Earnings Call: H2 2020

Feb 25, 2021

Everyone and thank you for joining today's q and a. Look, it's a shame we can't get together, but hopefully, we'll be able to do so at the next set of results. I'm also conscious that a reasonably large number of you will need to join the AXA call at 10AM. So we will sort of call an end to the q and a then. Clearly, you know where we are, if you have any other questions. Now one advantage of doing the virtual q and a is that we have the whole of the executive team on the call, which provides me with some great optionality for all those difficult questions. So, let's go right now to the first question, please, Ruby. Absolutely. Our first question is from David McCann of Numis. Your line is now open. Please go ahead. Good morning, everyone. Thanks, guys, for taking my question. Yes, I'll have you, the analyst, free, if that's okay. Just to just to kick off, firstly, in terms of the the new guidance around the cost growth, I mean, can you give us some specific, you know, articulate some specific actions you're actually taking to, you know, reduce the cost base, the cost growth to that new new lower level just just so I guess, can get some comfort with it because the material change from the the, you know, the prior 10. That that's question one. Question two relates to that. So what confidence do you have if this isn't gonna kind of negatively impact in some way on client and partner, you know, servicing, obviously, not not, growing cost cost as much? And then, finally, the third question on new targets you've articulated from Roan Dart and then Asia. I mean, can you say kind of what fund management growth you'd require to get to those kind of breakeven targets? So how much is predicated on continuing to grow those businesses quite strongly and how much are there other factors? And also, guess, a follow-up part of that, so I guess it might be four questions, really. So the yeah. To get to those breakevens you're talking about in 2024, 2025, is that kind of should we assume that's in the linear through the light from where we are now or is it back end loaded to get to that breakeven point? Thank you. Okay. I'll I'll take the RV in Asia, question in a moment, but perhaps hand over to Craig to talk about the costs and how we're going to achieve the five percent. Yeah. So so, David, what what you're describing is what we're calling the the financial envelope that we're going to be working within over the next five years as we pursue that plan. The as as with all plans, there is a need for a kick start, and and the kick start is happening in the form of a review that we're in the process of doing and completing at the moment, and and you'll have seen that there are a number of roles that we've we've put at risk. And we've we've really been through the process of looking at existing roles within the the business as a whole and reaching a view on on the the the role that those roles will play in the future and our future plans because they've obviously had an important role in the past. But we're we're thinking of ways in which we will adapt the business and grow the business and take a very different approach to the use of resources. So step one in that is the review that we're doing at the moment, which has put a couple of 100 roles at risk within the organization. I don't wanna say too much about that because I have to respect the fact that we're still in consultation. But the the the output of that is is going to enable us to keep the establishment expenses that you're familiar with flat, and then the amount that we would typically grow establishment expenses by will be redeployed into other areas of growth, and that's principally investment in technology and smarter processes. The the question of how we'll go about doing it, I I I think we've got a reasonable track record of saying what we're gonna do and then doing it. I I think my answer is that over the next five years, the the executive board as a whole has set itself this financial envelope to work within, and therefore that's that's what we will do. I know there's a follow-up to this question. Andrew, I don't know who you wanted to cover. Yeah. So this is the the, confidence that we won't impact, partners and and that's, you know, a very good question, David, and absolutely key that we have to continue with, you know, servicing, if that's the right word, partners and clients and we're very confident that, we can do that within the financial envelope. To to to answer your RD and Asia question, There's a couple of bits in there. So so firstly, for for your modeling, I would just do linear. I can't, you know, the the the numbers, you know, will probably end up being slightly different than that, but I think linear will be fine for your model. I also said in in my presentation, which, I'm sure you watched this morning that we will do a Capital Markets Day later in May and that we'll do recover RD in Asia in a bit more detail. There's clearly two levers to that improving result. One one is the, income and the other is expenses. And, we would expect, the income to grow faster than than the group 10, but we're we're not you know, they're not factoring in any massively heroic, assumptions there. And I think the other important point on Asia in particular, David, is that, about half of the funds under management are in the six year gestation period. So those those will naturally start generating income in future years. And that's why we couldn't see the trajectory to the the sort of cash profit 2025. So I think, Ruby, we go to the next question, please. Absolutely. Our next question is from John Hocking of Morgan Stanley. Your line is now open. Please go ahead. Hi there. Good morning, everybody. I've got two questions, please. Firstly, can you comment about what your assumptions are in terms of adviser growth going forward? Historically, we've had this on seven to 8% trajectory. I guess COVID has interrupted that somewhat. So what are you receiving after 2025 in terms of, the growth in advisers? And then secondly, just in terms of the, the admin cost burden, I wonder, in in the scope of these plans, are you planning on pushing back any of the admin burden to the partners? So is there some implicit transfer, given BlueGirl's efficiencies on on that front? Thank you. I might might take the second question first. I I think you're saying, are we passing some admin costs to to the partner? And I think partners and the answer there quite simply is no. You know, that that that model is not changing. And and in terms on on the the the assumptions, around adviser growth, wanna just come back to the this is what we're trying to do is grow the business by 10 per annum. And there's a whole host of levers we can we can operate within there. There's experience recruitment, which as you know was on hold last year and and we've now restarted. There's graduations from the academy. They're supporting our partners to grow their business. That's making it easier to do to do business with. So I don't wanna give a specific breakdown of the 10%, but it will be using each of those levers. And then, you know, we're very confident that we can do that. Ian, I don't know whether you want to to to add anything. No. No. I think you're right there. The the the range of levers and strategies we have within the group means that we were confident of the 10%, and that ranges from, recruiting experienced advisers, as Andy says, developing our own academy, increasing the efficiency and productivity of our existing advisers. And we've we've taken we're increasing our spend on learning and development and the impact there, particularly on partners in their first five years. So it's it's it's a range of a range of strategies, and we're confident of achieving the 10. Yeah. So no particular change from the past? No. We we we will continue to do exactly what we've done in the past, you know, and and, you know, some some years, you know, we might have higher adviser growth than than other years. It it but it is a, you know, whole host of pulling different levers. I'm I'm not sure whether we've totally answered your your admin question or not. So might just see if Craig wants to Yeah. So he it's more whether there's whether you're transferring, any responsibilities to the advisers, given that they could do some more things through self-service or encourage their clients to do things through self-service rather than actually be, recharging them overhead. I I I think, John, the way the way Craig Craig here, by the way. So, I think I think the way to to think about this is that if if we can have better systems and smarter processes, it benefits everyone. So what what the 2025 plan involves is finding difference and better ways of doing things. Now you mentioned Blue Door. And and over the next planning period, we see BlueDoor as quite a significant enabler because it enables us to build those smarter processes and IT supported systems around it. So it it's certainly not the case of transferring activity back and forth, but it's changing the way in which that activity is carried out. And if that can benefit SJP as a business and it benefits the partner business, that that's a win win situation, and that's really what we're pitching for over the next period of time. Okay. Thank you. Thank you. How's the next thank you, John. Can we have the next question, please, really? Absolutely. That is from Andrew Sinclair of Bank of America. Your line is now open. Please go ahead. Thanks, and, morning, everyone. Three from me, if that's okay. Firstly, it's just on, you've talked about, about growth and flows, but St James is now a much more mature business coming up from 30 years old. How do you think about retention rates over your plan period as as customers age, take retirement? And and how do you think of changes in retention rates in your 200, 250,000,000,000 AUM targets? Secondly is, you talked about moderate growth over the early weeks Just wondered if you could give us a bit more color about how we should think about that. Is is that actual growth in gross flows year on year against a a pretty tough q one comp last year, or is that just leading indicators? And thirdly was, I I realize this is perhaps looking a long time out. But as you look beyond 2025, if the business mix stays as it is and business matures, thinking about the IFS profit element as well and retained earnings, do you think you still stay at at 70%? Do think that can increase again? Or, or how should we think about payout beyond 2021? Okay. Thank you. Thank thank you, Andrew. I'll let Craig answer question three, in a moment, and and I'll perhaps try and deal with, with the first two. So so moderate growth. Well, I think firstly, it's important to remember that the comparative is a pre pandemic, comparator. So, we're comparing pre pandemic with, still being in lockdown. And and moderate, it it it's obviously greater than zero, and I would probably say, you know, less than 10, and and perhaps perhaps something in the middle there, something along those lines. But, you know, that that's what I would do in your models at this particular point in time. In in terms of of retention, we're we're we're not expecting any real change in in those retention statistics when when we look across the entire population of our clients. What we, are seeing and and have been for for a while is, is people actually reducing their regular income withdrawals. Some of that will be because of lockdown, and there's a lot more planning around intergenerational, planning as well. So some of the some of the pension funds with us, for instance, will, will probably pass through people's estates and stay with us for another fifty years. So we're not expecting to see any change in the retention rates. And then I'll hand over hand over to Craig on the IFRS one. Yeah. I I I don't see any any change, as we are at the moment. When when we last put together a five year plan, you go back to sort of 2015. This this was something that didn't need to be featured in in the plans that we made because of the way in which the balances were made up because of stocks of profits in in different places. It's come on to the to the scene for the next five years. And and what we're doing here is rather than do an emergency stop anywhere, we're we're sort of anticipating how this is likely to evolve in the future. And it's really important to have in mind that the core assumption here is growth. And it's growth that drives that behavior within a deferred income balance because you're constantly moving more into the future than you're you're gathering up from the past. So it is just a timing difference, but the the 70% sees us very, very safely through the planning horizon that that we have at the moment. And I can't, at this stage, anticipate anything that would significantly change that once we get to the end of that planning horizon, but it is all dependent on the scale of growth. And and, again, just just to emphasize, it's one of those odd balances that that grows where growth is sharper. But but certainly, what what we're putting forward now is a a a five year at least sustainable approach to group distributions. Yeah. Sustainable and certain. Yeah. Could we have the Thank you so much. Yeah. Next question, please, Ruby. Absolutely. Our next question is from Ashik Musari of JPMorgan. Your line is now open. Please go ahead. Yeah. Thank you, and good morning, Craig. Just a couple of questions. So first of all, now that you you have a new growth outlook of 10% going forward, I mean, what is giving you enough confidence on this 10% growth outlook? Is it like a mix of partnership and productivity, or or is it, like, any better outlook for macro? And would you say that it could still be 15% just because the the visibility is low? That's why you are you have gone to a 10% outlook rather than 15 to 20% that you had in the past. So that's the first one. Or is something structurally changing the business to go to 10% versus 15 to 20? The second one would be around the payout ratio. Again, I mean, you mentioned I mean, clearly, again, going back to the previous question is that there is to something to do with IFRS deferral, etcetera versus the cash profit. So that would still mean that you will be accumulating cash over next five years because you you don't need more than that. Because if there is no back office infrastructure cost, then there's not much of leakage between underlying and net cash as well. So what do you plan to do with this extra cash? Yeah. You might not be able to pay it out, or you just want to preserve it because of IFRS distributable profit, but what are your other plans for that remaining 30%? Yep. Okay. Thank you, Ashley. I'm I'm probably gonna go straight to Craig to to answer the second question because it sort of continues from, Andrew's question just now. So, Craig? So, Ashley, you're absolutely right. The the the impact of having these IFRS deferrals is that you you accumulate cash in in a in an entity. And, the the one thing you you can't do with that cash is distribute it because it has to to to wait in in the queue for distribution as it were. Now the the the the fact is that this is this is cash that over time will accumulate in the life company. And therefore, you have to think quite carefully about what you can and what you can't do with it. The way we use this the the the sort of data that we've used in our planning assumptions, we've taken a pretty cautious approach. So we haven't made any bold assumptions about what we will or what we won't be able to do with that cash. But the reality is, over time, as it becomes a more meaningful figure, there probably will be things that we can do with it that puts it to good use within the group. But what I would say is that if if for whatever reason, and I can't think of the reason, but if for whatever reason we couldn't put it to good use, that would not in any way affect the payout ratio that we've calculated. But it's one of those things that over time we'll be working on, and, one of one of our priorities will will be to, as I say, put it to good use. Thank you, Craig. I'm I'm just coming back to your first question, Ashik. The 10% growth, on the size of the flows that we're doing now is still really, really attractive growth. So it's just a sheer scale point. We remain confident that we can do that for those levers that we, you know, we talked about just now, recruitment experience, advisors, academy graduations, helping partners and supporting partners, grow their businesses. And and underlying all that, as I said in the presentation this morning, you know, is is all those market dynamics of, you know, growing market, growing need for advice into generational transfer of wealth, low interest rates not going anywhere. So, yeah, we we're we're confident about the 10%. And it's not gonna be 10% every year. Some years, it might be harder than that. Other years, it might be lower than that. But over five year time horizon, that feels, that's definitely achievable. Could we have the next question then, please, Ruby? Absolutely. We do have further questions, but I would just like to please repeat if you would like to ask a question. It's star followed by one. And if you change your mind, it's star followed by two. Our next question is from Colin Kelly of UBS. Your line is now open. Please go ahead. Yes. Thanks. Thanks very much for taking my questions. First, on the expense growth of 5%. So it's very good guidance on that today. You indicate that there will be 9,000,000 of restructuring costs for this year. I suppose as we look forward and lowering the growth in the operating expense base, you know, is it likely that it's still going to take further restructuring costs over a couple of years? You know, as you say, it's it's technology driven, and I know you continue to invest in technology and automation side of the business, in order to drive cost efficiency. So, you know, is it sensible to assume there'll be maybe some restructuring costs there beyond 2021 in relation to this? And the second question is in relation to the timing mismatch between cash and distributable profit. So, again, a very sensible guidance here. I suppose even based on a 70% payout ratio on the dividend, there's likely to be some years where the dividend will be higher than the IFRS process and may require dipping into the distributable reserve. So I assume within your plan, you know, you've allowed for that. You're happy to dip into the stock of distributable reserve, where needed to support that payout ratio, or is there any ambition to keep distributable reserves anyway stable? And then just lastly related to that, again, related to a similar question earlier. I mean, based on your modeling, is there a time frame at which the IFRS profit is expected to catch up with the cash results? I appreciate it may not be in the the next five year plan, but based on your modeling, do you have a a rough, you know, time frame from which you think this issue goes away? Thank you. Yeah. Thank you, Colin. And I'm gonna pass, both those questions over over to Craig. Okay. So on on the expense growth, yeah, I I mentioned this morning a a restructuring charge that that that we're we'll see in the cash result. I as I see it, any any business will always be contemplating change in the way it delivers what it delivers and the way it uses its resources. But am I at this stage contemplating a a a further restructuring cost of this size? I think the answer is no, But there will be a constant level of activity within the business as we always reassess what it is we need for the future and what we need to change from the past. But I I think I used the expression in an earlier question, kick start. I I think what what this restructuring charge will represent is a is a kick start to a to a new plan going forward for the next five years. So my anticipation at this stage will be is that that to the extent we we have additional costs coming through on on change that will just be absorbed into the, operational cost base. On on the payout ratio, it it's always complicated, Colin, as you know, because you're you're looking at distributable profits at the statutory entity level. And there are one or two of those statutory entities that are quite complicated because of the IFRS accounting rules, but the the modeling that we've done anticipates, that that this this payout ratio will be sustainable, through the emergence of cash backed profits over the next five years. So, that's very much the basis on which it's been done. You you talk about convergence. You'll probably already see some convergence because one of the things that people will pick up on is the fact that we tend to focus very heavily on underlying cash for all the right reasons, but we have also had the blue door costs going through below the line. And, of course, IFRS is agnostic as to whether it's below or above any line. It just goes through as an IFRS cost. So so you would already see operating cost convergence as a result of the completion of that program. Other than that, it's actually quite difficult other than through complex reconciliation to see the relationship between IFRS and the cash result because of so many other things that represent accounting changes rather than changes you expect as a result of of commercial activity. But I but I think you will probably see more congruence in the future than you've seen in the past. Okay. Thank you, Craig. Could we have could we could we have next question, please, Ruby? Absolutely. Our next question is from Andrew Crean of Autonomous. Your line is now open. Please go ahead. Hi. Good morning, This is Andrew Crean speaking. Good morning. Firstly, can you talk about the investment performance last year relative to benchmark on a weighted basis? Secondly, and I suppose this one's ready for all Manduka. Are you thinking of changing the executive remuneration structure? Because it's still very heavily guided to the embedded value, whereas every single question on this call is, based on the cash earnings, which are clearly more important to the market. Thirdly, it's not if you grow your funds under management 10% and your expenses 5%, obviously, there's a bit of an issue about funds coming in and going out of gestation. What's the implication for that in terms of the underlying cash earnings growth as you see it? And one thing just for the for the, May Investor Day, I'd be really interested, not now, but I'd be really interested then to see what the profile of productivity is on academy recruits versus experienced IFAs because clearly that's gonna have an issue on on how the timing picks up or how the net flows pick up, as you swing between those two. Okay. I'm just gonna pick up the second one on the executive remuneration on behalf of, guess, Paul and the remuneration committee for a moment. Look, we we had our remuneration structure approved by shareholders at the AGM last year. We we are clearly hearing the feedback about having a little bit more around cash and stuff in the remuneration. So that will be factored into, you know, the future remuneration structure that comes back to shareholders for approval next time. On investment performance, we've got Rob Gardner on the call. So I'm going to pass that to Rob. So over to you, Rob. Yes. Good morning, Andrew. Quick, Andrew. Can you hear me okay? Yes. We can hear you. Yeah. Yeah. Look. So, Andrew, I don't have the kind of blended bit, but I can kind of give you our portfolios, which, as you know, 70% of our our our sort of flows go into our our our portfolios. So our most popular portfolio, and this is probably the best representative, was 5.03% net of all fees, and that was the 2020, total performance. Our other popular portfolio strategic growth actually did 9%, and our adventurous did 7.6%. And a lot of that was because we restructured our RMA with our kind of three global funds, these kind of global quality, global growth, and and and global value, and and and all all of those three changes actually fared very well in in in in 2020. So so 5% is probably a good start at the tenth. What's your benchmark? Well, I mean, the obviously, for different clients, there's there's there's different benchmarks depending on on on how they did. I mean, as you know, the if you took a sixty forty FTSE gilts portfolio, that was sort of minus two and a half percent. If if you took sort of MSCI World, as you know, did very well was sort of 120.3%. I mean, most most of our clients have historically been benchmarked to a kind of ARC, FTSE benchmark, and where we're trying to transition to is a more sort of global outlook, benchmark for our clients. But each each one of those is is with reference to the amount of risk the client wants to take. So the managed portfolio is a sixty forty benchmark. It it it sounds, Andrew, as if we might link you up with Rob for conversation, at some point in the future. Craig, can I pass the underlying cash earnings question to you? Just very briefly. I I I suppose most people on this call have got their own models, so they'll be able to plug in the data and and come up with their own answer. But I think at a high level, the way the way I see this is that if if you can contain the cost at a lower rate than the cost were growing in the past, you get the immediate benefit of that cumulatively in any cash results over a planning period. Whereas if the growth in funds under management are lower, when you take into account the fact that the sizable portion of that goes through a six year gestation period, you you're not seeing any disbenefits of a lower growth in fund. So if anything, there's a potentially positive impact there. But but it's probably better for me to leave people to their own models to calculate what they they believe the answer would would be. Okay. Thank thank you, Craig. Be helpful. Okay. Thanks. Thanks, Andrew. Thank you, Craig. Ruby, could we have the next question, please? Absolutely. Our next question is from Andrew Baker of Citi. Your line is now open. Please go ahead. Great. Hi, everyone, and thanks for taking my questions. Three from me, if I may. So just on the 10% flow growth, are you able to give any expectations on timing? Are you expecting lower in 2021 and then maybe a catch up thereafter, or do you see it as more even? And then secondly, on adviser productivity. So as we come out of COVID, have the forced learnings or the forced digital learnings from the past year increase your productivity expectations going forward for your adviser base? And then finally, just on the f s FSCS levy, obviously, the FCA has come out with a goal of potentially redesigning the system to make the polluters pay. But do you have any sense on when any when these changes might actually come through and any potential benefit if they do? Thank you. Okay. I'll I'll take the, first question and hand over to Ian on on the productivity and the FSCS to to to Craig. I mean, firstly, this is a five year planning cycle. So the 10% is expectation of annual growth over that period. As I said in the presentation this morning, there will be some years where we exceed that and there will be other years where we may fall short of that. You know, we are still, in lockdown. You know, we have said that we've seen moderate growth at the start of, this year, but the environment is still challenging until we find ourselves out out of social distancing. But as I say, it is encouraging that we're seeing growth on last year, which was a pre pandemic comparator. And obviously, the comparators, get relatively easier, and we will at some point hopefully be in a comparator in a post pandemic world. Sorry. I'll say that again. We will be in a post pandemic world with a comparator that was in a pandemic world, and and therefore, you know, that that should be positive. But you should see it as a five year business planning cycle, not specific year by year. Advisor productivity and technology and stuff here. Yep. Andrew, I think you, you maybe answered the question yourself in the way you asked it. There's certainly been a massive increase in learning by the partnership and using technology as a way of interacting with clients during the COVID period. So as a a face to face advice business, the business levels of last year are being produced with partners working from home and working remotely, and their clients also being in lockdown. The learnings during that period, as we take those into this year, with the lessening of the lockdown, that the the second half of the year, we've been able to move back to a full full service face to face service supplemented by the learnings through the the lockdown of of working remotely and interacting with clients and servicing them remotely, does give us confidence for, productivity gains during the year. And I'm gonna pass over to Craig on the FSC CS levy. Yeah. I and and I think you've picked up on the language there that the the chairman of the FCA use. So I I I think we're we're of the view that the FCA are very clear on where the challenge lies Inevitably, and as as I think we made very clear at our half year, we're we're very supportive of the idea that the the polluters in the industry should should pay. I'd I'd add that by some means, they need the financial strength to be able to pay as well. That's very important. As and when the as to when this will actually happen and and when we're going to see change, I'm I'm afraid I'm I'm probably no clearer now than I was at the half year last time we had a a a similar conversation. But if there is a a bright light on the horizon, it's the fact that, our our belief is that they're clear on what the challenge is and and what the outcome needs to be. Okay. Thank you, Craig. And, Ruby, can we go to the next question, please? Absolutely. Our next question is from Steven Hayward of HSBC. Your line is now open. Please go ahead. Hi, Steven. Hi. Good morning. Hi. Good morning. Thank you very much for taking questions. I've got two, if you don't mind. On the Asian and BSN, expenses, now are they within the 5% growth target? Are they material really? And are they going to be a worry over time? And on this Asia DSM, getting to the positive, cash neutral stage by 2025 or 2024. Quite impressive. Can you give us the drivers of this? And then secondly, sorry, w a u m by 2025 is kind of your blue sky, target, I believe. 260,000,000,000 AUM, I think you said. Can you describe the drivers you need to get to that level of AUM? Thank you. I'll I'm gonna ask Craig to talk about Asia and DFM, and are they in the 5% or not? So so in in short, no. Because the way we see Asia and DFM is on a on a net investment basis. So the the goal that we've set in the planning horizon is to turn what is currently a net investment cost into breakeven and beyond as we've set out. Now that's not to say that there won't be cost control. There will be cost control. But the the way we plan for those investments is different to the way we plan for the, normal ongoing operational cost base for the business. Thank you, Craig. In in terms of opportunity and stuff, I've I've got Ian Rayner, on the line. So I'll ask Ian to come in in a moment and just talk about Asia just as as you know, just to pick on one of those those two investments. In in terms of, funds under management, Steven, the the target is to exceed 200,000,000,000 and that's doing the 10%, you know, sort of retaining the strong retention that we have, with some modest market growth. Of 250,000,000,000, as I said in my talk was the it's a stretch target. It's the gauntlet that I threw down to to Saint James' place. But but you should very much see in excess of 200,000,000,000 as as being the the unstretched target, if if you like. Ian, if you're still on the line, can I just talk about Asia for a moment? Yeah. Thanks, Andrew. Can you hear me? Yes. We can hear you. Great. Thanks, Andrew. Thanks, Steven. Yeah. Very briefly, we're really pleased with the 2020 numbers in Asia. As you've seen in the release, 27% growth in gross inflows and some good progress on reducing the the net cash investment. We've got a plan out to 2025. Let's see. Both of those numbers continue to trend, in the right direction, and we're and we're really confident about, about delivering early trading in both Hong Kong and Shanghai and Singapore in 2021 has been has been positive, and we see some really good opportunities to recruit experienced people from private banks and family offices over the next few years that are gonna help us help us, deliver those numbers, basically. So so, yeah, real confidence around the around the delivery of the number. Anything else? Thank you. Thank you, Ian. I'm I'm conscious some of you are gonna have to jump off, in a moment, but we have two more questions, I think, lined up in the queue. So we will answer, both of those. But but for those of you who got to who have to jump off, look. Thank you. I'm looking forward to meeting you again soon. But in the meantime, please stay safe. You know where to find us. But, Ruby, could you go to the next question, please? Absolutely. We have Raya Shah of Deutsche Bank. Your line is now open. Please go ahead. Thanks, Ruby. Thanks, Andrew and Craig. So three questions for me. The first one, how sustainable is the 10% per annum flows growth beyond the fifth year given that there's a buildup of pent up savings particularly during COVID? Secondly, how sustainable is the 5% per annum controllable cost growth beyond GSI given that the staff savings from the redundancies are all near term. And then thirdly, just looking at the academy, it's it feels like it's going to become a more important part of your recruitment strategy if the market for existing advisers is in a decline. But we're seeing news about other wealth managers starting their own academies or having also run them for a few years. Are you seeing any impact from that on your own academy recruitment? And could this become an issue over the medium term? Yeah. I'm I'm gonna pass the academy question in a moment to to Peter, Edwards. In in in terms of the, of the 10%, clearly, it's a five year planning cycle, but the market dynamics are very exciting. I'm not gonna sort of give a statement now, but we would expect to be able to continue to grow beyond 2025 because the market is very exciting. And in terms of the expenses, look look, Craig's a really, really mean CFO, so I'm pretty sure we can we can stick to the 5% going forward as well. But, Craig, do wanna add anything to that? I I think the way to see this, as Andrew said, this is a this is a five year planning cycle, but I can't imagine for one minute that when the next five year planning cycle is done, we won't be putting ourselves under pressure to make sure we take advantage of all the things that are available to us to be better at doing things more effectively because it's a it's a win win result. So, whether it's 5%, 4%, 6%, that that's for the next planning cycle, but, I believe this is sustainable. Yes. Thank you, Craig. And and Peter, if you want to just come in on on the academy, answer if you would. Yeah. Hi, Andrew. Yeah. No. I think that's, it's really interesting that others are indeed entering this, this space in terms of their desire to grow their distribution. And, that's not new, of course. People have historically tried to grow their own, so to speak. I think what makes our academy slightly different is we have been developing, refining, and improving the academy over a decade. And I think you referenced earlier on, Andrew, that a lot of the learnings that we have taken through the COVID period will in fact enhance and develop our ability to flex the intakes on the academy, allowing us to basically move away from the traditional model that we've refined to date. I think an important question around the impact of others starting that academy is on our ability to attract people. I I I don't believe that is the case. I do think that we, have a very refined model, and it it delivers what we require in terms of growth for our business. But it's an important thing to note that almost 90% of people who apply for the academy are not selected to start a program so that the bar for entry into the academy is very high. So we we anticipate maintaining that high standard of entry, and we have a very positive feeling about the growth from that sector, in terms of that manpower over the foreseeable future. Thank you, Peter. Thank have one final question in the queue. So, Ruvi, if we could take the next question, please. Absolutely. That is from Greg Simpson of Exane. Your line is now open. Please go ahead. Morning, all. Just a few questions from my side. The the first is if if can I ask you if the 5% expense growth target, if that's independent of of market levels? Or is it something you might look to flex up or down if the equity markets are particularly strong or weak in a given year rather than the kind of modest level you're budgeting for? The second question, I was wondering about the pipeline in terms of experienced recruitment, if you're seeing any increased interest from IFAs who've maybe seen the importance of having access to strong technology because of COVID, or do you think that the academy is going be the main growth driver of headcount growth going forwards? And then just lastly, we seem to be seeing a lot of demand at the industry level for alternative assets. You provide any color on how the relationship with KKR that you talked about a few years ago is going? And if there's any scope to launch more private markets funds going forward? Would guess that's something that smaller wealth managers can't offer access to for their clients. Thank you. Yes. Thank you, Greg. And I'll get Peter back in a moment on the pipeline and Rob back on the, alternative. But Craig, do you want to just, talk about the 5% growth target again? Yes. I I I think it's fair to say what what we've done here is we've we've set ourselves a a a plan, a goal, a financial envelope, call it call it what you will, that that we intend to stick to. So I don't think it's the case that, for example, if we if we found we were experiencing stellar performance on the markets this year, that that we would feel that gives us a license to go outside of that. Because what what this represents is a a whole series of commitments that we plan to make over the coming years and and their commitments in in pursuit of particular outcomes, whether it be improved processes or or or new technology. So I I wouldn't see it gearing up or down with with the markets other than to say that in the real world, if, god forbid, there there was something that really held back income, we're no different to any other business. You would have to reassess your plans and make sure you you've reprioritized based on the the conditions that that you find yourself in. But, no. I don't I don't see any reason for stretch on this. Thank you, Craig. And Rob, do you want to just pick up where we are with the DAF fund and sort of other, assets and our sheer scale and, you know, what what it gives us? Yeah. No. A a good question. So our our DAF fund with KKR is is sort of bedding in, and and the challenge of private assets is always the sort of deployment of cash and and and getting the cash in the ground. And I suppose just, being open, the other challenge is having illiquid assets and what is in effect a a a liquid, a liquid vehicle. The advantage that we have because of our, you know you know, the structure of our business means that that we can do that. As as we look forward to 2025, my job is to ensure that we have the capacity for 250,000,000,000 and and actually for the next five years after that all the way through to to 500,000,000,000. So we are working on a a sort of illiquid assets building block where we can kind of leverage off the work that we do on DAP. And that exactly as you say, the opportunity to create bespoke old asset solutions that just aren't available, to other players in the marketplace is is is the opportunity. I I just wanna caution the the other bit which you heard from Andrew is that we've hung up signed up to Net Zero Asset Owners Alliance and our flight plan to achieve that. So it's just trying to make sure those two work in tandem. Okay. Thank thank you, Rob. And, Peter, if you just wanna talk about the pipeline and sort of IFA market in general. Yeah. Thank you. So in terms of pipeline, I I think it's an important thing to recognize that someone who is currently an advice professional other than with a Saint James Place, the journey to decide to leave where they currently are to join Saint James Place, in many instances, can be over the significant period of time. So part of the reason we, paused recruitment in that space during the lockdowns and COVID of twenty twenty, was was to allow people to focus on their clients. However, we have remained engaged with, high numbers of these people, and they are indeed very engaged with Saint James's Place. There's there's huge interest in joining Saint James's Place from across the advice profession. But I think, again, along with what I said about the academy, the the the selection point to be able to join the partnership is quite high, which means that we could take a significant period of time selecting the right people to join the partnership. In terms of the advice, landscape and and certainly the IFA marketplace, what what I would say is it it doesn't look like it's going to get any easier to operate as an IFA. Indeed, burden of responsibility on individuals and businesses looks ever more, difficult. So we we do have high levels of contact. We have high levels of interest, and we have high levels of retention of people who do make the decision to join the partnership when the time is right. I think the confidence I have in this marketplace is that as the academy has grown and developed and we have increased its size and scope, the blend of experienced advisers from an IFA or global advice background along with these new joiners gives us the the correct age profile because the profile the age profile in the IFA market is significantly higher than that in, in the academy or indeed in the partnership. Okay. Thank thank thank you, Peter. I'm gonna call the, q and a to a close now. So thank thank you everyone. Thank you, Ruby, for facilitating. And obviously, if you have any questions, then, please get in contact. So thank you again, everyone. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your line.