The document discusses implications for asset managers from consolidation and changes in the financial industry. It notes that mergers are creating large global distributors with centralized decision making. This is forcing asset managers to improve segmentation, target territories more precisely, and find new, less competitive opportunities. It also suggests that asset managers will need to capitalize on regions with growing wealth and access the global distribution networks of the newly merged firms. Distribution is highlighted as the key differentiator for asset managers in this shifting landscape.

1. The Future of Distribution
Opportunities at Home and Abroad
October 2, 2008

2. Agenda
+ Understanding the current Market
+ Six Implications on our Industry
+ Q&A
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3. Let’s make sense of all of this:
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4. Mergers
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5. Investments
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6. What Does This Mean for Asset Managers?
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7. 7 Implications
+ Rising National Accounts
+ Producing Alpha
+ Winning Because of Segmentation
+ Advisor Migration
+ Redefining Wholesaling
+ Using the Power of the Web
+ Capitalizing on Regions with Growing Wealth
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8. One to Watch
20,000 advisors and $2.5 Trillion in client assets
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9. Pop Quiz: Does this sound familiar?
+ 20,000 advisors ~8% market share
+ $2.5 T client assets
+ 86% US Household penetration
+ 8% market share of non auto retail sales
1 in 12 dollars is spent here!
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10. National Accounts Implications
How is the role of the Key Accounts team evolving?
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11. Product Implications
How will Asset Managers be able to consistently produce alpha?
How will larger firms broaden their product offerings?
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12. Segmentation Implications
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13. Use Segmentation to Improve Distribution
+ What often separates the success of two large-cap mutual funds:
+ Distribution, not performance, should be viewed as firms’ key differentiator
Only 36% of firms cited distribution as critical to combating margin pressure
The greatest untapped opportunity to improve distribution is segmentation
“We are focused on attacking territories with a scoped rifle
versus a shotgun.”
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14. Use Segmentation to Improve Distribution
+ In today’s environment, distributors have the upper hand
Distributors have reduced basis points paid to manufacturers by almost 50 percent
For almost every distributor, 25-50 firms offering similar products are competing
+ Firms must look for newer, less competitive opportunities
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15. Let’s Make Sense of the Financial Crisis
Advisors migrate to RIAs and Independent Firms
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16. Use Segmentation to Improve Distribution
+ With improved targeting, how should firms allocate wholesaling resources?
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17. Virtual Coverage
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18. Global Implications
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19. Global Implications
Strategic Insight
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20. Global Implications
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21. Global Implications
+ These mergers are creating global power houses:
What do Asset Managers have to do to get
access to their global distribution?
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22. Challenging Times
+ Across the US Asset Management industry, margins are still high
Average net profits are still around 30%
+ Why does distribution need to change?
Mergers are forcing more centralized decision making at the distributors
Mergers are creating global power houses
Wholesaling is less effective with wires
Advisors are migrating
Traditional wholesaling structures are not scalable
70% of advisors are untapped
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