This document summarizes a presentation by Santi Burridge on lessons from Silicon Valley for Australian financial advisers. Key points include: - Over 800 startups in Silicon Valley are focused on financial services and know more about clients than advisers. - Advisers' role in investment advice is changing due to technology enabling mass customization of advice. - Australian advisers need to embrace technology to ensure future disruption complements their businesses. - Advisers should focus on building scalable, personalized client experiences through technology.

1. LessonsfromSiliconValley
andwhatitmeans
forAustralianadvisers
Presented by
Santi Burridge
Co-founder and Chief Executive – Strategic Development
Implemented Portfolios
7 Dec 2016

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2

3. | Netwealth
Meet today’s speaker
Santi Burridge
Co-founder and
Chief Executive – Strategic Development
Implemented Portfolios
3

4. HEADING GOES HERE
Portfolio Construction Masterclass
Presented by Santi Burridge
August 21, 2012
Lessons from Silicon Valley and what it
means for Australian Advisers

5. HEADING GOES HEREKey Learnings
How financial service providers in the US are responding to the shift in
consumer needs and technological disruption in wealth management
Current landscape - More than 800 data-driven businesses in Silicon Valley
focused solely on financial services, who know more about clients than advisers
do.
Why the adviser's role in the investment piece is fundamentally changing
What the new world is all about - Mass customisation via technology allowing
advisers to build scalable businesses and personalised client experiences
Key measures Australian financial advisers can take to help ensure that the
coming disruption is complimentary to their businesses

6. HEADING GOES HEREKey Learnings
Silicon Valley is on the attack
• 16,800 lean start-ups in the valley currently
• Everyone is trying to take our job, and when they attack our industry will be fundamentally
changed
• They will then come here and take our clients
Mass Personalisation of advice is on
• The customer is changing rapidly
• It is not that hard but mass customisation is critical
• Going mobile in a massive way
• No longer use data feeds, data harvesting is here combined with artificial intelligence
Iterate and pivot
• Culture
- We need to change culturally
- Failure needs to be celebrated as long as we learn
Independence is celebrated
• To not be independent will ensure failure
• They will be managing 1,000 clients per adviser in the near future

7. HEADING GOES HERE
Independence
Even in Politics, with 20-25% regularly crossing the floor
55% advisers switching cited independence as the major factor
Why?
• Consumer sentiment
• Tech choice – Control Data
• More faith in the model
• Political pressure on institutions
• It’s un-American to be insto aligned
Being consolidated now
Very cost focussed as the consumer is becoming increasingly aware
• Fighting to maintain their margins by expanding offering into personalisation of advice
Predominantly % fees, flat fees failed as a business model

8. HEADING GOES HERE
Independent Blueprint
Strong Leadership
Advisor managing a system not a product!!!!
Scalable, integrated investment processes
Willing to iterate, pivot, fail and make change
Marketing and sales focussed
Consistent Investment Philosophy
Independents are becoming institutions as they grow to significant scale
They are 10-15 years ahead of us
Butchers v Dietitians video
Brokers are Institutional aligned and Fiduciaries are independent

9. HEADING GOES HEREChange is on
Data is persuasive and powerful
Unicorns are real – start up valued over $1 billion
“Software is eating the world”
Silicon Valley has changed very recently
• Was an “arms dealer” to insto
• Now they’re taking clients from everyone – now they are a
“mercenary”
What is the most unsettling thing you could imagine happening to
your job and/or business? Expect it to happen!

10. HEADING GOES HERE
Mass Personalisation
Personal Capital – Human advice, technology solution
Remember the Bionic adviser? 100 – 1,000?
400 - 600 clients per adviser
Account Aggregation based
Clients interacting 60% by mobile
System generated outbound communication all in positive context
Quarterly or semi-annual technology enabled meetings
Quarterly calls with ‘your’ investment team
SOAs auto generated

11. HEADING GOES HERE
Mass Personalisation
Clients contacting via the website
Waking up knowing exactly what your client did yesterday on your
platform
Clients want more information
Ask the clients what information they want and curate it to them
Bucket the clients into segments about what they want from you, not
what they make you
The best are scalable with every client receiving a consistent
scalable experience

12. HEADING GOES HERE
Mass Personalisation
Robos starting to win in the B2B space as the banks roll out
Advisers using Robos to deliver investment solution
Driving down costs and educating clients
They are just better at servicing than we are
Investment management in the traditional model
It was discussed that the biggest lawsuit waiting to happen is that
you cannot remodel every client by tech
Every client receiving a consistent experience focussed around their
goals and values
CLAIRE WIVELL PLATER, MANAGING DIRECTOR, THE FOLD
LEGAL
IFA article - Improving Portfolio Monitoring

13. HEADING GOES HEREMass Customisation
What did we do poorly? – Controllable Alpha
Ownership Structure
Tax
Your Journey and your Preferences
Implementation
Remodelling speeds
Asset Allocation
Communication
Control
Why transparent
portfolios won
Why Mass Portfolio
Customisation wins

14. HEADING GOES HERE
Software Disruption is real
Category Disrupted Revenue Disrupted Disruptors
Mobile Handsets Nokia, Motorola, RIM,
Mobile Operators
$75B iOS, Android
Advertising Broadcast and print media,
Big brands
$50B Google, Facebook
Music Music retailers,
Distributors, Labels
$25B Apple, Pandora
Movies Movie retailers, content
creators
$10B Netflix
Hospitality Major Hotel Chains $10B AirBnB

15. HEADING GOES HEREIt’s coming
They are spending every day thinking about who to attack next
• It is not a slow process
• Fundamental and dramatic
Financial services is huge
800 plus Silicon Valley businesses focussed on Fin Services
They are data driven & know more about our clients than we do
The implications are really dramatic

16. HEADING GOES HEREIt’s happening
Schwab decimated broking & attacking advice as we speak
Well funded
So successful they are cancelling other business lines that
could not compete with their own service
Vanguard Personal Portfolio Services
They don’t care about losing cash, even at $1 billion in revenue

17. HEADING GOES HERETime to Pivot
So what should we do as a result of this new reality?
Start with the end in mind and plan backwards
Build 2 Client Avatars
• Today’s client
• 5 years time
What is the best service you can provide FULL STOP and demand this
from your providers or leave
Be value driven as costs will be market driven not client driven
The maths has to change
• 1975 – Charles Schwab halved brokerage rates, it’s now nil
• Client has $250k to invest and an income of $100k pa
• Client pays 2% pa or close to $400 a month
• Adviser has 100-200 clients paying $500k to $1mil pa
• Start thinking about how you could do it for $25 a month

18. HEADING GOES HERETime to iterate
We have been building it for years and are focussed on
delivering this to you
Full back office automation
• Digital Signature
• Paperless office
• Automated compliance report delivery
Middle office automation
• Seamless execution across every client via tech
• Mass Customisation
• Mass Personalisation
Front office automation on one integrated system
• World’s best client engagement. Get a CRM that works for you
• Interactive platform
• Brilliant data analytics allowing you to engage customers at another level

19. HEADING GOES HERETime to Engage - Data
The big one is marketing and customer relationship systems
Fully automated rules bases engine that is customised to me
Event triggered messaging automated
• Data driven and event responsive
• You just did that and we know and we reach out
This is happening in many industries but not in fin services…..yet

20. HEADING GOES HERE
Advice business are making twice as much as you
They have a one scalable, consistent and individualised
client experience
They are collaborating, thinking about technology first
Data is everything and what they do with it
Marketing drives from the data
They are trying to exceed client expectations
Mass Personalisation of advice is coming and we can do it
if we do the above
Let’s be clear

21. HEADING GOES HERE
Business Value
Enough is enough What’s yours?
54%?
60-70%?
Do you want to win?
What do you want to win?
• Best Product?
• Best Service?

22. HEADING GOES HERE
Managing 1,000 clients per adviser is now real
Stop managing products! PLEASE JFDI
Start only managing your system and your client experience!
• Do you have Pirates working for you or are you running the Navy?
Be your clients trusted network
Change from
Product to Service

23. HEADING GOES HERE
PIMCO – how is your performance?
We have never lost a customer!
We have been asking and answering the wrong questions!
It is about the journey, engagement, trust
Set the expectations you know you can beat so the customer is going to
be satisfied
The whole industry is about trust a journey not a destination
If you can develop the trust you have an opportunity to serve on an
ongoing basis
Change the conversation

24. HEADING GOES HERE
Create your perfect client Avatar
• What do they want?
Be able to mass customise now
• Any time you decide to run a client one by one is a
decision that is going to cost you
• Be brilliant at servicing the customer by tech, not people
• Your role is changing to managing a system – embrace
it if success motivates you
• Pivot, iterate and create great services
• Any staff that are not systems based must go
- Lose the pirates
• Have fun and reward failure as long as you learn
Where to from here

25. HEADING GOES HERE
In their words
Richard Arnold
Software Industry Is Gunning For You Now

26. HEADING GOES HERE
Join us in April for the
2017 US Study tour in
Philadelphia and Manhattan, NYC
“How will you manage 1,000
clients (not 100) through
technology (not people)?”

27. Q & A

28. Thank you
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