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INVESTMENT SUITABILITY REPORT TEMPLATEThis sample ‘suitability wording’ contains detailed information about the investment options from Royal London and has been designed to assist you in formulating your own client suitability report. If you need more specific information for your report about Royal London, we’ve also created the Key messages for your suitability report template.

It’s important that within your suitability report you clearly explain to your client why you’re recommending your proposal and how it meets their financial goals and objectives. Within the FCA’s guidance about suitability reports, they also mention how the report should:

• provide a balanced view,

• detail the costs and charges involved and,

• highlight any potential penalties that may be linked to your recommendation.

If your client is already saving for their retirement, but as part of your proposal you’re recommending they cancel their existing plan and transfer their benefits to a new plan with Royal London, in addition to providing a like for like comparison, the FCA will also be checking to make sure that good and appropriate advice has been provided. To help with your advice process, we’ve highlighted below the following points which you’ll need to take into account when producing your suitability reports. We’ve also included some of the points highlighted by the FCA in their 2008/2009 Thematic review:

• Knowing your client – finding out what their financial needs and objectives are.

• Analysing their existing arrangements – reviewing their existing arrangements and identifying any shortfalls.

• Researching new plans – identifying suitable new plans and their benefits.

• Identifying suitable investment options – identifying their suggested attitude to risk and recommending suitable investment options.

• Carrying out regular reviews – regularly reviewing their circumstances and ensuring their investment options remain suitable.

It’s important that you produce your suitability report in line with your own compliance requirements and that if you’re advising any client to transfer their existing plan to a new provider, that you’re authorised to do so, it’s in their best interests and it meets the FCA rules.

Note to adviser

If you’re using this template to form the basis of your report, you should delete the text from this front page including this note.

THIS IS FOR FINANCIAL ADVISER USE ONLY AND SHOULDN’T BE RELIED UPON ANY OTHER PERSON

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Royal London [with Governed Portfolios/Target or Flexible Lifestyle Strategy/External Investment Options/Governed Retirement Income Portfolios/Custom] suitability report prepared for [Name of client]

The contents of this report and the recommendation was provided by (Insert name and address of financial adviser)

Date of initial meeting

Date of follow up

meeting Date of

suitability report

Date service agreement

signed

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CONTENTS 1. Asset classes explained 4

2. Governance 4

3. Risk Profiling 5

4. Investment Options 8

Core Investments _8Governed Portfolios 9 The Matrix _9Target Lifestyle Strategy 10 External Investment Lifestyle Strategies 11Customised Options 11Governed Retirement Income Portfolios 12

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1. ASSET TYPES EXPLAINED Royal London have over 160 funds to choose

from and some of our investment options hold a mix of assets, such as company shares, bonds, property and cash. Others may invest in a single type of asset. The main asset types are summarized below:

Deposits This term is used to describe investments such as

cash and short term fixed interest investments. They work in much the same way as a bank or building society account. Investments are put on deposit with a financial institution where they earn interest. Deposits are generally considered safer than other asset classes; however, over the longer term they are likely to provide lower returns

Corporate bonds and giltsCorporate bonds are loans to companies for a set period. During this period the company pays interest and eventually returns the original amount.The main risk with a corporate bond is that the company to which the loan has been made might go bankrupt and fail to pay it back. Corporate bonds tend to be less volatile investments than company shares but provide the opportunity for higher growth than deposits.Gilts are loans to the Government and work in much the same way as corporate bonds. However, gilts are considered very safe investments - since the Government is unlikely to go bankrupt.To date, the British Government has never defaulted on a gilts issue. Like corporate bonds, gilts tend to be less volatile than company shares but provide greater opportunities for growth than deposits.

EquitiesEquities are company shares. Limited companies can sell their shares to raise capital, paying a share of their profit (known as a dividend) to the buyer in return. Shares are bought and sold on the stock market, and their prices fluctuate based on a number of factors including the company’s potential profitability. As a result, they tend to be too volatile for short-term investors. However, it is widely accepted that equities have the potential for better returns over medium and longer terms. It’s also worth bearing in mind that equities traded on some overseas stock exchanges can be more volatile than UK equities. They are also affected by fluctuations in currency exchange rates.

Mixed assets Some funds will invest in a mixture of different asset classes such as company shares, property and deposits. This way, if one particular investment performs poorly, you won’t be as badly affected because your risk is spread more widely.

Property There are two main types of property funds:

Direct property funds invest in bricks and mortar properties such as retail outlets, industrial sites and office buildings. One proviso: because the property in a fund may not be readily saleable, it’s possible that you might not be able to cash in your investment in a property fund when you want to. Also the value of property is generally a matter of a valuer’s opinion rather than fact.Property security funds invest in Real Estate Investment Trusts and shares in property companies. These funds typically experience short-term price movements similar to equity funds but would be expected to have characteristics similar to direct property funds over the longer term. They are also less likely to place restrictions on cashing in your investment than direct property funds.

Specialist Some funds have an investment universe that is not accommodated by the mainstream sectors. These will be included in the specialist sector. This sector is hugely diverse and will contain funds with various investment objectives and styles.

2. GOVERNANCEA key part of Royal London’s investment proposition is the governance provided through the Investment Advisory Committee (IAC).The Investment Advisory Committee (IAC) reports into the Royal London board, whose remit covers every aspect of the running of our Unit Linked fund range. Critically the committee operates independently of Royal London Asset Management (RLAM), who have day-to-day running of the Royal London funds.The Investment Advisory Committee (IAC) meets on a regular, usually quarterly, basis to review our risk-graded Governed Portfolios and fund range.To help the IAC make these decisions, they review a substantial amount of material each time. This includes confidential Morningstar Investment Management fund reports, a comprehensive risk report from Moody’s Analytics and market commentary from Royal London Asset Management, who manage the internal fund range.A summary of each committee meeting is published as soon as possible following the meeting. To view the latest summary or a list of

OUR Your appropriate Towepryouascautious/ relevant

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Who’s on the committee? The IAC comprises of five pensions and investment experts.Currently, the committee comprises:

• Julius Pursaill, Independent Chairperson

• Dr James McCourt, Investment Office Director, Royal London Group

• Piers Hillier, Chief Executive Officer, Royal London Asset Management

• Ewan Smith, Proposition Design & Market Engagement Director, Royal London Intermediary

• Colin Taylor, Independent Representative

3. RISK PROFILINGRisk attitude Within this part you’ll need to include details about yourclient’s suggested attitude to risk. You may want to include information about how risk averse they are and the length of time they have until they retire. You should base your recommendation upon investment options that are suitable for them and which does not expose them to an unnecessary level of risk.Here are some suggestions about what information you may want to include:

• It’s important to explain to your client that the greater level of risk they take with their investment decisions increases the chances of greater rewards as well as the possibility of greater losses.

• You’ll also need to point out to your client that their investments can go down as well as up.

• If you’ve gone through a risk questionnaire with yourclient, you’ll need to discuss the outcome from this tooland ensure your client agrees with your recommendationand their suggested attitude to risk. If you’ve used ourrisk profiling questionnaire the following informationmay help you to give your client an idea of their attitudeto risk;

Governed Range

It is important to match your asset allocation to your riskattitude. The Governed Range does this for you. Each option has been designed for a particular risk attitude which means Royal London take care of the asset allocation.

OUR Your appropriate Towepryouascautious/ relevant

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Very Cautious investors Very Cautious investors typically have very low levels of knowledge of investment matters and very limited interest in keeping up to date with investment issues. They are unlikely to have experience of investment, having only saved into bank accounts.In general, Very Cautious investors prefer knowing that their capital is safe rather than seeking high returns. They are not comfortable with the thought of investing in the stockmarket and would rather keep their money in the bank.

Very Cautious investors can take a long time to make up their mind on investment matters and will usually suffer from severe regret when their investment decisions turn out badly.

Cautious investors Cautious investors typically have low levels of knowledge about investment matters and limited interest in keeping up to date with investment issues. They may have some limited experience of investment products, but will be more familiar with bank accounts than riskier investments.In general, cautious investors do not like to take risk with their investments. They would prefer to keep their money in the bank, but may be willing to invest in other types ofinvestments if they are likely to be better for the longer term.Cautious investors can take a relatively long time to make up their mind on investment matters and can often suffer from regret when investment decisions turn out badly.

Moderately Cautious investors Moderately Cautious investors typically have low to moderate levels of knowledge about investment matters and quite limited interest in keeping up to date with investment issues. They may have some experience of investment products, but will be more familiar with bank accounts than riskier investments.In general, moderately cautious investors are uncomfortable taking risk with their investments, but can be willing to do so to a limited extent. They realise that risky investments are likely to be better for longer-term returns.Moderately Cautious investors can take a relatively long time to make up their mind on investment matters and may suffer from regret when investment decisions turn out badly.

Balanced investors Balanced investors typically have moderate levels of knowledge about investment matters and will pay some attention to keeping up to date with investment matters. They may have some experience of investment, including investing in products containing riskier In general, balanced investors understand that they have to take investment risk in order to be able to meet their long-term goals. They are likely to be willing to take risk with part of their available assets.Balanced investors will usually be able to make up their minds on investment matters relatively quickly, but do still suffer from some feelings of regret when their investment decisions turn out badly.

Moderately Adventurous investors Moderately Adventurous investors typically have moderate to high levels of investment knowledge and will usually keep up to date on investment issues. They will usually be fairly experienced investors, who have used a range of investment products in the past.In general, Moderately Adventurous investors are willing to take investment risk and understand that this is crucial in terms of generating long-term return. They are willing to take risk with a substantial proportion of their available assets.Moderately Adventurous investors will usually be able to make up their minds on investment matters quite quickly. While they can suffer from regret when their investment decisions turn out badly, they are usually able to accept that occasional poor outcomes are a necessary part of long-term investment.

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Adventurous investors Adventurous investors typically have high levels of investment knowledge and keep up to date on investment issues. They will usually be experienced investors, who have used a range of investment products in the past, and who may take an active approach to managing their investments.In general, Adventurous investors are happy to take investment risk and understand that this is crucial in terms of generating long-term return. They are willing to take risk with most of their available assets.Adventurous investors will usually be able to make up their minds on investment matters quickly. While they can suffer from regret when their investment decisions turn out badly, they are able to accept that occasional poor outcomes are a necessary part of long-term investment.

Balanced investors Balanced investors typically have moderate levels of knowledge about investment matters and will pay some attention to keeping up to date with investment matters. They may have some experience of investment, including investing in products containing riskier In general, balanced investors understand that they have to take investment risk in order to be able to meet their long-term goals. They are likely to be willing to take risk with part of their available assets.Balanced investors will usually be able to make up their minds on investment matters relatively quickly, but do still suffer from some feelings of regret when their investment decisions turn out badly.

Moderately Adventurous investors Moderately Adventurous investors typically have moderate to high levels of investment knowledge and will usually keep up to date on investment issues. They will usually be fairly experienced investors, who have used a range of investment products in the past.In general, Moderately Adventurous investors are willing to take investment risk and understand that this is crucial in terms of generating long-term return. They are willing to take risk with a substantial proportion of their available assets.Moderately Adventurous investors will usually be able to make up their minds on investment matters quite quickly. While they can suffer from regret when their investment decisions turn out badly, they are usually able to accept that occasional poor outcomes are a necessary part of long-term investment.

Very Adventurous Very Adventurous investors typically have very high levels of investment knowledge and a keen interest in investment matters. They have substantial amounts of investment experience and will typically have been active in managing their investment arrangements.In general, Very Adventurous investors are looking for the highest possible return on their capital and are willing to take considerable amounts of risk to achieve this. They are usually willing to take risk with all of their available assets.Very Adventurous investors often have firm views on investment and will make up their minds on investment matters quickly. They do not suffer from regret to any great extent and can accept occasional poor investment outcomes without much difficulty.I have enclosed a report that confirms your answers to the risk questions and gives

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4. INVESTMENT OPTIONS

The range includes;

• Fund Range

• Governed Portfolios

• The Matrix

• Target Lifestyle Strategies

• External Investment Lifestyle Strategies

• Customised options

• Governed Retirement Income Portfolios(Income Release only)

Fund Range At the centre of a client’s plan is the Core Investments. The Core Investments are made up of Royal London’s own funds that are managed internally by Royal London Asset Management (RLAM) as well as a range of funds from carefully selected leading external fund managers. Royal London currently offer over 160 individual investment funds available from a wide range of fund managers. The range of funds and fund managers gives you a choice of different investment styles and exposure to different geographical areas.

If you would like to know more about any of the fund managers please visit Royal London’s website royallondon.com/pensioninvestments

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Governed Portfolios The importance of choosing the appropriate mix of assets in order to meet investment objectives is widely recognised and Royal London’s Governed Portfolios can help with this.

The Governed Portfolios identify suitable asset allocations - the proportion that should be invested in different assets/funds such as equities, property, fixed interest and cash – based on attitude to risk and length of investment. A total of nine portfolios are available covering various risk levels over different time horizons. This means whatever your attitude to risk and period of time until retirement there is a portfolio to suit you.

All of the Governed Portfolios are subject to a strict governance process overseen by a panel of investment experts; Royal London’s Investment Advisory Committee. This Committee review and recommend changes to the asset allocation to reflect market conditions. This provides the peace of mind that the objectives of the Governed Portfolios will continue to be met over time.

The Governed Portfolios are automatically adjusted back to the initial asset allocation on a monthly basis to ensure that the split between the different assets held within your Core Investments doesn’t drift away from that originally selected. This means you can be reassured that your plan is not exposed to greater investment risk than that selected at the outset.

Another attraction of the Governed Portfolios is the flexibility to tailor them to your specific needs. As well as opting for the default options it is also possible to select specific equity funds from the full Royal London range to make up the equity element of the portfolios.

For further information on each of the nine Governed Portfolios, please view the individual governed portfolio factsheets on royallondon.com/pensioninvestments.

Following our discussion we have agreed that to meet your objective of ............................................................ Governed Portfolio .....................is the most appropriate one taking into account your attitude to risk.

The Matrix To complement the Governed Portfolios, Royal London’s Fund Matrix categorises externally managed equity funds available through the Core Investments by sector (including UK, American, European and Worldwide equities) and level of tracking error risk – the level to which the funds vary from the benchmark for the sector. This fund categorization makes it easier to identify the type of equity funds available and to select suitable funds based on your individual circumstances. These funds can be held individually or as part of the Governed Portfolios.The funds within the Matrix were carefully chosen in conjunction with leading fund

research group Morningstar Investment Management on

the grounds of consistent performance and

adherence to set risk parameters. Each of the funds has a clearly

defined objective and is regularly monitored by Royal

London’s Investment Advisory Committee to ensure it continues to be managed in a way that is

conducive to meeting that objective. This means that

whenever you invest in a Matrix fund you can be confident that

you have selected a quality investment supported by

a rigorous selection and governance process.

Details of the funds held within the Fund Matrix are provided in the Pension investment options – a clear and simple guide which can be found on royallondon.com/pensioninvestments.

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TARGET LIFESTYLE STRATEGIES

The Royal London Target Lifestyle Strategies are a range ofpre-set Lifestyle strategies. A lifestyle strategy allows you to benefit from potentially stronger investment performance in the early years by investing in higher risk investment funds although this is not guaranteed. The accumulated fund is gradually switched into lower risk funds as retirement approaches.

The pre-set lifestyle strategies are based on the Governed Portfolios. The Governed Portfolios are a collection of asset allocation that are designed for individuals with different attitudes to risk and terms to retirement.

The Royal London Target Lifestyle Strategies have been specially created to provide a consistent investment approach that is regularly monitored and automatically updated. It means you can make investment decisions based on risk profile and asset allocation and be confident that a governance process is in place to ensure the strategy continues to meet its objective.

For each risk category you can choose a Target Lifestyle Strategy to target either cash, annuity or drawdown. This will depend on how you plan to use your retirement savings and your choice will impact on the mix of assets you invest in as you approach retirement.

*The asset allocation of each Governed Portfolio will depend on what the strategy is targeting at retirement. Please refer to the Strategy factsheets available on our website at royallondon.com

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There are three types of Target Lifestyle Strategy to choose from, depending on the equity funds you prefer -

1. Target Lifestyle Strategy This lifestyle strategy invests the equity portion in the RLP Global Managed fund. This is an actively managed global equity fund that is automatically blended between UK and overseas equities as part of our governance review process.

2. Target L i f estyle S t r a te g y – T r a c k er o p tion

This tracker option invests the equity portion of each portfolio in the RLP/BlackRock Aquila Global Blend fund. This is a global equity tracker fund that is automatically blended between UK and overseas equities as part of our governance review process.

3. Target Lifestyle Strategy – Active option This active option invests the equity portion of each portfolio in a specialist manager of manager fund RLP Global Blend Core Plus (Rathbones Global Alpha) fund. This is an actively managed global equity fund that is automatically blended between UK and overseas equities as part of our governance review process.As you approach retirement age, you’ll probably want to reduce your investment risk. Lifestyle Strategies are designed to help you do that. Your investments are gradually switched from higher to lower risk portfolios as you get closer to retirement. The Lifestyle Strategy is not compulsory. You can start or stop it at any time, but it must apply to all payments to your plan.

Following our discussion we have agreed that to meet your object of.......................................the ........................................................................................................................................................Lifestyle strategy is the most appropriate one taking into account your attitude to risk.

Flexible Lifestyle Strategy A Flexible Lifestyle Strategy allows you to create your own lifestyle strategy using the Governed Portfolios. You choose the Governed Portfolios and the equity funds for terms 5, 10 and 15 years to retirement and Royal London will gradually switch your investments between these portfolios as you approach retirement. At retirement you can choose to target either cash, annuity or drawdown. The Governed Portfolios are a collection of asset allocations that are designed for individuals with different attitudes to risk and terms to retirement.Details of the flexible lifestyle strategy are provided in the Pension investment options – a clear and simple guide which can be found on royallondon.com/pensioninvestments.

Following our discussion we have agreed that to meet your objective of .......................... the following Governed Portfolios and equity funds for terms 5, 10, 15 years will be used……………………………………………………………………………………………………………………………………………………………………..

External Investment Lifestyle Strategy Royal London also offer a range of lifestyle strategies managed by fund managers, 7IM, Brooks Macdonald, Schroders and Rathbones. These lifestyle strategies also target either an annuity or cash.To view the external investment lifestyle factsheets please visit royallondon.com/pensioninvestments.

Following our discussion we have agreed that to meet your objective of ...........................................the .......................................................................................................................................................................................... External Investment Lifestyle strategy is the most appropriate one taking into account your attitude to risk.

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Governed Retirement Income Portfolios (GRIPs) If you’re taking income from your pension you can chooseto invest in a GRIP. The portfolios are designed to suit customers with different risk attitudes and invest in a mix of equities, bonds and property funds managed by RLAM. There is also the option to replace the default equity fund – the RLP Global Managed fund – with an alternative equity fund or funds from a selection of fund managers available within our range.To view the Governed Retirement Income Portfolio factsheets, please visit royallondon.com/pensioninvestments.Following our discussion we have agreed that to meet your objective GRIP 1/2/3/4/5 .............................................................................................................................................................................................

would be most appropriate.

Please note that it is important to remember thatinvestments can go up as well as down in value and you may not get back the same amount you originally invested.

Customised Your adviser can create bespoke strategies or portfolios for you by using a choice of asset allocation and funds from the Royal London fund range.

Following our discussion we have agreed that to meet your objective of ……............................................................the ..................................................................... Lifestyle strategy is the most appropriate one taking into account your attitude to risk.

Royal London1 Thistle Street, Edinburgh EH2 1DG

royallondon.com

All literature about products that carry the Royal London brand is available in large print format on request to the Marketing Department at Royal London, St Andrew

House,1 Thistle Street, Edinburgh EH2 1DG.

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The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London, EC3V 0RL.

Royal London Marketing Limited is authorised and regulated by the Financial Conduct Authority and introduces Royal London’s customers to other insurance companies.

The firm is on the Financial Services Register, registration number 302391. Registered in England and Wales number 4414137. Registered office: 55 Gracechurch Street, London, EC3V 0RL. Royal London Corporate Pension Services Limited is authorised and regulated by the

Financial Conduct Authority and provides pension services. The firm is on the Financial Services Register, registration number 460304.

Registered in England and Wales number 5817049. Registered office: 55 Gracechurch Street, London, EC3V 0RL.

June 2018 5LT0106/13