This document discusses how innovation trends are changing client expectations in wealth management. It outlines that clients now expect services to be easy and simple to access, personalized and holistic, and more cost effective. Some clients are comfortable with algorithmic investment solutions, though they still have concerns about performance variability, security, and cyber risks. To succeed, wealth managers need to embrace a winning formula of using people and technology together to enhance the client experience while maintaining trust through a reputable brand and customized services.

1. Investment products and services are:
NOT A DEPOSIT ● NOT FDIC INSURED ● MAY LOSE VALUE ●
NOT BANK GUARANTEED ● NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
Innovation Trends are Changing Expectations
Chady AlAhmar
Head of Strategy and Business Development
February 12, 2019

2. Important Disclosures
U.S. Wealth Management – U.S. Bank is a marketing logo for U.S. Bank.
This information represents the opinion of U.S. Bank. This is not intended to be a forecast of future events or
guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of
securities or recommendation to invest. Not for use as a primary
basis of investment decisions. Not to be construed to meet the need of any particular investor. Not a
representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment
professional for advice concerning their particular situation.
The factual information provided has been obtained from sources believed to be reliable, but is not
guaranteed as to accuracy or completeness.
U.S. Bank and its representatives do not provide tax or legal advice. Each client's tax and financial situation is
unique. Clients should consult their tax and/or legal advisor for advice and information concerning their
particular situation.

4. Since then…things got more complex
Cars transmit over
2GB of data per lap
A modern F1 car
is equipped with
200+
sensors to gather data
on ~10,000 components
3TB of data gathered
over a full race
Data source: Intel 2017

5. 1.92
seconds

6. Who knew?
Driverless Car
Engineer
App Developer
Big Data Analyst /
Data Scientist
YouTube
Content Creators
Social Media
Manager
Cloud Computing
Specialist
Drone Operator

7. New technologies adopted at faster rates
Smartphone
Internet
Mobile Phone
PC
TV
Radio
Telephone
Years taken until adopted by 25% of the U.S. population0 50
Electricity
Source: U.S. Census, Wall Street Journal

8. “In the future, the Internet will disappear…
you won’t even sense it, it will be part of
your presence all the time.”
Eric Schmidt*, Executive Chairman
Google, USA
* Davos 2015

9. Challenge to keep up with innovation
n = 315.
Source: CEB 2016 HNW Client Experience Survey.
2 0 0 – 4 5 0 Applications
Maintena
nce
Mandatory
Business
Opportunity
Innovation
Not-so-seamless Integration Technology-Related Expenses
Typical Number of Technology Applications North American Wealth Management Firms, 2016

10. Innovation trends are changing client expectations
Ease, simplicity and increased control
Personalized holistic advice
Lower cost of service
Comfortability with algorithm-rebalanced portfolios
Information, security and cyber risk concerns

11. “I want easy and simple access”
Source: Betterment.com

12. “I expect it to be personalized and holistic”
Commodity Premium
Personalization
and depth
of relationship
Low
High
Pricing
Investment
management
only
Additional
planning:
Estate, tax,
insurance
Primarily
investment
management
Comprehensive
planning and
wealth
management
Source: Vanguard “Winning the Next Era of Wealth Management”, 2017

13. “I expect it to be more cost effective”
Automated Advisory fee based on AuMs
Mass Affluent Affluent High Net Worth
Pressure on traditional
advisory fees
Costandfees
*Examples shown are for illustrative purposes

14. “I’m comfortable with algorithmic solutions…”
Source: Investment Company Institute; Credit Suisse.
Note: U.S. domestic equity funds; 2016 figure as of 11/30/16

15. “…even though performance may vary”
30%
41%
34%
38%
32%
30%
31%
36%
17%
13%
12%
23%
16%
34%
16%
10%
15%
4%
29%
19%
5%
7%
10%
U.S. Stocks International Stocks U.S. Bonds International Bonds Other
Source: Wall Street Journal – “Putting Robo Advisers to the Test”, April 24, 2015
Asset-class mixes recommended for an investor with a moderate risk profile

16. “I still have concerns about security and risk”
Spending on
Information Security
worldwide …
… with organized criminals
exceptionally well-funded, the
cost of cybercrime
is very high!
Cost: http://www.mcafee.com/us/resources/reports/rp-economic-impact-cybercrime2.pdf

17. Who is going to win?

18. “Price is what you pay.
Value is what you get.”
Warren Buffett

19. We will always be in the people business, so people
and technology are the winning formula
Client Wealth Spectrum
“Human Based”
“Science Based”
NatureofAdvice
People
+
Innovation
Source: Deloitte, 10 Disruptive trends in wealth management

20. “If you do not seek out allies and helpers,
then you will be isolated and weak.”
Sun Tzu, "The Art of War"

21. Patterns identified by
common analytical
techniques
Patterns identified by ML
techniques
Raw dataset
(aka Reality)
v1
v2
v1
v2
v1
v2
What is Machine Learning (ML) – really?
*Examples shown are for illustrative purposes

22. Trust Takes Years
To Build
Seconds
To Break
And Forever
To Repair

23. Financial Advice is based on a trusting relationship
augmented by technology and innovation
Fully integrated access
to services
Partnering with client-facing
technology platforms
Best-thinking content
Protocols to introduce digital
clients to advisors where
appropriate
Innovation
Established
Institutions
Most Trusted
Choice Wins
Trusted brand
Reputable and strong
Good customer service
Customized client
experience
Low cost
Online advice
Social community
Algorithm-based
investment advice

24. Embrace technology to enhance the client experience,
broaden distribution, lower cost of delivery, and support
client-facing talent
― Define and adjust to emerging client journeys
― Use data analytics to support client journeys
― Manage resources dynamically in response to change
Most importantly: How do you make your client feel?

25. “Ultimately it’s about the human capital and the
human potential and technology empowers humans
to do great things.”
Satya Nadella*, CEO
Microsoft Corporation
* Davos 2015