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table of contents
                                                    TABLE OF CONTENTS - OVERVIEW
INTRODUCTION & METHODOL...
Exhibit 1.06. U.S. Market Sizing: Asset Growth Rates by Segment, 1998-2008 . . . . . . . . . . . . . .27
  Exhibit 1.07. U...
Exhibit 3.04. Retail Manager: Expected Future Asset Growth by Client/Product Type, 2009 . . . .57
   Exhibit 3.05. Institu...
PUBLIC DEFINED CONTRIBUTION
   Exhibit 5.09. Public Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . ....
SUBADVISED VARIABLE ANNUITIES
   Exhibit 7.09. Subadvised Variable Annuity Assets: Unaffiliated and Affiliated Arrangement...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...
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THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT ...

  1. 1. C A C e r u l l i a s s o c i a t e s C E R U L L I Q U A N T I TAT I V E U P D AT E R etirem ent Markkets 2008 CERULLI QUANTITATIVE UPDATE SUBSCRIPTION THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 Total U.S. addressable assets fell 18.6% in 2008 to $23.3 trillion, signifying that the asset management industry has experienced lasting changes and may never be the same. Now is the time to evaluate your business lines and determine if they make sense in this new environment. This report examines all U.S. market segments, client types, and vehicles within the retail and institutional marketplaces. It looks at asset management busi- ness organizations and the major trends driving change in the dynamic business of asset gathering. This report allows firms to: INSIDE LOOK: • Critically examine business lines for expansion or contraction Key findings: • Determine if mutual fund alternatives are a • Institutional investors will be bigger holders of mutual funds by 2011 if current growth rates threat to their business persist Report purchase includes: • Understand the role of investment consultants • Despite market turbulence, unified managed accounts (UMAs) experienced growth in 2008. • 5 hardcopies • Determine their place in an open-architecture • The funds-of-funds market showed degree of resiliency in 2008, due to demand by DC • Online access environment plans for ready-made asset allocation strategies • Exhibits in Excel format • Assess staffing levels by function and firm • Third-party distribution continues to be the leading source in both retail and institutional • Key findings in PDF format size markets. • PowerPoint presentation of highlights • Private defined benefit is the most profitable institutional segment for asset • Web recording of analyst presentation managers—and trends indicate more asset turnover could be on the horizon. This report contains 172 exhibits and 213 pages. It includes the following chapters: For pricing, please contact: Exclusive data: 1. Asset Management Market Overview Marketing & Business Development • NEW: Collective investment trust assets, top managers, and fees CAmarketing@cerulli.com 2. Asset Manager Addressable Marketplaces 3. Asset Management Organizations • U.S. market sizing and projections, 1998-2013E +1 617-437-0084 4. Defined Benefit • Retail and institutional marketplace profitability rankings WWW.CERULLI.COM 5. Defined Contribution • Assets, flows, and key metrics by marketplace and investment vehicle 6. Endowments and Foundations 7. Subadvisory Sample Exhibit: Institutional Ownership of Mutual Funds, 2003-2008 2 New in 2009: Quantitative Updates are 8. IRA $5,000 50% now subscription-based and include 9. Traditional Private Client Groups online access to a database of prior $4,000 40% 10. Mutual Funds annual releases of this report, related 11. ETFs $3,000 30% Thematic Reports, and a data supple- 12. Collective Investment Funds ment updating select exhibits. $2,000 20% 13. Managed Accounts See page 3 for more details. 14. Annuities $1,000 10% 15. Hedge Funds 0 0 2003 2004 2005 2006 2007 2008 Cerulli Associates Boston • Singapore • London Table of contents, user examples, and sample Institutional-owned mutual funds exhibits are included in this attachment. Institutional ownership as % of total mutual fund assets Source: Cerulli Associates July 2009
  2. 2. C A C e r u l l i a s s o c i a t e s C E R U L L I Q U A N T I TAT I V E U P D AT E R etirem ent Markkets 2008 CERULLI QUANTITATIVE UPDATE SUBSCRIPTION THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 USER EXAMPLES: The following are examples of how this report can be applied to business planning and strategic decision-making: m Scenario 1: A large mutual fund manager with a sizable U.S. investor base wants to benchmark the fortunes of its business in 2008, but is not sure how to best do so. They are unsure of the degree to which aggregate long-term mutual fund assets declined due to market performance and investors moving into money markets, and want to know what products will be competing for these dislodged assets when investors rediscover an appetite for risk. Cerulli Quantitative Update: The State of U.S. Retail and Institutional Asset Management addresses these concerns by answering the following questions: p • Over the past 10 years, how have long-term open-end funds fared from asset and flow perspectives? (Exhibits 10.02, 10.03) • How much money went into money market funds in 2008? (Exhibit 10.06) • How big is the exchange-traded fund (ETF) market, by assets and by number of funds? (Exhibits 11.01, 11.05) Scenario 2: A small institutional asset manager is seeking to expand its business and garner more attention from investment consultants. Until recently, it has mostly sold directly to institutions and is unsure of how consultant-intermediated sales will affect its sales cycle. It is also uncertain as to what an appropriate level of consultant relations might be for a firm of their size. This report addresses these concerns by answering the following questions: • How large are the addressable direct and third-party institutional markets? (Exhibit 2.11) • How long is the average sales cycle for institutional managers selling directly versus those selling through a third party? (Exhibit 3.11) • How do institutional managers staff their firms? (Exhibit 3.10) Scenario 3: A mutual fund company with a strong defined contribution (DC) presence has been trying to gather information on the size and the growth of the collective investment fund (CIF) market. It is concerned that the low fees for CIFs will make them increasingly competitive with their products, and they will lose marketshare as a result. This report addresses these concerns by answering the following questions: MORE INFORMATION: • Which firms are the largest managers of collective investment funds? (Exhibit 12.02) • How are these products primarily invested? (Exhibit 12.03) To learn how to apply this report • On an asset-weighted basis, what is the average basis point fee for an actively managed equity CIF mandate of $100 million? (Exhibit 12.05) to your firm’s unique needs, please contact: Scenario 4: A consulting firm providing advisory services to the financial services industry wants to know the true size of the entire U.S. asset manage- Marketing & Business ment marketplace, and wants to understand the true toll of last year’s financial crisis from a high-level perspective. This report addresses these concerns Development by answering the following questions: +1 617-437-0084 4 0 CAmarketing@cerulli.com • How large is the U.S. asset management market when measured by traditional market sizing methods versus Cerulli’s model? (Exhibit 1.03) • In aggregate, how have the retail and institutional investors fared during this crisis? (Exhibit 2.01) • Which segments of the market have declined the most? The least? (Exhibit 1.04) • What are Cerulli’s projections for growth in these segments over the next five years? (Exhibit 1.08)
  3. 3. C A C e r u l l i a s s o c i a t e s C E R U L L I Q U A N T I TAT I V E U P D AT E R etirem ent Markkets 2008 CERULLI QUANTITATIVE UPDATE SUBSCRIPTION THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 A subscription to Cerulli Quantitative Update: The State of U.S. Retail and Institutional Asset p Report purchase includes: Please contact me about this report. Management 2009 remains active through 11/01/2010 and includes online access to the Fax completed form to +1 617-437-1268. • 5 hardcopies 11 related reports below at no cost. See the green Purchase tab on www.cerulli.com for • Online access more information on these reports. • Exhibits in Excel format Name: _________________________________________ • Cerulli Quantitative Update: State of U.S. Retail and Institutional Asset Management 2008 • Key findings in PDF format Title: _________________________________________ • Cerulli Quantitative Update: Asset Manager Addressable Marketplaces 2007 • PowerPoint presentation of highlights • Institutional Sales and Relationship Management 2007 Email: _________________________________________ • Web recording of analyst • Cerulli Quantitative Update: Asset Manager Addressable Marketplaces 2006 Phone: _________________________________________ presentation • U.S. Multiaffiliate Marketplace 2006 Firm: _________________________________________ • Evaluating Asset Manager Addressable Marketplaces 2005 Division or Business Unit Name: _______________________ • Professional Buyers and Manager Selection 2005 _______________________________________________ NEW: Quantitative Updates are now • U.S. Subadvisory Marketplace 2004 subscription-based. Your purchase includes online access to a database • Asset Management: Institutional Sales & Marketing 2003 of prior report releases, related • Investment Consultants: A Strategic Outlook 2003 Thematic Reports, and a data sup- • Institutional Sales and Relationship Management 2003 plement. Please contact Marketing & Business Development to learn more about pricing. +1 617-437-0084 4 0 CAmarketing@cerulli.com CERULLI ASSOCIATES One Exeter Plaza Boston, MA 02116 Special Feature: r Tel: +1 617 437 0084 To view a thumbnail view of the contents of this report, please visit our website at www.cerulli.com. 28 Maxwell Road Go to Reports and click on ‘view’ next to the report title. Singapore 069120 Tel: +65 6327 4045 EXHIBIT 2.14 - PART 1 EXHIBIT 4.02 EXHIBIT 1.01 EXHIBIT 14.09 Institutional Client Assets: Calculations, 2003-2005 Defined Benefit Assets by Subset, 1998-2008E Fixed Annuity Sales: Traditional and Fixed Indexed, 1999-2008E U.S. Market Sizing: Total Assets Under Management, 1998-2008 ($ billions) ($ billions) ($ billions) ($ billions) Source: Cerulli Associates Sources: Department of Labor, Federal Reserve, EBRI, Cerulli Associates Sources: NAVA, LIMRA International, Morningstar Direct, Cerulli Associates Source: Cerulli Associates 2003 2004 2005 $7,000 $100 $45,000 20% Total Total Total $91.6 Direct Affiliated Third-Party Direct Affiliated Third-Party Direct Affiliated Third-Party Market Segment/Vehicle Institutional Institutional Institutional $966 16.4% 16.6% 15.1% $39,630 Distribution Distribution Distribution Distribution Distribution Distribution Distribution Distribution Distribution $6,000 $935 $90 $82.9 Client Assets Client Assets Client Assets $40,000 15% 11-15 Betterton Street 11.8% Public defined benefit $2,344 $721 $38 $1,585 $2,572 $740 $41 $1,791 $2,721 $728 $44 $1,949 $902 $80 $75.4 10.9% $35,449 Private defined contribution: 401(k) $1,607 $266 $835 $506 $1,872 $322 $942 $608 $2,087 $402 $970 $714 $872 $35,000 8.4% 10% $5,000 $996 $67.8 $31,510 Private defined benefit $1,941 $1,189 $31 $721 $2,106 $1,248 $34 $824 $2,254 $1,291 $36 $927 $679 $699 $830 $70 $64.5 $30,789 Insurance general account $1,622 $340 $1,152 $129 $1,713 $384 $1,183 $146 $1,735 $424 $1,150 $161 $640 $759 $30,000 $28,394 5% $4,000 $792 $3,050 $3,157 $60 Short-term mutual funds $725 $725 $0 $0 $667 $667 $0 $0 $749 $749 $0 $0 $52.2 $53.0 $25,605 $2,721 Short-term mutual funds: S&L governments $63 $63 $0 $0 $67 $67 $0 $0 $72 $72 $0 $0 $2,572 $47.3 $47.8 $23,729 $23,776 $21,968 $2,326 $2,293 $2,344 $2,464 $50 $25,000 $23,395 0% Short-term mutual funds: non-financial corporations $299 $299 $0 $0 $324 $324 $0 $0 $367 $367 $0 $0 $3,000 $2,031 $2,207 $20,378 0.2% Short-term mutual funds: funding corporations $363 $363 $0 $0 $276 $276 $0 $0 $311 $311 $0 $0 $1,931 $40 $36.5 -1.6% Federal defined benefit $20,000 -5% $830 $508 $13 $308 $872 $517 $14 $341 $902 $517 $14 $371 $2,000 $30 $27.3 $26.5 403(b) plans $533 $53 $320 $160 $571 $57 $343 $171 $616 $62 $370 $185 $23.4 $25.3 $25.0 -6.1% Foundations $477 $338 $13 $125 $511 $357 $14 $139 $551 $380 $16 $155 $15,000 -10% $2,442 $2,504 London WC2H 9BP $1,000 $1,937 $2,058 $1,986 $1,941 $2,106 $2,254 $1,975 $20 $14.0 Subadvisory: unaffiliated mutual funds $359 $231 $0 $128 $430 $272 $0 $157 $508 $317 $0 $191 $1,825 $1,665 $11.7 Private defined contribution: other $472 $78 $245 $149 $446 $77 $224 $145 $465 $90 $216 $159 $6.5 $10,000 -15% $10 $5.2 $5.4 Endowments $231 $165 $6 $60 $267 $188 $7 $72 $298 $207 $8 $83 $0 Taft-Hartley $360 $236 $7 $117 $398 $261 $8 $129 $420 $275 $8 $136 $0 $5,000 -20% Subadvisory: unaffiliated variable annuities 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E 2008E $287 $185 $0 $102 $321 $204 $0 $118 $361 $225 $0 $136 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E -20.5% Federal Thrift Savings $129 $129 $0 $0 $151 $151 $0 $0 $173 $173 $0 $0 $0 -25% Long-term mutual funds $152 $152 $0 $0 $168 $168 $0 $0 $186 $186 $0 $0 Private DB State and local government DB Federal DB Traditional fixed annuity sales Fixed-indexed annuity sales 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Long-term mutual funds: S&L governments $26 $26 $0 $0 $28 $28 $0 $0 $30 $30 $0 $0 Long-term mutual funds: non-financial corporations $126 $126 $0 $0 $141 $141 $0 $0 $156 $156 $0 $0 Assets Growth rate 457 plans $117 $29 $53 $35 $130 $33 $59 $39 $143 $36 $64 $43 Fixed annuity sales reached a record $109 billion in 2008, an increase of 50% from 2007. marked the end of five consecutive years of declining This Total $12,185 $5,346 $2,714 $4,125 $13,195 $5,646 $2,869 $4,681 $14,167 $6,060 $2,896 $5,211 The state and local government DB segment is the largest subsection of DB plan assets, at an estimated $2.5 trillion at year-en accounting d 2008, Tel: +44 20 7470 8817 for a 45.3% marketshare. Cerulli analysts expect this segment to remain the largest for some time to come as it persists as the primary plan structure f or sales. As measured by traditional market sizing methods, total assets under management in the United States declined by $8.1 trillion i , dropping n 2008 government employees. Analyst Note: Fixed annuity data in the above exhibit includes both traditional fixed annuities and fixed-indexed annuities. Analyst Note: This exhibit illustrates the calculations for segmenting U.S. institutional client assets by distribution method. from $39.6 trillion at year-end 2007 to $31.5 trillion at year-end 2008. This decline of 20.5% weighs heavily on calculations o asset management f the total After several years of robust growth, corporate DB slipped 21.1% to just less than an estimated $2 trillion, down from $2.5 lion in 2007. The tril Key Implication: Unexpectedly, the major driver of the phenomenal increase in fixed annuity sales was sales of traditional fixed annuities, whic by h increased market’s compound average growth rate (CAGR). From three- and five-year perspectives, the market’s CAGRs were 0.8% and 4.2%, respectively. marketshare of this segment also declined, from 37.8% in 2007 to 36.3%. an astounding 73% year-over-year (fixed-indexed annuity sales increased a modest 6% during this same period). CA analyststhe momentum for t that predic Analyst Note: This exhibit reflects the total asset management pool managed for U.S. retail and institutional investors as commonly presented (i.e., it has not Key Implication: State and local government plans, although often poorly funded, remain the primary retirement savings vehicles for government e mployees. traditional fixed annuities will carry over into mid-2009, at a minimum. Fixed annuity providers should capitalize on rgence of the product to develop this resu been adjusted for double-counting or nonprofessionally managed assets). This means that assets are likely to grow at a higher rate than the corporate DB market for the foreseeable future. positioning strategies so that the product becomes less reliant on underlying interest rates and known more for providing a gua for clients’ eventual ranteed base Key Implication: Save for a select few, asset managers will want to forget the market crisis of 2008. Severe declines in asset levels translated for many firms retirement needs. to a collapse in short-term profitability, and several companies that had for generations been household names in financial ser vices disappeared, many of them dragged into the abyss by failed investment banking affiliates. While companies have recently begun to recover from cks, many are unsure exactly these setba of the havoc wrought by last year’s declines and how to appropriately size the opportunity available to them going forward. Ind analysts believe the eed, Cerulli traditional all-in approach to market sizing grossly overstates the true opportunity available to managers, as it double-counts portions of the market. significant In the exhibits that follow, we illustrate the exact effect of this overstatement and how we believe it should be corrected. CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 CHAPTER 4 67 194 CHAPTER 14 CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 22 CHAPTER 1 CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 CHAPTER 2 51 WWW.CERULLI.COM Page 22 Page 51 Page 67 Page 194
  4. 4. table of contents TABLE OF CONTENTS - OVERVIEW INTRODUCTION & METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 KEY THEMES & PROGNOSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 SECTION I: U.S. MARKET OVERVIEW CHAPTER 1: U.S. ASSET MANAGEMENT MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 CHAPTER 2: THE ASSET MANAGER ADDRESSABLE MARKETPLACES (AMAM) DISTRIBUTION MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 CHAPTER 3: U.S. ASSET MANAGEMENT ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 SECTION II: INSTITUTIONAL MARKETS CHAPTER 4: DEFINED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 CHAPTER 5: DEFINED CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77 CHAPTER 6: ENDOWMENTS AND FOUNDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93 CHAPTER 7: SUBADVISORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 SECTION III: RETAIL MARKETS CHAPTER 8: INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 CHAPTER 9: TRADITIONAL PRIVATE CLIENT GROUPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 CHAPTER 10: MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139 CHAPTER 11: EXCHANGE-TRADED FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 CHAPTER 12: COLLECTIVE INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166 CHAPTER 13: MANAGED ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .176 CHAPTER 14: ANNUITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .185 CHAPTER 15: HEDGE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .201 TABLE OF CONTENTS - EXPANDED SECTION I: U.S. MARKET OVERVIEW CHAPTER 1: U.S. ASSET MANAGEMENT MARKET OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Exhibit 1.01. U.S. Market Sizing: Total Assets Under Management, 1998-2008 . . . . . . . . . . . . . .22 Exhibit 1.02. U.S. Market Sizing: Total Addressable Assets Under Management, 1998-2008 . . . .23 Exhibit 1.03. U.S. Market Sizing: Total and Addressable U.S. Assets Under Management, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Exhibit 1.04. U.S. Market Sizing: Total Assets Under Management by Segment, 1998-2008 . . . .25 Exhibit 1.05. U.S. Market Sizing: Double-Counting Adjustments, 1998-2008 . . . . . . . . . . . . . . . .26 4 TABLE OF CONTENTS CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009
  5. 5. Exhibit 1.06. U.S. Market Sizing: Asset Growth Rates by Segment, 1998-2008 . . . . . . . . . . . . . .27 Exhibit 1.07. U.S. Market Sizing: Asset Marketshare by Segment, 1998-2008 . . . . . . . . . . . . . . .28 Exhibit 1.08. U.S. Market Sizing Components and Projections, 1998-2013E . . . . . . . . . . . . . . . .29 KEY U.S. ASSET MANAGEMENT TREND: MUTUAL FUNDS Exhibit 1.09. Ownership of U.S. Assets by Client Type, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . .30 Exhibit 1.10. Institutional Ownership of Mutual Funds, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . .31 Exhibit 1.11. Institutional Ownership of Mutual Funds by Marketplace, 2003-2008 . . . . . . . . . . .32 Exhibit 1.12. Mutual Funds by Marketplace by Subset, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Exhibit 1.13. Mutual Funds by Marketplace by Subset, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . .34 CHAPTER 2: THE ASSET MANAGER ADDRESSABLE MARKETPLACES (AMAM) DISTRIBUTION MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Exhibit 2.01. Retail and Institutional Client Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .36 Exhibit 2.02. Marketshare of Retail and Institutional Client Assets, 2003-2008 . . . . . . . . . . . . . . .37 Exhibit 2.03. Retail and Institutional Client Assets: Growth Rates, 2003-2008 . . . . . . . . . . . . . . .38 Exhibit 2.04. Retail and Institutional Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . .39 Exhibit 2.04. Retail and Institutional Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . .40 RETAIL CLIENT ASSETS BY DISTRIBUTION MODEL Exhibit 2.05. Retail Client Assets, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Exhibit 2.06. Retail Client Assets by Distribution Method, 2003-2008 . . . . . . . . . . . . . . . . . . . . .42 Exhibit 2.07. Marketshare of Retail Client Assets by Distribution Method, 2003-2008 . . . . . . . . .43 Exhibit 2.08. Retail Client Assets: Growth Rates by Distribution Method, 2003-2008 . . . . . . . . .44 Exhibit 2.09. Retail Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Exhibit 2.09. Retail Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 INSTITUTIONAL CLIENT ASSETS BY DISTRIBUTION MODEL Exhibit 2.10. Institutional Client Assets Under Professional Management, 2003-2008 . . . . . . . . .47 Exhibit 2.11. Institutional Client Assets by Distribution Method, 2003-2008 . . . . . . . . . . . . . . . . .48 Exhibit 2.12. Marketshare of Institutional Client Assets by Distribution Method, 2003-2008 . . . .49 Exhibit 2.13. Asset Growth Rates: Institutional Client Assets by Distribution Method, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50 Exhibit 2.14. Institutional Client Assets: Calculations, 2003-2005 . . . . . . . . . . . . . . . . . . . . . . . . .51 Exhibit 2.14. Institutional Client Assets: Calculations, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . .52 CHAPTER 3: U.S. ASSET MANAGEMENT ORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 LEGACY AND GROWTH EXPECTATIONS Exhibit 3.01. Survey Respondent Age of Business by Marketplace, 2009 . . . . . . . . . . . . . . . . . . .54 Exhibit 3.02. Retail Manager: Historical and Expected Future Asset Bases by Distribution Model, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Exhibit 3.03. Institutional Manager: Historical and Expected Future Asset Bases by Marketplace, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 TABLE OF CONTENTS 5
  6. 6. Exhibit 3.04. Retail Manager: Expected Future Asset Growth by Client/Product Type, 2009 . . . .57 Exhibit 3.05. Institutional Manager: Expected Future Asset Growth by Client/Product Type, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 PROFITABILITY RANKINGS Exhibit 3.06. Retail Manager: Channel Profitability Rankings, 2009 . . . . . . . . . . . . . . . . . . . . . . .59 Exhibit 3.07. Retail Manager: Third-Party Distributed Channel Profitability Rankings, 2009 . . . .60 Exhibit 3.08. Institutional Manager: Channel Profitability Rankings, 2009 . . . . . . . . . . . . . . . . . .61 STAFFING AND INSTITUTIONAL SALES Exhibit 3.09. Retail Manager: Personnel/Staffing by Firm Size, 2009 . . . . . . . . . . . . . . . . . . . . . .62 Exhibit 3.10. Institutional Manager: Personnel/Staffing by Firm Size, 2009 . . . . . . . . . . . . . . . . .63 Exhibit 3.11. Institutional Manager: Client Relation Duration and Sales Cycle, 2009 . . . . . . . . . .64 SECTION II: INSTITUTIONAL MARKETS CHAPTER 4: DEFINED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Exhibit 4.01. Total Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .66 Exhibit 4.02. Defined Benefit Assets by Subset, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Exhibit 4.03. Top Defined Benefit Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 PRIVATE DEFINED BENEFIT Exhibit 4.04. Private Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . . .69 Exhibit 4.05. Private Defined Benefit Net Flows, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . .70 Exhibit 4.06. Private Defined Benefit: Plans and Participants, 1998-2007E . . . . . . . . . . . . . . . . . .71 PUBLIC DEFINED BENEFIT Exhibit 4.07. State and Local Government Defined Benefit Assets and Growth, 1998-2008E . . .72 Exhibit 4.08. State and Local Government Defined Benefit Net Flows, 1998-2007 . . . . . . . . . . .73 Exhibit 4.09. State and Local Government Defined Benefit: Systems and Participants, 1998-2007E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 FEDERAL DEFINED BENEFIT Exhibit 4.10. Federal Defined Benefit Assets and Growth, 1998-2008E . . . . . . . . . . . . . . . . . . . .75 Exhibit 4.11. Federal Defined Benefit Net Flows, 1998-2007E . . . . . . . . . . . . . . . . . . . . . . . . . . .76 CHAPTER 5: DEFINED CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77 Exhibit 5.01. Total Defined Contribution Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . .78 Exhibit 5.02. Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . .79 Exhibit 5.03. Top Defined Contribution Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Exhibit 5.04. Top Defined Contribution Recordkeepers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 PRIVATE DEFINED CONTRIBUTION Exhibit 5.05. Private Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . .82 Exhibit 5.06. Private Defined Contribution Net Flows by Subset, 1998-2008E . . . . . . . . . . . . . . .83 Exhibit 5.07. Total Number of Private Defined Contribution Plans by Subset, 1998-2008E . . . . .84 Exhibit 5.08. Active Private DC Participants by Subset, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .85 6 TABLE OF CONTENTS CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009
  7. 7. PUBLIC DEFINED CONTRIBUTION Exhibit 5.09. Public Defined Contribution Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . .86 Exhibit 5.10. Top 403(b) Asset Managers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Exhibit 5.11. Top 457 Asset Managers, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 Exhibit 5.12. Federal Thrift Savings Plan Asset Allocation, 2001-2008 . . . . . . . . . . . . . . . . . . . . .89 TAFT-HARTLEY Exhibit 5.13. Taft-Hartley Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90 Exhibit 5.14. Top Taft-Hartley Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91 Exhibit 5.15. Taft-Hartley Plans by Type, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92 CHAPTER 6: ENDOWMENTS AND FOUNDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93 Exhibit 6.01. Total Endowment and Foundation Assets and Growth, 1998-2008 . . . . . . . . . . . . . .94 Exhibit 6.02. Endowment and Foundation Assets by Subset, 1998-2008 . . . . . . . . . . . . . . . . . . . .95 Exhibit 6.03. Top Endowment and Foundation Asset Managers, 2008 . . . . . . . . . . . . . . . . . . . . . .96 ENDOWMENTS Exhibit 6.04. Total Endowment Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . .97 Exhibit 6.05. Top College and University Endowments, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . .98 Exhibit 6.05. Top College and University Endowments, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . .99 Exhibit 6.06. Endowment Asset Allocation, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 FOUNDATIONS Exhibit 6.07. Total Foundation Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . .101 Exhibit 6.08. Top Foundations, 2007-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 Exhibit 6.09. Number of Foundations by Type 2005-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Exhibit 6.10. Foundation Assets and Flows, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 CHAPTER 7: SUBADVISORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105 Exhibit 7.01. Total Subadvised Assets by Investment Vehicle, 2003-2008 . . . . . . . . . . . . . . . . . .106 Exhibit 7.02. Unaffiliated Subadvised Assets by Investment Vehicle, 2003-2008 . . . . . . . . . . . .107 SUBADVISED LONG-TERM MUTUAL FUNDS Exhibit 7.03. Subadvised Long-Term Mutual Fund Assets: Unaffiliated Single-Advisor and Multiple-Advisor Arrangements, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Exhibit 7.04. Marketshare of Total Long-Term Mutual Fund Assets by Affiliation, 2005-2008 .109 Exhibit 7.05. Top Subadvisory Long-Term Mutual Fund Asset Managers: Unaffiliated Single Advisor, 2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110 Exhibit 7.06. Top Subadvisory Long-Term Mutual Fund Sponsors: Unaffiliated Single Advisor, 2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 SUBADVISED SEPARATE ACCOUNT CONSULTANT PROGRAMS Exhibit 7.07. Subadvisory Separate Account Consultant Program Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 Exhibit 7.08. Top Subadvisory Separate Account Consultant Program Sponsors, 2008 . . . . . . . .113 CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009 TABLE OF CONTENTS 7
  8. 8. SUBADVISED VARIABLE ANNUITIES Exhibit 7.09. Subadvised Variable Annuity Assets: Unaffiliated and Affiliated Arrangements, 2003-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 Exhibit 7.10. Marketshare of Total Variable Annuity Assets by Affiliation, 2003-2008 . . . . . . . .115 Exhibit 7.11. Top Subadvisory Variable Annuity Asset Managers: Unaffiliated Arrangements, 2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116 Exhibit 7.12. Top Subadvisory Variable Annuity Sponsors: Unaffiliated Arrangements, 2005-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117 SECTION III: RETAIL MARKETS CHAPTER 8: INDIVIDUAL RETIREMENT ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 Exhibit 8.01. Total IRA Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .119 Exhibit 8.02. IRA Assets by Investment Product, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . .120 Exhibit 8.03. IRA Assets: Traditional and Other, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . .121 Exhibit 8.04. Traditional IRA Assets as Percent of Total IRA Assets, 1998-2008E . . . . . . . . . . .122 Exhibit 8.05. Other IRA Assets as Percent of Total IRA Assets, 1998-2008E . . . . . . . . . . . . . . .123 Exhibit 8.06. Other IRA Assets by Type as Percentage, 1998-2008E . . . . . . . . . . . . . . . . . . . . . .124 Exhibit 8.07. Top-5 IRA Providers by AUA, 2006-2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125 Exhibit 8.08. IRA Rollover Contributions, 1998-2008E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 CHAPTER 9: TRADITIONAL PRIVATE CLIENT GROUPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 HIGH-NET-WORTH INVESTORS Exhibit 9.01. Cerulli Wealth Tiers, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 Exhibit 9.02. High-Net-Worth Client Assets by Investment Vehicle, 2Q 2008 . . . . . . . . . . . . . . .129 HIGH-NET-WORTH PROVIDERS Exhibit 9.03. High-Net-Worth Marketshare by Provider Type, 2008 . . . . . . . . . . . . . . . . . . . . . .130 Exhibit 9.04. Projected High-Net-Worth Provider AUM by Firm Type, 2005-2013E . . . . . . . . .131 Exhibit 9.05. Top U.S. Wealth Managers, 2Q 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 Exhibit 9.05. Top U.S. Wealth Managers, 2Q 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Exhibit 9.06. Services Offered at High-Net-Worth and Ultra-High-Net-Worth Providers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 Exhibit 9.06. Services Offered at High-Net-Worth and Ultra-High-Net-Worth Providers, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135 Exhibit 9.07. Open Architecture Estimates Across Private Wealth Channels, 2008 . . . . . . . . . . .136 TRADITIONAL PRIVATE CLIENT GROUPS Exhibit 9.08. Traditional Private Client Group Assets and Growth, 1998-2008 . . . . . . . . . . . . . .137 Exhibit 9.09. Traditional Private Client Group Non-Investment Management Services, 2008 . . .138 CHAPTER 10: MUTUAL FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139 Exhibit 10.01. Total Mutual Fund Assets and Growth, 1998-2008 . . . . . . . . . . . . . . . . . . . . . . . .140 8 TABLE OF CONTENTS CERULLI QUANTITATIVE UPDATE THE STATE OF U.S. RETAIL AND INSTITUTIONAL ASSET MANAGEMENT 2009

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