Wealth management advisory. Ernst & Young Financial Services Office

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1 Wealth management advisory Ernst & Young Financial Services Office

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3 Wealth Management Advisory Overview Financial services is Ernst & Young s largest global industry group. We deliver wealth management advisory services (WMA) to global retail brokerage, private banks, private asset management, trust organization and other money management businesses. Wealth Management Advisory contacts Anthony Caterino Partner Charlotte, North Carolina Tel: antony.caterino@ey.com Marcelo Fava Senior Manager Charlotte, North Carolina Tel: marcelo.fava@ey.com Karina Raynesh Executive Director New York, New York Tel: karina.raynesh@ey.com We have advisory personnel located in all major financial centers around the world. In the US, our WMA team is located in New York, Charlotte, Boston, Chicago and San Francisco. Our team includes business strategy, product development, financial planning, risk, regulatory, technology and operations professionals working together. We deliver value add wealth management and related business operations services from strategy and operating model development to technology and solution enablement. Alan Fish Partner Boston, Massachusetts Tel: alan.fish@ey.com Scott Becchi Principal New York, New York Tel: scott.becchi@ey.com Mark Jain Senior Manager San Francisco, California Tel: mark.jain@ey.com Michael Winter Senior Manager San Francisco, California Te; michael.winter@ey.com Charlie Zehil Senior Manager New York, New York Tel: charles.zehil@ey.com All Rights Reserved Ernst & Young 2010 Ref

4 Wealth Management industry trends Changing Demographics Baby boomers heading into retirement are creating significant demand for retirement planning, distribution advice and wealth transfer. Scaling the advisory experience will be key to addressing this opportunity, coupled with creating next generation offerings relevant to those assets that will be transferred. Rebuilding Client Trust (and Wealth) Significant market share shifts are likely as unsatisfied clients seek a new trusted advisor. The need for advice and planning to rebuild portfolios will entail capturing investor s information in a balance sheet fashion; across risks, investments, and liabilities. New Risk Management Practices The credit crisis and related events have prompted immediate changes to risk management practices including risk governance, board reporting and enterprise-wide risk management. These changes are designed to ensure the appropriate structure and processes are in place to provide a comprehensive, timely and forward looking integrated view of all risk types (operational, market, credit, liquidity, strategic and legal regulatory). New Business Operating Models Mergers of giants, boutiques grabbing market share, and the Hybrid RIA channel are all rethinking their business models and offerings. Banks, brokers and insurance firms are increasingly developing overlapping capabilities and seeking a larger share of clients wallet. Regulatory Changes The current Administration will spend much of the next three years increasing legislation which financial services firms need to respond to. From pension fee disclosure and cost basis regulation to revised fiduciary standards the need for more transparency along with enhanced risk and compliance capabilities will be increasingly important. Product Unbundling Products are becoming unbundled, firms are moving to open or hybrid (combination of outside and proprietary) investment architecture and require the launch of the appropriate managed product (SMAs, UMAs, etc.) with automated and controlled rebalancing to alleviate suitability and fiduciary concerns. Advisor Movement / Optimization Advisors continue to move across firms, and bring their books of business. A significant shift from the wirehouses to the boutiques and independent channel is creating a new set of investment in front office tools to capture the highest producing advisors. Top producers expect to have tools and support staff so they can focus cross selling and customer retention. Technology Lifecycle Many of the core systems that WM firms use today are reaching the end of their natural lives. The dramatic increase in the number, types and complexity of products along with a customer-centric focus is not easily enabled by aging systems. WM firms need to re-evaluate their technology plans, rationalizing platforms and moving to system oriented architecture. 2 Wealth management advisory Ernst & Young Financial Services Office

5 Our Services In Summary Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent Business vision and strategy Organizational design Current state vs. Future state operating model design Current state vs. Future state process definition Transformation Execution Execution leadership and governance Stakeholder expectation setting and management Program risk and benefits management Roadmap; timeline and sequencing Program management Business Case/Economic Model Financial model and impacts Business case development Pre-deal Legal day 1 Post deal execution Product Development/Launch Product/platform definition Product distribution strategy Product management and reporting Financial Planning and Advice Product offerings by investment types Advisor workstation assessment and build-out Customer relationship management approach Economic models Sales and service delivery model Business process re-design Middle office improvement Client and Advisor Contact Center Strategy Learning management, advisory education, content development Advisory support (financial planning creation, monitor plans and alerts, etc.) Specialized administrative support (prospecting, reporting, etc.) General help desk support (account maintenance, transfers, statements, etc.) Compliance and Regulatory Compliance policies and procedures Regulations response and remediation Product and portfolio suitability Fiduciary responsibilities Anti money-laundering risk assessment and advisory Supervisory policies and procedures (development, documentation and remediation) Regulatory mapping, control, testing and certification Know your customer and client on-boarding Cost basis reporting (ORM) ORM framework and policy definition Risk monitoring approaches and techniques Quantitative risk measurement Risk and control governance Product risk review Process and controls review Risk technology architecture design Information security controls and governance Financial Planning Technical Support and Training On-call technical advisory for WM advisors (tax, trust and estate rules) Financial planning training workshops for WM advisors Financial planning seminar delivery training Retirement Modeling and Advisor Tool Review Product allocation tool Retirement readiness tool review Advisor desktop tool assessment Comprehensive wealth management tool review Asset allocation modeling and assumption validation Trust tax and compliance outsourcing Trust product calculation and methodology assessment Fiduciary accounting Foreign trust compliance Implementation Vendor assessment, selection and management Business process outsourcing, technology outsourcing Maturity models Gap assessments and gap closure detailed planning Project execution for integration activities and information security Requirements, design, development testing and implementation Program management for complex, cross-organizational technical integrations All Rights Reserved Ernst & Young 2010 Ref

6 Our services Wealth Management Advisory Services Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent/Operating Model Design Transformation Execution Business Case/Economic Model Product Development/Launch Financial Planning and Advice Client and Advisor Contact Center Strategy Compliance & Regulatory (ORM) Financial Planning Technical Support and Training Retirement Modeling and Advisor Tool Review Implementation management Operating Model Our operating model services cover the full extent of the wealth management business from strategic intent, mergers & acquisitions and client relationship models to development of economic models to rationalize investments. Strategic Intent/ Operating Model Transformation Execution Business Case/ Economic Model As WM firms are looking to retain profitable customers, cross sell, increase producer efficiency as they increase assets and reduce costs. Our Strategic Intent and Operating Model services are designed to address those challenges and opportunities: Business vision and strategy Organizational design Operating model design Process definition Once the strategic intent and operating models have been defined; building and executing on an achievable plan are the keys to reach the expected business outcomes. We work with WM firms to accomplish those objectives by providing the following services: Execution leadership and governance Stakeholder expectation setting and management Program risk & benefits management Roadmap; timeline and sequencing Program management Defining the economic viability of any transformational initiative is not only a step in the processes but it is an obligation. We work with WM firms to assess the true economic impact of those initiatives that will take the business to the next level of performance: Financial methodology and critical assumptions Business viability; new products and services Scenario-based sensitivity analysis Baseline analysis (current vs. Future states) Financial impacts of market considerations In the event of a merger or acquisition, EY brings the best we have to offer by integrating all of our service lines to address the entire lifecycle of an M&A; a comprehensive and proven due-diligence methodology, an established process to execute on a legal close and a proven target definition and merger integration execution approach for all phases of an M&A: Pre-deal Post-deal and legal day 1 Post-deal, transition execution 4 Wealth management advisory Ernst & Young Financial Services Office

7 Wealth Management Advisory Services Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent/Operating Model Design Transformation Execution Business Case/Economic Model Product Development/Launch Financial Planning and Advice Client and Advisor Contact Center Strategy Compliance and Regulatory (ORM) Financial Planning Technical Support and Training Retirement Modeling and Advisor Tool Review Implementation management Business Transformation Our business transformation services are focused on developing and launching new investment products to meet increasingly complex client demands, while adjusting the supporting infrastructures to efficiently and effectively serve those products at scale. Product Development/Launch Financial Planning and Advice Client and Advisor Contact Center Determining the products and services that clients need during their different life stages, while assessing overall P&L impacts, is one of the primary business growth levers. We work with WM firms to accomplish those goals by focusing on: Product fit by life stage Product/platform definition Identify best-in-class products Product distribution strategy Product P&L, management and reporting Full service WM firms address client needs via a comprehensive investment approach that focuses on pre-tax investments, after tax investments and holistic financial planning; we help firms develop that comprehensive approach by developing: Product offerings by investment types Advisor workstation assessment and build-out Customer relationship management approach Economic models Operating at scale and efficiently is one of the keys to a successful and profitable WM firm. We help WM firms to design scalable and efficient models by developing: Sales and service delivery model Business process re-design Eliminate overlap and redundancies Operational efficiency approach Middle/back office improvement Advisors operate on a team-based approach and for them to be effective they need the appropriate support structure; we assist WM firms with defining and strengthening those advisor support structures. Our services in this area included: Learning management and advisory education Advisory support (financial planning creation, monitor plans and alerts, etc.) Specialized administrative support (prospecting, reporting, etc.) General help desk support (account maintenance, transfers, statements, etc.) Centralized marketing programs All Rights Reserved Ernst & Young 2010 Ref

8 Our services Wealth Management Advisory Services Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent/Operating Model Design Transformation Execution Business Case/Economic Model Product Development/Launch Financial Planning and Advice Client and Advisor Contact Center Strategy Compliance and Regulatory (ORM) Financial Planning Technical Support and Training Retirement Modeling and Advisor Tool Review Implementation management Risk and Regulatory Our risk and regulatory services focus on ensuring our clients remain compliant with existing and new regulations as well as helping understand the risks their organization faces and developing detailed mitigation plans that improve processes and procedures and reduce known risk. Compliance and Regulatory Our regulatory advisory services cover a broad range of current and evolving supervisory and compliance issues. Our group includes former supervisors, regulators and industry practitioners that provide a robust, yet practical approach to WM regulatory issues; our services include: Compliance policies and procedures Regulations response and remediation Product and portfolio suitability Fiduciary responsibilities Anti money-laundering risk assessment and advisory Supervisory policies and procedures (development, documentation and remediation) Regulatory mapping, control, testing and certification Know your customer and client on-boarding Cost basis reporting Our approach to operational risk management takes into account recent developments in the regulatory environment and can be integrated into the firm s Sarbanes-Oxley and compliance certifications efforts. Operational risk management services for WM firms include: Operational risk framework and policy definition Risk monitoring approaches and techniques Key risk indicators and metrics Quantitative risk measurement Risk and control governance The current financial markets situation causes WM firms to re-examine and enhance their risk management approach, implementation, policies & procedures. We help WM firms design, buy and implement solutions that will satisfy risk management requirements. Our offerings range from a structured definition of management requirements through design of effective information architecture and system selection advice and implementation of third party software solutions. Advisory services include: Product risk review Process and controls review Risk technology architecture design Information security controls and governance 6 Wealth management advisory Ernst & Young Financial Services Office

9 Wealth Management Advisory Services Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent/Operating Model Design Transformation Execution Business Case/Economic Model Product Development/Launch Financial Planning and Advice Client & Advisor Contact Center Strategy Compliance & Regulatory (ORM) Financial Planning Technical Support and Training Retirement Modeling and Advisor Tool Review Implementation management Retirement and Trust Our retirement and trust service offerings include technical support to wealth advisors, comprehensive review and assessment on current advisor tools and compliance with trust and estate laws allowing the wealth advisor to better serve their clients. Financial Planning Support We work with Wealth Management advisors on a daily basis and we support them by providing tax, estate and trust advice that they can use to better serve their own clients. In addition, we provide ongoing training and education opportunities on a range of highly relevant tax, retirement, trust and estate topics to increase the wealth advisors knowledge. Our services include: On-call technical advisory for WM advisors (tax, trust and estate rules) Financial planning training workshops for WM advisors Financial planning seminar delivery training Retirement Modeling and Advisor Tool Review Our offerings and services on this area range from providing product allocation tools to meet stated client investment or retirement goals to evaluating tools and methodologies used at your firm. We work with WM firms to conduct desktop capabilities assessments and fit gap analysis to help define enhanced retirement modeling capabilities necessary to satisfy increasingly complex client demands. Our services include: Product allocation tool Retirement readiness tool review Advisor desktop tool assessment Comprehensive wealth management tool review Asset allocation modeling and assumption validation Trust services are a critical component of any WM firm and we work with them by conducting detailed assessments of tools and methodologies to ensure they remain within the spirit and the letter of compliance and IRS regulations. Our services include: Trust tax and compliance outsourcing Trust product calculation and methodology assessment Fiduciary accounting Foreign trust compliance All Rights Reserved Ernst & Young 2010 Ref

10 Our services Wealth Management Advisory Services Operating Model Business Transformation Risk and Regulatory Retirement and Trust Strategic Intent/Operating Model Design Transformation Execution Business Case/Economic Model Product Development/Launch Financial Planning and Advice Client and Advisor Contact Center Strategy Compliance and Regulatory (ORM) Financial Planning Technical Support and Training Retirement Modeling and Advisor Tool Review Implementation management Our system and technology enablement service offerings cover the entire spectrum of solution enablement and deployment; from solution sourcing to system integration activities across the different technical and operational areas and from technology architecture design to technical implementation management. Technology Architecture Implementation Management Once operating models and or changes to service delivery models and operational structures have been defined, we assist WM firms with the sourcing of the specific solution. Our services include: Potential sourcing solutions and partners Competitive analysis and industry sector best practices Design open architecture Strengths and weaknesses of each potential solution Competitive selection criteria Solution implementation and vendor management activities One of the critical components of a business operating model is the technical architecture necessary to support it in order to satisfy the business strategy. We work with WM firms to better understand the complexities of the technical architecture by conducting: maturity model assessment against industry best practices and core infrastructure assessment against stated business outcomes Maturity gap analysis and detailed implementation plan for gap closure We work with WM firms to integrate their selected WM solutions with the core enterprise systems, architecture and infrastructure to satisfy client experience and strategy requirements. Our services in this area include: Integration scope, business and technical requirements Information security management Technical design and operational integration Integration between channels touching the client Outsource/co-source system development activities Planning and execution of testing activities (on-shore and off-shore) Our WM services extend the full length of the project lifecycle and we work with WM firms to effectively prepare the entire organization for a successful rollout. Our services include: Implementation strategy and approach design and execution Readiness assessment criteria and process Go-live business, operations and technical support structure Post go-live, close-out and remediation activities 8 Wealth management advisory Ernst & Young Financial Services Office

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12 Ernst & Young LLP Assurance Tax Transactions Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The Ernst & Young organization is divided into five geographic areas and firms may be members of the following entities: Ernst & Young Americas LLC, Ernst & Young EMEIA Limited, Ernst & Young Far East Area Limited and Ernst & Young Oceania Limited. These entities do not provide services to clients. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global and of Ernst & Young Americas operating in the US Ernst & Young LLP. All Rights Reserved