Frontline Revolution: The New Battleground for Asset Managers Featuring Preliminary Results of the State Street 2014 Asset Manager Survey

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1 Frontline Revolution: The New Battleground for Asset Managers Featuring Preliminary Results of the State Street 2014 Asset Manager Survey June 2014 This presentation features data from the State Street 2014 Asset Manager Survey conducted by FT Remark. LIMITED ACCESS

2 State Street 2014 Asset Manager Survey About the Research On behalf of State Street, FT Remark conducted a global survey of 300 senior executives at asset management firms globally during April and May 2014, to examine the future outlook for the sector. Respondents were equally distributed across North America, Europe and Asia Pacific. Respondents by Size (Assets under Management) 7% 2% US$5-$24bn Respondents by Type of Assets Managed 5% 12% 19% 17% 43% US$25-$49bn US$50-$99bn US$100-$200bn US$200-$499bn US$500bn or greater 17% 78% Both retail and institutional Institutional only Retail only 2

3 Expected Sources of Growth: Business Strategy Which of these is the greatest growth opportunity for your business over the next three years? Existing Country Markets New Country Markets Growing market share of existing products in existing markets Developing new products for new markets 24% 48% 28% 8% 20% Developing new products for existing markets 72% Bringing existing products to new markets 3

4 Challenges to Growth: Asset Managers Acknowledge a Capability Gap Multi-asset solutions are the investment strategy that will contribute most to business growth over the next three years Few asset managers are currently equipped to thrive when offering multi-asset solutions 67% 74% 76% say that changing client demands are causing a fundamental shift in their overall business strategy 4

5 Challenges to Growth: Building Internal Expertise What is the single biggest challenge for your firm when launching new products in your existing markets or expanding to new markets? Building the necessary internal expertise Selecting the right distribution platform(s) Determining the optimal fund structure/domicile Creating the necessary operational and technology infrastructure Overcoming regulatory barriers Gaining internal consensus on strategy 2% 21% 20% 21% 15% 19% 10% 13% 13% 18% 8% 55% report that distribution challenges deter them from investing in otherwise highly attractive markets 40% 0% 20% 40% 60% Single biggest challenge when launching new products in existing markets Single biggest challenge when entering new markets 5

6 Capitalizing on New Opportunities: Number of Distribution Channels Please indicate which of the following will be likely for your business over the next three years. 19% 49% 32% There will be no change Will increase number of distribution channels Will decrease number of distribution channels 6

7 Capitalizing on New Opportunities: Investment in Front Office Capabilities What level of investment in your front office capabilities is required to support your business over the next three years? Risk analytics 7% 11% 33% 48% Performance analytics 4% 11% 39% 46% Data integration 3% 11% 50% 36% Acquiring new talent to resource higher volume of business 13% 28% 28% 31% Skills training 6% 29% 37% 27% Acquiring new talent to address capability gaps 20% 26% 36% 17% 0% 20% 40% 60% 80% 100% None Minimal Moderate Significant 91% believe that asset managers who provide the greatest degree of transparency to clients have a competitive advantage in attracting new assets 7

8 Conclusion: How Asset Managers Can Secure Competitive Advantage Transformation Enhance operational efficiency and focus on enterprise-wide agility Master regulatory compliance so that regulation is no longer an obstacle to growth Tools Upgrade the front office to support new growth segments and more complex multi-asset solutions Deploy advanced tools to deliver a more outcome-based perspective on investment risk and performance Talent Identify where the new solution set require different skills; augment your capabilities with the right blend of in-house and external support The Bottom Line Asset managers must prioritize those shortcomings that hinder immediate growth prospects The most innovative asset managers are already adjusting to new customer demands, transforming single asset products into fully-serviced solutions Leaders are investing heavily in the tools and capabilities required to thrive in this more specialised and testing environment LIMITED ACCESS 8

9 Disclaimer This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein. This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances. CORP-1031E Expiration Date: 06/30/2015 LIMITED ACCESS 9