Presented by Russell Investments at Netwealth's 2020 adviser roadshow.

1. MARCH 2018
Planning
beyond 2020
Netwealth
Timothy Noonan, Managing Director, Strategic Business Initiatives
THIS MATERIAL IS FOR FINANCIAL PROFESSIONAL USE ONLY AND NOT FOR DISTRIBUTION TO CURRENT OR POTENTIAL INVESTORS.

3. Value maximisation across the adviser lifecycle
FAKE
IT
MAKE
IT
TAKE
IT
Internal Sale
[7–10 years]
(succession
planning and EV)
External Sale
[0–2 years]
(maximize EV)
Strategic
Acquisitio
n
(EV drivers
and risks)
No Strategy
(no planning)
Adviser Lifecycle
Value Maximisation Strategies Transition Strategies
S
S B
FINANCIAL PROFESSIONAL USE ONLY
Value
For illustrative purposes only.

4. The Winds of Change

5. Demographics
Source: World Bank World Databank, databank.worldbank.org, pulled Sept. 19, 2016. Retirees is defined as the Population, age 65 and above, as of 2014 estimates. Workers is defined as the Total Labor Force as of 2013 estimates. Total Labor Force
is defined as residents age 15 and above who are economically active, according to definition by International Labour Organization.
FOR FINANCIAL PROFESSIONAL USE ONLY

6. Progressive, not Prosecutorial
Fall-out from RDR: potential parallels
for U.S. advisers
1. Fewer left
2. Younger, more planning-oriented
3. More team-oriented and networked
4. The “advice gap” is a myth
How might the U.S. experience diverge
from the U.K. RDR aftermath?
1. More litigation and private right of action
2. Greater pressure to reduce fees
3. Product consolidation
Strategic implications:
Advisers urgently need help
operationalising new working models that
ascend to the standard of fiduciary best
practice

7. FINANCIAL PROFESSIONAL USE ONLY
Investor Behaviour
BEHAVIO
URGAP

8. Source: BNY Mellon Analytical Services, Investment Company Institute, Russell Investments. Based on annualised returns from January 1, 1984 to December 31, 2017. Return
was calculated by deriving the internal rate of return (IRR) based on ICI monthly mutual fund net new cash flow data which was compared to the rate of return if invested in the
Russell 3000 Index and held without alteration from January 1, 1984 to December 31, 2017. Indexes and/or benchmarks are unmanaged and cannot be invested in directly.
Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment
*Average US equity investor is based on general cash-flow trends as measured by the ICI compared to the market's overall performance.US mutual fund data was used as
robust global or Australian historical data is not currently available.
FINANCIAL PROFESSIONAL USE ONLY
Recent proof of a “buy high and sell low” mentality
INVESTMENT PATTERNS AT THE WRONG TIMES
Sep-17
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
-$80
-$60
-$40
-$20
$0
$20
$40
$60
Dec-07
Mar-09
Jun-10
Sep-11
Dec-12
Mar-14
Jun-15
Sep-16
Dec-17
GROWTHOF$100
NETINFLOW($USBILLIONS)
Monthly US
mutual fund
cash flows*
Russell 3000®
Index (Growth of
$100)

9. (1) BNY Mellon Analytical Services, Russell 3000® Index annualised return from January 1, 1984 to December 31, 2017.
(2) Russell Investments & Investment Company Institute (ICI). Return was calculated by deriving the internal rate of return (IRR) based on ICI monthly fund flow data which was
compared to the rate of return if invested in the Russell 3000® Index and held without alteration from January 1, 1984 to December 31, 2017. This seeks to illustrate how regularly
increasing or decreasing equity exposure based on the current market trends can sacrifice even market like returns.
Indexes and/or benchmarks are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not
indicative of any specific investment.
The high cost of investor behaviour
1984-2017
FINANCIAL PROFESSIONAL USE ONLY
The above chart is for illustrative purposes only.

10. TruNorth Curve
Overspending Afraid of Spending
LowHigh
MONEY
SATISFACTION
Funded Ratio
p.10 FINANCIAL PROFESSIONAL USE ONLY

11. FINANCIAL PROFESSIONAL USE ONLY
Value of time

12. ANNUAL GROSS REVENUE
2,000 hours
$800,000
= $400/hour
What is your time worth?
FINANCIAL PROFESSIONAL USE ONLY
The information contained in this slide is an example and figures shown are for illustrative purposes only

13. Top
20%
320
CLIENTS
$560k
64
$800k
REVENUE
$560,000
64 clients
$8,750 rev/HH
$8,750 rev/HH
$400/hour
~22 hours
A typical example
70%
These numbers represent a real book of business consisting of 320 clients and $800,000 of revenue. This example was selected since the allocation of revenue across the
client base is representative of a significant number of clients that Russell Investments has worked with in the context of RPM Advisor Coaching. Your numbers may differ
from these. This information may not be representative of the experience of other clients and is no guarantee of future performance or success.
FINANCIAL PROFESSIONAL USE ONLY
The information contained in this slide is an example and figures shown are for illustrative purposes only

14. What advisors think their inventory looks like
The averages above are from the 2014-2017 participants of the Russell Investments Disciplined Investing Program and used for illustrative purposes only.
30
MUTUAL
FUNDS
150
UNIQUE
INVESTMENT
PRODUCTS
$
$
$
$
50
STOCKS
$
$
$
$

15. What it ACTUALLY looks like
The averages above are from the 2014-2017 participants of the Russell Investments Disciplined Investing Program and used for illustrative purposes only.
167
MUTUAL
FUNDS
520
UNIQUE
INVESTMENT
PRODUCTS
$
$
$
$
321
STOCKS
$
$
$
$

16. Top
20%
$51.2m
AUM
51 CUSIPS
80/20 again
80%
167
Mutual Fund
CUSIPs
$64m
AUM
LIABILITY

17. FINANCIAL PROFESSIONAL USE ONLY
A typical book of business
CLIENTREVENUE
HIGHLOW
HIGHLOW
TOO
LITTLE
TOO MUCH
EFFORT TO SERVE

18. FINANCIAL PROFESSIONAL USE ONLY
Which side is problematic?
CLIENTREVENUE
HIGHLOW
HIGHLOW
EFFORT TO SERVE
› Unprofitable
› Over-served
› Under-charged
› Financed by others
› Profitable
› Over-charged
› Under-served
› Financing others
› At Risk!

19. FINANCIAL PROFESSIONAL USE ONLY
The art of segmentation
REVENUE
HIGHLOW
HIGHLOW
EFFORT TO SERVE
$5,000
$1,000
Create client advocates
Deliver a highly personalised,
goal-oriented wealth management
experience that includes
customised models.
Efficiency and leverage
Delivered via planning and investment outsourcing
combined with a proactive One-to-Many service model.
Move-up or out
Establish a minimum and work to move clients up or out.
A
B
C
These revenue amounts are used for illustrative purposes only. Your experience may differ.

20. Before Global Financial Crisis After Global Financial Crisis
SOURCE: CEG Worldwide, 2001 and 2012 surveys of financial advisors.
13.8%
86.2% 89.5%
10.5%
YES
NO
Spending time on client relationships &
Making that time generate more valued outcomes
NO
YES

21. Fintech: Disruption, Lite or Full Calibre?
21
According to CNBC 86% of millennials have less than $100,000
Making an imperfect process more
efficient does not constitute evolution

22. A better discovery conversation
FINANCIAL PROFESSIONAL USE ONLY
Source: SLCT—A process for initiating critical reflection, by Jeff Belkora, PhD. Jeffbelkora.com
0
500
1000
1500
2000
2500
3000
0 5 10 15 20 25 30 35
TALKTIME
EXCHANGE
› Advisor (Orange, 27%) & Client (Blue, 73%) talk time per exchange
› Advisor asked questions in 63% of exchanges, Client responded with 4,286 words

23. Even if we know what we want, often our advisors don’t
FINANCIAL PROFESSIONAL USE ONLY
0
500
1000
1500
2000
2500
3000
0 5 10 15 20 25 30 35
TALKTIME
EXCHANGE
› Advisor (Orange, 54%) & Client (Blue, 46%) talk time per exchange
› Advisor asked questions in 26% of exchanges, Client responded with 1,213 words
Source: SLCT—A process for initiating critical reflection, by Jeff Belkora, PhD. www.slctprocess.org

24. Study intervention: SLCT training
FINANCIAL PROFESSIONAL USE ONLY
Source: SLCT—A process for initiating critical reflection, by Jeff Belkora, PhD. Jeffbelkora.com
Scribe
Ladder
Check
Triage

25. FINANCIAL PROFESSIONAL USE ONLY
QUARTERLY ROADMAP FOR SAMPLE CLIENT
Source: Sample US Bancorp Roadmap
January – March, 2018
Scheduled Activities
 Data Gathering
 Financial Goals
 Risk Tolerance
 Long-range Plan
 ED: Diversification
April – June, 2018
Scheduled Activities
1. Goals Review
2. Road Map Review
3. Investment Implementation
4. Life Insurance
5. Estate Plans Updated
6. ED: Capital Markets
July – September, 2018
Scheduled Activities
 Goals Review
 Road Map Review
 Investment Review
 Insurance Implementation
 Estate Plans Completed
 ED: Long-term View of the
Market
October – December, 2018
Scheduled Activities
 Review Existing Plans
 Road Map Review
 Investment Review
 Will and Trust Planning
 Client Satisfaction Review
 ED: Legacy Planning
January – March, 2019
Scheduled Activities
 Goals and Situations Review
 Roadmap Review
 Investment Review
 Education Planning
 Legacy Planning
 ED: U.S. Equities
April – June, 2019
Scheduled Activities
 Goals and Situations Review
 Roadmap Review
 Investment Review
 Disability Insurance
 ED: Fixed Income
July – September, 2019
Scheduled Activities
 Goals and Situations Review
 Roadmap Review
 Investment Review
 Long Term Care Insurance
 ED: International Investing
October – December, 2019
Scheduled Activities
 Goals and Situations Review
 Roadmap Review
 Investment Review
 Tax Strategy Review
 ED: Legacy Planning

26. Someday Rich?
26

27. ENTERPRISE VALUE (EV) =
Present value of future profits
27 FOR FINANCIAL PROFESSIONAL USE ONLY

28. Definitions for the terms in the EV model:
P = profit in year 0
g = short term growth rate
n = year
DR = discount rate (profit sustainability factor)
G = long-term growth rate (terminal growth)
Present value of
terminal profits
Present value of the next 5
years profits
Current
Profitability
Sustainability
of Profits
Growth
FINANCIAL PROFESSIONAL USE ONLY
Measure enterprise value

29. Fee efficiency
True profit
Manage both top
and bottom line
Recurring revenue +
client turnover
Client service model
Balancing revenue and
client service
Key man risk
Institutionalisation of
workflow
Process, continuity &
succession planning
Client acquisition
Gather new assets
Growth potential
of existing book
Household age
demographic
Current
Profitability
Sustainability
of Profits
Growth
FINANCIAL PROFESSIONAL USE ONLY
8 critical business metrics
For evaluating and maximising enterprise value

30. Use change to your advantage
Source: http://fieldservicenews.com/roadmap-becoming-trusted-advisor/

31. Important information
Issued by Russell Investment Management Ltd ABN 53 068 338 974, AFS Licence 247185 (RIM). This document has been prepared for
financial professionals only. This document provides general information only and has not been prepared having regard to your objectives,
financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your
objectives, financial situation or needs. This information has been compiled from sources considered to be reliable, but is not guaranteed.
This document is not intended to be a complete statement or summary.
Frank Russell Company is the owner of the Russell Indexes and their associated trademarks, which are used under license from Frank
Russell Company. The members of the Russell Investments group of companies, including Russell Investment Group Limited are not
affiliated in any manner with Frank Russell Company or any entity operating under the “FTSE RUSSELL” brand. Frank Russell Company
does not guarantee the accuracy and/or completeness of the Indexes or any data included
therein.
Copyright © 2018 Russell Investments. All rights reserved. This material is proprietary and may not be reproduced, transferred, or
distributed in any form without prior written permission from Russell Investments.