined research and decision-making. When it comes to investment research, there is [indiscernible] and from this, we can design, develop and deliver the portfolios that meet the evolving needs of our advisers and clients. This gives peace of mind for both parties and decision-makers with extensive insight so that they can make good decisions. By combining our team with excellent data and technology, we can get the best possible results. We have 35 external [indiscernible] from internal and external sources. This feeds into a bespoke investment data hub that we've built on AWS and Snowflake, supported by Ian MacKenzie's technology team, which feeds the investment team, the insights they need to design a new portfolio or select, monitor and change of our managers. We continue to invest in industry-leading technology [indiscernible] a key component in our day-to-day decision-making. We understand that we can't make the correct call every time. But what we do know is if you get the right group of people in a room with the right technology to [indiscernible] in your internal team and 5 independent nonexecs who between them have over 150 years of investing experience. On top of that, we have a panel of 6 [indiscernible] portfolio construction and fund manager research. They challenge and support our ideas and improve our decision-making. But crucially, what guides us? What's the recipe that keeps us on track when we're investing for decades, not days? We have our investment beliefs, which guide us in everything we do, starting with: One, great client outcomes; two, asset allocations; 6, disciplined research; and 7, responsible investing. Those are the 4 key ingredients. So let me bring them to life through a case study. [indiscernible] used to be an engineer and Ms. Taylor used to be a solicitor. They now enjoy time being grandparents. The problem they face is that they're no longer earning money. They're just spending their retirement savings and living to 90 and a 25% chance of one of them living to 100. Unfortunately, the Taylors, like all of us, don't know what inflation is going to be for the next 2, 3 decades. [indiscernible] And not where they are that just won't work. And as they withdraw their money and try to make it last for the long term, this introduces a new risk. It's called part dependency or sequence risk -- designed to deliver a secure income to our clients in retirement. So the Taylors' adviser, Susie, who graduated from the SJP Academy a few years ago, uses her relationship and deep understanding of the Taylors as well as financial planning tools to translate their financial goals into valuable advice and a tailored investment strategy. She advises them to invest in the in-retirement growth fund, allowing them to take out 4% of their money a year inflation-adjusted for the rest of their lives. And it ensures that they've got capital left over to pass on to their family. This is a great example of intergenerational financial planning. This is why we're so well positioned to come up with solutions like this, for the Taylors and similar clients. So keeping the case study of Mr. and Mrs. Taylor in mind, how do our beliefs work in practice? Let's start with investment belief one, achieving [indiscernible] need to stay flexible and ready to adapt. So if for any reason, the outcomes of our clients change, their partner, Susie, can adapt quickly to reflect that. We're aware of the challenges to [indiscernible] to finance. Striking the balance of having enough income to meet their current needs, and having enough to last the rest of their retirement. [indiscernible] biggest opportunities we face in the U.K. and around the world. And as we help our clients have a secure income for their retirement, we increased the retention rate for Susie and SJP's, we're able to blend asset classes to meet the risk and return profile of different clients. And as I said earlier, that results in 5 million different investment solutions needs. And if they want something truly tailored, they can do that with DFM. The third value is diversification, diversification between asset classes as well as by managers and geography. Despite the fact we can't predict what the future holds, this principle ensures we don't have all our eggs in one basket. Diversification [indiscernible] active management of asset exposure and stock selection can add value. And we'll use it appropriately where we think that active management can improve that process. We believe in active management. Being proactive about how we select, monitor and change means that at any given time, we can ensure we continually have access to some of the best fund managers around the world. The performance of our 3 new global [indiscernible] gets results. And underwriting our commitment to our U.K. equity fund manager through our deep understanding of their DNA has meant we have captured significant relative outperformance to analyze and carefully manage risk because we know that's the best way to beat inflation as well as path dependency for the Taylors over the long term. We are continually monitoring our asset allocation decisions [indiscernible] being their performance over time. Six, disciplined research and decision-making. We have a well-resourced team with world-class data, technology and insights pulled together by peer bonds, alternatives and property. And we challenge ourselves by bringing in independent and external expertise to review every challenge. This process [indiscernible] again, we won't get every decision right, but by using this disciplined approach, we'll make more and more of the right calls, which will improve our performance over the decades to come. Finally, responsible investing is a strong source of financial performance. We know that integrating environmental, social and governance factors, ESG, to the circular economy of make, reuse and recycle, it's a $4.5 trillion opportunity according to research by Accenture. Let me bring that to life. We've invested over GBP 170 million [indiscernible] now cost more than before because they're [indiscernible] to wear, waste less and have strong consumer commitments, and therefore, brand momentum, which means Nike's revenues are up, their profits are [indiscernible]. Two years ago, we committed to have 100% of our fund managers signed up to the UN PRI, which they now all are. And 63% of those are rated A plus which is the very best Task Force for Climate-related Financial Disclosures, TCFD. And we also produced our Stewardship and Engagement Reports. We're one of a handful of FTSE 100 companies that have done this [indiscernible] better as a business because we know if we get this right, our clients, like the Taylor's, benefit, as well as the planet. This is how our investment beliefs help deliver financial well-being in a world worth living in. We've gone behind the scenes of our investment management proposition to understand the in-retirement funds that the Taylors were advised to invest in. I hope that this makes you feel as confident as I am that SJP is ready for the future, whatever it holds. But where are we now? We're continuing to monitor, adjust and improve our investment proposition so that we can maximize performance for the Taylors and our other 830,000 clients. Our size and scale means we're able to [indiscernible] in addressing some of the short-term performance challenges, which we identified in last year's value assessment statement. For example, we'll be making changes to our U.K. managers and creating a single U.K. building block, giving us better control over the style of managers that we have. We'll also merge our various alternative funds into a single absolute return fund, which is a simpler way to have diversification against equities and bonds. Later this year, we'll be relaunching our largest equity fund, which is over GBP 14 billion. And we will align it with a 1.5-degree C world. We will have reduced our fees on the external fund managers' footprint and half the carbon intensity of the MSCI world equity benchmark, and we'll do all of this with a 1% tracking error. As you can tell, I'm really excited about [indiscernible] many of our clients double their wealth, beating cash and inflation, and we've done it with less risk and equities. We have the recipe and the ingredients to repeat that performance. Our IMA plus DFM plus stockbroking gives our advisers that ability to offer tailored and bespoke solutions for their clients. On top of this, we're open to considering the right consolidation opportunities in the DFM market. We'll continue to ensure our advisers and clients have access to our unique [indiscernible] and again. Let's put that all together. Our size and scale puts us in a unique position. We have a senior well resourced team with great data, technology and insights [indiscernible] by the Taylors to achieve long-term financial security. In a world of low interest rates and one where many of us will live to 100, in a world where the big risk on the horizon is inflation, the biggest risk of all is not investing. We're ensuring that we're in the best place to make better decisions. And whilst we can't get every decision right, I believe that in an uncertain world, we can continue to grow our client's wealth decade after decade after decade. Thank you. Let me hand over to Ian MacKenzie to talk about how we are investing in technology.

[indiscernible] technology. What it means for St. James's Place, what we are doing today and how it will drive and support the SJP of 2025 and beyond. The pandemic has highlighted the importance of effective technology across all sorts of businesses, and we are no exception, [indiscernible] allowing a smooth transition of over 12,000 people from office space to remote working. This is testimony to our journey over the last 5 or so years and specifically, to our significant investments in Bluedoor, which has laid the foundation for our technology strategy and also a move towards becoming a cloud-first organization. Our partners and clients, just like all of us here today, are a lot more tech-savvy than they were a year ago. Everyone is more comfortable using technology, and expectations continue to soar. We've risen to the challenge of operating in a difficult environment by introducing digital and remote tools for our partners and clients, reducing paper and enabling new ways of working and collaborating. St. James's Place is and always has been a business providing a common infrastructure, exactly as both Andrew and Peter touched on earlier. Combining and integrating St. James's Place ecosystem with world-class technology will create a strong proposition, but also significantly in terms of sustainable expense management whilst meeting the current and future needs of clients and advisers in this age of experience. We think of this as building our next-generation client experience, or NGCX, for both today's and future clients of St. James's Place. It's about next-generation experience, next-generation technology and also about next-generation clients. This is an ambitious program of work to reimagine our digital client experience from today's online wealth account to what we believe will be a true -- this will complement and strengthen the outstanding personal face-to-face-led relationships our partners already enjoy with their clients. The program will enable [indiscernible] It will enable great outcomes for advisers, efficiency, scalability and of course, those great personalized outcomes for their clients driven by data and insights. And through all of this, it would deliver great outcomes for our business, sustainable growth of inflows, high retention through great experiences for clients and partners, operational leverage through efficiencies and scalability whilst keeping the business resilient. With the quality of the St. James's Place partnership and our commitment to an investment in world-class technology, we are strongly placed to deliver a leading digital experience between clients and partner powered by St. James's Place. This graph is from some Gartner research, showing the percentage of wealth clients choosing different interaction channels based on assets under management and technology, a hybrid approach. Recent research from Salesforce supports this hybrid approach, with 31% preferring human interaction when making significant financial decisions of record and Salesforce, our system of engagement. Both are bedding in nicely. We've seen their resilience and scalability in recent times, and they will be [indiscernible] we invest in long-term relationships, and this is just as true with technology partners as it is with our advisers and clients. We have long-term strategic partnerships with SS&C Intellect as the U.K.'s largest advice-led wealth manager. With ambitious plans for the future, we have competitive advantage in being able to invest with these leading providers. Through these relationships, our strategy is to deploy world-class technologies, leveraging continuous innovation by tech firms to support our partners and clients and deliver our next-generation client experience. Bluedoor, our system of record from SS&C, has enabled us to scale our business even through the pandemic. The recent tax year demonstrates this. We saw record new business in March, all handled by Bluedoor, with the majority of cases touching delivering sustainable scalability for the future. And whilst mentioning Bluedoor, an absolute game changer for our technology journey and now part of the fabric of St. James's Place, we shouldn't understate just what we achieved in recent years with a very successful implementation and migration journey, hundreds of thousands of clients, billions of funds under management, all successfully transformed to the new system, quite a rare event in U.K. financial services. What's even rarer is being able to then actually decommission legacy back-office systems, something we achieved during 2020. And I'm particularly proud that our Bluedoor program was awarded Best Implementation in Fund Europe's FundTech 2020 awards. Salesforce, our system of engagement is all about long-term relationships hyper-personalized service delivery and efficiency in partner businesses as well as in superb practices to highlight this.

You can have 2, 3 months worth of work, and you can see the hours have put into it by all members of the team before that person is even a client of us. It's just such a great way of really appreciating the amount of work that the team puts into each client.

Now we're able to run reports on a monthly basis as to who we need to book in next month, the month after, the month after that. And my team do that automatically now without me getting involved, so that's taken a lot of stress off me. And obviously, off the advisers, so that gives us a bit more time now to focus on business, focus on cash flows, clients, et cetera. If we can get that right, we know clients will come back for a repeat business.

When Salesforce came along, we could say I wasn't quite exactly we're most happy about it and being completely proton. Actually, we like Salesforce, it's really easy to use. It's dead simple. It's really simple for training up other people. The system itself will be what we needed to be. It will deliver what we wanted. I look at it as a tool to improve the service that you deliver to your client.

Bluedoor and Salesforce, our combined ecosystem, not only providing the bedrock for powering our digital strategy, but also the key enablers allowing us to reimagine the way we build out our offset per annum expense guidance. And as you would expect, we are well on the way with leveraging this ecosystem, in particular, partnering with fintechs, allowing our partners today to choose to access a range of tools for their businesses, DocuSign, Qwil Messenger, think WhatsApp, but compliant ,provides us with digital front office. DocPortal, providing a document management portal for advisers and clients. And Digital Clipboard to support digital client onboarding, including fact finding and compliance. Just like all of our clients today, Mr. and Mrs. Taylor, who Rob introduced to us earlier, can currently access their St. James's Place online wealth account. As allocation information, personalized actual performance information, over time periods of the Taylors' choice, electronic rather than paper correspondents, secure messaging and including that last-minute ISA investment before the end of the tax year. All this live and used day in, day out by Mr. and Mrs. Taylor and all our clients and partners today. Deloitte's 10 Disruptive Trends in Wealth Management Report notes that many advisers still face significant barriers to providing holistic financial advice to their clients, including access to the right tools and software. I [indiscernible] not if you're a St. James's Place partner, and our continued investment in this area will deliver increased productivity, stronger client relationships and a more efficient St. James's Place. Our strategy is also about simplifying our technology estate, reducing costs and increasing resilience. For example, our investments in Bluedoor and Salesforce has already enabled us to decommission our back-office mainframe, which was 26 smaller systems, tangible outcomes, which support our 5% per annum expense guidance. Our technology architecture is moving to a simpler and more structured design than we had before. This approach makes our technology simpler and cheaper to maintain, reduces operational risk and is much more scalable. Our investments in automation will deliver over 100 processes automated by the end of this year, an equivalent saving of 25 FTEs in operations, technology and business checking. This is on top of the 70-or-so bots we already have working, which have freed up 21 FTE opportunities already. This operational excellence journey, combined with simplification and automation, is the fundamental principle which will enable us to deliver on our 5% per annum mix as we manage and mitigate the associated fast-changing and evolving risks through technology solutions, awareness and training, support from external experts, including a specific role on the Board's Technology Advisory Group. So almost the state of the nation as to where we are today. And hopefully, I've shown a light of what we are actually doing today. I suspect a far more technology-enabled St. James's Place than you might have perceived. But what about our future technology journey as we move from the information and digital age into the experience age? The keyword here is client experience. Let me bring to life how we're using data and the future value we see in it. We start from a strong place. We have years and years of data around every transaction placed, every piece of advice given, every investment made and every investment in cash. One of the strong advantages of being a long-term integrated advice business. Rob talked earlier about some examples of using this data in the investment world. Our key focus over the coming months and years is leveraging this data to support and drive outcomes for clients, adviser by artificial intelligence insights to increase efficiency and productivity. We're already working to pilot Einstein artificial intelligence within Salesforce to identify next best actions and opportunities for clients to achieve their goals. Similarly, AI-driven insights will enable timely interventions with partners as part of managing conduct risk and keeping the business safe. Data and AI will also enable an evolution from a successful robotic process automation to intelligent automation of the future. We are developing this initially within our business checking function and indeed, last year, won an award for our early work in this area in partnership with Intellect, the Celent Model worth book case studies for intelligent automation and wealth management. This intelligent automation will further underpin our expense management over the coming years, whilst providing consistency and to support partners. This will drive efficiency and productivity, allowing partners to spend more time face-to-face with more clients, focusing on the complexities of the advice to a straightforward advice. To support all of this, we will continue to invest in data science capabilities alongside our strategic partners as we increasingly leverage the power of our ecosystem through data, including maturing our use of Salesforce through adoption of Marketing Cloud, social media integrations and more AI-powered insights. These plans will enable us to continue to grow inflows in a long-term sustainable manner through increased insights, deepened relationships and productivity, all underpinned by tech. Beyond data, we are focused on reengineering our business processes from paper-heavy to digital first. Our move from electronic correspondence, PDFs rather than paper to true digital experiences for partners and clients, delivering efficiencies, cost savings, scalability, arched with clients and partners for our next-generation client experience and expect to have a pilot launched in Q1 of 2022 with continuous rapid enhancement in innovation of their actions to design and deliver the digital experience they want from St. James's Place for both today and tomorrow. Our focus on data and reimagining our digital experience for clients is part of our operational excellence program of work over the next few years, making it easier for everyone to do business with St. James' Place, whilst reinforcing our capabilities to support and enable sustainable growth in inflows and powering operating efficiency across the organization and crucially funded within our expense guidance. I believe our plans are significant and ambitious and will power our future growth alongside underpinning operational leverage whilst keeping the business resilience. We have a track record in safe delivery given our Bluedoor and Salesforce journey in recent years. We have [indiscernible] to a data and AI integrated ecosystem, delivering growth, scalability, efficiency and resilience whilst reducing complexity, costs and operational risk. We are already on this journey and begin to see the benefits, and these will further crystallize over the coming months and years as we deliver an efficient St. James' Place of GBP 200 billion funds under management and scaling well beyond that. And of course, all these plans are included in our medium-term expense guidance. We are a people business [indiscernible] sufficient growth as we look to the future. Thank you very much. And now I'd like to hand over to Iain Rayner, who will talk about how we are building a long-term business in Asia.

To talk to you today about our business in Asia. I'm Iain Rayner, and I led the projects in 2013 and 2014 to acquire the Henley Group to form SJP Asia. And since October last year, I've taken over executive Board responsibility. I think I'm right in saying that the last time we gave an in-depth market update specifically about Asia, was at our annual results presentation in February 2015, and it now seems an opportune time to look again at SJP Asia and provide you with an update, an update on the considerable amount our team of partners, advisers, managers and employees in Asia have achieved over the last 7 years. And more importantly, an update on the plans in Asia for the next 5 years to 2025 and our strong belief in and commitment to the longer-term Asian opportunity for St. James's Place. There are 3 key things I want you to take away from this presentation about SJP Asia today. The first is that we plan to grow gross inflows by 25% per annum compound to 2025, such that we have a business growing from its GBP 1.3 billion core funds under management by 27% in Asia in 2020 and are confident of achieving the 25% growth in gross inflows target in 2021 to over GBP 400 million. The second is that having invested to build our presence, we plan and expect to move SJP Asia to cash breakeven by limiting further fixed expense growth while increasing fee income through new investments and maturing of funds in gestation. Beyond 2025, we expect to grow cash profits from the Asian business strongly as those operating jaws widen. In 2020, we reduced the post-tax net investment cost in Asia to GBP 17.4 million from GBP 19.9 million in 2019. And we plan to be below GBP 15 million in 2021 and then to reduce, on a consistently predictable basis, to cash breakeven in 2025. The third is that we see real long-term value in building a disruptive, growing and profitable presence in 2 of the most attractive wealth management markets globally with the opportunity compelling. When we talk about SJP Asia, we mean Singapore, arguably the world's most exciting wealth management market right now, and Hong Kong. And our Hong Kong office has a satellite office in Shanghai, dealing with expats in China. We purchased the Henley Group, the building block of SJP Asia, 7 years ago now in 2014 in order to provide us with a long-term strategic option in an exciting growth market. The origins of Henley Group actually go back to the early 1990s, around the same time that SJP was founded. In 2014, our market entry strategy to the fast-growing wealth management markets in Asia was as a British brand built on largely expat British partners serving largely expat British clients. I talked earlier about the considerable achievements of our team in Asia over those 7 years. When we purchased Henley, it had GBP 0.5 billion of funds under management. And today, SJP Asia has GBP 1.3 billion of SJP core investments and DFM plus another GBP 0.5 billion of third-party assets. From 4,000 clients in 2014 to 12,000 clients today, from 50 advisers in 2014 to 132 at the end of 2020. In terms of infrastructure, we have invested largely through our new life company in Hong Kong and a branch of our Dublin Life company in Singapore. We operate Rowan Dartington's DFM service in Hong Kong and Singapore under the St. James's Place brand, Asian clients and partners. And SJP Asia was an early adopter of Salesforce. There have been challenges, but we have overcome them and are well positioned for the next phase of our growth. We're particularly focused on the U.K. expat market as the U.K. expat-focused financial Australians make up the biggest concentration and increasingly high net worth families from across Asia who live in or use Singapore or Hong Kong to conduct their financial affairs. But in many instances are really global citizens, with homes and families spread across the world, including and often in the U.K. I want you to hold on to that thought of the Asian high net worth families and the global expats using Singapore and Hong Kong to invest and structure their financial affairs because that's where our big medium- to long-term Asian opportunity is. Partners in SJP Asia today look after 12,000 clients, with an average of GBP 110,000 core funds under management invested. That's GBP 1.3 billion of core SJP investments at the end of 2025. Our Asian partners are consistently acquiring 800 new clients a quarter, so 3,200 per annum. So even if we don't increase that run rate, 27,000 clients with an average of GBP 185,000 invested with us is GBP 5 billion. So how are we going to do that? There are 4.6 million mass affluent people with between USD 100,000 and USD 1 million to invest in Singapore and Hong Kong combined. There are then another 300,000 people in Singapore and Hong Kong combined with between USD 1 million and USD 30 million to invest. That's a total asset pool of just under USD 2 trillion, a path to those clients who may have bought financial products on an ad hoc basis, but who now want and need to take a more planned and order approach to their finances often as they get older. And we also want to offer an alternative to the private bank client who is perhaps tired of the fact that they're frequently being told they need to up their minimums to stay with the private bank or whose advisers are thinking about leaving perhaps because they want to take a more client-centered approach in an environment where they work for themselves. Our guiding principle must be that our partners are doing business with clients who see value in international family wealth structuring and wealth extraction strategy percentage. The U.K. is still seen as an attractive place for many Asian families to educate their children at either school or university, and also to buy property, even more so given the 300,000 B&O visas which are likely to be handed out to Hong Kong citizens by the U.K. government. So we do financial planning and investment in a way that is cognizant of these important international lifestyle considerations. We're very conscious of those clients and their needs, and working with Asian families on those aspects will be very important to us between now and 2025. We're also working to make sure our SJP Asian versions of the investment proposition and DFM are optimized for Asian clients. That means more international and Asia-centric funds and portfolios, SJP in Asia is and always will be our partners and advisers. The diversity and strength of the U.K. partnership is incredible. For many years, I've been lucky enough to work closely with many of the large and small who have around GBP 1 billion of funds under management each, and these businesses are compounding at an astonishing rate. And when I walk into the SJP offices in Singapore or Hong Kong, I feel a strong similarity to our offices and teams in London in the city and Canary Wharf and Beyond. Enthusiastic, motivated, bright people, serving the bankers, lawyers, accountants and business people in the world's most exciting financial centers. Clients follow or do business because of their advisers. What I think we know how to do is recruit and help develop the best partner businesses, to find the right people and back them, to help them recruit, to provide them with the right products and services, to provide them with the right financing and technology and expertise. If we're in a business of 27,000 global expats and Asian high net worth clients in Singapore and Hong Kong by 2025, then we need a diverse, high-quality team of partners and advisers who will attract and retain them. We start from a good place. We have some brilliant partners in Asia who have stayed with us from the Henley acquisition and successfully built their businesses. We've recruited the very best expat-focused financial advisers in Singapore and Hong Kong since 2014 to become St. James's Place Partners. And as I've just said, we continue to recruit them. One of the lessons we've learned is that we mustn't chase adviser numbers for the sake of it, recruiting too many inexperienced advisers. You'll have seen our Asia adviser numbers drift back in 2020 as a result. Our 2025 partner strategy is to have the best 100 partner businesses we can, split roughly 50-50 between Singapore and the combined Hong Kong and Shanghai offices. Many of these partner businesses will be multi adviser. Increasingly, we're becoming the home for private bankers or those running family offices for high net worth Asian families who want more control over their lives or to work with their clients on their terms. And we must offer a career path for the very best Asian life assurance agents, a partner proposition based on empowerment, and responsibility to look after their clients and their own lives. It's going to be a really exciting next few years. When I look at what we're -- just last week, we completed the recruitment of an advice firm in Hong Kong with GBP 130 million of funds under management and 6 advisers. That's the type of thing that I know we can do more of. Just like we are in the U.K., we've got to be the best place for entrepreneurs in Singapore and Hong Kong to build their financial advice businesses. I started out talking about the history of SJP in Asia because I wanted to demonstrate that we have strong routes dating back through the Henley Group to the early 1990s. The point I want to make here is the importance of a long term approach. We've quietly and patiently built a GBP 1.3 billion [indiscernible] to someone who has only a short-term mindset. That's a principle which is incredibly important to our clients and partners in the U.K. as well. It's in the DNA of SJP. This year, our target is to have gross inflows in Asia north of GBP 400 million, which will be 25% above 2020, and reduce the cash net investment to below GBP 15 million. We're on track to deliver both. And we plan to move to cash breakeven in 2025 on a broadly straight line, predictable basis. Andrew mentioned this earlier, some historical perspective from SJP in the U.K. It was really only in 2003, SJP's 12th year of existence, that the U.K. business became consistently cash profitable. And our business plan in Asia is to reach the same milestone at the same point, 12 years after the acquisition of Henley. I've set out our medium-term financial targets to the end of 2025: 25% compound growth in gross inflows to GBP 1 billion per annum; GBP 5 billion core funds under management; and cash breakeven. Just as we have been in the U.K. over the last 30 years, we intend to be a market disruptor in Asian wealth management, bringing a long-term partner-client relationship advisory approach to the market amongst the big life insurers and private banks in Asia. We will win by building the best 100 Asia partner businesses we possibly can by 2025 by building a long-term advisory client proposition with a distinct Asian U.K. perspective and flavor, by being open and clear in business and the opportunity for it. Over time, we will build confidence and excitement in SJP Asia by delivering in 2021 and the 4 following years to the end of 2025 against the clear numbers and strategies that I've talked about today. Thank you.

Thanks, Iain and the rest of the team for today's session. I hope this Capital Markets Day has given you a helpful insight into our business and why we remain excited about our future. Today's session will have provided you with some color around how we will deliver against those going forward. Peter explained how in the context of a U.K. adviser market that is set to shrink rather than grow, we remain confident in being able to expand the partnership through a combination of recruitment and an increasing contribution from our Academy. Not only that, we have focused plans to support enhanced productivity across the partnership. Rob talked about [indiscernible] and counting. We are evolving and developing our distinct investment management proposition. so that it continues to underpin great client outcomes and support high retention. Ian MacKenzie spoke about how in a fast-changing digital world, we see technology emerging as a key competitive advantage for SJP as well as acting to enable and underpin our medium-term expense guidance. And finally, Iain Rayner spoke about our growth strategy in Asia, how we will reach cash breakeven by 2025, and our commitment to creating long-term value in some of the most attractive wealth management markets worldwide. That's it for the presentations, and we look forward to joining you for a live Q&A session shortly.

Good afternoon, and welcome to the St. James' Place Capital Markets Day live Q&A session. I will now hand over to Andrew Croft, Chief Executive of St. James' Place, for opening comments before we open the line to questions.

Thanks, Rob, and welcome, everyone. I'm joined not only by my executive board colleagues who present [indiscernible] let's now open up to Q&A. So first question, please.

Can we please have the first question from Andrew Sinclair, Bank of America Merrill Lynch.

On the Academy, you talked about delivering 400-plus from the Academy into the partnership for 2022. Would you see that as a steady state? Or do you think you'd look to growth? I think you talked about consolidation opportunities in DFM. Just wondered, is that part of the breakeven time frame targets around Dartington or could that accelerate? Or -- and thirdly, it was just on current trading and holidays, I think most of us on the call haven't taken many days off so far this year. I expect your advisers are similar as the world opens up again?

Thanks, Andrew. And actually, I'll take them in reverse order and do the current trading one first. And look, we are really encouraged by what we've seen. But you're absolutely right. It's tricky year to call, isn't it? And it's not a year where you can do simple extrapolation. I have no doubt people will take holidays in. And over to Rob on the DFM.

Andrew, Rob here. So just on DFM, the pathway to breakeven 2024 is really just based on us focusing on getting the speed up or slow down depending on the nature of that deal.

Okay. Thank you. Pete?

Yes. Thank you, Andrew. In terms of the projections we have happening moving forward of Academy graduates into the partnership, I think the important things to remember is an Academy graduate is on a training program that is not determined in terms of time scale at the very date they joined it as a specified graduation point. So it's something that will remain flexible in the medium term.

Okay. Thanks, Peter. Can we have the next question?

This will be 3 in 3 different areas. The first one is probably aimed at Rob, I'd imagine. As you outlined in your piece, I think that, that's always been the objective, but it is ever harder at the moment. So -- and you obviously outlined that you thought that you could. So just really curious digging into a bit more detail there, what kind of assumptions are you making in the big -- in the annual report and economic assumptions? You're attributing 2.6 blended or unit-linked bundle in the 3.3 inflation rate. I appreciate if it's for slightly different purposes, but nonetheless, just wondered what area. Second question is around Asia. Thanks for the comments there, Iain. Just on dating that number, so maybe you can just outline how much that actually is constraining the revenues if you like of the business because I didn't associate that business -- a gestation business. Similar to revenue margin assumption kind of now versus 2025? And then the final question or area really is just a quick one really, just on the Academy over time, have they been getting better or worse?

Okay. Thank you, David. Since the last question was on the Academy, I'll probably go to Peter first to answer the Academy question.

Yes. The Academy are predominantly younger. They have less experience and therefore, can take slightly longer to get going as opposed to new drillers from an industry background, but we came from an existing industry background. Now the other factor that we've known for many years is the longer partners, irrespective of their background, state of the partnership by way of numbers or indeed moving to a different type of business shape. So we've got a long track record of people growing their business over a period and a -- longer than with us.

Yes. As you say, it's a challenging question. The way we've tried to tackle it is with our core building blocks. So I talked about these global equity really got split by start -- these equities. You know that within equities, you've got growth value and quality. And depending on what environment you're in, quality might do better of equities. The challenge, as you know, is that bond yields are extremely low which is why we started to sort of build out our alternatives piece as well as a scenario we saw in equities. In terms of the expected return on Alpha, each one of those building blocks has active mandates with a high tracking areas all net of all fees or net of all the fund manager fees are 1% Alpha assumption. So that could be 20% on top of a 5% expected return.

I'll put Craig on the gestation first, and then Craig can hand over to Iain for the second part of the question, David.

Yes. Dave and I -- the gestation figure for Asia is inevitably pretty decreased. The products and the charges work much in the same way as you're familiar with in the U.K. products. And so what you'll see is an increase in that top level and so on. And as that becomes a more meaningful figure, it's one that we may choose to track at the age level externally. Inevitably at this stage in a sort of sub.

Really, hi, David. Yes, it's -- we should use the U.K. experience as a guide to the paths of cash profitability in 2025, ultimately the U.K. proxy.

Okay. Can we have the next question, please?

Yes. Can we go to Ashik Musaddi from JPMorgan Cazenove, please?

I mean, sorry, I missed a part of the presentation, so I'm not sure if it is already covered. But you mentioned that there are plans to increase the productivity of the partners over the next few years. I mean could you -- it's a bit complicated to measure as in like what is really driving productivity, so that's 1 question. And second question, I think you mentioned that about 2/3 of your gross recruitment in Academy means that majority of your net recruitment is done through Academy.

Thanks, Ashik. I'll pass those over to Peter.

Yes, Ashik, for the last decade -- and indeed, the way we approach recruitment in the wider partnership has always been on a quality-led basis. As we manage, we, to achieve our own growth aspirations need to focus more on the Academy achieving a greater proportion of new joiners. So yes, there will be, over time, the Academy. This is something that we're very focused on, managing the growth of the business in a sustainable and manageable way. We have evolved the management of the partnership through what we call a field management team. What we're looking to do very clearly as the partnership matures, and it's important that we look to isolate that the category -- not category, sorry, the way a partner wishes to grow their business, be they in a developed business development phase, pick a field management team through to help the partners grow, stabilize their business, to create more efficiency and to create the business that the partner ultimately wants to put to measure because you're right, it's an art, not science. It's very important that we are able to establish the growth required for each individual business in the way that business wants to.

[indiscernible]

No, no. I thought Pete covered most of the bases. One of the -- I think another way of saying this, what we're trying to do actually is for the management team and it has its own business cycle. And I think we can see some really great opportunities for more impact on the partner business. The second one is a post-COVID world where partners do [indiscernible] and conducting business remotely. Partner businesses themselves are seeing opportunities to really increase their own meeting capacity remotely for appropriate clients. So they opened up an opportunity to increase their business efficiency in this post-COVID environment.

[Operator Instructions] In the meantime, we'll go to Oliver Steel from Deutsche Bank, please.

Not a preponderance, but given the mix between gestation business and Unit Trust and ISA business, the faster new business growth in the short term has a more negative, open to the opportunity of consolidating other DFMs, which I don't think I've heard before. Did I hear it right? How much potentially could you spend on that? Because if you buy DFMs, you're not recruiting them yourselves. And then the third question I've got is on technology. I mean, you say you have a competitive advantage.

Thanks, Oliver. I'm going to pass the revenue margins to Craig.

Yes. Hi, Oliver. The impacted range that we've given from net income under funds under management, which may sound counterintuitive if you think about some of the business that goes straight into this is going. So put simply, no change in any guidance we've given at that level as a result of business performance that's about positive gearing and negative gearing in the presence of fixed costs and any calculation. That has an impact, but fundamentally...

DFM one. It's always been part of the business model, Oliver. And you're absolutely right, any acquisition, particularly an acquisition of a people business is risky. So it's not a big right fit for the business. So hope that helps. And I'm going to pass over to Iain on the technology.

Thanks, Andrew, and thanks Oliver for the question. Some of that's availability and scale to engage with large tech firms and their desire to work with us. So we're seeing -- receive assets actually take terms, work towards us, wanting to works with us in terms of [indiscernible] The other point I'd bring out here is, I think for many people, and I suspect many people on the call, we're probably not shown enough light on what we're actually doing and where we are and the journey we've been on. And actually, I'll just give you the -- a little further advanced than that than many firms. And the article on to say, SJP have a level of functionality in many mainstream ISA platforms would do well to emulate, the big tech given our scale and our plans in giving us an offensive advantage going forward.

Thank you, Iain. And just looking back to the DFM and consolidation, I should have said anything we do, do will be small, but that economically we'll be struggling, and it could be a good time to invest. Can we go on to the next question, please?

Next, can we talk to Andrew Baker from Citi.

Can you just give me a sense of your retention rates for graduates from the Academy? So for example, of the graduates in any given year, what percent would you still expect to be part of the partnership in, let's say, 3 to 5 years? Your gross flows per adviser, it looks like that peaked in 2017 and has declined every year since then. I appreciate that some of that is the consumer sentiment impacting the flow number, but with your investments that you see as a run rate for this?

I'm going to pass you over to Peter in a minute. But I think the -- I wouldn't underestimate the impact of the markets or the election of Brexit this year. But anyway, Pete, over to you, both the Academy and productivity points as well.

Okay. So the academy retention, I think, to rear a change journey for people is a -- I'll generalize it. It can take a couple of years to go from being a complete non-industry person to getting through. The future as a financial adviser is not for people -- it will be on that journey. That's why we're very careful at diligently supportive of the people that go through the training program who also would be sustainable in terms of either running their own business or as an adviser inside someone else's business. We have a methodology where people moved away from the Academy and so show against the field management team and they are then talk the real trade up. So their learning is continuing over a number of years until they are putting absolutely sustainable business numbers in terms of our retention for partnership.

And on the retention question, do we -- not retention -- productivity question, do we believe productivity parts can get back to 2000?

Talk about the volatility, about Brexit, about how did it -- it's naturally had an impact on all sorts of businesses. I think all the things that we've done really successfully through -- at the capacity within that, such as Ian MacKenzie as mentioned earlier on. So whilst I wouldn't want to reflect back to 2017, do I believe that we will improve productivity or the stone of the strategy we've got to achieve our stated targets? So yes, very, very confident.

Thank you, Peter. Could we go to the next question, please?

Three questions from me, if I may. The first 1 is on cost reduction and the new technology. So you were mentioning, for example, that 2 things [indiscernible] however, this is still a very, very small proportion of your total workforce. Can we expect something more for the coming years? By that, I mean can the run rate costs in terms of full-time employees in terms of new recruitments necessary to support the business? Or simply that the business model requires and will continue to require, clearly, are focusing much more on the economy for sustain your future growth? Is there a chance that actually you might move to slightly lower demographics [indiscernible] been historically for you? And then the final question, if I heard well, you say that you would be able to integrate your DFM proposition together basically with the rest in a single proposition?

Thank you very much. I might take the first 1 on cost reduction because we were very, very clear in our strategy back in February that we would be looking to limit cost is a way that we will enable our sales to do that whilst growing gross flows by 10% and continuing to grow and scale business. I'll put again, go on to the [indiscernible]

I think all the real strengths of the partnership, is this broad church, if you like, the demographics of being nationwide offering anchored in people who are in mainstream face-to-face advice elsewhere in the profession, doesn't necessarily mean that the people that they attract to do business with St. James's Place or will get to graduate from the Academy or graduate into our larger businesses who will have client servicing legends set up within those businesses and giving them the opportunity to a record of that happening in the past. But obviously, it's something we would keep a very close eye on but no indication of that.

I might just see -- hearing [Gascon,] got anything he wants to add.

Also age and gender and also it's what Gardner talked earlier about taking a long-term view of things. There's a level of future proofing and how long do they become, et cetera. But this is future proofing the business, both in terms of the use and vibrancy, but also the diversity, which we'll talk the [indiscernible]

Rob here. So if you remember back to my presentation, we have the proposition triangle, which has -- better be our core IMA, and then it has discussion fund management and stock broking [indiscernible] and so our partners no longer see this as necessarily a separate proposition, but completely integrated with the way that we do business. Second, then it's probably not come out, but actually end up of cooperating. But thirdly, the big game changer for me is the integration. If you remember, I talked about the 4 key ingredients to long-term success, the right people, the data and technology, the investment governance and beliefs, albeit implemented in different ways, and that's the whole point. We're now able to leverage the data and technology between the 2 businesses. So this is the real opportunity, it's that ability to let it approach to DFM and stockbroking, but with a common set of people, base in technology, investment beliefs and investment governance.

Okay. Can we go to the next question?

I've got 3 questions, if I may. Firstly, on performance, Rob, I think you said there's 12 portfolios with 39 distinct funds. On comparing to inflation is not a particularly high hurdle to be. So I'd like to know really whether your funds are actually beating the competition, very well competition. Second, on client growth [indiscernible] has grown by 210,000. So it's grown at 3x the rate. And I just wonder with an advice model, you are limited in terms of [indiscernible] swing towards investing that we've seen over the last year. And then finally, I think at the moment, the number of advisers per client is 192. And what does it mean and what are the implications of that in terms of overall adviser growth if you're trying to grow gross flows by 10% per annum?

Thank you, Andrew. The 39 funds means that there's a lot of different choices. So in July, we will be producing our funds reports with all of our both absolute and relative funds that we relaunched last year. All 3 of those funds are outperforming their relative benchmark. But you'll be aware that the key shift was to shift in the point. I want to go back to decades not days, and the key thing is about making sure that we have both the absolute and relative performance on a rolling 5-year and decade basis, by 10 years, has really been momentum driven. And so where we really repositioned our RMA is to make sure that we are well exposed to the key drivers. And actually, we're taking [indiscernible] So whether it's a value or growth or momentum, most of our managers have actually demonstrated that by holding the court, you've done very well. I take the U.K. e-com fund, deep value manager in market has underperformed. So that highlights why we need to get this right. But I would say 2/3 of our equity fund managers are kind of outperforming on a relative basis.

Everyone wants to go on in -- come in and say a few things. We are, of course, a different model to Hargreaves. We are vertically integrated, as I said, in my section rather than being a platform. So it is totally different.

It's just from the lockdown in that a lot of people were all staying at home and opening accounts. I'm not sure they were clients. We -- to acquire 70,000 new clients during a lot long term, some people have opened an account with Hargreaves. I think they're very different.

And I think the third point, Andrew, is on the number of clients who -- advise over to Peter on that one.

Yes. Thank you, Andrew. The point Andrew makes there that about the length of time that partners have been with St. James's Place and other people relatively new. So the calculation of dividing the client base by the partner members is slightly misleading in some ways. And as far as some new people, the value now is through 200. The longevity of client relationships with St. James's Place, which Andrew referenced in the very early talents of the companies, decide the number advisers throughout the [indiscernible] lights on of our clients and by our ability to use our business sale and purchase agreement means that actually, yes, I do think that adviser growth will be adviser growth. And indeed, I think the important factor is the length of time that these clients spend in the organization and our ability to retain the clients' relationship and...

Clients under the age of 1. And hopefully are going to be with us for a very, very long time. And we have 200 clients over the age of 100. Almost certainly all that's [indiscernible] .

[Operator Instructions] For now, can we move to Abid Hussain from Shore Capital, please?

Competition in Asia differs to adapt here in the U.K. because in the Asian markets, in Hong Kong and Singapore, you've got the large life insurers with -- and I'm wondering, does that sort of provide you with a robust competitive landscape locally? Or is it simply a case actually, there's very limited overlap because you are focusing [indiscernible]

I'll pass it to Iain Rayner.

Thanks, Andrew. Thanks, Abid. Yes, I think the competition in Asia is going to be different to the competition in the U.K. That's the assumption on this, so is -- recruit a very significant majority of the U.K. and other expat-focused effectively IFA. Now I think you're right. We're focused in a different area, particularly with that pivot towards Asian high net worth families. And actually, I think the competition there [indiscernible] and that's where we will look to have some conversations with some of their people that might want to come and join us as partners, and I think we will certainly be computed in it -- on that top-end agents, if you like. But I think that's a very, very different model. It's a very bancassurance product-led model, which is -- we're obviously in the advisory [indiscernible]

Steven Haywood from HSBC have a question, please.

Okay. Sorry, can you hear me? Is 2025, for the Asian business, I wonder if you had some explicit targets for the DFM business in terms of AUM expectations by 2025?

Also that's kind of a good proxy for one we break even. But by 2025, we should be able to get to about GBP 8 billion in DFM. So hopefully that answers the question.

He rose his hand again.

I have indeed. Just 1 final 1 for me. It was just -- there's been quite a few questions about productivity. And I would imagine you'll get a good boost as well already effectively in the system. And just really wondered if you can give an equivalent figure for investment bonds and unit trust and ISAs. How much of that would already be market-linked, say, again?

Thank you, Andrew. I'm not sure we allowed double dipping in these Q&As. I think what you're asking, Andrew, is -- because I've missed the question slightly, so to introductions and referrals, I would say that is indifferent across products if that makes sense. I think you might also have been asking your question...

But really how much is already in the market? I think you previously said something like around 80% for pensions. And I'm just looking for an equivalent figure for other products.

For pensions, Andrew, it's inevitably correct because of the nature of the product, particularly where you've got people mocking up all sorts of legacy investments to where the funds come from in terms of already invested or new money in the other products. So I'm afraid that's one where we had just drawn a line that you [indiscernible] there the repairs.

Thank you, Andrew. Can we have the next question, please?

Can we please ask Oliver Steel from Deutsche Bank for a question?

Okay. So I think I'm being told there's no more questions in the queue, which is good news. It means we can be released to the presentations, and it's given you some helpful insight into the business and also why we remain very confident about our ongoing prospects through '25. So finally, stay safe, and thank you again.