Welcome to Today s Web Seminar! August 6, 2014 2:00 PM ET

Welcome to Today s Web Seminar! August 6, 2014 2:00 PM ET Sponsored By: Hosted By:

MODERATOR: David Adler Contributing Writer Financial Planning Magazine David is author of Snap Judgment (FT Press, July 09) about applications of behavioral finance to personal finance and financial planning. He is editor of the academic anthology "Understanding American Economic Decline" (Cambridge University Press). He is also the producer of the PBS documentary, "Financial Insecurity: America's Crisis in Healthcare and Retirement." In addition to his writing, David Adler is the recipient of a research grant from the CFA Institute's Research Foundation to study tax aware investment techniques by wealth managers.

PRESENTER: John Bird Senior Director of Product Marketing Yodlee John is responsible for the marketing of the Yodlee platform to financial institutions and startup financial technology companies. With more than 20 years experience in financial services technology, John s passion is delivering new and innovative products designed to transform the way people manage their finances. John holds a B.A. in Political Science and Philosophy from Villanova University.

PRESENTER: Sophie Schmitt Senior Analyst, Wealth Management Team Aite Group Sophie Schmitt covers financial planning, customer relationship management, practice management, and bank wealth management topics such as crossselling, deepening mass-affluent relationships, and building partnerships across business lines on the Wealth Management team. Before joining Aite Group, Ms. Schmitt served as sales process manager for Bank of America's global wealth and investment management groups, including the former premier banking & investments group, where she was involved with developing and implementing a best practice sales process. Prior to her experience at Bank of America, Ms. Schmitt was a research analyst with Financial Insights, an IDC Company. She has also worked in product management for Doubleclick Inc. (now part of Google) and in mergers & acquisitions for Chase Securities Inc. (now J.P. Morgan Chase). She has been quoted widely in the press in publications such as The Wall Street Journal, American Banker, and The Boston Globe.

THE DIGITAL WEALTH MANAGEMENT TRANSFORMATION IS HERE. PREPARED? John Bird Yodlee Product Marketing 2014 YODLEE. CONFIDENTIAL 5

A PROVEN TRACK RECORD 15 Year History 750+ Organizations use Yodlee Millions Users 9 of the 15 Top U.S. Financial Institutions 300 Internet Service Partners 12,500+ Data Sources 2014 YODLEE. CONFIDENTIAL 6

The Digital Transformation is Here: Prepared? August 6, 2014 Page 7 Page 7

Wealth Management Macro Trends Wealth management firms face challenges on many fronts Existing competitors: every segment is competing for the HNW New competitors: technology-driven wealth mgt. models on the rise Unprecedented surge of entrepreneurship Simpler, web-based and low-cost models appeal to Gen X and Y Demographic shifts: retirement, intergenerational wealth transfer Baby boomers starting to draw down assets Assets transitioning to Gen X / Y The average FA practice is at risk of seeing assets declining unless they can attract younger clients Page 8

Wealth Management Assets in Motion Clients and advisors are shifting assets Client Assets and Number of Financial Advisors Across U.S. Wealth Management Industry Subsegments, 2013 (In US$ billions) 0 1000 2000 3000 4000 5000 6000 7000 Client assets '11 to '12 Δ '12 to '13 Δ More clients are choosing either hightouch fiduciary service (RIAs) or convenient and lowcost service Wirehouse Fully disclosed retail brokerage Self-clearing retail brokerage (non-wirehouses) 54,189 52,588 $2,525 $2,626 $6,202 247,000 8.2% 12.7% 8.0% 7.6% 8.8% 14.6% Financial crisis and regulations drive financial services firms from product-focused to client-centric Independent RIAs Discount and online brokerage 16,650 $2,337 58,112 $3,359 Number of f inancial advisors (total=427,954) Client assets (total=us$17,049 billion) 18.5% 23.0% 12.0% 18.2% Source: New Realities in Wealth Management: Let the Good Times Roll?, Aite Group, June 2014 Page 9

Advisors are Out of Touch with the Next Generation Only 20% of an FA s client base is 40 or younger Average Advisor Client Base by Age 7% 14% 19% 25% 21% 14% 22 to 30 31 to 40 41 to 49 50 to 59 60 to 69 70 or older Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 10

For Majority of Practices, Clients Children Represent Less than 15% of FA Book Adult Children of FA Clients as a Percentage of Total FA Clients 24% 31% 24% 17% 5% 5% or fewer 6% to 10% 11% to 15% 16% to 25% More than 25% Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 11

But FAs see Attracting Next Gen Clients as Key to Practice Growth Advisors rating strategy very important for practice s long-term growth Working with adult children of older clients 47% Acquiring clients under the age of fifty (Generation X and Y clients) 43% Building a team practice 28% Hiring young advisors (under the age of forty or fifty) 19% Q. How important are each of the following strategies for ensuring your practice continues to grow over the long-term, after your clients have transferred their assets to heirs? (very important, important, not too important) Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 12

High Performing Practices More Likely to See Gen XY Acquisition As Key Growth Strategy vs. Low Performers Advisors Indicating Strategy is Very Important to Practice Growth over the Long-term (by 2013 practice revenue performance) 58% 57% 30% 31% 32% 25% 18% 19% 19% 18% 18% 12% High performing practice (10%+ growth in 2013, n=105) No change in revenue (n=67) Decrease in revenue (n=28) Acquiring clients under the age of fifty Building a team practice Working with adult children of older clients Hiring young advisors Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 13

How do FAs Plan to Acquire Gen XY? Q. How does your practice plan to acquire and service younger generation X and Y clients? (n=232) To attract Gen XY, FAs need Appealing Content Self-service tools / financial mgt. Advice expansion (debt, work etc.) Online marketing Create communications/marketing content that appeals to younger prospects and clients Create an offer that provides more self-service tools (e.g. account aggregation, light planning tools) and less advisor-delivered service Expand the type of advice/service offered to appeal to a younger audience (e.g. budgeting, debt mgt.) Increase online marketing and social media marketing efforts 50% 43% 42% 41% Organize special events tailored to young prospects/clients (e.g. seminars, family meetings etc.) 35% Allow clients to open brokerage or managed accounts online 27% Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 14

But Client Portals Still Lack Functionality for Gen XY (Online Trading, Aggregation) Q. What can clients accomplish on your firm's client site / portal? (n=314) Access real-time portfolio information Access news or educational content Access up-to-date portfolio rate of return Send secure messages to advisors Access financial calculators Upload documents Aggregate external account information Place trades/orders online Build a financial plan on their own Modify their financial plan Start/complete the client onboarding process 85% 68% 65% 52% 42% 38% 36% 32% 18% 15% 15% Account aggregation is still not a widespread capability (36%) Few firms give clients ability to build or modify a financial plan (fewer than 20% of advisors) Source: Aite Group survey of 401 U.S. financial advisors, Q2 2014. Page 15

How are Millennials Different? Page 16

More Likely to be Self-directed Online Traders 40% of gen Y characterize themselves as online selfdirected traders Self-directed Online Traders, Passive Investors and Non-Investors by Generation Young gen Y (18 to 27, n=163) Old gen Y (28 to 35, n=168) 40% 38% 25% 27% 35% 35% By contrast less than 20% of Boomers describe themselves as online traders Gen X (36 to 49, n=154) Boomers (50 to 67, n=172) 25% 31% 44% 17% 29% 54% Online trader Passive investor No investments *Investors who characterize themselves as passive with their investing: investing through a financial advisor or on their own through a retirement plan or a standard basket of funds. Source: Aite Group survey of 2,781 individuals across six countries, including 688 U.S. individuals. Q4, 2013. Page 17

More likely to Own a Smartphone Gen Y are twice as likely as Boomers to own a smartphone Over half of Gen Y own a tablet while under half of boomers own a tablet Q. Which of the following devices do you own or plan to own within the next year? 64% 73% 82% 84% 77% 79% 78% 65% 31% 39% 42% 53% 76% 80% 65% 42% 53% 61% 49% 38% Desktop personal computer Laptop Feature phone (cell phone that is not a smart phone) Smartphone (e.g., iphone, BlackBerry) Tablet (e.g., ipad, Kindle Fire) Percentage outlined by a square differs significantly from those outlined by circles Source: Aite Group survey of 1,242 U.S. consumers, Q2 2013. Page 18

Financial Priorities of the Young The Top Three Ranked Unmet Financial Needs of U.S. Gen X and Y* (n=326) Most frequently ranked top three priorities after emergency funds, education: 1. Finding attractive investments 2. Building a financial plan 3. Finding better financial management technology Putting money aside for emergencies Saving for my children's education Being able to find and use attractive investment products Developing a financial plan that structures my financial life Having better technology to keep track of my finances Putting money aside for retirement Paying for healthcare costs (e.g., bills from doctors and hospitals) Putting money aside for one or several large purchases (e.g., house, car, etc.) Being able to find and use a financial services firm that can meet my financial needs Financing my everyday expenses (e.g., paying for food, transportation) Identifying a trusted advisor who can help me meet my financial goals Other unmet financial need 17% 16% 33% 7% 9% 9% 27% 7% 10% 9% 12% 13% 11% #1 ranked unmet financial need #2 #3 15% 13% 59% 56% 34% 33% 25% Source: Aite Group survey of 688 U.S. adults aged 18 and older. Q4, 2013. *Question was for individuals who describe themselves as passive investors (i.e. not online traders) or who do not own investments. Page 19

For Boomers, Financial Management Technology is not as Important The Top Three Ranked Unmet Financial Needs of U.S. Boomers* (n=143) Saving for my children's education 27% 24% 15% 65% Developing a financial plan that structures my financial life Being able to find and use attractive investment products Putting money aside for emergencies Paying for healthcare costs (e.g., bills from doctors and hospitals) Being able to find and use a financial services firm that can meet my financial needs Putting money aside for one or several large purchases (e.g., house, car, etc.) Other unmet financial need Financing my everyday expenses (e.g., paying for food, transportation) Putting money aside for retirement Identifying a trusted advisor who can help me meet my financial goals Having better technology to keep track of my finances 25% 17% 12% 18% 10% 15% 12% 14% 9% 10% 17% 55% 43% 35% 31% Page 20 #1 need #2 need #3 need Source: Aite Group survey of 2,781 individuals across six countries, including 688 U.S. and 438 Canadian individuals. Q4, 2013. *Survey focused on individuals who describe themselves as passive investors (e.g. not self-directed online traders) or who do not own investments.

How Wealth Management Startups are Addressing Unmet Needs Page 21

New Firms Are Emerging to Cater to Investors Needs For Low- Cost, Fiduciary Advice and Digital Service Products Brokerage account No products offered / recommended Managed/ fiduciary account Recomme ndations Direct to consumer service (primarily) Technology provider to advisors / institutions Includes access to a financial advisor Betterment Covestor Wealthfront Asset builder Rebalance IRA Personal capital Future Advisor SigFig Balance Financial Blueleaf emoney Advisor Guide Financial Oranj Wealth Access esavant FirstPoint Financial Ric Edelman Motif Investing Financial Guard MarketRiders FlexScore iquantify Jemstep LearnVest Source: Emerging Players in Digital Wealth Management: Competing for the Everyman Investor, Aite Group, February 2014 Assets in specific account Assets for retirement All investment assets (as aggregated by client) All assets and liabilities, budgeting Scope of Advice Page 22 / Service

Direct Channel Advice Firms 8 firms, $88.5 million in funding (LearnVest has $72mm, 3 are brand new) Service delivers investing recommendations or financial advice for a monthly fee (ranging from $16 to $70 ) Investment oriented firms give recommendations on just under $5 billion in assets (most of it MarketRiders) Firms have attracted just over 2 million to their free content/tools No investment management or product fulfillment is provided LearnVest provides comprehensive financial advice through CFP professionals and is the only firm in this group to provide access to a dedicated advisor Page 23

Online Investment Managers & Brokers Start-ups and Digital-enabled Traditional RIAs 13 firms managing just under US$4 billion that charge less than 1% of AUM (with 2 exceptions) and require less than US$125,000 to open an account 2 provide innovative online brokerage offerings (Motif, Kapitall) $340 million raised from VCs Three largest firms by assets are Wealthfront ($1bn), Betterment and Personal capital ($700mm each) 3 firms have attracted a significant number of users through free services (about 5 million users) Several providers deliver innovative products: Wealthfront s proprietary ETF, Betterment s goals-based investing Five provide access to a dedicated financial advisor Page 24

Multichannel Service Enablers Powering the Advisor s Digital Office Technology providers to wealth management firms and advisors All provide advisors with an online client portal which includes automated data aggregation and advisor / client collaboration tools Applications of the data differ Blueleaf focuses on performance reporting, Wealth Access on portfolio analytics and balance sheet visualization, Oranj delivers alerts and insights to advisor Several provide website design and hosting services Service costs $300 per month on average per user Page 25

The WM Business Model of the Future will Require High-Tech and High-Touch, Across Segments Client segment Personal Wealth Mgt. (PWM) High net worth Collaboration tools Fullservice channel Private bank/ trust Online fulfillment (trading, managed accounts) Advice phone center Mass affluent Mass retail Technology-led service Advisor/people-led service Page 26

THE DIGITAL WEALTH MANAGEMENT TRANSFORMATION IS HERE. PREPARED? John Bird Yodlee Product Marketing 2014 YODLEE. CONFIDENTIAL 27

THE VALUE OF A PLATFORM APPROACH Yodlee Wealth Platform Client Onboarding Estate Planning Advisor Collaboration Advisor Reporting Financial Planning Alerts Tax Planning Householding CRM Wealth Protection Net Worth Asset Allocation Research Client Cash Flow Personal Rate of Return Peer Comparison Financial Planning Rewards Alerts Custom Reporting Aggregated Data Across Client s Financial Life 2014 YODLEE. CONFIDENTIAL 28

YODLEE S WEALTH SOLUTIONS OFFER: 1 Multiple solutions from one SSO integration via apps and an integrated data platform 2 Access to best-of-breed innovator technologies 3 Unique data insights that accelerate onboarding, collaboration & financial planning 4 New ways to increase Assets Under Management 2014 YODLEE. CONFIDENTIAL 29

DATA-POWERED WEALTH APPS: THE NEW EXPERIENCE 2014 YODLEE. CONFIDENTIAL 30

CASE STUDY: AGGREGATED DATA CAN POWER ADVISOR DESKTOPS Integrated aggregation service for their self directed and advised user segments Identified $2.5B in held away investment assets Converted 5% of the held-away assets in 4 months Generating annual management fees of $1.25M 2014 YODLEE. CONFIDENTIAL 31

CASE STUDY: AGGREGATED DATA CAN ACCELERATE FINANCIAL PLANNING Planned to move from 100k Financial Plans to 1.8MM Financial Plans Reduced time to produce a financial plan from 90 days to 01 day Yodlee data automating 87% of the process, Resources went down from 30 to 10 2014 YODLEE. CONFIDENTIAL 32

THE DIGITAL TRANSFORMATION IS ALREADY HERE Robo-Advisors Traditional FIs 2014 YODLEE. CONFIDENTIAL 33

INNOVATION APPLIED

Q&A Session: Questions??? For More Information Contact: John Bird Senior Director of Product Marketing, Yodlee Inc. Sophie Schmitt jbird@yodlee.com SSchmitt@aitegroup.com Senior Analyst, Wealth Management Team, Aite Group