Beyond Investment Management Outsourcing: The State of the Art in 2012

Transcription

1 Beyond Investment Management Outsourcing: The State of the Art in 2012 A Supplemental Report for Outsourcing Solutions Providers October 2012

2 Contents Overview... 1 Survey Themes... 3 Investment Performance...3 Investment Products...4 Outsourcing and Cost-Efficiency Marketing Support...6 Segment-Specific Findings... 7 Scope of Outsourcing...7 Less Reliance on Multiple Partners...8 Outsourcing Drivers...9 Detail on Outsourcing Expectations vs. Experience Independent Financial Planning/ Investment Advisory Firms...11 RIAs...12 Regional Broker-Dealer Firms...13 Smaller Firms...14 Larger Firms...15 Asset-Based Firms...16 Combination Firms...17 Survey Thank You Northern Trust thanks Brinker Capital and Hanlon Investment Management Inc. for their partnership in this project. A special thanks to all advisors whose thoughtful survey participation made this report possible. This research initiative reflects Northern Trust s ongoing commitment to sponsors and participants in retail investment platforms. To learn more, please contact your Northern Trust Investment Relationship Manager or the Northern Trust Financial Intermediaries Team at

3 Overview For solutions providers, Northern Trust s updated research on financial advisors use of investment management outsourcing is a resounding affirmation. Related 2010 research by Northern Trust found that 92% of financial advisors surveyed were pleased with their outsourcing partnership. When a comparable question ( What s your level of satisfaction with your outsourcing solution? ) was posed over a three-week period in June and July 2012, 94% of respondents said that they re satisfied and 34% very satisfied. In both cases, the surveys were directed at financial advisor subscribers to AdvisorPerspectives.com Satisfaction with Outsourcing Solution As a percentage of outsourcing respondents 1% 5% Satisfied Very satisfied Dissatisfied 34% Very dissatisfied 60% 94% By Firm Type RIAs 6% Regional Broker-Dealers 5% Independent Financial Planning/ Investment Advisory Firms 5% 33% 61% 28% 67% 41% 54% 94% 95% 95% By Firm Size Larger Firms (AUM>$150M) 2% 7% Smaller Firms (AUM<$150M) 5% By Firm Compensation Model Asset-Based Firms Combination Firms 5% 2% 8% 25% 66% 41% 54% 40% 55% 28% 62% 91% 95% 95% 90% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

4 This report, to be read in tandem with Investment Management Outsourcing: The State of the Art in 2012, provides additional insights, including: Selected survey themes emerging from across the survey responses of advisors from firms that outsource and those that don t Segment-specific findings Detail on advisors expectations versus outsourcing experience Analysis of the research included consideration of the advisors firm type (independent financial planning/ investment advisory, RIA or regional broker-dealer), firm size (our smaller firms label applies to those with $150 million in assets or less, larger firms have $150 million in assets or more) and compensation model (asset-based or a combination of commissions and fees). Northern Trust prepared this supplemental report as a means of deepening the understanding of advisors perspectives on outsourcing today and to help outsourcing providers tune their sales discussions. Investment Management Outsourcing: The State of the Art in 2012 October Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

5 Survey Themes Investment Performance Investment management outsourcing offers advisory firms several practice management benefits. But, these survey results leave little room for doubt that advisors consider an investment performance advantage chief among the benefits. Favorable investment performance is the second mostcited positive impact of outsourcing, and poor investment performance is the most frequently cited negative impact of outsourcing. The potential to generate alpha through best investment ideas is the third most-cited outsourcing decision driver. Asked what outsourcing has achieved for their firm, four out of 10 advisors select better investment results. The Single Most Positive Impact of Outsourcing As a percentage of outsourcing respondents More time to focus on the business 44% 55% Favorable investment performance 21% 32% Strong client service Good performance reporting 13% 10% 8% 5% % 9% 0 10% 20% 30% 40% 50% 60% Poor investment performance The Single Most Negative Impact of Outsourcing As a percentage of outsourcing respondents 33% 27% Too expensive 17% Lack of communication 13% Poor client service 6% Poor performance reporting 4% 0 5% 10% 15% 20% 25% 30% 35% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

6 Investment Products Survey findings suggest that investment product availability via an outsourcing solution is top-of-mind for advisors. But, support for investment products may not be driving outsourcing decisions. In seeking to identify outsourcing decision drivers, the 2012 survey included four investment product wrappers alternative investments, separately managed accounts (SMAs), mutual funds and, new this year, unified management accounts (UMAs) among its list of options. Advisors were asked to select their top three. Product seems to have a diminishing influence, as suggested by the graph below comparing 2012 and 2010 responses. It should be noted that the 2012 question included a broader selection for advisors to choose from. 20% 15% 10% 5% 0 Investment Product Wrappers as Outsourcing Decision Drivers As a percentage of all outsourcing responses 9% 16% Access to separately managed account (SMA) expertise 8% 19% Access to alternative investments expertise 5% 12% Access to mutual funds expertise 5% Access to unified managed account (UMA) capability (2012 only) In their assessment of what outsourcing has achieved for the firm, advisors credit three product-related answers: the ability to offer a wider array of investment products, support for tactical asset allocation and help with a specific product set. The ability to offer a wider array of investment products Support for tactical asset allocation Help with a specific product set Outsourcing Bolsters Firms Product Range As a percentage of outsourcing respondents 18% 49% 58% 0 10% 20% 30% 40% 50% 60% And, for almost half of the advisors surveyed (48%), the decision whether to outsource particular assets or accounts is determined by the products selected for the client. Outsourcing of Particular Assets or Accounts As a percentage of outsourcing respondents Product is important to non-outsourcing advisors, too. Access to broader investment options, including institutional-type investment management research and strategies ranks high on the non-outsourcing advisors list of what they could use help with. 50% 40% 48% 38% Top 5 Areas Where Non-Outsourcing Advisors Say They Could Use Help 30% Marketing support 20% 10% 13% Performance reporting Access to broader investment options, including institutional-type investment management research and strategies 0 The investment products selected for the client Client account size 1% The need for tax efficiency Superior back-office technology and support Performance monitoring Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

7 Outsourcing And Cost-Efficiency What do advisory firms achieve with outsourcing? Expense containment in the high-cost areas of research, technology and compliance. The ability to contain the expense of research staff The ability to contain the expense and need for technology infrastructure The ability to contain the expense of compliance Outsourcing s Effect on Related Expenses As a percentage of all respondents 25% 36% 42% 0 10% 20% 30% 40% 50% Reason for Not Outsourcing As a percentage of non-outsourcing respondents Among advisors who don t outsource, the expense of outsourcing does not appear to be a hurdle. It is a distant third primary reason, cited by 8% of respondents. This was also the case in Our firm considers investment research part of its value proposition Our firm wants to retain maximum flexibility Our firm cannot justify the expense Our firm has not found a solution that supports our business Our firm is not currently considering but has not ruled it out Our firm has assessed outsourcing and decided against it 11% 8% 7% 6% 6% 54% Our firm is currently considering outsourcing 6% Our client mix doesn t warrant it 2% 0 10% 20% 30% 40% 50% 60% What Would Need to Occur in Order for Opinions to Change As a percentage of all non-outsourcing responses One in five non-outsourcing advisors, however, says that today s solutions need to be more affordable. 35% 30% 25% 34% 20% 15% 20% 19% 10% 5% 11% 7% 9% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Our opinion won t change Today s solutions need added capabilities such as alternative investments or a broader selection of models Today s solutions need to be more affordable for our firm Our firm s assets under management must grow substantially Our firm s client base must grow substantially 5

8 To no surprise, technology emerges as one of the key considerations in outsourcing. Advisors consider superior back office technology and support among the leading outsourcing decision drivers. And so, it follows that it s considered a critical consideration in the evaluation of partners and when working with them. Marketing Support As was reported in the 2010 research, advisors whose firms don t outsource investment management have an intense interest in marketing support. It tops the list of areas in which non-outsourcing advisors say they need help. But, outsourcing advisors say support in growing my business (i.e., via marketing/recruiting/other business functions) is not important during the evaluation and selection of an investment management outsourcing partner. In fact, it is the top ranked Not dimension. However, such marketing support climbs slightly in importance when advisors consider their experience working with a provider. (For more, see Detail on Outsourcing Expectations vs. Experience, page 10.) Similarly, when outsourcing advisors are asked to rank the top three primary outsourcing drivers, they place Marketing Support toward the bottom of the list, just below Practice Management Support and Production of Client Proposals and above Client Profiling and Education and. 6 Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

9 Segment-Specific Findings Scope of Outsourcing As reported in Investment Management Outsourcing: The State of the Art in 2012, 50% of survey respondents outsource all investment management activities. Segment analysis shows that smaller firms and independent financial planning/investment advisory firms are likelier to outsource all investment management. Regional brokerdealers, RIAs and smaller firms are likelier to outsource all related back-office operations. All respondents Independent financial planning/ investment advisory firms RIAs Regional broker-dealers All respondents Outsource All Investment Management Activities by Firm Type As a percentage of outsourcing responses 33% 41% 43% 50% 0 10% 20% 30% 40% 50% Outsource All Investment Management Activities by Firm Size As a percentage of outsourcing responses 50% Larger firms 31% Smaller firms 49% 0 10% 20% 30% 40% 50% Outsource All Investment Management-Related Back-Office Operations by Firm Type As a percentage of outsourcing responses All respondents s 20% Independent financial planning/ / investment advisory firms s 7% RIAs s 23% Regional broker-dealers s 24% 0 5% 10% 15% 20% 25% Outsource All Investment Management-Related Back-Office Operations by Firm Size As a percentage of outsourcing responses All respondents 20% Larger firms 13% Smaller firms 20% 0 5% 10% 15% 20% 25% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

10 Less Reliance On Multiple Partners The research suggests that advisors are increasingly content with a single outsourcing partner. The percentage of advisors who say they use multiple outsourcing partners because they haven t found one firm to meet all their needs has dropped to 39% in 2012 from 48% in Such contentment is welcome news for incumbent providers, perhaps less so for firms seeking to gain inroads. 50% 40% 30% 20% We Haven t Found One Firm That Can Meet All of Our Firm s Needs All respondents 39% 48% 10% By Firm Type As a percentage of all outsourcing respondents Independent financial planning/ investment advisory firms 41% 53% RIAs 45% 50% Regional broker-dealers 33% 45% 0 10% 20% 30% 40% 50% 60% By Firm Size As a percentage of all outsourcing respondents Larger (AUM >$150M) 42% 47% 37% Smaller (AUM <$150M) 52% 0 10% 20% 30% 40% 50% 60% By Firm Compensation Model As a percentage of all outsourcing respondents Asset-based 37% 47% Combination 45% 51% 0 10% 20% 30% 40% 50% 60% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

11 Outsourcing Drivers Segment differences can also be noted in advisors responses to what is driving their firms outsourcing. By Firm Size Larger Firms Most Frequently Cited - The potential to generate alpha through best investment ideas - Access to separately managed account (SMA) expertise - expertise - Access to asset allocation models - Access to managers we could not access on our own Least Frequently Cited - Education and training - Client profiling - Marketing support - Practice management support - Production of client proposals By Firm Type Independent financial planning/ investment advisory firms Most Frequently Cited - The potential to generate alpha through best investment ideas - expertise - Portfolio construction - Access to managers we could not access on our own - Portfolio monitoring Least Frequently Cited - Client profiling - Production of client proposals - Education and training - Access to mutual funds expertise - Practice management support By Firm Compensation Model Asset-based Firms Most Frequently Cited - Access to asset allocation models - Portfolio construction - Access to managers we could not access on our own - expertise - The potential to generate alpha through best investment ideas Least Frequently Cited - Client profiling - Education and training - Practice management support - Production of client proposals - Marketing support Smaller Firms Most Frequently Cited - Portfolio construction - Portfolio monitoring - Access to managers we could not access on our own - Access to separately managed account (SMA) expertise - expertise Least Frequently Cited - Client profiling - Education and training - Production of client proposals - Marketing support - Practice management support RIAs Most Frequently Cited - Access to asset allocation models - Portfolio monitoring - Portfolio construction - Superior back office technology and support - Access to separately managed account (SMA) expertise Least Frequently Cited - Education and training - Client profiling - Access to unified managed account (UMA) capability - Marketing support - Practice management support Combination Firms Most Frequently Cited - The potential to generate alpha through best investment ideas - Portfolio monitoring - Access to separately managed account (SMA) expertise - Access to managers we could not access on our own - Portfolio construction Least Frequently Cited - Client profiling - Education and training - Marketing support - Production of client proposals - Practice management support Regional broker-dealers Most Frequently Cited - The potential to generate alpha through best investment ideas - expertise - Portfolio construction - Access to managers we could not access on our own - Portfolio monitoring Least Frequently Cited - Education and training - Client profiling - Marketing support - Production of client proposals - Practice management support 9

12 Detail on Outsourcing Expectations vs. Experience The survey sought to identify gaps between expectations during the buying (evaluation and selection) process and advisors experience once working with the selected investment management outsourcing partner. Studying these differences between expectations and experience may help providers better prepare firms for the outsourcing experience. 10 Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

13 Independent Financial Planning/Investment Advisory Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 19% 9% 17% 8% 4% 13% 11% 3% 11% 11% 6% 12% 8% 11% 8% 13% 7% 6% 8% 20% 8% 10% 13% 3% 12% 15% 3% 10% 21% 0 5% 10% 15% 20% 25% 30% 35% What Is Now That Advisors Are Working with Their Partners 15% 9% 3% 17% 6% 6% 11% 12% 3% 11% 11% 6% 12% 8% 10% 9% 11% 9% 4% 10% 18% 7% 12% 11% 9% 12% 14% 5% 9% 20% 0 5% 10% 15% 20% 25% 30% 35% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

14 RIAs What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 19% 7% 1% 15% 10% 1% 14% 8% 8% 12% 12% 1% 12% 11% 5% 7% 8% 22% 6% 10% 16% 6% 12% 12% 6% 11% 16% 3% 11% 18% 0 5% 10% 15% 20% 25% 30% 35% 40% What Is Now That Advisors Are Working with Their Partners 18% 7% 2% 15% 8% 6% 14% 10% 3% 13% 9% 6% 11% 12% 3% 8% 10% 13% 6% 11% 16% 6% 10% 19% 5% 12% 14% 4% 11% 18% 0 5% 10% 15% 20% 25% 30% 35% 40% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

15 Regional Broker-Dealer Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 13% 11% 1% 21% 12% 12% 11% 3% 12% 10% 4% 11% 9% 6% 9% 9% 25% 8% 7% 19% 6% 12% 9% 4% 9% 18% 4% 10% 15% 0 5% 10% 15% 20% 25% 30% 35% 40% 45% What Is Now That Advisors Are Working with Their Partners 20% 7% 13% 11% 3% 12% 11% 4% 14% 9% 8% 13% 10% 6% 7% 10% 15% 6% 9% 18% 7% 12% 9% 3% 10% 21% 5% 11% 16% 0 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

16 Smaller Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 19% 8% 15% 9% 4% 15% 9% 4% 12% 11% 2% 10% 9% 7% 8% 11% 13% 7% 9% 19% 7% 11% 16% 4% 11% 22% 3% 12% 13% 0 5% 10% 15% 20% 25% 30% 35% 40% What Is Now That Advisors Are Working with Their Partners 17% 8% 14% 9% 5% 14% 9% 5% 10% 13% 2% 14% 8% 6% 7% 12% 11% 6% 10% 19% 8% 9% 17% 4% 10% 23% 6% 12% 12% 0 5% 10% 15% 20% 25% 30% 35% 40% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

17 Larger Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 24% 7% 1% 15% 9% 6% 11% 12% 4% 15% 12% 2% 9% 10% 11% 7% 9% 15% 8% 6% 21% 5% 13% 10% 4% 11% 14% 2% 11% 16% 0 5% 10% 15% 20% 25% 30% 35% What Is Now That Advisors Are Working with Their Partners 21% 7% 3% 16% 8% 7% 10% 13% 5% 14% 11% 3% 10% 9% 11% 10% 8% 13% 5% 10% 16% 7% 13% 10% 5% 11% 14% 2% 10% 18% 0 5% 10% 15% 20% 25% 30% 35% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

18 Asset-Based Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 22% 6% 1% 13% 11% 1% 13% 9% 6% 12% 9% 8% 12% 11% 4% 7% 8% 20% 7% 11% 14% 5% 12% 14% 5% 12% 15% 4% 11% 17% 0 5% 10% 15% 20% 25% 30% 35% What Is Now That Advisors Are Working with Their Partners 20% 6% 2% 12% 12% 2% 14% 9% 7% 15% 8% 7% 12% 10% 6% 5% 10% 18% 7% 11% 11% 6% 11% 14% 4% 12% 16% 5% 11% 17% 0 5% 10% 15% 20% 25% 30% 35% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust, Beyond Investment Management Outsourcing: The State of the Art in 2012 Supplement

19 Combination Firms What Was During the Investment Management Outsourcing Partner Evaluation/Selection Process 17% 8% 3% 16% 10% 1% 12% 10% 4% 12% 11% 3% 11% 10% 9% 9% 9% 14% 9% 7% 20% 6% 12% 12% 4% 10% 21% 4% 13% 13% 0 5% 10% 15% 20% 25% 30% 35% 40% What Is Now That Advisors Are Working with Their Partners 16% 9% 2% 16% 8% 5%5% 12% 10% 4% 11% 12% 3% 11% 10% 8% 10% 9% 13% 9% 9% 10% 10% 11% 11% 6% 10% 18% 5% 12% 15% 4% 10% 21% 0 5% 10% 15% 20% 25% 30% 35% 40% Source: Investment Management Outsourcing: The State of the Art in 2012, Northern Trust,

20 Survey Does your firm currently outsource its investment management capability, including one or more of the following: investment manager research, product selection, due diligence and ongoing monitoring and management? Yes No (if no, direct respondents to the no track) If the respondent answered YES to question 1 they were directed to the following questions Q2 Q16 below. If the respondent answered NO to question 1 they were directed to the set of questions Q17 Q21 beginning on page 19. All respondents were asked the profiling questions. Which of the following investment management activities does your firm outsource? (Choose all that apply) We outsource all investment management activities We outsource just specific asset classes We outsource all investment management-related back-office operations We outsource just specific investment management-related back-office operations (if you selected this please answer the following question) Which specific investment management-related back-office operations do you outsource? Please only answer if you outsource just specific back-office operations. (Choose all that apply) Portfolio operations Financial Planning Performance reports Quarterly Billing Statements Trading Recordkeeping Account on-boarding, account data Custody Services download and reconciliation Who is your firm s primary outsourcing provider? (Choose one) Adhesion Wealth Genworth Advisor Solutions Hanlon Investment Management Brinker Capital Lockwood Advisors Curian Capital Loring Ward Dorsey Wright Morningstar Managed Portfolios Envestnet PMC Placemark Investments Fidelity SEI Advisor Network Fortigent FTJFund Choice If your firm outsources to multiple partners, please select the answer that best explains your rationale. (Choose one) We want client assets to be diversified We haven t found one firm that can meet all of our firm s needs Working with multiple firms is cost-efficient What level of customization does your primary investment management outsourcing solution enable? (Choose one) Limited customization we have a selection of manager models Hybrid we manage one or more asset classes while others are outsourced to third-party managers Open architecture, which may include mutual funds, ETFs, equities, SMAs, UMAs 7. What percentage of clients assets does your firm outsource? (Choose one) Less than 10% 11% 24% 25% 50% 51% 74% 75% 100% 8. Has outsourcing all or some of your investment activities resulted in a change in fees charged to clients? (Choose one) Fees have increased Fees have decreased There has been no change Comment 9. Which of the following primarily drove the decision to outsource your firm s investment management? (Choose the top three that apply) Access to separately managed account (SMA) expertise Access to unified managed account (UMA) capability expertise Access to mutual funds expertise Access to asset allocation models The potential to generate alpha through best investment ideas Portfolio construction Portfolio monitoring Overlay management Access to managers we could not access on our own Superior back-office technology and support Performance reporting Client profiling Production of client proposals Education and training Marketing support Practice management support 10. Please indicate the importance of each to your firm when evaluating and selecting an investment management outsourcing provider. managers, portfolio construction, trading rules, pricing, reporting options) Comment Not a factor 18

21 11. Please indicate the importance of each to your firm when now that you are working with your investment management outsourcing provider. Not a factor managers, portfolio construction, trading rules, pricing, reporting options) Comment 12. What has your decision to outsource investment management achieved for your firm? (Choose all that apply) Better investment results for clients The ability to grow more efficiently The ability to offer a wider array of investment products The ability to develop a more consistent investment management process for the firm More time to spend with clients Help with a specific product set Support for tactical asset allocation The ability to contain the expense and need for technology infrastructure The ability to contain the expense of research staff The ability to contain the expense of compliance Institutional-level due diligence and monitoring Superior tax management for clients 13. What s your level of satisfaction with your outsourcing solution? (Choose one) Very satisfied Dissatisfied Satisfied Very dissatisfied 14. Which of the following has most negatively impacted your firm s outsourcing experience? (Choose one) Poor investment performance Poor client service Poor performance reporting Too expensive Lack of communication 15. Which of the following has most positively impacted your firm s outsourcing experience? (Choose one) Favorable investment performance Good performance reporting Strong client service More time to focus on the business 16. Which of the following factors determines whether your firm will outsource the investment management of particular assets or accounts? (Choose one) Client account size The investment products selected for the client The need for tax efficiency If the respondent answered NO to question 1, they were asked to answer this set of questions. 17. Which best describes the reason that your firm does not outsource the investment management capability? Our firm has assessed outsourcing and decided against it Our firm considers investment research part of its value proposition Our firm cannot justify the expense Our firm wants to retain maximum flexibility Our client mix doesn t warrant it Our firm has not found a solution that supports our business Our firm is itself an advisory solutions provider Our firm is currently considering outsourcing Our firm is not currently considering outsourcing but has not ruled it out 18. Which of the following needs to occur for your opinion on investment management outsourcing to change? (Choose all that apply) Our firm s client base must grow substantially Our firm s assets under management must grow substantially Today s solutions need added capabilities such as alternative investments or a broader selection of models Today s solutions need to be more affordable for our firm Our opinion won t change 19. Apart from your firm s decision not to outsource investment management, what could you use outside help with today? (Choose all that apply) Access to broader investment options, including institutional-type investment management research and strategies Access to asset allocation models Portfolio construction Portfolio monitoring Portfolio operations Compliance Superior back-office technology and support Performance reporting Client profiling Production of client proposals Education and training Marketing support Practice management support Recruiting support 19

22 Do you use outside help for any of the following? (Choose all that apply) Multi-manager mutual funds Asset allocation models Investment product analysis (e.g., Morningstar) Web-based practice management sites Marketing agencies I don t use any outside help for these How much time per week do you estimate that your firm spends on:? Investment manager research Portfolio construction Portfolio monitoring 1 hour 1 2 hours 2 5 hours 5 or more hours These questions answered by all respondents. Are you associated with any of the following? Independent financial planning firm or investment advisory firm Registered investment advisory firm Regional broker-dealer Bank Please indicate your firm s current AUM. This information is strictly confidential. $50 million and under $50 million $150 million $150 million $500 million $500 million $1 billion $1 billion and more Which best represents the bulk of your firm s revenues? Asset-based fee Commission Combination of commission and asset-based fee Hourly or planning fees 20 Investment Management Outsourcing: The State of the Art in 2012

23 ABOUT ASSET MANAGEMENT AT NORTHERN TRUST Finding the right financial partner is more important than ever in helping your clients prepare for today and tomorrow. Northern Trust is the asset management arm of Northern Trust Corporation. Our client base includes financial advisors, analysts, investment management solutions providers and institutional portfolio managers. We employ an investment process across all product lines that seeks to balance risk with return. Returns on the investments we manage have always been framed in terms of the risks we took and those we chose not to take. We provide financial advisors access to a broad array of 100% no-load mutual funds including multi-manager funds and managed accounts solutions. Northern Trust s size, scale and staff tenure provide tangible benefits for you and your clients. Call our financial intermediaries consulting group at to learn more. 21

24 IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. For more information about this notice, see This material is provided for informational purposes only and does not constitute an offer of any security. Any opinions expressed herein are subject to change at any time without notice. Information state is believed to be reliable but its accuracy and completeness are not guaranteed. Past performance is not indicative of future returns. This information is general in nature and should not be construed as legal, investment or tax advice. Your own advisors should be consulted as to how this information affects your personal circumstances. NOT FDIC INSURED May lose value/no bank guarantee NT WPR NOUT (10/12)