Robo Advice: Revenge of the Incumbents (MyVest and Aite INVEST session)

1. Presented at: July 12, 2017 ROBO-ADVICE: REVENGE OF THE INCUMBENTS

2. Aite (pronounced “eye-tay”) Group is an independent research and advisory firm focused on business, technology, and regulatory issues and their impact on the financial services industry. A fintech pioneer headquartered in the heart of San Francisco, MyVest combines best practices in wealth management with best-in-class technology. Our cloud-based platform enables holistic, client-centric wealth management across the enterprise in a single, unified system. Alois Pirker Research Director, Wealth Management Anton Honikman CEO © 2017 MyVest Corporation. All Rights Reserved.

3. Type Definition % of Population Wirehouse Merrill Lynch, UBS, Wells Fargo Advisors, Morgan Stanley 8% Independent RIA Mostly small firms but also have RIA groups working within larger broker- dealer firms 16% FA with other self-clearing firm Large / regional players: e.g., Ameriprise, Edward Jones, Raymond James, LPL, RBC 13% FA with online broker Schwab, Fidelity, TD Ameritrade on the retail side (fewer than 2,000 advisors) 10% FA with insurance BD e.g. AXA, Northwestern (fewer than 10K advisors, some with more than 5K) 15% FA with independent BD e.g. Commonwealth Financial, ING (fewer than 5,000 advisors) 14% FA with bank BD e.g. PNC, M&T Bank (fewer than 1,000 advisors) 8% FA with private bank / bank trust e.g. Northern Trust, US Trust, Bessemer Trust 16% 2 Annual Survey of 400 Advisors1 Qualitative Interviews In-depth interviews with a variety of industry participants: • Executives at financial institutions • Financial advisors • Executives at fintech firms • Start-up firms and disruptors “We take a topic and look at it from both sides, and that gives us a sense of what's happening in the market.” - Alois Pirker, Aite Group Aite Group Methodology © 2017 MyVest Corporation. All Rights Reserved.

4. How Did We Get Here? The Evolution of Robo-Advice

5. Traditional wealth management is under pressure Profitability Competition Demographic shifts Regulatory uncertainty Legacy technology & business model

6. 1996 Today OverallAdoption B2B for Enterprise 1.0 Quick Wins Simplicity, UX B2B for Enterprise 2.0 Hybrid Human+Tech Multi-Segment + + Pioneers Early Niches B2C 1.0 Retail Disrupters B2B for Independent Advisors Disrupt RIA Vendors B2C Pivots to B2B B2C 2.0 Retail Response Evolution: From robo-advice to digital wealth © 2017 MyVest Corporation. All Rights Reserved.

7. 1996 Today OverallAdoption B2B for Enterprise 1.0 Quick Wins Simplicity, UX B2B for Enterprise 2.0 Hybrid Human+Tech Multi-Segment + + Pioneers Early Niches B2C 1.0 Retail Disrupters B2B for Independent Advisors Disrupt RIA Vendors B2C Pivots to B2B B2C 2.0 Retail Response Evolution: From robo-advice to digital wealth © 2017 MyVest Corporation. All Rights Reserved. “B2B for Enterprise 1.0 is a quick win; B2B for Enterprise 2.0 is about strategic business transformation.” - Alois Pirker, Aite Group

8. $70 $141 $204 $16 $25 $43 $171 2016 2017E 2018E Estimated Growth of Digital Advisor Solutions ($ in Billions) Retail assets acquired by traditional incumbents Retail assets acquired by start- up digital advisors directly Vanguard, Schwab, Fidelity, E*Trade, TD Ameritrade $400B $90B Market sizing & growth: Incumbents pulling away © 2017 MyVest Corporation. All Rights Reserved.

9. $70 $141 $204 $16 $25 $43 $171 2016 2017E 2018E Estimated Growth of Digital Advisor Solutions ($ in Billions) Retail assets acquired by traditional incumbents Retail assets acquired by start- up digital advisors directly Vanguard, Schwab, Fidelity, E*Trade, TD Ameritrade $400B $90B Market sizing & growth: Incumbents pulling away © 2017 MyVest Corporation. All Rights Reserved. “Banks and insurance firms will challenge this $171 billion growth segment.” - Anton Honikman, MyVest

10. 3% 16% 31% 23% 13% 15% 5% 15% 13% 32% 20% 15% Practice has made the decision to launch a digital advisor service Very interested Interested Somewhat interested Not interested We have not discussed this/thought about this Q2 2017 Q3 2015 50% interested or ready to adopt (up from 33%) Source: Aite Group survey of 369 financial advisors, Q2 2017 and 403 financial advisors, Q3 2015. Q: How interested is your practice in leveraging new digital advisor technology over the next few years? Advisor interest in new technology © 2017 MyVest Corporation. All Rights Reserved.

11. 3% 16% 31% 23% 13% 15% 5% 15% 13% 32% 20% 15% Practice has made the decision to launch a digital advisor service Very interested Interested Somewhat interested Not interested We have not discussed this/thought about this Q2 2017 Q3 2015 50% interested or ready to adopt (up from 33%) Source: Aite Group survey of 369 financial advisors, Q2 2017 and 403 financial advisors, Q3 2015. Q: How interested is your practice in leveraging new digital advisor technology over the next few years? Advisor interest in new technology © 2017 MyVest Corporation. All Rights Reserved. “The sands are shifting. The fastest growing advisors see the opportunity in new technology.” - Alois Pirker, Aite Group

12. Response % of Population Improve the clients' digital experience 46% Acquire a new segment of clients 40% Automate processes (onboarding, portfolio management) 39% Offer clients more service options to best fit their needs and preferences 39% Serve some of our existing clients more cost-effectively 34% Meet the needs of any client/prospect... who prefers passive/low-cost portfolio management 32% The “What” Q: What are (or would be) the practice’s goals for such a platform? Response % of Population Generation X (35- to 50-year-olds) 49% Millennials (under 35 years old) 48% High-potential clients (e.g., early career professionals) 47% Children of existing clients 45% Friends of existing clients who do not meet the minimum balance 27% Parents or other relatives of existing clients 26% Any client who does not meet our practice’s minimum balance 13% The “Who” Q: What types of clients would your practice seek to acquire or service through a digital advisor platform? Source: Aite Group survey of 369 financial advisors, Q2 2017. Who will they target & what are their goals? © 2017 MyVest Corporation. All Rights Reserved.

13. Response % of Population Improve the clients' digital experience 46% Acquire a new segment of clients 40% Automate processes (onboarding, portfolio management) 39% Offer clients more service options to best fit their needs and preferences 39% Serve some of our existing clients more cost-effectively 34% Meet the needs of any client/prospect... who prefers passive/low-cost portfolio management 32% The “What” Q: What are (or would be) the practice’s goals for such a platform? Response % of Population Generation X (35- to 50-year-olds) 49% Millennials (under 35 years old) 48% High-potential clients (e.g., early career professionals) 47% Children of existing clients 45% Friends of existing clients who do not meet the minimum balance 27% Parents or other relatives of existing clients 26% Any client who does not meet our practice’s minimum balance 13% The “Who” Q: What types of clients would your practice seek to acquire or service through a digital advisor platform? Source: Aite Group survey of 369 financial advisors, Q2 2017. Who will they target & what are their goals? © 2017 MyVest Corporation. All Rights Reserved. “As you can see, these digital advice platforms service nearly all client segments and firm goals.” - Alois Pirker, Aite Group

14. Where Are We Going? The Revenge of the Incumbents

15. Brand Customer base Multiple service channels Existing BD or bank Client data Product diversity Research Balance sheet Incumbents’ unique advantages

16. But incumbents have their own unique challenges Inertia Lack of digital vision Fear of cannibalization Siloed legacy technology Non-agile development culture

20. Serve multiple segments Value-added services Robust client data layer Incumbents’ new opportunities in digital wealth © 2017 MyVest Corporation. All Rights Reserved. “There’s so much opportunity in the amount of data firms have. Start with the data and use it to hyper-personalize the experience.” - Anton Honikman, MyVest

21. 1. Invest in great UI/UX (table stakes) 2. Leverage your strengths 3. Seek out smart fintech partnerships 4. Move from simple segmentation to hyper-personalization Incumbent recipe for success

22. 1. Invest in great UI/UX (table stakes) 2. Leverage your strengths 3. Seek out smart fintech partnerships 4. Move from simple segmentation to hyper-personalization Incumbent recipe for success “Incumbents, now is your time.” - Anton Honikman, MyVest

Robo Advice: Revenge of the Incumbents (MyVest and Aite INVEST session)

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