Make the leap with NBS Guaranteed Structured Deposits

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Make the leap with NBS Guaranteed Structured
Deposits September 2008
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• Who are the Newcastle?
• 12th Largest Building Society in the UK
• Largest Independent Financial institution in
  North East of England
• 4.8bn Assets under management
• No sub-prime exposure
• Mutual owned by our customers
• Provided Guaranteed Structured Products for over
  10 years both through our branch Network and
  Intermediaries
• Accredited Investor in People
• Who are Newcastle Intermediary Services?
• Specialist Intermediary marketing arm
• Bespoke online proposition
• Continuous product offerings many of which are
  exclusive to Intermediaries
• No cross selling to your customers
• Provision of technical marketing support and
  material
• Competitive and Regular Commission payments

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Explore the opportunities Section 1 Where are
the business opportunities? Section 2 How do
the products work? Section 3 Why use NBS
Intermediary Services?
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SECTION 1
Explore the opportunities
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How big is the opportunity?
The estimated total size of the UK structured
deposit market was 7.1 Billion in 2007 and
it is growing every day!
Guaranteed structured deposits are no longer
considered small fry in the savings
markettheyre a big fish!
Source Structuredretailproducts.com
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What does this means for IFAs?
We estimate GuaranteedStructured Deposits will
generate 283m new business commission during
2008
Are you prepared for your share?
Your clients are buying these now..but who from?
Source Newcastle BS estimate based on 3 of new
business
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What do we mean by Guaranteed Structured Deposits?

• Key features
• Deposit based product with 100 capital guarantee
• Return linked to market index (or basket of
  indices) most popular FTSE 100 or HHPI but can
  be international (SP, NIKKEI, CACI)
• Anything from 20 125 participation in market,
  with or without a cap
• Term is medium and fixed - normally 3 to 6 years
• Not invested directly in market

A medium term savings product where your initial
investment is secure. Yet you can still earn
significant returns as the product is linked to
an underlying asset or index of asset values,
such as the FTSE 100
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Whats driving the growth in the GSD market?
Low interest rate environment Market volatility
Loss of confidence in with profits Higher
public profile Simple proposition
People still remember rates at 10 Investors are
becoming more cautious Consumers looking for low
risk alternative Media attention is fuelling
interest No risk to capital, stock market
return appeals!
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Where do the biggest IFA opportunities lie?

• The personal investment market represents a
  large, well established market for GSDs
• Investment Trustees provide a new, relatively
  untapped market for GSDs

GSDs can compliment collective investments and
open up new markets for you
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What does the personal investment market for GSD
look like?
Sophisticated investors
Discretionary portfolio management (GSDs) Asset
decumulation into retirement (GSDs) Estate
planning (GSDs)
Financially astute
Trusts
GSDs provide mass market and niche new business
opportunities and can be applied to a range of
client circumstances
Portfolio management (GSDs) SIPPs (GSDs) IHT
Consumer Sophistication / Risk Appetite
Mass market

• Deposit accounts
• ISA
• GSDs
• Stakeholder pensions
• Simple investment bonds

Consumer wealth
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Personal portfolio planning

• Average investment 14,000
• Perfect toe in the market product for cautious
  investors
• Alternative to traditional savings accounts but
  not emergency funds
• Extra option for simple portfolio planning
• Good promotional product keep your diaries full!

From first time investors to clients with a
significant portfolio holding, GSD can compliment
traditional investment advice and create an
additional income stream.
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Where do GSDs sit in personal portfolio
planning? Example Portfolios
Long term portfolio e.g. 20 years
Balanced portfolio e.g. 10 years
Cautious portfolio e.g. 5 years or less
Cash and fixed interest 10
Cash and fixed interest 40
Equities 20
Cash and fixed interest 80
Equities 90
Equities 60
Balanced portfolio with modest holding in GSD
offers scope for above average returns with same
guarantee as a cash holding.
Low risk portfolio huge scope for GSD to boost
average returns without compromising cautious
investment mandate. GSDs are near cash
investments and so diversify the cash holdings of
the portfolio without increasing risk.
Full participation of equities required GSD
provides cash alternative with scope for further
equity exposure with safety net of capital
guarantee
Opportunities in low risk portfolios are
particularly strong
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Mini Cash ISAs Using a GSD Mini Cash ISA is
the perfect bridge product to collective
investment sales

• Cash ISA - 3,600 per year
• TOISA transfer opportunities
• Cash ISA transfers up to 30k interest since
  1999
• Tax-free stock market exposure with capital
  guarantee

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• Targeting GSD clients
• GSD offer flexible marketing opportunities
• Non-regulated
• Simple execution
• Clear proposition especially with headline
  rate!

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What does a typical GSD client look like?
Lifestyle Retired Lower middle income Owner
occupier
Attitudinal Cautious investors although on
average more likely to hold some stocks or
shares or a unit trust

• Demographic
• 33 aged 65
• 31 aged 55-64
• 62 female (often for tax efficiency)

• In our experience the average investment is
  14,000 with 40 of clients investing 10,000 -
  40,000. Other product holdings typically include
  other bank and building society savings account.
• These are people who want a safe haven for their
  savings!

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How do you target clients who could benefit from
GSDs?

• Client reviews
• Annual financial reviews
• Regular portfolio reviews
• Re-engage with dormant / orphan client bank
• Diary of opportunity
• Maturing deposit accounts
• Maturing endowments / investment bonds
• Annual ISA review
• Referrals
• Over 50s community one of best sources of
  referrals for GSD
• Marketing activity
• Regular mailings with headline rates
• Editorial / PR
• Off-the-page
• E-marketing campaigns

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SECTION 2
Dont follow the shoal!
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Section 2 Dont follow the shoal

• Where do Guaranteed Structured Deposits sit in
  financial planning?
• When should you introduce GSD to your clients?
• Advantages and disadvantages of Guaranteed
  Structured Deposits
• Who can sell them?

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Where do GSDs sit from your clients perspective?
Long Term Future
Year to Year
Day to Day
Emergencies Holidays Family etc
Fees Income/Growth Gifting
Money in Expenses out Savings
Opportunities in low risk portfolios are
particularly strong
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Where do GSD sit in financial planning?
High
Derivatives
Venture Capital Trusts
REGULATED
Individual shares
Unit trusts / OEICs
Risk
Investment trusts
Income distribution funds
With Profits funds
UNREGULATED
Gilts
Building society Bank account
Cash ISA
Guaranteed Structured Deposits
National savings
Low
High
Reward potential
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What are the advantages and disadvantages of GSD?

• Advantages
• Equity exposure with full capital guarantee
• Simple way to track popular indices like FTSE
  100, HHPI
• Non-regulated (simple sales process)
• No capital gains tax liability
• Good first-time investment
• Ideal for cautious investor
• Can be used inside ISA wrapper
• Flexible investment option suitable for
  SIPPs/SSAS

• Disadvantages
• No dividend participation
• Income tax may affect client tax status in year
  of maturity
• Limited access to capital

Guaranteed structured deposits are the simplest,
safest and most popular structured products on
the market
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When should you introduce GSD to your clients?
These products are not sold instead of regulated
investments

• Theyre sold as well as regulated investments
• They sell where clients attitude to risk dictates
• They open up the clients mind to full financial
  planning
• They can be sold on an informed choice basis

Dont forget, we pay commission on the full
amount invested and again on re-investment at
maturity
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Who can sell them?
Anyone can sell a GSD, its just a building
society account!

• By mail shot / direct offer
• On informed choice basis
• New starters
• Investment advisers
• Mortgage advisors

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Section 3 Who provides them? .the difference
is in the experience
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The difference is in the experience

• Why Newcastle Building Society?
• Why Newcastle Building Society Intermediary
  Services?
• Our Guaranteed Structured Deposit products
• Support for Advisers
• Doing business together

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Why Newcastle Building Society?
What it means to your clients As a mutual
organisation, we can afford to offer more
competitive rates than our plc competitors. That
means putting our customers first.

• One of the strongest mutual building societies in
  the country -12th largest
• Largest building society in the North East
• No exposure to sub-prime lending
• Strong profit track record
• Better rates than plc competitors
• Products 100 guaranteed
• Added protection of FSCS (50k per investor)

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Why Newcastle Building Society Intermediary
Services?
What it means to you The only building society
offering a Guaranteed Structured Product service
dedicated to Advisers. Our goal is to give you
an excellent service.

• Fast and efficient end-to-end online processing
• Dedicated marketing and campaign support
• Innovative off-the-shelf or bespoke products
• Full sales, technical and training support
• Competitive commission
• Cast-iron no cross sell

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Example of Newcastle IS Product Range Available
September 2008 Refer to www.newcastleis.co.uk for
latest range
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Fact all our products are 100 capital
guaranteed
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The 3 Year FTSE Trigger Account
Attractive growth potential with no risk to
capital

• How it works
• Three year term
• If FTSE increases by 9 in Year 1 the product
  ends and pays Gross Return of 9
• Otherwise if FTSE increases by 18 by end of
  Year 2 the product ends and pays a Gross Return
  of 18
• Otherwise provides a return of 80 of any growth
  in the FTSE after 3 years
• Capital return guaranteed
• Minimum investment 1000
• Maximum investment 1m
• Early bird interest 5 Gross/AER

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The Guaranteed Capital Performance Account
Attractive growth potential with no risk to
capital

• How it works
• Five year term
• Provides a return of 40 gross based on FTSE 100
  either maturing at same level as start date or
  being higher.
• Capital return guaranteed Minimum investment
  1000
• Maximum investment 1m
• Early bird interest 5 Gross/AER

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The 5050 Balanced FTSE Account
Growth potential with guaranteed return and
complete capital security
How it works

• Equity Element
• Five year term
• 50 of FTSE growth
• Uncapped
• Capital return guaranteed
• Early bid interest 5.00 Gross AER on full
  deposit

• Savings Element
• Fixed rate of 9.00 Gross/AER in first 12 months
• Thereafter match Bank of England base rates for
  remaining term
• Monthly income option on balances over 1,000
  subject to a rate reduction of 0.25
• Easy access to funds without penalty

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Dedicated online support
Online application process
Product Start Date Applications online or by
post
Four days later Welcome Pack sent to Client with
copy letter to IFA
Product End Date Approx 3 months no further
funds permitted
Start Tracking Date 14 days after Product End
Date FTSE fixed
Commission paid within 4 working days of
start of following month
Annual Statement Sent to client each year
on anniversary
Final Return Estimate Sent to client one
week before maturity
End tracking Date Final FTSE Fix
taken, interest calculated and product matures
The easy way to submit and manage new business.
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Dedicated online support
ltInsert screen grabs of new business submission
page from the website with annotated textgt
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Dedicated online support
Virtual office Easy way to manage your business
with us.

• Latest product offers
• Follow product performance
• Case tracking
• Product valuations
• Amend customer details
• Track commission payments

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Dedicated online support
IFA Online Toolkit Everything you need to
generate more business.

• Literature library
• Campaign checklists and guides
• Marketing and campaign tools
• Sales presentations
• Order stationery

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Dedicated online support
IFA Toolkit Everything you need to generate
more business Literature library Campaign
checklists and guides Marketing and campaign
tools Sales presentations Order stationery
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Doing business together
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Testimonials
"My client was looking to diversify his portfolio
and had just been paid his bonus. He had already
invested into Sterling ISAs and the Investment
Account, and wanted more flexibility because he
may be buying a house in about a year's time. I
suggested the Newcastle Account to him, because
it allows him access to the cash element, to
allow him to buy the house, whilst giving him a
good interest rate, and it also gives him some
exposure to the markets over the next 5 years. My
client loved the idea. It was a very easy
process with hardly any paperwork!" Rebecca
Edwards, Welbeck Group Rebecca's client took a
version of our 5050 Balanced Product which
offers a great rate on 50 of the deposits on
easy access and fixed for a year, whilst also
offering the potential to benefit from any
increase in the FTSE over the next 5 years, all
with a 100 capital guarantee. -------------------
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"Our working partnership with the Newcastle has
developed well, and from first dealings with
Newcastle intermediary services, the team have
always been professional, easy to communicate
with and positive. The products are innovative
and well placed in the market, with service
levels appropriate to the arena."Wendy Byrne,
Head of Business, Development Sales, Tenet Group
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Experience the difference and make the leap to
more new business
Newcastle Building Society Intermediary
ServicesGuaranteed Structured Deposits