Leveraging Data and Analytics to Drive Your DCIO Business

Dan Cwenar President and General Manager Access Data, a Broadridge Company

Leveraging Data and Analytics to Drive Your DCIO Business February 10, 2014

2

Today

• Product distribution

• Retirement channel distribution

• Insights into the “advisor driven” DC market

• Conclusions

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I: Expectations are high

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5

II: Framework for thinking about data

Volume Velocity Variety

Veracity

Inversely proportional?

Doug Laney, 2001

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III: Data solutions versus rules-based solutions

• Payroll and accounting solutions are rule dependent • Data solutions

• Not knowing all the questions is OK • “Directional” idea: “I want to understand DCIO distribution”

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IV: Role of variety

• Big Data can indeed be BIG • +55,000 files per month • 1x1010 data points

• Variety

Product Distribution

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Generic product distribution is complex and dynamic1

92.4 million Investors

290 million accounts, 54 million households

38,160 Sales & Distribution

Professionals

+500,000 Advisors,

+20,000 Firms

16,380 Products

Manufacturers distribute products directly to investors

776 Fund Sponsors, $16 Trillion AUM

Manufacturers distribute products via intermediaries to investors

1. Data based on the 2013 ICI Fact Book, ICI Quarterly update bulletins, and Broadridge proprietary research

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Industry trends create unique data challenges

• Omnibus accounting less transparency

• Lack of data exchange standards poor data quality and management

• Regulatory environment fee scrutiny, held away assets, revenue sharing

• Complex distribution environment many data islands

• Difficulty finding the right advisors 500,000 advisors with different needs and preferences

Intermediary 1

Intermediary 2

Intermediary 3

Intermediary 4

Intermediary 5

Intermediary n

Mfg 1

Mfg 2

Mfg 3

Mfg 4

Mfg 5

Mfg n

Typical Data Exchange Process

Retirement Channel Unique transparency challenges

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Components of product distribution1

Manufacturers +700

Products +16,000

Sales / Ops +38,000 professionals

Intermediaries +20,000 firms

Advisors +500,000

Investors +92M / $16T

Generic 3rd party distribution model


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New entities are introduced1

Plan Participants

Plan Sponsors

Plans (large versus

small)

Record Keepers and

TPAs

Advisors (DC specialists)

Manufacturers +700

Products +16,000



Advisors +500,000



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Product distribution becomes MORE complex1

Manufacturers +700

Products +16,000


Distributors / TA +20,000 firms

Advisors +500,000

DC Record Keepers / TPAs +1,500

DC Plans +650,000

Plan Sponsors +450,000

Plan Participants +88M / $5.6T

Advisors (DC Specialists) +5,000

Without data and analytics, finding these advisors is

challenging

The 1% Problem

Manufacturers +700

Products +16,000



Advisors +500,000


DC Distribution 3rd Party Distribution


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Fastest growing segment of employer sponsored plans (27% 1985 / 41% 2012)


Context of “advisor driven” assets1

DC – MF $3.3T

(59% of DC)

DC: 401k, 403b, 457, Keogh $5.6T

(26% of Retirement)

IRA, DC, Private DB, Government, Annuity $21.9T

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Advisors target small to medium DC Plans. These plans overwhelmingly employ Mutual Fund products.

Fastest growing segment of employer sponsored plans (27% 1985 / 41% 2012)


DC: 401k, 403b, 457, Keogh $5.6T

(26% of Retirement)

IRA, DC, Private DB, Government, Annuity $21.9T

DC – Advisor Driven

$2.0T (36% of DC)

Context of “advisor driven” assets1

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Total Assets

$2T

Advisor Sold DC Plans 450K

of 650K (70%)

Advisor Sold DC Participants 49M

of 88M (56%)

Independents

$1.6T

$.4T Supermarket-driven

1. Data based on Broadridge proprietary research

Advisor driven DC landscape1

Advisor Driven DC Market Platform Insights

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Advisor driven DC assets by platform type1

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

Mutual Fund Platform Supermarket Platforms Insurance Platforms

Advisor Driven: $2T

1. Source: Plan Sponsor Survey and Broadridge proprietary research

20%

39.0%

60%

Bill

ions

of D

olla

rs

20%

20

DC plans by platform type1

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Supermarket Platforms Mutual Fund Platform Insurance Platforms

Advisor Driven: 450K Plans

4%

1. Source: Plan Sponsor Survey and Broadridge proprietary research

Num

ber o

f Pla

ns

67%

29%

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Top Fund, Supermarket, and Insurance platforms1

1. Source: Retirement Plan Sponsor Survey

Asset Rank Firm Millions of $ Plans Average Plan Size ($)1 ING 301,720 47,718 6,322,981 2 Great West 178,166 27,266 6,534,365 3 Principal 136,987 47,857 2,862,423 4 Mass Mutual 104,318 37,159 2,807,341 5 Transamerica 82,292 20,345 4,044,827 6 Nationwide 79,161 40,698 1,945,083 7 John Hancock 71,105 44,620 1,593,568 8 Lincoln 48,940 23,429 2,088,864 9 New York Life 32,595 1,650 19,754,545 10 OneAmerica 18,100 9,700 1,865,979

1,053,384 300,442 3,506,114

Asset Rank Firm Assets (millions of $) Plans Average Plan Size ($)1 Fidelity 1,096,623 32,293 33,958,536 2 Prudential 199,488 5,145 38,773,178 3 Schwab 109,363 1,164 93,954,467 4 Ascensus 41,973 41,338 1,015,361 5 ADP 40,473 35,384 1,143,822 6 American Funds 37,648 34,686 1,085,395 7 Newport 23,422 2,261 10,359,133 8 CUNA Mutual 11,315 6,214 1,820,888 9 Daily Access 8,050 1,595 5,047,022 10 Aspire 5,637 6,056 930,812

1,573,992 166,136 9,474,118

Advisor Driven DC Market Advisor Insights

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Advisor affiliation: advisors selling one or more plans1

-

10,000

20,000

30,000

40,000

50,000

60,000

Banks and TrustCompanies

RIA Independent /Regional BDs

Wirehouse

68%

22%

5% 5%

1. Source: Broadridge proprietary research

Num

ber o

f DC

Adv

isor

s

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Advisors selling DC plans1

85K

67K

18K

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Total Advisors Selling DCPlans

Advisors on One Platform Advisors on MultiplePlatforms

79%

21%

100%


Num

ber o

f DC

Adv

isor

s

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3.68

2.2

1.3

-

1

2

3

4

Retirement Specialists Retirement Users Total Participating Advisors

Top advisors by number of platforms1

5K Advisors

13K Advisors

85,000 Advisors

15% (of 85K)

6% (of 85K)

or

1% (of 500K)


Num

ber o

f DC

Adv

isor

s

Further segment the 18K who are affiliated with multiple platforms…

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20+, 16%

10-19, 24%

5-9, 25%

1-4, 35%

Currently Manage in 2012

Average number of plans managed per year1

BASE = Advisors with 5%+ AUM in 401(K) Plans 1. Source: Cogent Research, Retirement Plan Advisor Brandscape® 2012

20+, 24%

10-19, 25%

5-9, 28%

1-4, 23%

Anticipate in 2013

Conclusions Advisor Insights

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I: Conclusions: Strategies for driving growth

• The advisor driven DC market is significant and growing

• Gaining insights into this market can be challenging • Finding the needle in the haystack can be challenging (1% problem) • Use data to identify best prospects

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II: Conclusions: Strategies for driving growth

• A data management program is key to growing your business

• Data live everywhere and change daily • “VARIETY”: Link retirement specialists with their associated plans • Segmentation

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III: Conclusions: Strategies for driving growth

• “Data Insights” support: • Territory management / sales staff allocation • Competitor analysis (region, product, and channel) • Compensation plans and management • Using multi-channel communications, engaging content and education • Measure results / modify approach

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http://access-data.broadridge.com/

Thank You

Leveraging Data and Analytics to Drive Your DC and DCIO Business February 10, 2014

Leveraging Data and Analytics to Drive Your DCIO Business

Business

firms advisors

dependent data solutions

products manufacturers

data islands difficulty

dcio distribution

role of variety big

generic product distribution

right advisors