1. Founders management advisory and insights for financial services institutions
Advisory
Founders Quarterly 3Q 2012 Asset & Wealth Management

2. Contents (including 16 proprietary exhibits)
Founders Quarterly 3Q 2012
I. Summary: Rethinking U.S. Institutional III. Wealth Management: U.S. Private Clients
Distribution Founders Quarterly is our
II. Asset Management: U.S. Institutional A. Migration of the financial advisor vehicle for delivering Ideas
and Insights on a regular
A. Measuring distribution effectiveness and 1. Stock selectors
basis. We explore and provide
performance 2. Fund selectors advice for relevant global
B. Growth and profitability challenges asset and wealth management
3. Portfolio selectors issues and problems supported
C. New investments and resource by our deep industry
allocations 4. Strategist selectors (i.e., outsourced CIO)
knowledge, applicable senior-
1. Investments in sales vs. client B. Managed accounts discretionary framework level industry experience, and
service vs. consultant relations in-depth knowledge
1. Financial advisor discretion development and problem-
D. Open architecture solving process. Each
2. Home-office discretion
E. Distinct group for investment-only DC quarterly issue draws upon
3. Third-party strategists discretion our ongoing dialogues with
F. Asset gathering potential by channel senior executives from around
C. Managed accounts equates to very the world and our multiple
1. Salesforce deployment satisfied financial advisors ongoing invite-only
methodology proprietary surveys. We
D. End-client/investor advisory knowledge
G. Client segmentation distribute an issue each
1. Number of client segments IV. Appendix calendar quarter in electronic
format.
H. Separating sales from client service A. Reading guide & methodology
This Founders Advisory material is intended exclusively for distribution within the purchasing firm. Distribution to or use by any other firm,
subsidiary, affiliate, external field force, or client is prohibited (as is reproduction in whole or part in any media, including electronic or company
communications), except by permission. Analysis relies on data sources deemed to be reliable. Although believed to be accurate, this
information is not guaranteed and may be incomplete. Founders Advisory. All rights reserved.
Founders Quarterly 3Q 2012 Asset & Wealth Management Founders Advisory Ideas & Insights 2

3. I. Summary: Rethinking U.S. Institutional
Founders Quarterly
Distribution
Founders Quarterly 3Q 2012 Asset & Wealth Management Founders Advisory Ideas & Insights 3

4. We believe that asset management firms addressing the U.S. institutional
marketplace need to make meaningful adjustments to their distribution strategies
Summary: Rethinking U.S. Institutional In this issue of Founders Quarterly we also continue our analysis of
Distribution the U.S. private wealth management marketplace. We define the
migration of financial advisors from individual securities selectors
In this issue of Founders Quarterly we begin our analysis of U.S. (a.k.a stock jocks) to outsourcing total portfolio construction (i.e.,
institutional asset management. We work closely with senior outsourced CIO).
executives (see methodology on page 18 for an overview) to better
understand the key agenda items shaping the future of asset gathering We believe that the next wave of managed accounts growth will
within the U.S. institutional marketplace. Our ongoing analysis of this have a greater impact on the private wealth management industry
segment includes an annual survey (this year’s survey was launched than any other era. To that end, we outline the managed accounts
in July and closed in late September) and ongoing interactive discretionary framework. The location of discretion (i.e., who has
conversations with leaders in the industry. This fall and winter we’ll it) is reemerging as a key underlying theme to the overall managed
continue to analyze the institutional market by focusing on accounts growth story. We also examine the satisfaction levels of
investment consultants and/or institutional pro buyers (see page 18). financial advisors associated with firms at which 30% or more of
revenues are sourced from advisory.
As part of our survey this year, we spent considerable time delving
into key items impacting the business over the next five years.
Specifically, we examined challenges to profitability, growth, and
where firms plan to make new investments over the next five years.
We asked senior leaders in the industry to rate the asset gathering
potential by institutional channel over the next five years.
Additionally, we examined the future of open architecture within both
defined benefit and defined contribution plans.
We largely believe that the status quo of U.S. institutional distribution
strategy needs rethinking. The challenges facing the business are
greater than most firms perceive. For example, while it is widely
believed that consultant relations are a critical element to asset
gathering, the effectiveness of these groups is lagging considering
their importance. We’ll continue this analysis in the 4Q issue.
Founders Quarterly 3Q 2012 Asset & Wealth Management Founders Advisory Ideas & Insights 4

5. Methodology
Founders’ Ideas & Insights methodology
Key Attributes Description Overview of Cohorts
Coverage of each cohort includes an annual invite-only survey and non-
•Expertise links together the entire attribution dialogues and discussions with leading senior executives.
1 value chain
•We challenge many of the old norms Asset Management
Advice & of the industry and provide advice on
Recommendations how your firm can embrace the U.S. Retail Intermediary
postmodern era and flourish
• Current survey cohort includes 30 heads of distribution
•Our advice is supported by our deep
representing more than $15 trillion in worldwide AUM and
industry knowledge, applicable senior-
roughly $3.5 trillion in retail intermediary assets.
level experience, and in-depth
development and problem-solving
U.S. Institutional
process
• Current survey cohort includes 26 heads of distribution
•Our advice is not only creative and representing more than $3.5 trillion in worldwide AUM and
2 catalyzing, but also pragmatic roughly $1.5 trillion in institutional assets.
•We emphasize the “so what do we do
Focused & now?” versus “nice to have data”
Pragmatic •We focus on the global asset and Wealth Management
wealth management industry and work
to link together the entire value chain U.S. Private Wealth Management
• Current survey cohort includes 20 senior executives at firms
representing 100,000 financial advisors and/or client advisors and
•We use proprietary data and roughly $8 trillion in assets under advisement/supervision.
3
information
Original & •We explore trends and issues, and U.S. Institutional Wealth Management
Proprietary design invite-only surveys based • This cohort is currently in flight/process. Firms within the
upon collaboration with the industry institutional wealth management cohort include institutional
•Our analysis entails active dialogues investment consultants and/or pro buyers.
and debates with senior executives
and leaders in the industry
Ideas & Insights Founders Advisory management advisory and insights for financial services institutions 5

6. Products
Ideas & Insights leverages deep industry relationships and works closely
with senior executives via ongoing dialogues and proprietary invite-only surveys
Ideas & Insights Offerings Description
•This is our vehicle for delivering Ideas & Insights on a
regular basis
Founders •We explore and provide advice for relevant global asset
Quarterly and wealth management issues and problems
•Annual cost US$5,000 per institution
Al la carte pricing or
combined subscription
for US$15,000 •All reports are linked to multiple surveys and targeted
interviews with senior executives
1. Asset Management: the core cohorts include
US institutional and retail/intermediary
Founders 2. Wealth Management: the core cohorts include
Reports
US private wealth management and institutional
wealth management (i.e., pension/investment
consultants, pro buyers)
•Each report cost US$5,000 per institution
Ideas & Insights Founders Advisory management advisory and insights for financial services institutions 6

7. Founders management advisory and insights for financial services institutions
Advisory
Paul A. Fullerton
Managing Principal
617.794.6788
paul_fullerton@foundersadvisory.com
P.O. Box 130020 Boston MA 02113
www.foundersadvisory.com
This Founders Advisory material is intended exclusively for distribution within the purchasing firm. Distribution to or use by any other firm,
subsidiary, affiliate, external field force, or client is prohibited (as is reproduction in whole or part in any media, including electronic or company
communications), except by permission. Analysis relies on data sources deemed to be reliable. Although believed to be accurate, this
information is not guaranteed and may be incomplete. Founders Advisory. All rights reserved.
Founders Quarterly 2Q 2012 U.S. Private Client Asset & Wealth Mgmt. II Founders Advisory Ideas & Insights 7