Creating your future with Cofunds

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1 For professional financial advisers only Wealth Solutions Financial Advisers Creating your future with Cofunds Transitioning and excelling in a changing world

2 Turn change into opportunity

3 To succeed in a fast-changing marketplace, work with a platform partner that s stayed ahead for more than a decade. Over the 10 years since Cofunds was established, the investment market has evolved significantly. Private investors have become more empowered, able to research, buy and change investments at the click of a mouse. The product market has continued to innovate with an ever greater focus on transparency, flexibility and performance. Financial advice is shifting from a focus on selling products to building long-term client solutions. And where there were just three fund platforms when Cofunds began life in 2001 today, there are close to 30 platform propositions vying for attention from investors, advisers and institutions. Be ahead in a changing world. It s a different world, but an exciting one and Cofunds is ideally placed to help you make the most of it. Over the past twelve years, we ve been constantly evolving to deliver what firms need to do more business more easily, efficiently and compliantly. Now, we re positioned to support and partner with advisory, non-advisory and other financial services firms as they take on the challenges ahead. In particular we are ready to help businesses respond to the demands and opportunities presented by the Retail Distribution Review (RDR), providing the tools, services and support to help our clients create businesses that can be efficient, profitable and in demand. It s an exciting world be part of it with Cofunds.

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5 Evolving every day to serve you better Responding to real market needs, Cofunds is dedicated to finding the most appropriate solutions to real client needs. The aim of Cofunds has always been simple: deliver what s needed to enable our clients to do more business, more easily. When we started, we revolutionised how advisory firms trade and hold collective funds. By transforming timeconsuming manual administration into easy online execution we made it possible for more firms to deliver a whole-of-market proposition to a growing and diverse client base. In essence, we enabled our clients to improve the value they delivered to their clients. We then expanded the service into other sectors of the market, from discount brokers to custodians. We introduced a cash account facility to enable our service to become a true financial-planning platform for every client. Plus we introduced tools and services to enable firms of all sizes to deliver and demonstrate an investment process that s efficient, repeatable and compliant. We enhanced our services in 2012 to cater to the needs of firms and investors in a post-rdr world. The introduction of our segmentation tools gave firms, for the first time, the ability to offer different service propositions through the platform. We also introduced explicit pricing and lead the market with the introduction of clean share classes, offering truly transparent pricing. By developing our proposition in step with market needs, Cofunds has become a multi-dimensional platform that consistently solves the problems that are most relevant to our clients.

6 Cofunds revolutionises the time consuming and inefficient way advisers trade and hold collectives EO service developed to aid discount brokers to trade more easily 2004 Institutional services developed to meet the demand for effective dealing and custody for collectives Focus on fee management to meet the expanding demands of advisers Cash is put at the heart of the platform to make trading quicker and easier Model portfolios developed to enable consistent and efficient ways for advisers to service their clients Increasing support to businesses transitioning through and beyond RDR 2011 Introduced client segmentation tools to allow firms to offer different service propositions through the platform Explicit pricing and clean share classes, offering transparent pricing on platform

7 Over a decade of delivery Cofunds has been at its best when identifying problems and delivering market leading solutions As markets continue to evolve and new regulation is introduced, we re here to help our clients address the new market challenges they face to enable them to excel. There are some clear trends developing in the UK investment and savings market. Each of these present challenges for financial services firms but also open up exciting possibilities: Shrinking advisory market Following the implementation of the RDR, the number of advisers is set to decrease. However, the level of business that remaining advisers will write is likely to increase a compelling opportunity for advisers who are willing and able to stay in the market. Greater pressure on margins As charges and costs become more explicit and the value chain compresses, firms will experience even greater pressure on their profit margins. Businesses that can maximise efficiency, minimise risks and offer a clearly-defined proposition will be the winners here. Thrive with Cofunds Cofunds is committed to helping firms to thrive in the face of these trends. Our service is positioned to help firms transition and excel in the new market environment building the businesses they want and the services that their clients need. On the following pages we want to highlight some of the ways that Cofunds is helping firms of all kinds to capture new opportunities and build on their business success. Expanding D2C market The number of consumers willing to conduct their own financial-planning particularly using online solutions is growing. New execution-only providers are emerging, and some advisory firms will offer a non-advised proposition for lower net worth clients to enable them to produce the appropriate level of service at the appropriate cost to these clients.

8 Powerful solutions to market challenges Introducing three propositions to help provide the platform solution that your business needs. Over the past twelve years, Cofunds has come to serve many different kinds of financial services firms, from small advisory firms to large banks and custodians. Now to help these different clients get the most out of Cofunds we have flexed our services, support and expertise into three core client solutions: Wealth Solutions Cofunds is offering the tools, investment choices and services to help wealth managers and advisers deliver an advisory proposition that s compliant, efficient and that can clearly demonstrate value to fee-paying clients. Investor Solutions As demand for execution-only services increases, Cofunds can now support any company offering a direct to consumer (D2C) offering. This can include advisory firms looking to offer execution-only services to advised clients. Firms can offer easy access online trading, reporting and valuations to help assure profitability and a great proposition, even for smaller clients. Enterprise Solutions Providing stockbrokers, private banks, product providers and custodians with efficient, open-architecture collectives administration. Straightthrough-processing, an online interface and upcoming features like multicurrency dealing are all designed to help clients with large-scale fund activities to increase efficiency, reduce business risk and optimise profitability. Build the proposition that s right for you The attraction of these solutions is their flexibility. We can work with you to mix and blend the elements you require to build the solution that s right for your business all supported by appropriate expertise from Cofunds.

9 Cofunds Investor Wealth Enterprise Solutions Online trading Clear and concise statements Online valuations Solutions Planning & risk profiling Online investment process Model portfolios Solutions Straight through processing Online interface Comprehensive reporting Support Call centre Platform consultancy team Strategic partnership manager Market knowledge Support Strategic partnership manager Platform consultancy team Call centre Events and workshops Technical hub Partnered with the best in market Market knowledge Support Relationship manager Operational contacts Risk-reduction measures Market knowledge

10 Wealth Solutions

11 Easing the move from commission to fees Transform your remuneration model for the post-rdr world with full support from Cofunds. The implementation of the RDR presented many challenges for advisory firms. One of the most daunting for many firms is the move from commission to fees, under the adviser charging regime. Cofunds is committed to doing all we can to help make the transition easy and undisruptive and to help advisory firms adopt a fee-based model successfully. We can provide business transition services that starts with: Identification of business goals Current client base analysis Client segmentation Remuneration you control Most important of all, we aim to offer complete flexibility to enable all advisory firms to manage remuneration on their terms: You can still take an initial fee at the point of trade You still have the flexibility to negotiate special terms with fund managers You can still rebate units into a client s account Guidance and support Our platform consultancy team is on hand to discuss your preferred charging model options and how these can be administered using the Cofunds platform. To speak to a consultant, contact your regional Cofunds support team. We also offer: Full support to administer both fees and commission through the Cofunds platform A fully unbundled platform charging model (see overleaf) that s VAT exempt Assured continuation for undisturbed legacy business

12 Unbundled charging on Cofunds A simple, flexible charging model to clearly separate the costs of investing. Since launch, Cofunds has operated a simple bundled pricing model where the cost of platform services are automatically met out of the charges on the funds we host. Easy, convenient and especially suitable for mass-market clients, it s a model we intend to retain for legacy and execution-only non-advised business. But post-rdr for new business, advisers can now take advantage of a new pricing model for advised business an unbundled solution that completely separates the costs for our services from those for fund management and advice. Simple, transparent and flexible, this pricing model is designed to give you complete flexibility while offering real value to your clients. How our pricing model works Our pricing model is simple and designed to reward clients for increasing their level of assets on platform. It features: 1. Flat service fee The model has a flat annual fee to cover all basic platform services, including all fund switches. We ll take 20 when your client first invests in commission free share classes, then 20 every 6 months thereafter. This will be deducted from a client s Cofunds Cash Account. 2. Monthly tiered fee On top of the flat fee, investors will be charged a tiered percentage fee starting at 0.29%pa and reducing to 0.15%pa for assets of more than 1m, paid monthly. 3. No upfront or switching charges Under this model, Cofunds levies no upfront fund costs or additional charges to switch funds. This means clients can make unlimited fund switches all covered by our flat service fee.

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14 VAT & platform charges Our new platform charging model will continue to be VAT exempt under the dealing and custody exemption rules. Benefits for you, benefits for your clients We have devised this model in close consultation with advisers, distributors and industry pricing specialists. The result is a charging proposition that has clear benefits for both adviser and client. Simple and competitive This charging structure is designed to be simple to explain to clients and among the most competitive in the market. Introducing a flat service fee in return for unlimited free fund switching, for example, should appeal to many investors. Supports investment choice Introducing this charging model will allow us to host more types of investment in the future that don t automatically accommodate platform fees in their charging structure, including exchange traded funds (ETFs), investment trusts and direct securities. Adviser flexibility The model will complement any adviser charging model that a firm puts in place, whether a firm charges a percentage fee, a flat or time-based fee or a combination. Rewards consolidation Investors will be able to see instantly that the more assets they have on platform, the less it will cost them. We hope this will aid advisers by encouraging clients to consolidate assets on platform.

15 What does RDR mean for pricing? Pre-RDR Fund AMC 1.5% Client was charged an annual management charge (AMC) of 1.5% 0.75% paid to fund manager Typically 0.25% paid to platform Typically 0.5% trail paid to adviser Post-RDR AMC Fund manager continues to receive their fee from the AMC of the fund Post-RDR Platform fee Platform charges a different platform fee Post-RDR Adviser fee Advisers no longer receive ongoing commission determined by the product provider* Instead, adviser fees are agreed directly with the client * except on legacy business set up before 2013

16 Managing your legacy business

17 Giving continuity to your existing income streams post-rdr. Many firms have legacy business on which they can continue to receive commission unless the business is disturbed for example by revising the terms of the original contract. As a vital source of ongoing revenue for transitioning firms, we aim to help make it easy to manage these legacy funds: With Cofunds, firms can continue to receive commission from non-disturbed business as usual or transfer it to their new charging model as and when they feel ready to. Where advice is disturbed and moves to the new charging regime Cofunds aims to make it easy to update a client s account, including regular savings and model portfolios.

18 Delivering your client proposition

19 Helping you target a service to offer real value to every client. The Retail Distribution Review has made it essential for advisory firms to make clear to clients what service they ll receive with RDR in place and how much they ll pay for this what s known as the client proposition. A big challenge for many firms is to ensure they deliver an ongoing service that clients want to pay for that is also profitable for the firm. Client segmentation Many firms have come to the conclusion that they need to tailor different service offerings to different clients, each with its own pricing structure. This might typically include, a gold service offering full discretionary wealth management, a silver service based on model portfolios and bronze service offering a more basic service. Non-advised business For some clients, firms may be considering a nonadvised or execution-only service. Through our Investor Solutions, Cofunds is able to fully support an executiononly service covering all the collectives and investment wrappers available through Cofunds. Investor Solutions on Cofunds enables you to manage advised and non-advised business side-by-side. You can even segment a single client s activities into advised and execution-only business. A single client is able to have separate accounts for their advised and execution-only assets. Cofunds aims to make it easy to manage multiple client segments: You can structure multiple fee-based models on the Cofunds system and automate how charges are deducted from each client s cash account. You can use sales management information (MI) built up on the Cofunds system to determine which clients should be allocated to which client segment and highlight when a client s assets or activities indicate they should be upgraded to a new segment. Model portfolios of different complexity and risk profile can be customised to different client profiles and servicing levels.

20 Stability you can trust

21 Longevity, stability and scale make Cofunds the clear RDR partner for your business. In a crowded and constantly growing market, we recognise that advisory firms and their clients have a wealth of platforms to choose from. But in a time of uncertainty and massive market and regulatory change, the stability and security offered by Cofunds remains unrivalled. Financial stability Cofunds is the UK s largest independent platform, wholly owned by FTSE100 company Legal and General. Cofunds launched in 2001 and over the years we ve grown and evolved to become the UK s leading platform. Cofunds has been awarded a B+ in rating for its financial strength for the second consecutive year by AKG Actuaries & Consultants*. Established profitability Whereas the majority of platforms operate at a loss, Cofunds has been in profit since 2008, providing us with funds to continue to invest in our business and our technology. Trusted experience and commitment With a track record of more than 10 years, we are one of the most experienced platforms on the market. We have weathered bull and bear markets and years of regulatory change. Our ongoing success can give our clients the reassurance of our steadfast commitment and presence for many years to come. Today Cofunds supports: 800,000 investors* 2,500 funds from more than 100 fund groups* *as at July Proven scalability With over 50billion* in assets under administration, clients can be assured of the ability of our systems and people to handle assets of any size. The fact that we remain the fastest-growing platform by sales is a strong reflection of the trust and confidence that firms and their clients have come to place in us.

22 Your future, your Cofunds Tell us what you need to deliver the solutions your business demands. At Cofunds we are excited by the future and the challenges ahead. But always remember that Cofunds is your platform, designed to help you deliver your business, your way. Let us know how we can help and please get in contact with your regional Cofunds team to ensure your business gets the most out of Cofunds every day.

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24 This is not a consumer advertisement. It is intended for Professional Financial Advisers and should not be relied upon by private investors or any other persons. Issued and approved by Cofunds Limited 1st Floor, Minster Court, Mincing Lane, London EC3R 7AA Registered in England and Wales under No, Authorised and regulated by the Financial Conduct Authority (FCA). FCA registration No BO21AUB 07/13