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1 The investment management industry s revenue growth will continue to slow, with net flows accounting for less than 1% of annual growth worldwide between now and 2017, compared to organic growth rates of between 6% and 7% per annum before the crisis. Nevertheless, there will be substantial opportunities in key segments and strategies. Five key drivers will account for virtually all positive impact on revenue growth during the next five years: Continuing democratization of alternative investments Increasing popularity of customized and packaged investmentsolutions Globalizing portfolios Growing assets of wealthy individuals The rise of investors in emerging marketsNearly 90% of new industry revenues between now and 2017 will accrue to a select group of firms able to capably deliver one or more of four key value propositions to investors.

2 High-alpha active management Cost-efficient beta Asset allocation expertise Solutions-led distributionA substantial portion of the industry s current competitors face the threat of irrelevance unless they undertake substantive change. Firms that do not offer any of the four key value propositions will only attract 10% of the industry s net new revenues and lose significant market share between now and s asset managers can transform themselves into tomorrow s Complete Firms by: Delivering investments leadership in a difficult to differentiate environment Organizing well-led and resourced sales/marketing efforts that foster growth Building a technically skilled client interface for client cultivation and retention Implementing incentives that aggressively attract and retain talent Instituting governance and ownership practices that support long-termdynamismThe Complete Firm 2013.

3 Competing for the 21st Century InvestorCaseyQuirk by Deloitte. The Complete Firm 2013: Competing for the 21st Century Investor1 Table of Contents1. Introduction:A Changing, Maturing Industry ..22. Slowing Revenue Growth ..33. A Concentrating Prologue to the Complete The Complete Firm 2013 ..206. Conclusion ..30 AuthorshipAuthors:Kevin P. Quirk, PrincipalBenjamin F. Phillips, Investment Management Lead Strategist - ConsultingContributors:John F. Casey, former Chairman at Casey QuirkDaniel Celeghin, Head of Wealth Management Strategy Asia-PacificYariv Itah, Casey Quirk Global Practice LeaderJonathan H. Feldman, former Director of Research at Casey QuirkJeffrey A. Levi, PrincipalSupporting Team:Michael D.

4 Chia, former Manager at Casey QuirkDan Neeman, former Senior Associate at Casey QuirkJacob F. Walker, former Senior Associate at Casey QuirkSheryle D. Wells, former Marketing Associate at Casey QuirkCasey Quirk by Deloitte helps clients develop broad business growth strategies, improve investment/product appeal and growth prospects, evaluate new market and product opportunities, and enhance incentive alignment structures. Our unparalleled industry knowledge and experience, detailed proprietary data, and global network of relationships make Casey Quirk by Deloitte a leading advisor to the owners and senior executives of investment management firms in the by Deloitte. The Complete Firm 2013: Competing for the 21st Century Investor2 Introduction: A Changing, Maturing IndustryThe global asset management industry remains vibrant and profitable, generating an estimated$350 billion of revenue and more than $100 billion of earnings worldwide in 2012.

5 The 2008 financial crisis, however, loudly marked the end of the industry s adolescent growth spurt. Going forward, four key changes to the operating environment will define opportunity and challenge in the global asset management industry: Organic industry growth will slow, with expansion from net new flows dropping from between 6% and 7% annually before the crisis to less than 1% for each of the next five years. Changing investor sentiments and shifting asset allocations will define opportunity going forward. The resulting changes in competitive dynamics will favor select products and clientsegments, and transform others into turnover-driven takeaway games. Investors will concentrate their business with asset management firms that add valuein one of four clear ways, reflecting growing investor concern over outcomes rather thanbenchmarks in an increasingly low-return environment, as well as a desire for globalportfolios less correlated to the broader market.

6 Competition will become even fiercer, with a larger number of industry laggards falling further behind a select group of successful competitors. Winners will differ in scale,and comprise both new entrants and (some) existing market leaders, but will share afew common characteristics related to their operating and ownership principles. Finally, given oversupply in the industry, asset management firms that fail to execute fivestrategic initiatives will become increasingly irrelevant to investors and that do succeed will be investment management businesses we call Complete Firms able to meet increasingly high client and stakeholder expectations regarding not onlyinvestments, but also distribution and business 1 Key White Paper Sections1 Revenue Growth Slows Exogenous factors re-shape the industry New revenue opportunities will be targeted 2A Concentrating Industry Complete Firms consolidate new revenue share Challenged firms increasingly less relevant Four primary value propositions 3 Success Factors Evident Factors correlating more strongly with higher growth and/or.

7 Show the potential path forward 4 The Complete Firm 2013 Five strategic initiatives for success The Complete Firm 2013 Checklist Charting the path to success The Complete Firm 2013: Competing for the 21st Century Investor3 Subsequent sections of this white paper will describe each of these changes in detail, outlining how asset management firms can, and should, transform themselves into tomorrow s market leaders. The success principles in this paper are often extensions of concepts first introduced in our earlier Success in Investment Management series, but reflect the fact that the operating environment has changed dramatically in the last 10 Revenue GrowthThe 2008 financial crisis and its aftermath accelerated a number of secular trends that have been dampening the industry s long-term revenue growth.

8 Exhibit 2 Exogenous Pressures on Long-Term Asset Management Industry Revenue GrowthThese exogenous forces are very long-term in nature and already familiar to many readers; five of them can be summarized as investor and client demographics. Post-war baby boomers in major developedmarkets are retiring, withdrawing their accumulated savings from pension and welfaresystems that states and corporations are increasingly unwilling to fund for youngergenerations with less aggregate savings to deploy. New flows in developed markets will come from investors who have grown up in less attractive market conditions than their baby-boomer parents did; in emerging markets, younger investors making their first foray into investments will drive organic growth.

9 Both demographic trends will impact product intermediariesSlower industryrevenuegrowthDiverging investor/client demographics Low return/volatile capital markets Shifting product/investment demandNew investment frameworksThe Complete Firm 2013: Competing for the 21st Century intermediaries. The number of intermediaries for asset management products and services retail and private banks, insurers, brokerages, and asset consultants continues to shrink as aftershocks from the financial crisis spur weaker players to consolidate. Moreimportantly, as other lines of business (such as investment banking) become less lucrative for large global financial conglomerates, they have placed greater emphasis on operations that generate asset-based, non-cyclical cash flows such as distributing asset management products and offering wealth management services.

10 Intermediaries globally are becomingprofessional buyers: more selective in the asset managers they choose to distribute, morecompetitive in terms of the asset allocation advice they provide, and more expensive in termsof revenue-sharing and return/volatile capital markets. Between 1988 and 2000, fueled by bull markets inglobal equities, the average global 60/40 balanced portfolio grew 10% compounded 2000, as interest rates tumbled to historic lows in major economies and stock marketsgyrated amid uncertain macroeconomic signals, a similar 60/40 portfolio has only appreciated5% compounded annually, with higher volatility. The mighty tailwind that propelled industrygrowth for much of its modern history is now investment frameworks.