Investor update

Jun 13, 2023

Slides

Good morning, everyone, and thank you for joining the latest of our deep dives into our separate businesses. We last did a wealth management deep dive in October 2021, so there has been plenty happening since then. The business has been performing very well, and the idea today is that we get into the detail of each of those businesses. I will be joined on stage during the course of the morning by Mary-Anne Daly, who will give us a presentation on Cazenove, David White, who will do a presentation on Benchmark, and Mark Duckworth, who will give us a deep dive into Schroders Personal Wealth. Then we will come back on stage about 10:00 and take questions both from the room and online. If we run past 10:30, we will keep on going to make sure we have answered all the questions. Before we start, I just wanted to set the scene about our strategy. As you all know, in this room, wealth is a really important part of our strategy to invest to grow. It is something we have been investing in consistently, and I just want to just give you the headlines as to why that is, because it is just. We will give you a lot of proof points during the course of the morning that justify each of these six points, but it is really important that these are the bedrock of our strategic drive. The first, being in the wealth market clearly means being very close to your clients. Being very close to your client means you really understand what makes them tick, and that makes us much better wealth managers in the rest of the Schroders business. Wealth management for other clients of other wealth advice firms is an important part of our business. So being close and understanding this segment well is critical. Clearly, we are those clients' trusted advisor. These are very long-term relationships. There is very good longevity, to use our buzzword in this sector. That longevity is a really important part of driving higher long-term growth rates. The margins in this business are good and stable. There are not the same pricing pressures evident here as there are in other parts of the market. But importantly, Schroders has a strong growth presence. I think the reason this is important is it allows us to continue to invest for growth. One of the themes you will hear this morning is that we have been consistently investing further in this business to accelerate our growth rate, and you will see that coming through. Fifthly, we are very fortunate in having both exceptional talent and very strong and deep client relationships. Why that is important is it enables and attracts other like-minded individuals, and that virtuous loop of people who stay for a long time, attract high-quality clients, talk in the market, Mary-Anne will unpack that, particularly in the ultra sector, is a very important driver of future growth. Finally, there are some good synergies between this business and our other asset management businesses. I have talked in the past about the flywheel effects, and I want to unpack that in more detail. There are also important synergies with Lloyds Banking Group, not least the referrals that we get from Lloyds, but also access to their banking facilities and if clients needed access to their credit facilities. So six quite distinct reasons why we feel this business works well for us. It is intrinsically valuable to us and perhaps more valuable to us because of the interlinkages with the rest of the group, which I just want to unpack quickly. First and foremost, Schroders investment management capabilities acts as a brains trust. It provides collateral, it provides advisors, it provides thinking, it provides access to experts, which can be then used across our wider business. It also provides, if you like, the cyber, the cloud computing technology, the systems backbone. So that knowledge which exists as a group and investment capabilities is an important power for our wealth businesses. Secondly, and really importantly in some parts of the wealth market, our leadership in sustainability, which we've got within our investment business, has important resonance for wealth clients. If you took something like the charity sector, I think Mary-Anne will give us the numbers, but around 85% of the money in motion is coming to us because of our leadership in this segment. And the tools that we've built in the asset management business in large part have helped support that growth, so that that relationship is very symbiotic and helps us get better and better, particularly on things like the active ownership agenda, which is particularly important for charities and some high-net-worth individuals. Investing in private markets, the Schroders Capital investment we've made is an important area for clients wanting to understand how they move into those markets. Having products which suit those clients and are designed specifically for their needs is something that we are able to manufacture within Schroders as a whole, which may not be as easily available in the rest of the market. You'll hear David talk in Benchmark about how we make Schroder Investment Solutions, discretionary models available. Those are created and powered by Schroders collateral and by the brains trust that you heard later. For the most sophisticated and long-term clients, our wider solutions business can often provide the thinking which will enable clients to properly understand the sorts of long, long-term decisions they're making in terms of rates of return on different asset classes and how they blend and combine those. So there are a whole series of opportunities which arise to our wealth business, which aren't generally available to other wealth businesses. I think it's a really important characteristic of our business that we maximize the opportunities that come from this, because at the end of the day, they make us a better business, they make us a more reliable business, but they also contribute to future growth. That's the background to strategy and the flywheel, but let's get into our businesses in a little bit more granular detail. We have several distinct businesses, and I'm just going to work across this page, from left to right. First of all, Schroders Personal Wealth, which is our joint venture with Lloyds, where we have a 49.9% stake. Advisors on GBP 11.7 billion, with 320 advisors. Mark will talk about the transformation of this business and the future growth opportunities. Do bear in mind that we earn three different sets of revenues from this business. We earn our share of profits, we earn money from being the platform provider from Benchmark for this business, and we earn money as a manager of assets for this business. We get advice revenue, we get management revenue, and we get platform revenue. This is a really important part of our strategy, the ability to keep on layering on further levels of the value chain into our fee proposition. David will talk a lot about that in the Benchmark business. That brings me to Benchmark. It is a business we acquired 2017, has advice revenues of assets of GBP 4.5 billion, platform revenues of GBP 17.9 billion. We also run some money for them within the wider group. A total managed by Schroders for our wealth business is GBP 23 billion. We own 90 advisors directly, and David will break that down, in addition to the advisors which are on platform. Cazenove U.K., which is probably the best-known business. It is the longest-standing business, and it is the really mature business. When you look at the split of profit, you can see that both Schroders Personal Wealth and Benchmark are relatively immature businesses, which we are putting a lot of emphasis on growth. Cazenove and Schroders International are more mature, at a better inflection point in their profitability, but still with very good growth. I think that is a really powerful combination. That and investing for future growth will be a big part of what we talk about today. Cazenove and Schroders International has advised business of about GBP 58 billion. For those listening outside the U.K., you may not be aware that back in the early 2010s, the government made some changes to the advice market, which meant taking advice in the U.K. was really very difficult if you had about GBP 100,000 up to about GBP 500,000. Schroders Personal Wealth and Benchmark seek to address that advice gap, and we think there is a large opportunity in advising more of those people who were denied advices. Less than 30,000 advisors for a population of 60 million plus in the U.K. There is a big opportunity there. Cazenove, Schroders International advises clients in the high net worth and ultra-high net worth space. Different brands, different parts of the market, different opportunity sets, different dynamics, but nevertheless, a common DNA of advising people on their long-term wealth needs. Total profitability of GBP 130 million. Just quickly looking at the growth rates before we get into the individual businesses of the moment. Assets under management have grown five-year CAGR of 8%, net operating revenue slightly faster at 11%, and operating profit at 14%. A progression that you would expect to see. Then some of the key highlights. I have talked about we earn fees on GBP 115 billion of assets, but the advised portion of that is GBP 74.6 billion of assets. Our client retention rate within the high net worth, ultra-high net worth businesses at Cazenove is at 99.6%. Not a number we have given before, but I think speaks to the importance of the high longevity, high stickiness, and staying with clients throughout their life cycle and often into the next generation. I talked about an attractive and stable revenue margin, the advised margin of 55 basis points we are achieving. But the thing I think we feel the most proud of is the growth rate of new business. You can see the trend there. If you took this chart further back to 2015, 2016, 2017, you saw a much, much more muted growth rate, very low single digits, if at all. What we are seeing is a progressive series of investments in this business, which are now starting to drive a better growth rate. That is a really important dynamic that we think allows us to get into this virtuous circle of putting in more regional offices, investing further for growth, and picking up the growth rate yet further. Before I step away, four takeaways that we would like you to have today. First of all, we think there is a lot more operational leverage in this business. Mary-Anne will talk about some of the changes we are making. Continuing to extract that operational leverage is important. We see SPW as having gone through a transformation and is now really poised for growth, and Mark will talk more about that. We see the Benchmark technology platform as being a really interesting thing. This is not a private equity construct, which is looking for an exit. This is a very long-term, high-quality platform, which will drive further advisors onto that platform, and has a pretty powerful proposition for advisors across the marketplace. Then finally, Cazenove, well-placed for future growth in the high net worth and ultra high net worth segment. Each of those areas of our wealth business all contributing to growth and all enabling us to do two things today. We have issued new guidance, which first of all, to increase our expectation of future growth. We previously said 5% growth rate, we want to increase that to 5%-7% that we feel confident enough in the growth rate that we can extend that opportunity. We are also going a step further and saying that even without markets and FX, we believe that the profitability of this business will grow at 10% per annum. Now, you will have your own beliefs about what markets can do. We are not trying to bake any of that into numbers, but if you just look at the underlying dynamics, we are saying that profit growth of 10% per annum through to 2025 is very achievable from our perspective. With that, I am going to hand over to Mary-Anne Daly, who will take you through the Cazenove and Schroders International business. Thank you. Well, thank you, Peter, and good morning, everyone. Now that Peter has given you an overview of Wealth as a whole, let me concentrate for a moment on what we do at the upper end of the wealth bracket. My objective today is that by the end of my talk, you will have a really good understanding of what we do, who we are, who our clients are, and importantly, what are the key factors behind our success. To explain to you why we are very confident that these will sustain our success going forward. In so doing, I will spend a little time on the non-financial elements that you see at the bottom of this pyramid, because those exceptional scores of employee engagement and client attachment to the business, they are fundamental to our success. Importantly, as Peter said, they feed that continuous virtuous circle of sustained success, because happy clients will naturally refer more business. That leads into better revenues, better profits. It means we can reinvest in our people, in their careers and their well-being. It also means that we can invest in our client proposition. So that virtuous circle goes. Let me start with a description of our business first of all. Before I do that, a brief clarification about our brands. We use the Cazenove Capital name in the U.K. and Channel Islands. We call ourselves Schroder Wealth Management in Singapore and Switzerland. The reason behind that is very simple. When Schroders first acquired Cazenove back in 2013, we wanted to mark the strategic nature of this first acquisition in Wealth and to mark also our intention to grow Wealth as a pillar of growth, a fundamental pillar of growth for the group, rather than just an extension of our asset management activities. At that time, of course, the Cazenove Capital name was very well known in the U.K., but it was less the case internationally, where Schroders was a much more powerful brand. Hence, the pragmatic decision to use both brands. I think that is probably enough said on the marketing and the history behind that, but I thought it was important to clarify that. Let me now turn to our business and the here and now. You will see here that we have GBP 58 billion of assets under management. The bulk of that, so GBP 48 billion, is in the U.K., with our international offices providing very useful jurisdictional diversification and also allowing us to reach more clients. The bulk of our business is discretionary, so it is a quality business with recurring, dependable revenues. The other interesting aspect of that business model is that as we build our clients' trust, then more often than not, we will end up managing the whole of their wealth. This is somewhat in contrast with the key players in this ultra market, where relationships tend to be more advisory and transactional in nature. In terms of our client profile, you will see here that we are the largest player in the ultra-high net worth segment in the U.K. By ultra-high net worth, we are using a definition which is commonly used in our industry of $30 million plus of net worth. This is $30 million. You will remember that we extended our franchise in this segment with the acquisition of Sandaire back in 2020. That acquisition has been highly accretive for us in that we retained all but one family, and pretty much all of them have added and extended their relationship with us since. Also, a common misconception about us is that we primarily look after inherited wealth. Actually, you will see here that the majority of our clients have made their wealth in this current generation, and that percentage continues to grow as we extend our very strong franchises in the worlds of finance and business. Last but not least, we are the largest manager of charity assets in the U.K. As Peter said, we have increased our market share markedly over the last two and a bit years, in that these clients, typically the large endowments, big universities, they are particularly attracted to our expertise in sustainability. Peter rightly said that our multi-asset fund, the charity multi-asset fund called Amalfie, a responsible multi-asset fund that actually attracted 85% of the flows of charities into multi-asset funds over the last four years. On the right-hand side, I have given you a breakdown of our AUM by portfolio size. You will see here that, yes, we do look after some very large clients, some in the hundreds of millions. But equally, you see a very good diversification in terms of client size. That is, I think, very important and something that we like in that it improves our resilience, it improves our margins because that is better margin business, that is at a very high end. I think thirdly, it allows us to expand our footprint of clients and therefore of referrers of further business. Also, I think this is very important, it allows us to grow with our clients. That is particularly relevant in the business owner space, where many of these clients, at least initially, their wealth is tied up in their businesses. So by taking on relatively smaller portfolio sizes, you can develop an early relationship of trust and be their natural home as that business grows or is exited. Now let me turn to what we consider to be our strengths in this market. You see them listed here. Award-winning reputation for over 30 years. Shareholder strength. Investment performance. Great people. We believe we have some of the most talented people in the industry. A broad proposition. These are really important and fundamental to success in this bracket. I would say they are must-haves if you are to get to the table and win on a consistent basis. But to be entirely frank, they are not, when taken individually in their own right, they are not necessarily USPs in their own right. But in combination and in combination with the stability of a family shareholder with 200-plus year history and culture of investing in the future, whether that is in talent, technology or new areas of investment, well, that is truly powerful and I would say is unique. Maybe just a word on the breadth of our proposition because we have been investing in it since we last saw you some 20 months ago. On this next slide, what I have tried to do is give you a flavor for the sorts of questions that we are equipped to solve for. They range from the most basic, such as general questions about investment strategy or planning for a retirement or planning for a business exit, to the much more complex, such as reporting to clients across asset classes, including their personal assets or assets held with third parties, intergenerational planning and advice, philanthropy, and of course, private assets and impact investments. There, absolutely, as Peter said, Schroders Capital's expertise in this segment has been incredibly helpful to us. So with that in mind, how have we done? Well, I am pleased to say that in an environment where certainly our quoted U.K. competitors have struggled, we have delivered industry-leading rates of growth well in excess of the 5% that we indicated to you some 20 months ago, more like 8%. As flows stand today and given the pipeline of notified wins that we have, we stand ready to beat that again this year. What is particularly pleasing is where is this growth coming from? It is very broad, but it is coming from those segments, those client segments that we have specifically focused on in our strategy and where our USPs and strengths and reputation resonate. As an example, charities, business owners, the world of finance and ultra-high net worth. I will talk more about our strategy in a moment. Also, as we committed to you, that growth has not come at the expense of our margins. Quite the contrary. You see here that we have increased our revenue margin by three bips to 59 basis points. Yes, some of that is of course due to interest income, better interest income. Importantly, it is also due to fantastic investment performance and very strong net new business that have completely dampened the impact of adverse markets on our AUM and therefore revenues. Lastly, on profit margin, you will see that we have increased our profit margin as well to 34 basis points. That is the benefit of scale coming through and also very rigorous cost discipline. On costs, I should say that we have initiated a restructuring of our operational resources to better leverage the Schroders fantastic resources that we have. That stands to add another 2% to that profit margin from 2025. Unfortunately, it is a bit early to tell you a lot more about that because we have just entered a period of consultation with the impacted employees. Certainly, Richard and Peter will be able to say more at the half year, and we will update you as we can. So much about the history. Now, what about the future? I should start by saying that I am very confident that we can sustain this success in future for two reasons. First, the market is very deep, it is very fragmented, and there is plenty more for us to play for. The second is that our strategy is working. I think the flows that we are seeing right now are a proof point of that and that should absolutely sustain us for the future. Now let me take each in turn. First of all, the market. On the pyramids on the right, you see the depth of the global market, a massive market that we can go for and that we are well positioned for. If you take just our home market, the U.K. market, the ultra-high net worth segment alone, so I am talking here of the GBP 30 million plus, that represents 15,000 individuals with over $1.1 trillion of wealth. So you can see here that despite our leading position, we still only scratch the surface. Our market share is probably of the order of 3%-5%, so plenty more to play for. The other aspect is I told you that we are not limited to that ultra bracket. Our portfolio size span is larger than that. Again, more to play for. Thirdly, despite what the newspapers will have you believe about the demise of the City of London was the only top 10 world city to actually grow its ultra high net worth population in 2022, as it remains a very attractive place to work and live for these people as a center of finance, education and culture. Lastly, we are very pleased with the success of our decision to expand our business owner franchise into the regions where we've established four new hubs, attracted 28 super talented people, and are attracting the owners of some really exciting, thriving local businesses. Of course, benefited from a very strong referral flow from our friends at Lloyds. Now let me turn to the strategy, and the one message I would leave you with is that our success is absolutely not the result of chance. It is the output of a very thoughtful, data driven development strategy that is focused on those client segments where our USPs and strengths resonate. I've given you those on the pie chart on the right. I think having heard me speak now for the last 10 minutes, they will come as no surprise to you. Let me draw out a couple of points. Firstly, top right, you see our current clients and they are our best ambassadors. So yes, we are absolutely focused on growing our footprint of new clients because obviously that improves our referral rate as well. But we are just as focused on basically delivering exceptional service to our current clients. Everybody in our team knows that, and we watch and measure client satisfaction, client attrition, client additions to their portfolios like hawks. I think the client retention figure that we showed you earlier on of 99.6%, I think it was, is a testament to that. The second point I'd like to make is that this is absolutely a team effort. We don't have any lone proprietary wolves here. On the contrary, actually, our culture is one where collaboration and joint success are celebrated and measured. This is very important for several reasons. First, it makes it a really enjoyable place to work and for our younger generation of advisors to learn. Secondly, it ensures that our current and existing clients will always end up with the team most best qualified to deliver their specific needs regardless of where the business originated. Thirdly, naturally, when you have teams working together on any one of these segments, it naturally amplifies our contacts, our reputation, our networks within these segments. It allows us to develop a better understanding of what these clients need. Of course, to further refine our proposition as we go. I'll leave you with just one example of that. Private equity is one segment that we do focus on because our reputation is strong in that area. In the case of one London-based PE boutique, we started with one partner as a client, we now have eight, and we've just got two to go. That's all from me. With that, I'm very happy to hand over to David. Thank you. Thank you very much. Thank you, Mary-Anne, and good morning, everyone. Today I wanted to update you on four aspects of the Benchmark business. Firstly, a reminder of who we are and what we do. Secondly, three key growth drivers. Thirdly, how we've performed, importantly, over the last three years. Lastly, why I remain very positive about our future growth. Let's start with a reminder of who we are and what we do. In contrast to Mary-Anne's business and Mark's business, we are both a B2B and a B2C business, so our customers are both financial advisors and end retail clients. Today, we have relationship with over 1,500 advisors, and over 90 of those, as Peter mentioned earlier, are owned by us as a business. Schroders acquired a controlling stake in Benchmark back in 2016, and since then, we've grown significantly, leveraging the greater Schroders scale through resourcing, capital, investment expertise, and importantly, distribution reach. With a significant presence, as you'll see on the slide, across the U.K., we now have a truly national footprint of offices, managing over GBP 27 billion in assets and generating net new business flows of 7%. We have three distinct offerings to our business, and we report the assets according to each of these. Let me explain each of these in turn. Firstly, we have advised part of our business. This has two specific areas to it. Firstly, advice to end clients, and we do this through our own advice business called Benchmark Financial Planning. I'll explain a bit more about that in a moment. Secondly, we provide a range of business services to third-party advisors. Things such as advice, oversight, compliance, financing, and training. Think SJP in the U.K. or Edward Jones in the U.S. Moving to the middle box of the slide, our platform business is where we provide proprietary trading advisor and client-facing platforms to manage investments across pensions, ISAs, and cash. This provides advisors with access to over 4,500 funds and over 30 discretionary solutions to use for their clients. Think AJ Bell in the U.K. or Pershing in the U.S. Lastly and importantly, we come on to manage. Here we provide a model portfolio service called Schroder Investment Solutions. This gives advisors access to risk-mapped index, active, and sustainable options for them to use with their clients. Think solutions provided by the likes of Brooks Macdonald in the U.K. or Envestnet in the U.S. With that, I hope you have a clearer picture of what we offer. I'm now going to move on to explain how we work with advisors and how we help them solve the issues that they have as they grow their business, and how, in turn, our success is directly linked to theirs. Before I get into the detail of this slide, though, please picture in your mind a financial advisor. Their life is complicated. Most of them are small to medium-sized businesses, and so they're trying to balance both being a financial advisor, so dealing with regulation, administration, and investment decisions, alongside being a business owner. So managing cash flow, premises, staff, et cetera. Our goal is to simplify all of these complexities for them, freeing up the advisor to spend more time with their clients and not worrying about administration and day-to-day issues. This simplification in the running of their business improves their productivity and also, crucially for them, improves the client experience. Now let's get onto the detail of the slide. The point here is that our solutions help financial advisors at every stage of their life cycle. To bring this to life, we think about an advisor's business journey across four key stages, all the way from getting started through to them exiting and realizing value. When we talk to advisors, this way of looking at things really resonates with them. It demonstrates that we understand their business and what really matters to them, and that our solutions can support both their business as well as their advice needs. Let me bring this to life with you with a story of one of our customers. The customer is Finura, and you'll see that at the growing your business stage. They are absolutely at the growth stage of their business. Finura is run by three senior partners based here in London. They started trading back in 2014, and they approached Benchmark in 2019 to say, "Can you help power our growth?" Back then, they were seven advisors. They were managing around 280 million of assets on behalf of 600 families. We supported them by providing financing, by providing technology solutions, and also access to our model portfolio service, Schroder Investment Solutions. Four years on, not only has Finura doubled the number of advisors that they have, but in terms of productivity, the assets they manage have grown over two and a half times to over 800 million, and their revenues have doubled to 5.5 million. This is a powerful, yet simple illustration of how we help advisors, and we call that the Benchmark advantage. In summary, I hope you have a better understanding of what we do as a business and how we help advisors throughout their life cycle. I now want to turn and focus on three areas of growth that I see for our business. The first growth driver I want to focus on is what we're doing, as I flagged a moment ago, to deepen the relationships with our existing customers by cross-selling and why this is such an important driver of growth for us. As Mary-Anne mentioned just a few moments ago about the Cazenove business, for Benchmark too, deepening existing customer relationships is just as valuable for sustaining growth as attracting new ones. We do this through a dedicated partnership management team. They are the key interface to all of our advisors, and they help them develop their business strategy and also ensure that they can access all of our services whenever they need to. You can see on this slide, since my last update back in October 2021, we have increased the number of services our customers are using by over 7%, driving both margin and revenue growth. Further new growth is in our sights. As you see on the slide, currently, only 14% of our advisors are using one service, and 25% using two services. For me, the scale of the opportunity becomes clear when we move to the right-hand side of the slide. This shows the incremental basis point fees that we generate when more of our services are used. The big step up you will notice relates to where we take advice revenues alongside platform investment and support services. These are blended basis points as the combination of services varies between each advisor, but the significant upside of cross-sell for me is clear, and we have a proven track record of incrementally developing deeper and integrated relationships, and this is set to continue. Moving on from deepening existing relationships, a second driver of growth I would like to highlight is how we are growing our advisor base. Again, when I last spoke back at Capital Markets Day, in October 2021, we had identified several advisor segments that we saw opportunities for growth. One of those we refer to as breakaway advisors. We find it useful to categorize them in this way because they represent a distinct group of advisors targeting high-net-worth clients. They are currently employed within, typically, a traditional wealth manager, so for example, one of the private banking wealth arms. The opportunity for us is that they have often become frustrated with overly centralized controls in bigger organizations, alongside the fact they are having to pay away significant proportion of the fees that they are generating personally. As entrepreneurs, they are keen to break away, hence the name, and set up their own business, and they are looking for help to do so. One good example of how this works is Oculus Wealth Management. This is a business that we have been working with since 2016 when they started to use our platform and, more recently, accessing Schroders Investment Solutions. Oculus has been highly successful in attracting breakaway advisors and to date, they have taken on over 30. In March of this year, Benchmark took a majority stake in their business to accelerate both their growth and ours for this important sector. To give you an idea of what this means for us, since March, they have already added GBP 100 million in assets, and supporting them, we have built their strongest pipeline ever, where they are now in active discussions with 15 separate advisors who are looking to join them, and they have assets under influence of over GBP 750 million. All of which is to say, I am sure you can now see this segment has valuable opportunities and potential for us. And finally, I come on to the third growth driver and how we are helping advisors create value in their businesses, and in turn, for us, at the moment they look to retire and exit their business. In the U.K. in the past three years, the wealth management sector has witnessed significant momentum to consolidate advice firms. The best evidence for this is the 30-plus PE-backed consolidators reportedly now active in the U.K. market. The belief of the traditional consolidator is that they can buy several advice businesses, consolidate them into a single entity, and then sell that business on in the future. In reality, though, in my opinion, although they are successfully buying up the businesses, they are very rarely integrating them effectively. And as a consequence, the underlying advisors typically remain as separate entities with separate service offering pricing models, but also, crucially for us, they retain their client assets on multiple platforms. Our approach is different. Yes, we play an active role in helping advisors to realize value by buying their businesses, but this is the important point, over 80% of the firms we acquire, we already have an existing relationship with, and they are typically already using a range of our services. We are clear from the outset that the final destination for their business is Benchmark Financial Planning, our own national advice business. This is a restricted advice business, which combines a single advice process with a single primary platform and a central investment proposition, Schroder Investment Solutions. It has strong credentials, with our advisors generating over 36% more revenue per advisor than the industry average. We have now completed over 40 of these types of acquisitions, they are focused ones, to date, and we now have a proven and well-trodden path to embrace this consolidation trend, but to do it our way. Having built up valuable knowledge and capability in this area, we have accelerated our activity, and in 2023, we are forecast to acquire businesses who between them have over 90 advisors and in turn have access to over GBP 3 billion of assets, so a significant uplift from where we were in 2021. So how has all this translated into performance? Since I joined the business back in the first quarter of 2020, just before COVID, I can report that we have made excellent progress across a range of fronts. In terms of revenues and profits, we have delivered consistent growth, as you will see on the slide, and all importantly, across all areas of the business. I am particularly pleased with the underlying profit growth, which includes an uplift in investment of both technology and our people, which I see as a hallmark of Schroders' approach when acquiring businesses. In parallel to this, our market attractiveness has continued to grow. We have simplified our brand and positioning to the market. We have invested in our business development and marketing capabilities, and we now work with more advisers than we ever have before. Finally, and importantly, our assets have continued to grow. All of this against a pretty challenging backdrop of external pressures, COVID obviously being the main unplanned event. So what do I see as the future for Benchmark as I look out over the next three years? Well, put simply, continued strong growth and momentum. Our overall sales pipeline, in addition to that of Oculus, has never been stronger, with approximately 200 advisers looking to join our business over the next 12 to 18 months. Deeper and deeper relationships with our advisers will continue, and I see more advisers using more of our services and driving up revenues and margin. This growth won't come at the expense of effective cost controls. We have now reached a sufficient scale within our operational teams and, in turn, a clear inflection point, which means that we will be able to drive forward, adding more assets with limited operational cost increases. We are continuing to invest and deploy new digital solutions, working alongside Mark and the Schroders Personal Wealth team to improve adviser productivity. For example, we have already launched this year a new digital onboarding and annual review process. Over the next 12 months, we are looking to launch a new mobile app for adviser clients, new user journeys, and also e-signature capability. This will drive further and tangible adviser productivity gains, freeing up advisers to spend more time with their clients, over 215 hours or 26 days to be precise. Above all else, this is what matters to them. In summary, I believe we are well-positioned as a business. We have clear opportunities to accelerate our growth, attracting new advisers, cross-selling to existing advisers, and continuing to deliver growth in net new business. Thank you very much. I am now going to hand over to my colleague, Mark. Thank you, David. Good morning, everyone. Since the last time we spoke, we talked of how SPW would turn the performance corner. I think there was some doubt in the room. Today, I will update on how we have reshaped our business and how we have transformed the performance. I would like just to start by picking up on something that Peter said at the top about why we exist and the role that we play in society. Since 1990, there were 221,000 financial advisers, and today that number sits at just 27,000. We have lost 88% of the capacity. Over that same window, we have seen the population rise from 55 million to 67 million. There is a huge opportunity in this sector for us all. The average age of an adviser today across the sector stands at 57. Let us just take a look at who SPW are. We are a joint venture between Lloyds, Britain's largest bank, who have over 36 million clients across the group and over GBP 475 billion of client deposits. Schroders, I think who we all know, have incredible investment expertise and brand recognition with our clients. We deliver holistic wealth advice to clients who hold in excess of GBP 100,000 in assets. Today, we have 52,000 clients, 320 advisers, and GBP 13.6 billion of assets under management, GBP 10.7 billion of which is at our advised front book of assets, where the 52,000 clients take advice from us. This has grown by 34% since 2020 in gross inflows. We also have GBP 2.9 billion in assets through 20,000 direct clients who we do not today give ongoing advice to. Another opportunity for us. I would now like to just share with you what we have been working on to transform SPW since we were last together. Let us just take a walk around this slide. The first thing that I focused on was the vision and purpose of the business. We Change Lives is our vision, and it has provided an emotional connection between our staff and the positive impact that we can have on our clients' lives. That leads to incremental effort. Giving more advice to more people than any other U.K. wealth manager is our mission, and it has provided a North Star to both our ambition and goals as a business. If we turn to the adviser numbers. Whilst our adviser numbers have risen steadily since we last spoke, the real facts are these, that we have changed over 60% of our adviser base and significantly uplifted our productivity by 44%. I will share how that compares with our peers later. The leadership team, we have changed over 50% of the team. I have brought people in from across the sector to further accelerate our future growth. On the referrals process, which we will take a deeper dive look at in a second, we have increased the number of referrals by 170% to 50,000 per annum since 2020. We have also improved the conversion of the number of clients who choose to invest with us, up 16% from 9% back in 2020. We have also reduced the average age of our client by 11 years during that same period. Our client journey, we have reduced the time it takes to help a client invest with us from 14 hours to 4 hours. On the technology, we have now built a technology stack that has no legacy. It enables us to drive further automation into our processes as we move forward. Finally, in the investment area, we have added six new multi-asset funds with the help of the Schroders investment team, and we have broadened our overall proposition so that we can tend and care for more of our clients' needs. Let us just take a deeper look now at this referral process. I want you to do that because it is a key accelerator for our future growth. I want you to really focus on three key areas here, which is, one, identifying the right clients that we can help. Secondly, creating the seamless experience and journey for our clients as they onboard with us. Thirdly, just reducing the time it takes from the moment a potential client shows interest to the moment that they invest. Let us take each in turn. Firstly, Lloyds have built an intelligent referral engine, and this helps prompt the right clients that we know that we can help. Alongside this, we have built a technology matching tool that helps pair our prospective clients to the right advisor before they have met the advisor. So we are matching needs and advisor skills before the client meets. Secondly, we have also worked with Lloyds in creating joint marketing activities to very specific segments of clients. So we are tailoring needs through testimonials on how we can change their lives for the better, and that helps the prompt. Thirdly, we have changed all of the processes and technologies to reduce the time it takes from when that client shows interest to the moment they invest. That has gone from 65 days to 23 days over the window. That is a huge shift in driving up the conversion. We now believe that the journey that we have built is actually unique, and 16% more clients are choosing to invest with us than at the start of 2021. A lot of work has gone in. So how has that translated into our performance? For the purpose of comparison, I have highlighted performance through 2021 through to April 2023. I think this period highlights what has been a difficult period for our sector. If we now look at the top, left of the slide, you can see the referral number. That referral number has remained stable during, I think, what we can consider to be difficult market conditions. Against the stability, the performance has markedly improved. If you look at the top right, the number of clients choosing to purchase from us has increased by 16%. You can see that's lifted up to 2,400 clients purchasing through to April in 2023. As you go to the bottom left of the chart, also the initial amount that the client trusts with us at the initial investment stage has also risen by 29% to GBP 168,000. Our average client holding today stands at GBP 208,000. It's as a result of these two in combination that our net new business has grown by 93% to GBP 187 million in April 2023. Let's see how that compares to peers. On the left-hand side of the chart, we can see that this segment had a tough year in 2022, down 35%. Of those peers in the comparison, they include SJP, Quilter, Mattioli Woods, Hargreaves Lansdown, AJ Bell, Transact, Brooks Macdonald, and Rathbones. During that same period, as you look to the right-hand side of the chart, you can see that our gross flows have remained stable and our net new business has grown by 42%. This is a result of more clients choosing to remain invested with us, and indeed, investing more with us. This trend has continued for us into 2023. It's a result of materially improved advisor productivity. Our advisor gross flows have increased by 21% to GBP 4.5 million to date this year compared to 2022. Our net flows have increased by 59% over the same period to GBP 2.1 million, which is GBP 400,000 higher than the relative peers in just Q1 alone. GBP 400,000 more in Q1 alone. Where they've probably seen limited growth or indeed gone backwards. Overall, I am pleased with the progress that we've made and actually I'm more confident for the future growth. Let's finish by just taking a look at our plan through to 2025. Given the progress that we've made and the improvements that we've outlined across our processes, our skills, and our technology, I will conclude by just sharing three key statistics. Our referrals from Lloyds will remain stable over the period at around 50,000. Our conversion of the clients referred will continue to increase, leading us to adding another 18,000 clients through the window, taking us up to 70,000 clients by 2025. Our net new business will continue to grow at a rate greater than 7% through to the period in 2025. This in contrast to many of our peers. I hope that today we've demonstrated that SPW has turned the performance corner. I guess more importantly, it's built the foundations for future accelerated growth. Thank you for your time. For now, I'll hand you back to Mary-Anne. Mary-Anne. Thanks so much, Mark. Well, thank you, Mark. I hope you found those deep dives into each of our businesses informative, and that having heard from Mark, David, and me, you now have a much better grasp of the different dynamics behind our businesses and which are summarized here. In conclusion, we are confident that these three businesses are on a sustained growth path. As we continue to leverage Schroders' fantastic investment and operational resources, we can achieve those ambitious targets that are set out here. I think that's probably all we have time for before Q&A. I'd like to invite our other speakers, and indeed Richard, to come up, and we'll be very pleased to take your questions from here. Thank you. Right. Questions. If I could just ask you to wait for the microphone, if you wouldn't mind, and then ask you to state your firm's name and we're good to go. Okay, thanks. Yes. Hello. It's Nicholas Herman from Citigroup. I have three questions on Cazenove, please. Just within Cazenove, which client segments are you most constructive on over the next three years? Second would be, clearly you are a leading U.K. wealth manager. I think you said you have a 3%-5% market share. Who is the number one player in the U.K. ultra high space, and what would their market share be? I guess also as part of that, you have a pretty complete offering. That's clear. Just curious as to who you see as having the best-in-class offering across discretionary advisory. Then the final question would be just which parts of the business do you still see margin pressure? Yeah. Go ahead. Excellent. Shall I take those? In answer to your question on which areas are we most constructive on, I think we are constructive on those four segments that we are focused on. Finance. Obviously, in finance, both our brand names, Schroders and Cazenove, resonate really well. It remains 20%, really, of where the wealth is in this today. We are very positive on that, and we are seeing continued growth in that area, and it is also a very networked area. I think we like that a lot. Secondly, I suppose, the business owner space is very important to us. Here we have fantastic referrals from the networks themselves, from Lloyds, but also, really importantly, from the professional advisors that are operating in this space. The lawyers, the big accountants, they are also the trusted advisors to those clients, and having worked with them now for, as I said, 30 years or so, they really understand our business and they really trust us. We have got really strong referral flow from that. I think the ultra space is one where, again, our brands resonate. Sandaire was a way of marking that we are there for those very large multi-generational families. I do not necessarily say there is one particular segment. We are focused on all of them, and that is important, and I am very sure that our reputation and sustainability will continue to sustain that market share in charities. It is not a great answer because I know you want me to say there is one segment, but there is not really. Those are the four. Who is the number one? Well, I think in terms of numbers of ultra high net worth U.K. individuals that we serve, I think that is us. Where we play in that segment is really who do we come across. I think we come across, typically, those big investment banks. The Swiss and the American investment banks in the ultra high net worth space. As I think I explained, they have a different business model to us. They are much more operating looking at one sleeve of a client's wealth. We are trying to do something much more holistic because we offer financial planning, intergenerational planning, et cetera, to those families. I think we have the best in class offering, to be honest. I do not think you would expect me to say anything different. But we are very knowledgeable, and this is in the U.K., certainly, we are very knowledgeable about all the tax implications, et cetera. We offer the full range of services of structuring and being able to advise those very large families in that. Whereas some of the, let us say, the more international firms have less of that. We have got private assets and impact on one side. We operate an open architecture approach so we can serve that client best. I think that is an area where- We are very strong because, again, some of our competitors will not have that full range of services. They might not do the financial planning angle, which is actually what brings us closer to those big firms of lawyers and accountants, and gives us credibility with those people too. Richard, do you want to do the point on margins? Yes. As Peter mentioned at the start of the presentation today, the margins are pretty stable, and we don't see significant pressures on those underlying margins. Going back to the year-end analyst presentation, I did guide to the aggregate advised margin improving from 57 to 59 basis points. That two basis points improvement was predominantly down to net interest margin and the improvement we were expecting in the first half of this year, which has come through. So actually we see underlying improvement rather than attrition in revenue margins. Yeah. All right. Thanks. Peter, go. Yeah. Good morning. It's from BNP Paribas Exane. I've got three questions, please, on private assets. You highlighted quite a few times during the presentation and even during the Q&A that this is an area of synergies. I'm just wondering what the allocation today for your clients in Cazenove are towards private assets and where you're advising them to go towards. Secondly, what is the share of Schroders private assets sold to these clients? Is there an opportunity perhaps to increase that, and if there's indeed an impact on margins? Thirdly, we've seen a number of traditional managers or other, I suppose, asset managers are doing more M&A, building out capabilities, specifically in private credits and secondaries. Is this an area where you think you can bulk up and offer more towards your clients? Thank you. Maria, do you want to talk about the allocation? Yes, I'll take the first two if you'd like me to. On the allocation, that is very tailored to the client, because obviously, as I told you before, our client span is quite wide. For some of our smaller clients and less sophisticated clients, it will be probably less significant than it might be for a very large endowment, a very large charity, who have a much longer term horizon, and less need for that income to come in. I think we tailor that, absolutely, and we also advise that clients should take a staggered approach to building their exposure to private assets so that they're not limited to one vintage. So they get diversification of vintage. It's not a quick answer to say 20%, but it ranges from, let's say, 5%-20%, 25% even for the very large endowments, just to give you a sense of that scale. And it's a central investment recommendation because we believe in private assets. We believe in that being a strategic part of a client's investments. In terms of how much is the share? As a share of Schroders Capital flows, it's still a very small number because the U.K. is relatively early in this, I think. Since we built out the Schroders Capital platform, we're now starting to say, "Okay, the democratization piece is the next big piece." So, it would be single-digit percentages. As you point out, a decent upside for us. On your point on private credit, et cetera, absolutely. This is a market which is growing. We see a long-term convergence between public and private. We see a move to make privates a much more fluid market, and the deepening of secondary markets is part of that, but also initiatives by London Stock Exchange, et cetera, to change the nature of privates and some intermittent trading windows. I think there's an awful lot more to go in this space. The idea that when we all grew up, fixed income and equities lived in separate buildings. They are now part and parcel of the same firm. We are going to see the same between public and private come much more close together. Richard, do you want us to correct me? I just wanted to correct what I said earlier, 57 to 59. The guidance I gave in February was 55 to 57. We do not normally talk about the individual components of the wealth business, but in aggregate, the margins are increasing from 55 to 57 in the segment in advised. Good morning. It is Hubert Lam from Bank of America. I have got three questions. Firstly, on the net new money growth target, just want some clarification on that. You said it is 5% to 7%. I assume that also includes SPW, which Mark said is growing at more than 7%. Just wanting for the core business or the business excluding SPW, is it towards the lower end of that range or is it still 5% to 7% what you are looking for there? Again, the guidance of 5% to 7% is against the AUM in its entirety, not just against advised. You have heard today some very compelling stories in terms of the advised segment growing strongly. But yeah, 5% to 7%, we think is a good long-term target for the advised in the aggregate. But clearly advised is growing very nicely at the current time. I think, Hubert, your point is a fair one insofar as each business highlighted that they were growing at a higher rate. We are observing the headwinds in the rest of the sector and thinking, actually, do we want to put a target, given the headwinds that are out there, which in aggregate is in excess. But each of the businesses feels like they have got growth targets, which can get to the 7%. But we are just not going to put our necks out there all the way given the headwinds in the sector. Thanks. Two other questions. Firstly, on the penetration of the Schroders asset management products. Can you talk about the percentage of that in each of your different segments? How much potential there is to grow that penetration further, and are there any limits to that? Last question is for Mary-Anne, again. Can you talk about potential stemming from Credit Suisse and UBS, whether or not you see that as an opportunity for your wealth management business in U.K., international, in terms of gaining potential new clients from that transaction and potential to get more bankers? Thank you. Perhaps the aggregate managed assets are GBP 23 billion of assets. But David, it is probably worth you talking about the opportunity in SIS. Yeah, sure. In terms of Schroder Investment Solutions within the Benchmark business, it is around about 10% today is in Schroder funds. They are unfettered, so we make a commitment to select the best funds, and our Chief Investment Officer will make that decision accordingly. But it is around about 10% today, so there is opportunity, obviously, for further growth. Marianne, do you want to talk about- Sure. Well, in our case, again, it is a result of our asset allocation, and therefore, we don't have a target. That would be actually a conflict of interest for us to say we're going to do this. So it will vary between, let's say, 7%-15%, 20%, because we operate on an open architecture approach. It will depend on where we are in the cycle. So for example, last year, we felt that it was important to be at the short end of duration for our fixed income portfolios. Therefore, we were not holding that much in Schroders funds which were positioned differently. But it is a result, not an objective. Having said that, clearly, firstly, it's very attractive for us to invest in Schroders funds because we get access to those funds at a very attractive rate, because we're a major holder. Secondly, we know the group very well, so it's something that we actually would like to do more of. But ultimately, we have our clients' interests in mind, and we're doing the right thing by them. Mark is- Yep. So I split that into, so I talked of the six multi-asset funds that recently have just launched. They are starting to pick up. So inflows rise into them rapidly in quarter one. Of the multi-manager funds, pretty similar to Peter's response earlier, we're still single digit across multi-manager. But I do see that there's an opportunity, leveraging some of what Marianne talked of earlier, to expand the amount that we hold within Schroders funds. But right now, it's single digit. Marianne, do you want to talk about Credit Suisse? About UBS and Credit Suisse. Well, yes, we have seen some flows from that. Absolutely. It is primarily people worried about the financial aspect of holding in. It is interesting to note that we are a very cautious bank, and therefore, when there are periods like this of disruption, we have tended to see a lot of flows in. The same happened during the Great Financial Crisis. We will get flows from that. Whether or not we will hire from that angle, we hire people that are culturally aligned to us and to our business and to how we think and how we. It will depend, and I think that has been the success of the business, both in terms of our acquisitions and in terms of our acquisitions of people, is that unless they are culturally aligned, we will not have them. But if they are, we absolutely welcome them. Some of the advisors that we have hired in the regions, for example, have come from those sources. But again, we are very discerning on who we hire. Bruce Hamilton. Thank you. It's Bruce Hamilton from Morgan Stanley. I've got two questions. One on sort of AI implications. I imagine there might be a range of use cases around perhaps time to serve customers and other efficiencies. So I'm interested in how you're thinking about the potential benefits, but also any kind of potential disruptive impacts on the business. Secondly, just going back to the sort of private market opportunity. Would I be right in thinking it's going to be mainly at the higher end affluent or higher net worth because it's into your traditional sort of drawdown funds? Or do you have, or have plans for any kind of semi-liquid offerings so that you can penetrate further down the sort of wealth curve? Thank you. I'm sure everyone's got a view on AI. Let me start by saying our view is that it's a profound change. We have run very hard to make sure that we had a contract in place with OpenAI very early on. We've made the Genie available to every one of our staff with Schroders, in a safe space with protecting the relevant things that you would expect to be protected. There is a much larger plan being put in place to how we systematically change our business to do it. I think the easy wins are things like translation, et cetera. You can see, in fact, we've already done it in Singapore as a mock-up, the automation of the advice journey. Singapore's a particularly easy place because all the regulations exist in one place, so you can just simply take the act and reproduce it. The question is how you can make a much better client experience. I think we know that client relationships matter, and especially if you are the client's trusted advisor, but empowering that relationship. I know Mark's got some interesting use cases that he's been, in terms of keeping customer records and the rest of it. I don't know if anybody wants to offer a view. Shall I go first? Yeah. For me, just echo Peter's comments, this is a huge opportunity. I think I started to draw through, didn't I, the journey from the client's initial interest right through to the point of purchase and how we've taken that from 65 days to 23. With the advent of AI, the seamless nature by which you can stimulate a client and bring that client through to an advisor piece, I think is definitely going to shift over the next 3 to 5 years. The key aspect that I consider, though, always is the proximity to the client and where you get to the point of advice, because clearly that has a great amount of variance even in the mass affluent segment where we sit. It's quite a complex and individualistic process that you're going through, and it's that that will be more tricky to automate. But I think that from the point of stimulus through to the point of which they meet the advisor, that's where I'm going to see the fastest change. With the advisor, I think that's still yet to be proven. Will we still end up with the same client outcome through an AI algorithm that I would with an advisor? But I think advance will bring that to us. The area we're focusing on, and we're doing an early stage pilot at the moment, is in the compliance process. So where we have oversight for the advisors within our network, so just over 300. We're looking at how we use AI to automate some of the process where we have the dedicated compliance supervisors who do that today. How can we use AI to just streamline that and automate that and identify sort of trends within that advice process? Well, in our segment, obviously it's very tailored and what we do is very tailored to the clients. Having said that, again, on all of the services that come around that, whether it's marketing, whether it's investment writing, et cetera, there's huge applications, and it will free up our people's time. There's no question. Bruce, on your second question, you make an important distinction. The high-net-worth segment, the traditional LP route into private assets is, I think, a very well-trodden path, and for anyone who's done it, is quite a clunky and hard work to do. There is absolutely a major opportunity coming into democratization of private assets. We feel that as a firm with a lot of mutual fund heritage, that is going to be an important shift. We've already got a couple of vehicles on our GAIA range, which the first one's already raised over GBP 1 billion, and we would expect that range to carry on expanding. You saw that we raised the first Long-Term Asset Fund in the U.K. Now, tax transparency for that doesn't work for private individuals at the moment. It only works for pension funds. But we're working with the regulators to hopefully broaden that out fairly quickly so that the Long-Term Asset Funds could be made available in different ways. Again, that democratization piece is a huge priority, and I think will open up a broader range of alternatives to people over time. Peter, if I may, just one addition to that is in Cazenove what we have established is a PCC. This is a Guernsey-based vehicle that is a feeder into some of these LPs. That is, from a client point of view, one, it allows us to pool their assets and for, say, Schroders Capital to see only one investor. So the individual sizes that go in there can be much smaller than the typical, let's say, $1 million that you'd expect, or $5 million that you'd expect to go into one of those PCCs. It's also much less clunky from a reporting point of view because we report to the client as one, and they see that in their tax returns, et cetera. So it's a very efficient way for us to access those LPs. Are there any more questions in the room? Yes, sorry. Thank you, Peter. Haley Tam from Credit Suisse. Can I ask a question to Richard, please, and then a couple to Mary-Anne? Firstly, to Richard, thank you for the targets. The 10% operating profit growth was very clear. Can I just clarify, when you say excluding markets, does that also exclude any anticipated benefit of higher interest rates in the U.K. and on the revenue margin? It excludes all changes in FX markets and interest rates. Thank you. Then the questions for Mary-Anne, if I can. On slide 15, you laid out the very strong net new business growth that you've seen at Cazenove. Could I confirm a couple of things? Firstly, they look very U.K. biased. Is that a trend you expect to continue? Secondly, in terms of the Lloyds Banking partnership contribution, I know that was something that was called out 20 months ago. Could you give us some flavor on just how much of an impact that was and how we should think about the ongoing opportunity there, please? Thank you. Yes, certainly. I think your first question on whether it's U.K. biased, I think that is a natural sort of, yes, there's better growth in the U.K., but it is a natural sort of Peter, I think, referred to our business as being mature. It is mature, but equally, because we're bigger, the potential referrers from that business is higher. I think, yes, we probably continue to see that. But equally, we have really high hopes of that inflection point turning and being able to export some of those USPs in the sense of the sustainability expertise that we have. That should really resonate as we develop in Asia, in Switzerland, where there are large foundations and charities. So I think it's that optionality that will happen in those other regions. But of course, because of our size and our reputation here, it's sort of almost easier. I am not saying it is easy. If we have any colleagues listening today, I know that it is not easy. But it is just a bit more natural, if you will. Your second question was about the Lloyds Banking contribution. It was significant, important, but as I said to you, I think we have seen almost an equal contribution from those four segments. Absolutely, it is an important part of our growth and one we have very high hopes for. Perhaps from the other team. We will add Haley. Sorry, if I could just quickly follow up. Yes. I should not think of that as a one and done with Lloyds, then? There was not just an initial bump? Oh, not at all. Not at all. Because what's been happening is we've been deepening the relationships with those Lloyds bankers. They now trust us more. They understand that we add value to their clients, that it's enhancing their relationship with the owners of this business. On the contrary, I would see that actually building momentum, but it's already a very significant part. The fact we've opened the regional hubs makes it easier for that to happen as well. Yes. Thank you. Mike Warner from UBS. Actually going to ask about the regional hubs. Marianne, we've seen the regional hubs open up over the past couple of years. Can you just give us an idea about how the profitability of those hubs have progressed? Yeah. Whether there's more opportunity to open up regionally within the U.K.? Secondly, I think also to you, Marianne, we've seen a lot of M&A in the wealth management space. You mentioned Sandaire. When you think about growth going forward, do you feel like you have all the components in place? Or do you feel that inorganic growth can also complement the organic growth opportunities? Thanks. Right. On the profitability of our hubs, we are really quite early on in that process, but we are very pleased to see the flows that have already come in. I think our plan was that they would break even in 5 years. We are probably aiming for actually earlier than that. Having said that, this growth and this development has not only benefited the new hubs, it has benefited all of our regional offices, because we had three existing regional offices who are following that same strategy of developing those local contacts with the professional advisors, but also with our colleagues at Lloyds. They too have grown a lot as a result of that focus, and they are very profitable. If you take our regional offices, because they are more mature businesses, obviously. If you take our regional offices as a whole, they are profitable, very healthy, and we are confident that the new offices, call them that, will turn the corner maybe sooner than we had planned, actually. Do we want to open new hubs? Possibly. We have now got hubs in the key areas where wealth is located. Possibly we will. The important thing is not to proliferate, because also, I think when you have a regional hub, you need a minimum mass to create the buzz and to have a really significant presence. We do not want to open a two-person office here and a three-person office there. It is not necessarily the right way to go. Possibly, but I think we are pretty much done with the first development, let us say. There was a question on M&A. Apologies. On M&A, apologies. Where we are on M&A is I do not think we need to fill a gap anymore. Not that we did, because Sandaire, all of the big acquisitions that we did, Sandaire was an extension of our franchise in ultra high net worth. Hawes was absolutely the same business model as ours. It is not as though we needed to fill a gap, but it just amplifies that. Do we need to do that? No. Certainly not in the ultra high net worth segment. But are we open to acquisitions on culturally aligned firms? Because some of them are coming to a point where there is succession planning, there is an opportunity there. If they are culturally aligned and we can see clear synergies, absolutely. Perhaps I can just summarize on the cost build out in the regional wealth offices. We do not have any plans in place to further roll out new regional offices. We have invested significantly over the last few years, and really what we are delivering now and a part of what we see in terms of the profit increase in guidance is delivering leverage from what we have built. It is about delivering revenues behind the cost a few years ago. Who has got a microphone? Go on, go. Go for it. Where is it? I know, it is right here. Lost the microphone. Thanks very much. It is Tom Mills from Jefferies. Just had a question on, I think you said that the Lloyds deposit base is GBP 475 billion. How much of that do you think is ultimately addressable for the SPW business? Then, obviously the flows year to date are annualizing pretty well. Are you seeing any competition from time deposits, which obviously looking increasingly attractive now? Thanks. Yeah. Great question. The addressable market for Lloyds actually moves quite significantly. But the number, as you would guess, is significant for us across the 36 million people across the group. In terms of the headwinds, we are definitely seeing a little bit more now where clients are looking at those fixed cash rates being far more attractive than we have seen in a cycle since going back to 2008. So it is definitely becoming more of a conversation for clients. I think where we will end is that those durations tend to be quite short. What we are trying to do is build the relationship with the client through life, so that I think what we will see in the short to medium term is a combination of clients taking both cash in the shorter term. That, I think, will affect some of the shorter ISA planning. But certainly, in terms of the more mature thinking through goals and where I want to be in my life, GIA pension, that will remain robust. But I do think it will affect some of the shorter term investing. I think there is some evidence the cost of living crisis is also dampening at that end of the market as well. Absolutely. Yeah. Thank you. Thanks. It is Brian of Bloomberg Intelligence. I just had one question on Schroders Personal Wealth. You mentioned the collapse in the number of advisors in the U.K. And I suspect a lot of that is to do with some really quite difficult exams you have got to do to become an advisor now. I just wanted to know what you are doing to address that challenge of getting new advisors in, because you also mentioned the average age was 57. Yeah. I suspect a lot of those people want to spend more time playing golf or fishing or something. Yes. What is the look forward? That is a great question. The average age is 57, and you are quite right that I think post-COVID, we have definitely seen a slowdown from people as they have been through that COVID to think, do I come back and do I work as hard as maybe I would have done pre? What we did is we built an academy when I joined. Of the 60% that I quoted of the advisors that have changed, 50% have actually come through the academy, and 50% are of experienced peers. We have got a balance of 50/50. We have actually brought down the age. Our average age of our advisors at SPW now sits at 42. That is because the average age of an academy entrant actually is 32. It is split 50/50 male, female. We have got a really nice pipeline. We have got another 18 people that I expect to come off our next academy cohort in the next 4 weeks. It is going very well. That is what we are working through. Thank you. Are there any more questions in the room? In which case we will go to, are there any questions online? There is no questions online at the moment. But if anyone wants to ask a question, please put your hand up. Great. Well, thank you, everyone. The time is now 10:30. There will be transcripts and full video of this if you want to go back and watch it again. But thank you very much for joining us. Thank you. Thank you.