Dynamic Planner 2019 Autumn Training Academies - Motherwell, 1 Oct

©2019 Distribution Technology Ltd. All Rights Reserved.
Autumn 2019
Training Academies
Motherwell

Housekeeping
Please switch off your mobile phones
Toilets
Fire drills

Agenda
09:00 – 09:30 Breakfast, registration and networking
09:30 – 09:40 Introduction and welcome
09:40 – 10:10 Dynamic Planner Client Success (live demo) – Client Case Study, a ‘how to’ session
10:10 – 10:40 Dynamic Planner Asset & Risk Modelling – The Importance of Fund Risk Profiling
10:40 – 11:00 Refreshments and networking
11:00 – 11:20
Dynamic Planner Client Success (live demo) – Client Review Process Update, what is new
and what’s coming up in ‘Elements’
11:20 – 11:50 Partner session 1 - Global economic update
11:50 – 12:20
Dynamic Planner Client Success – ‘Let me show you how’, common questions asked by our
clients
12:20 – 12:40 Partner session 2
12:40 Lunch and networking – A chance to ask questions one-on-one

Introduction & Welcome
Dynamic Planner

Dynamic Planner Case Study:
Retirement Planning
Client Success Team

Learning objectives
Client Profile
Name: Andrew Green
DOB: 10/02/1970 (50 next birthday)
Retirement Portfolio: Circa £450k in Scottish Widows Personal Pension Plan.
Objective: retire at 60 and enjoy flexibility under drawdown
Learning Objective
To be able to understand the required information and steps needed to create a
Retirement Wealth Plan for Andrew.
Demonstrate how to perform the following in order to meet Andrew’s objectives:
→ Pension Transfer
→ Rebalance portfolio
→ Annual review (Session 2)

Begin in ‘Client record’

Select the relationship type

Always remember to name your case

Case control centre

Existing arrangements

Investor experience

‘15 Question Attitude to Risk’

Consistency check

‘Capacity for risk’

‘Select a risk profile’

Value at Risk

Analysis

Efficient frontier

Recommendations

Product actions

Portfolio Suitability Hub

Fund filters

Search by Citicode, ISIN or MEXID

Add to portfolio

Align weightings accordingly

Asset allocation – Recommendation
Click Finish Button

Transferred to new policy

Reporting

Report preview

Close down your case

‘Product summary’

Complete case and update client

‘Client confirmation update’

‘Complete case’

Dynamic Planner –
The Importance of Fund Risk Profiling
Jim Henning, Head of Investment Services
Jason Dewar, Head of Fund Research

Learning outcomes
→ Dynamic Planner Asset & Risk Model
Philosophy
→ Foundations of the Fund Risk
Profiling service
→ Centralised retirement process risk
mitigation strategies

Why is forward-looking fund risk profiling important?
→ Last 20 years have seen volatility for higher yield debt and equity fall considerably
→ Now similar levels to UK gilts
→ Interest rate normalisation and end of benign markets ahead?
Source Lipper – Rolling 3 year period volatility

Volatility compression continues, but spikey Interest rate normalisation ahead?

Global financial system going back on Methadone Bond yields at historic lows → duration risk higher
-2
0
2
4
6
8
10
12
%Yield
Govt Bond 10 Year Yields
10YR UK Govt 10YR US Govt 10Y Bunds

Dynamic Planner Fund Risk Profiling
→ Not based on past performance
→ Not based on sector asset ranges where divergence of outcomes can be wide
→ Not based on an arbitrary equity index relative scoring
0
20
40
60
80
100
120
140
1 2 3 4
Frequency
SRRI score
Mixed Investment 40-85% Shares
0
2
4
6
8
10
12
annualisedvolatility%
Annualised Volatility - last 5 years
Dynamic Planner Approach
→ Risk-adjusted benchmark ex-ante analysis → Client centric
Source Lipper/Dynamic Planner
max
max
min

Dynamic Planner Asset Allocation philosophy
Ensures ongoing investment suitability by translating these characteristics
to the needs, objectives, situation and risk profile of the client
Equity Risk, Interest Rate Risk,
Currency Risk, Basis Risk
Holding Period Risk, Credit Risk,
Liquidity Risk, Concentration Risk,
Counterparty Risk

Robust basis for Fund Risk Profiling – Quarterly oversight
Asset Allocation Comparison to Dynamic Planner
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
0.0% 2.1% 4.2% 6.3% 8.4% 10.5% 12.6% 14.7% 16.8% 18.9% 21.0%
Expectedrealreturn(%pa)
Expected volatility (% pa)
DT profiles
Multi Asset Growth I
Multi Asset Growth II
Multi Asset Growth III
Multi Asset Growth IV
Forward looking analysis

Robust basis for Fund Risk Profiling – Quarterly oversight
The historical volatility
‘journey’ relative to the
Dynamic Planner asset
allocation
Measured by tracking
error analysis
Helps to understand the level of
risk being taking
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Quarterly time series
Fund Volatility Risk Profile 4 Risk Profile 5 Risk Profile 6
Rear view ‘sense check’

Dynamic Planner Fund Risk Profiling services
Risk Target ManagedRisk Profiled
→ Portfolios managed in line with
Dynamic Planner model assumptions  
→ Additional investment
consultancy from Dynamic Planner  
→ Dynamic Planner Risk Profile
may change  
627 FRP’d funds + 617 DFM portfolios 72 RTM funds + 38 DFM portfolios

‘Cruise’
Active
‘Coronation St’
Sedentary
‘Care home’
Dependent
Day to day needs: Housing, Food, Heating
Regular discretionary:
Meals out
Leisure
One-off discretionary:
Holiday
Care costs
Needs in retirement
→ Average size of pension pot going into drawdown is £123,000*
→ Joseph Rowntree Foundation says a retired couple need a minimum of £13,500 pa
→ Yet clients will need to spend additional money at key life stages
Applying Fund Risk Profiling to a Centralised Retirement Proposition
£
Care costs
Drawdown from capital
inevitable for most
*Source FCA data bulletin – Sept 2018

→ Rate variability
→ Capital &
income erosion
→ Increasing life
expectancy
→ Long-term care
funding
→ Income
variability
→ Capital
uncertainty
→ Fixed
withdrawals
→ Pound cost
ravaging Sequencing
Risk
Investment Risk
Inflation RiskLongevity Risk
Drawdown risk cycle – Four key segments

Applying Fund Risk Profiling to a Centralised Retirement Proposition
The problem for natural yield investors
→ What level of risk am I taking to generate attractive income?
→ What is the expected level of risk?
→ How consistent is the income stream and capital variability?
→ Which peer group analysis is relevant?
The Solution
Income Focus Research Reports –
for Multi Asset funds
Premium / Select Research –
for Single Sector & Multi Asset funds

Premium and Select Research ratings
Sector Peer group
Single Sector Funds IA sector classifications
Multi-Asset Fund DP’s 1-10 Risk Benchmarks
Risk Targeted Funds Relative to the RTM fund families
The rating considers a fund’s consistency (or fit) against the Dynamic
Planner asset and risk model and its efficiency in delivering returns.
A uniform scoring matrix and ranked within a relevant peer group.
5 years 3 years

Sequence of returns – An actual example
Example: popular MA fund
Dynamic Planner Risk Profiled 4
Over seven years £10,000 made
total return of £16,348 (7.3% pa)
This risk has been unnoticed because of benign
markets (blue line)… but the risk hasn’t gone away
If: Fixed £ monthly withdrawal of
£41.67 pcm (so 5% of original pa)
The outcome can vary by 53%
depending on monthly sequence
of returns

The impact of volatility drag
1%
5% 11%
25%
43%
67%
100%
150%
233%
-1% -5%
-10% -20%
-30%
-40%
-50%
-60% -70%
-100%
-50%
0%
50%
100%
150%
200%
250%
Gain required to fully recover from a loss
Gain to recover
Amplification of
sequencing risk
when more
volatility occurs.
Loss
So reduce volatility
to mitigate the
sequencing risk

Sequence risk mitigation via our Fund Risk Profiling services
The problem for decumulation investors:
“There has been little in the way of product innovation in retirement income products
since pension freedoms came into force.” FCA Sector Views, January 2019
The solution: A new asset and risk model service to asset managers
New asset allocation framework
Measures and monitors the risk of a fall in value on a monthly basis
Ensures the risk to the client’s capital remains the same over the annual client review period

How effective Risk Managed solutions can be identified and profiled
Monthly Risk Control Required to be RMD
Fixed
Income
Property
Cash
Absolute
Return
Risk of short-term correlation with equities
Over exposure to inflation risk
Liquidity risk and risk of gating
Short-term downside protection
Ideally Market Neutral Hedge funds
More negatively correlated to equities in short-term
Less inflation risk
Mandates and objectives focused on short-term risk

A new standard for decumulation solutions
Badges will be applied to the RMD solutions
from asset managers when joining the service

Fund research landing page will show where to find RMD funds

Centralised Retirement Proposition – Challenges addressed
→ Rate variability
→ Capital &
income erosion
→ Increasing life
expectancy
→ Long-term care
→ Income
variability
→ Capital
uncertainty
→ Fixed
withdrawals
→ Pound cost
ravaging
Sequencing
Risk
Investment
Risk
Inflation Risk
Longevity
Risk
 Asset & Risk
Model
 Income Focus &
Research Reports
 Asset &
Risk Model
in real terms
 Cashflow
modelling

Thank you

Refreshments and networking

Dynamic Planner Elements /
Client Review Process Update
Client Success Team

What our clients say
“I don’t think there is anything else out there like this – it’s a new document for
a new process, which, because of MiFID II, advisers have to produce now,”
said Chris Miller, Miller Associates.
“Dynamic Planner is way ahead of the pack with this,”
said Nick Ryan, Yellow Bear Financial Consultancy.
“It’s the way forward for me as an independent adviser,”
said Dmitry Morgan, Morgan Financial. “It puts me in the same position as
large national firms, in terms of their very slick presentation and will definitely
save me time.”
“Elements produces an impressive report, which demonstrates to your clients
that as a firm you are professional and you know what you’re doing,”
said Gary King, GK Financial Solutions.

How to access Elements

New Elements service

Arrangements

Risk

Selection

Objectives

‘Past performance’ and benchmarks

Forecast

Charges

Outcomes

Investment Progress Review report

Report

Dynamic Planner Roadmap
Sept 2019 Oct / Nov / Dec 2019 Jan / Feb / Mar 2020 Apr / May / June 2020
Novia integration Cashflow trial
Suitability trial
RMD funds available in
software
Cashflow launch
Suitability launch
Cashflow
Suitability
Save The Date!
2020 Dynamic Planner Annual Conference
Manchester 28 Jan 2020
London 5 Feb 2020

Quarter 4 2019
Christopher Cade
Economic and Investment Policy Update
Sarasin & Partners

76Sarasin Global Strategy and Outlook | June 2019
“We always overestimate the change that will occur in the next two years
and underestimate the change that will take place in the next ten.”
Bill Gates
A slowing world economy….but why?

77Sarasin Global Strategy and Outlook | June 2019
Africa
Rest of Asia
China
India
Europe
South America
North America
0
2000
4000
6000
8000
10000
12000
1950 2017 2050
Population(millions)
Source: UN Population Division - World Population Prospects: The 2017 Revision
WORLD POPULATION
An expected increase of 67 million additional mouths per annum to feed each
year
2.5 billion
7.6 billion
9.8 billion
2018

78
A decline in the working age population means fewer salaries and reduced tax revenues
DEVELOPED WORLD LABOUR FORCES STATIC OR IN DECLINE – HIGH LDC POPULATION GROWTH BUT AT VERY LOW WAGES
Growth of the labour force is the key driver of economic
growth, and it is turning negative…

79
Source: Marcrobond, Sarasin Forensics, 2019
Nominal GDP growth (real GDP growth plus inflation) is the measure comparable with company profits growth
SLOWER GDP GROWTH THAN WE HAVE BEEN USED TO
Slowdown: our forecast is for global nominal GDP growth to
drop from an average of 7.5% p.a. to just 3.5% (2% real +1.5% inflation)

80
…3.5% nominal GDP growth before taking a haircut for excessive debt or
climate change & resource depletion…
Source: Climate Lab Book

81
Source: Macrobond, 2019
Human and Wild Animal Populations – Last 50 Years : UN Reports
THE TRAGIC V SIGN…
The human population has more than doubled since 1970
The wild animal population has more than halved
 Nearly half of the world's remaining species of
plants, animals and microorganisms will be
destroyed or severely threatened over the next
quarter century due to deforestation
 Rainforests once covered 14% of the earth's
land surface; now they cover a mere 6%
 25% of species are threatened with extinction
 Experts estimate that we are losing 137 plant,
animal and insect species every single day due
to rainforest deforestation. That equates to
50,000 species a year
 “We are eroding the very foundations of our
economies, livelihoods, food security, health
and quality of life worldwide.” [IPBES Chair, Sir
Robert Watson]
Since 1970 alone, vertebrate populations have fallen by 40% for land-
based species, 84% for freshwater species and 35% for marine species

82
Source: Global Footprint Network 2016 – Ecological Footprint, global hectares per person Population data source: United Nations 2015
Does increasing adoption of ‘Western civilization’ such as democracy, ethical values, and technologies, also have to equate to a wasteful lifestyle?
HECTARES OF LAND PER PERSON NEEDED TO SUSTAIN CURRENT LIFESTYLE – GLOBAL FOOTPRINT NETWORK
The cause of biodiversity loss is the rapacious demands of human consumer
lifestyles
USA
320 million people
Footprint 8.22 ha/person
EU
512 million people
China
1,404 million people
India
1,309 million people
8
7
6
5
4
3
2
1
0
The Ecological Footprint
measures the ecological
assets required, in global
hectares, to produce the
resources consumed and to
absorb waste like carbon
emissions
It includes plant-based food
and fibre products, livestock
and fish products, timber and
other forest products, space
for urban infrastructure etc.

83
COWBOY ECONOMY
When you have depleted and devastated the current place, you simply break up and go west. There are no limits to
growth, and the only issue that matters is to make profits. Development is defined as increased growth without limits,
increased consumption, increased waste production and conversion of natural resources to financial.

84
SPACEMAN ECONOMY
“The closed economy of the future might similarly be called the 'spaceman' economy, in
which the earth has become a single spaceship, without unlimited reservoirs of anything,
either for extraction or for pollution” Kenneth Boulding’s 1966 essay

85
2 Assumes future global profits growth in line with global GDP growth forecast
5 Year Profits Growth, Annualised – Estimated Global Average 3.5%2
FUTURE RETURNS – MORE COMPANIES WITH FALLING PROFITS
Sarasin & Partners – Model uses data from US S&P 500, all 5 year periods since 2004
1 Bloomberg/MSCI ACWI Data
5 Year Profits Growth, Annualised – Global Average 7.6% since 19701
HISTORIC DISTRIBUTION OF COMPANY PROFITS GROWTH
What does much slower global GDP growth mean? Lower average
company profits growth and the risk of falling profits increases…
0
50
100
150
200
250
-25 -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45
0
50
100
150
200
250
-30 -25 -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45
28% of
companies
with falling
profits
The distribution moves
left as global growth
slows – more
companies with falling
profits or growth
challenges
5 Year Average % Profits Growth 5 Year Average % Profits Growth
7.5% 3.5%
17% of
companies
with falling
profits

86Sarasin & Partners | Services for Private Clients
Shorter Term Asset Markets

Source: Macrobond
US Equity Volatility (VIX)
EQUITY VOLATILITY (VIX)
Source: Macrobond
Global Asset Returns GBP, year-to-date
GLOBAL ASSET CLASS RETURNS (GBP, YTD)
Another strong year for equities and now gold - with benign equity market
volatility…

Japanese and German bond investors now receive a negative yield on 10 year government bonds
GOVERNMENT 10 YEAR BOND YIELDS
But someone is still worried enough to pay an extra-ordinary premium for
safety…

Source: Macrobond
UK, Japanese and German Equity-Bond yield gap
BUT ACTIVE DIVIDEND MANAGEMENT ATTRACTIVE
Source: Macrobond
US S&P 500 Index and operating profits
US INDEX GROWING FASTER THAN PROFITS
US profits are lagging equity market growth…but there is still value in global
dividends

GLOBAL EQUITY PERFORMANCE BY STYLE
GLOBAL COMMODITY PRICES (-5 YEAR = 100)
Cyclical Commodities and Value Stocks have been weak – Gold and
‘Growth’ have led markets…

91Use the footer function to insert the presentation title and date here
Key Risks for Your Clients Portfolios

US 10 YEAR BOND YIELDS AND SCHILLER PE
Risk 1: Global equity valuations are expensive if bond yields
were to reverse...

Source: Macrobond and Sarasin and Partners
CENTRAL BANK ASSET PURCHASES
Risk 2: Central Bank Purchases are revived (QE) causing
even greater distortion to asset markets…
Central Bank Asset Purchases now in Decline

Source: Congressional Budget Office 2019
ETF STRCUTURES COULD POSE LIQUIDITY CHALLENGES
Source: OECD
MARKED INCREASE IN ‘RISKY’ DEBT
Risk 3: Liquidity and Risk - Lower Quality of corporate bond issuance
coupled with ETF structures
Only non-financial companies rated by S&P, Fitch and/or Moody’s.
Sources: Bloomberg Finance L.P., Eikon from Refinitiv and Bank calculations.
(a) One square = 1% of ~US$5 trillion global ETF market, data as at June 2019.
(b) All categories except emerging market (EM) equities and EM bonds exclude EM ETFs;
Indicative representation of the ETF universe(a)(b)

Source: Macrobond
UK EFFECTIVE EXCHANGE RATE
Source: Macrobond
UK GDP - SLOW FADE POST BREXIT
Risk 4: Currency, GBP appreciation
UK GDP (year-on-year growth) UK Effective Exchange Rate Index (BoE)

GLOBAL STRATEGY UPDATE
Lower interest rate expectations can still support real
assets but global economic outlook has deteriorated…
1. Bonds: Reduce Underweight – real returns negative but recession risk rising
• Corporate Spreads
• Caution on high yield as corporate leverage climbs and liquidity issues emerge
2. Equities: Stay overweight – valuations still attractive as global bond yields decline
• Central bank policies & reasonable valuation levels are still supportive
• US economy close to stall speed suggesting rising risk to US earnings
• Global dividend strategies attractive where supported by sustainable thematic trends
3. Alternatives: Neutral – liquidity and rate risks in leveraged/opaque assets
• Clear preference for gold and uncorrelated assets
4. Cash: Neutral
• Active sterling currency management needed in countdown to Brexit ‘resolution.
Risks: Current: Political Risk from Brexit, Financial Liquidity, Asia/China leverage
Longer-Term: Persistent weakness in global growth, inequality & populism

This document has been issued by Sarasin & Partners LLP which is a limited liability partnership registered in England and Wales with registered number OC329859 and is authorised
and regulated by the UK Financial Conduct Authority and passported under MiFID to provide investment services in the Republic of Ireland. It has been prepared solely for information
purposes and is not a solicitation, or an offer to buy or sell any security. The information on which the document is based has been obtained from sources that we believe to be reliable,
and in good faith, but we have not independently verified such information and we make no representation or warranty, express or implied, as to their accuracy. All expressions of opinion
are subject to change without notice.
Please note that the prices of shares and the income from them can fall as well as rise and you may not get back the amount originally invested. This can be as a result of
market movements and also of variations in the exchange rates between currencies. Past performance is not a guide to future returns and may not be repeated.
Neither Sarasin & Partners LLP nor any other member of the Bank J. Safra Sarasin group accepts any liability or responsibility whatsoever for any consequential loss of any kind arising
out of the use of this document or any part of its contents. The use of this document should not be regarded as a substitute for the exercise by the recipient of his or her own
judgment. Sarasin & Partners LLP and/or any person connected with it may act upon or make use of the material referred to herein and/or any of the information upon which it is based,
prior to publication of this document. If you are a private investor you should not rely on this document but should contact your professional adviser.
© 2019 Sarasin & Partners LLP – all rights reserved. This document can only be distributed or reproduced with permission from Sarasin & Partners LLP.
Important Information
04.09.2019

Dynamic Planner –
Frequently Asked Questions
Client Success Team

FAQs
Question 1. Risk Profile Client Invites – how to send and import data
Question 2. How to use research tools in Portfolio Suitability Hub
Question 3. How to find a risk score of funds that do not have a Dynamic Planner risk rating?

Qu1 Risk Profile Client Invites – How to send and import
→ Secure link via email
→ Makes face-to-face time with clients more efficient
→ Additional cost on top of Dynamic Planner licence
→ 10 invites for £10 per month (excluding VAT)
→ 250 invites for £15 per month (excluding VAT)
→ Easy import of answers into the service

Qu1 Risk Profile Client Invites – How to import answers

Qu1 Create a new case to import answers

Qu1 Case control centre

Qu1 Import functionality

Qu1 Import functionality splash screen

Qu1 Attitude To Risk – Import

Qu1 Expired invites – Send reminder

Qu1 Send reminder

How to use research tools in
Portfolio Suitability Hub

Landing Page – Portfolio Suitability Hub

Qu2 Charting service

Qu2 Charting – With ‘Sector’

Qu2 Charting report

Qu2 Filtering for suitability
→ Risk Profile 5
→ Premium
→ Active Management Style

Qu2 Pulling a report in Portfolio Suitability Hub

Qu2 Comparison

Qu2 Comparison report

How to find the risk score of funds that do
not have a Dynamic Planner risk rating?

Qu3 Portfolio Suitability Hub

Qu3 Fund selection

Qu3 Save as ‘Model portfolio’

Qu3 Model portfolio splash screen

Qu3 Model portfolio report

Qu3 Model portfolio

Training & Consultancy
Training on Dynamic Planner and bespoke consultancy is available for our users.
You can:
1) Access nine on-demand training videos - from Risk Profiling to Retirement
Planning to Elements - at: www.dynamicplanner.com/training-videos
2) Have paid-for training in your office or at the Dynamic Planner offices in
Reading
For full details, contact Client Success on 0333 6000 500 or at
support@dynamicplanner.com – or contact your Account Manager directly

M&G Multi Asset
September 2019
For investment professionals only

Lunch and networking
A chance to ask questions one-on-one

Dynamic Planner 2019 Autumn Training Academies - Motherwell, 1 Oct

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