State Street Wealth Manager Services

1
State StreetWealth Manager Services

• Presentation to Money
  Management Institute
• Technology Spotlight Workshops Outsourcing for
  SMA Operations
• Date
  March 1, 2006
• 
  Proprietary and Confidential

2
State Street CorporationCore Capabilities
Investment Servicing
Investment Management
Investment Researchand Trading

• Custody, Accountingand Administration
• Consulting, Outsourcing,and Implementation
• Transfer Agencyand Recordkeeping
• Capital Lending, Liquidity
• Performance, Risk,Compliance
• Investment OperationsOutsourcing
• Wealth Management Services

• Institutional Investors
• Advisors
• Securities Lending
• Active Strategies
• Index Strategies
• Research

• Global Link
• Execution and Order
• Management
• Trade Execution
• Origination and Credit Services
• Investment Research
• Portfolio Analytics
• Commission Recapture
• Transition Management

3
Wealth Manager Services
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Organization Chart
Anne P. Tangen Executive Vice President Division
Head
Stephen Nazzaro Senior Vice President Private
Client Services
Thomas M. McKee Senior Vice President Managed
Account Services
Meg M. Kelleher Senior Vice President Business
Development
Charles Duval Vice President Tax, Compliance and
Risk Management
Stanley J. Wasilauski Senior Vice President Chief
Technology Officer
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Mission
Provide integrated, strategic partnership
solutions customized for the wealth
managementmarket by leveraging State Streets
global perspective and local expertise,
dedicationto customer service, superior
technology, and extensive product mix
Business Lines
Growth
Locations
Team

• 156 billion in assets under administration
• 59,000 accounts
• Attractive pipeline

• United States
• United Kingdom

• 463 employees
• Experienced and proven leadership team
• Significant marketand industry expertise

• PrivateClient Services
• Managed Account Services

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Managed Account Services
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Organization Chart
Thomas M. McKee Senior Vice President Head of
Managed Account Services
Arlene Vallone Executive Assistant
Joe Kennedy Vice President Technology Integration
Cheryl Cohen Vice President Operations Client
Services
Peter Amato Vice President Project Management
Donna Antonacci Vice President Client
Implementations
Meg Kelleher Senior Vice President Business
Development
Raffaela Gallace Admin. Assistant
Nicole DeBlois Project Manager
MaryAnn DeGeorges Conversion and Implementation
Laura Riley Team Leader Account Administration
Nick Biancardo Performance Measurement
Pilar Ivanov Team Leader Recon Settlements
Roger Jones
Nelly Verbovetskaya
Brian Waterman
Anthony DiGangi Consultant
Jonathan Ferrara
Ewa Ryczek
Dean Daco Consultant
Jennifer Koszta
Andrea Huerta
Natasha Ramkishun
Zandi Zungo
Jasdeep Chanana
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Managed Account ServicesCommitment
Provide a world class servicing platform,
delivered through state-of-the-arttechnology,
that exceeds the needs of investment managers
participatingin the managed account marketplace.
I see managed accounts as a servicing
opportunity that has tremendouspotential for us
because of the large embedded expense base for
managersrunning managed account
programsthis is like mutual funds were for
us 25 years ago.
State Streets CEO Ron Logue Global Custodian,
October 2004
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Managed Account ServicesDifferentiators

• State Street
• Worlds largest asset servicer with over 10
  trillion in AUC
• Focus on providing a broad range of services to
  investment managers
• Commitment of 20 25 of operating expenses
  budget to IT/year
• People
• Extensive experience in the managed account
  industry
• Dedicated service center in New York City
• Strict quality control discipline
• Responsive service oriented culture
• Proven Implementation Methodology
• Efficient management of concurrent activities
• Leverage implementation experience and developed
  work products
• Experience integrating third-party systems
• Scalable Technology Platform
• Partnership with CheckFree APL
• Mature and flexible workflow application

Wealth Manager Services
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Our Services
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Service Offering
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Managed Account ServicesCore Services
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Managed Account ServicesCore Services

• Central point of contact for all operations,
  administration and technology support
• Establish operational processes for new sponsor
  relationships and new custodians
• Marketing / business development support
• Regulatory / internal audit support
• Management reporting
• Service level reporting
• Relationship management / service quality review
  sessions

Dedicated ClientService Team

• Open new accounts, including position, cash and
  tax-lot seeding
• Perform completeness review of all new accounts
• Notify Investment Manager of accounts requiring
  formal acceptance
• Process contributions, withdrawals, transfers and
  tax harvest requests
• Process style changes
• Process account closing / liquidation requests
• Profile coding of CRM information, including
  sponsor, program, broker / financial
  consultant,strategy, etc.
• Maintain investment restrictions for pre-trade
  compliance testing
• Industry / sector rules
• Security prohibitions (i.e. sin stocks)
• Security ceilings (x of portfolio market value)
• Cash ceilings (x of portfolio market value)

Account Servicing

• Document imaging for account activity paperwork
• Analyze operational environment for process
  enhancements via workflow
• Create workflow environment and specific business
  rules
• User readiness and training
• Utilize oversight features for automated
  supervision of workflow

Workflow Automation
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Managed Account ServicesCore Services
Dedicated ClientService Team

• Central point of contact for all operations,
  administration and technology support
• Establish operational processes for new sponsor
  relationships and new custodians
• Marketing / business development support
• Regulatory / internal audit support
• Management reporting
• Service level reporting
• Relationship management / service quality review
  sessions

• Open new accounts, including position, cash and
  tax-lot seeding
• Perform completeness review of all new accounts
• Notify Investment Manager of accounts requiring
  formal acceptance
• Process contributions, withdrawals, transfers and
  tax harvest requests
• Process style changes
• Process account closing / liquidation requests
• Profile coding of CRM information, including
  sponsor, program, broker / financial
  consultant,strategy, etc.
• Maintain investment restrictions for pre-trade
  compliance testing
• Industry / sector rules
• Security prohibitions (i.e. sin stocks)
• Security ceilings (x of portfolio market value)
• Cash ceilings (x of portfolio market value)

Account Servicing

• Document imaging for account activity paperwork
• Analyze operational environment for process
  enhancements via workflow
• Create workflow environment and specific business
  rules
• User readiness and training
• Utilize oversight features for automated
  supervision of workflow

Workflow Automation
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Managed Account ServicesCore Services

• Trade capture / recordkeeping
• Tax lot accounting
• Security set up and maintenance
• Security and portfolio valuations
• Corporate action processing

Investment Accounting
Settlements Process

• Match and reconcile trades with counterparties
• Instruct / notify custodians of trades (as
  necessary)
• DTC affirmation (as necessary)
• Resolve trade issues
• Monitor fails

Reconciliation

• Validation of portfolio accounting records with
  sponsor / custodial records(as provided by
  sponsor / custodian)
• Security positions
• Cash activity and balances

Performance Measurementand Reporting

• Calculate pre-tax, gross-of-fee account returns
  daily and composite returns monthly
• Composite maintenance
• Daily benchmark returns, including custom blends
• Management and investor reporting
• Support for AIMR verification

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Managed Account ServicesCore Services
Investment Accounting

• Trade capture / recordkeeping
• Tax lot accounting
• Security set up and maintenance
• Security and portfolio valuations
• Corporate action processing

• Match and reconcile trades with counterparties
• Instruct / notify custodians of trades (as
  necessary)
• DTC affirmation (as necessary)
• Resolve trade issues
• Monitor fails

Settlements Process
Reconciliation

• Validation of portfolio accounting records with
  sponsor / custodial records(as provided by
  sponsor / custodian)
• Security positions
• Cash activity and balances

Performance Measurementand Reporting

• Calculate pre-tax, gross-of-fee account returns
  daily and composite returns monthly
• Composite maintenance
• Daily benchmark returns, including custom blends
• Management and investor reporting
• Support for AIMR verification

17
Managed Account ServicesCore Services
Investment Accounting

• Trade capture / recordkeeping
• Tax lot accounting
• Security set up and maintenance
• Security and portfolio valuations
• Corporate action processing

Settlements Process

• Match and reconcile trades with counterparties
• Instruct / notify custodians of trades (as
  necessary)
• DTC affirmation (as necessary)
• Resolve trade issues
• Monitor fails

• Validation of portfolio accounting records with
  sponsor / custodial records(as provided by
  sponsor / custodian)
• Security positions
• Cash activity and balances

Reconciliation
Performance Measurementand Reporting

• Calculate pre-tax, gross-of-fee account returns
  daily and composite returns monthly
• Composite maintenance
• Daily benchmark returns, including custom blends
• Management and investor reporting
• Support for AIMR verification

18
Managed Account ServicesCore Services
Investment Accounting

• Trade capture / recordkeeping
• Tax lot accounting
• Security set up and maintenance
• Security and portfolio valuations
• Corporate action processing

Settlements Process

• Match and reconcile trades with counterparties
• Instruct / notify custodians of trades (as
  necessary)
• DTC affirmation (as necessary)
• Resolve trade issues
• Monitor fails

Reconciliation

• Validation of portfolio accounting records with
  sponsor / custodial records(as provided by
  sponsor / custodian)
• Security positions
• Cash activity and balances

• Calculate pre-tax, gross-of-fee account returns
  daily and composite returns monthly
• Composite maintenance
• Daily benchmark returns, including custom blends
• Management and investor reporting
• Support for AIMR verification

Performance Measurementand Reporting
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Managed Account ServicesPremium Services

• New business suitability review
• Devise mutually agreed upon acceptance screens
• Review and approve accounts based on screens
• New business acceptance review for sponsor
  required programs
• Provide approval to sponsor of account acceptance
• Generate SEC reporting (13f, 13g)

Compliance

• Model maintenance
• Order generation (block and rebalance)
• Trade placement / execution
• Trade execution monitoring
• Sponsor rotation tracking
• Manage / maintain trading records

Portfolio Administration

• Monitor portfolio holdings dispersion vs. models
• Monitor high / low cash
• Monitor debit balances and short positions
• Coordinate issue resolution with trading personnel

Trade Support

• Fee calculations in advance or arrears
• Support fee schedules for family and / or
  household group options
• Invoice preparation and mailing

Revenue Recognition Support

• New account welcome letters
• Monthly / Quarterly portfolio valuations and
  transaction detail
• Quarterly investment summary and performance
  analysis
• Annual mailings (ADV, privacy policy, proxy
  policy)

Private Label Reporting
20
Managed Account ServicesPremium Services
Compliance

• New business suitability review
• Devise mutually agreed upon acceptance screens
• Review and approve accounts based on screens
• New business acceptance review for sponsor
  required programs
• Provide approval to sponsor of account acceptance
• Generate SEC reporting (13f, 13g)

• Model maintenance
• Order generation (block and rebalance)
• Trade placement / execution
• Trade execution monitoring
• Sponsor rotation tracking
• Manage / maintain trading records

Portfolio Administration

• Monitor portfolio holdings dispersion vs. models
• Monitor high / low cash
• Monitor debit balances and short positions
• Coordinate issue resolution with trading personnel

Trade Support

• Fee calculations in advance or arrears
• Support fee schedules for family and / or
  household group options
• Invoice preparation and mailing

Revenue Recognition Support

• New account welcome letters
• Monthly / Quarterly portfolio valuations and
  transaction detail
• Quarterly investment summary and performance
  analysis
• Annual mailings (ADV, privacy policy, proxy
  policy)

Private Label Reporting
21
Managed Account ServicesPremium Services
Compliance

• New business suitability review
• Devise mutually agreed upon acceptance screens
• Review and approve accounts based on screens
• New business acceptance review for sponsor
  required programs
• Provide approval to sponsor of account acceptance
• Generate SEC reporting (13f, 13g)

• Model maintenance
• Order generation (block and rebalance)
• Trade placement / execution
• Trade execution monitoring
• Sponsor rotation tracking
• Manage / maintain trading records

Portfolio Administration

• Monitor portfolio holdings dispersion vs. models
• Monitor high / low cash
• Monitor debit balances and short positions
• Coordinate issue resolution with trading personnel

Trade Support

• Fee calculations in advance or arrears
• Support fee schedules for family and / or
  household group options
• Invoice preparation and mailing

Revenue Recognition Support

• New account welcome letters
• Monthly / Quarterly portfolio valuations and
  transaction detail
• Quarterly investment summary and performance
  analysis
• Annual mailings (ADV, privacy policy, proxy
  policy)

Private Label Reporting
22
Managed Account ServicesPremium Services
Compliance

• New business suitability review
• Devise mutually agreed upon acceptance screens
• Review and approve accounts based on screens
• New business acceptance review for sponsor
  required programs
• Provide approval to sponsor of account acceptance
• Generate SEC reporting (13f, 13g)

• Model maintenance
• Order generation (block and rebalance)
• Trade placement / execution
• Trade execution monitoring
• Sponsor rotation tracking
• Manage / maintain trading records

Portfolio Administration

• Monitor portfolio holdings dispersion vs. models
• Monitor high / low cash
• Monitor debit balances and short positions
• Coordinate issue resolution with trading personnel

Trade Support

• Fee calculations in advance or arrears
• Support fee schedules for family and / or
  household group options
• Invoice preparation and mailing

Revenue Recognition Support

• New account welcome letters
• Monthly / Quarterly portfolio valuations and
  transaction detail
• Quarterly investment summary and performance
  analysis
• Annual mailings (ADV, privacy policy, proxy
  policy)

Private Label Reporting
23
Managed Account ServicesPremium Services
Compliance

• New business suitability review
• Devise mutually agreed upon acceptance screens
• Review and approve accounts based on screens
• New business acceptance review for sponsor
  required programs
• Provide approval to sponsor of account acceptance
• Generate SEC reporting (13f, 13g)

• Model maintenance
• Order generation (block and rebalance)
• Trade placement / execution
• Trade execution monitoring
• Sponsor rotation tracking
• Manage / maintain trading records

Portfolio Administration

• Monitor portfolio holdings dispersion vs. models
• Monitor high / low cash
• Monitor debit balances and short positions
• Coordinate issue resolution with trading personnel

Trade Support

• Fee calculations in advance or arrears
• Support fee schedules for family and / or
  household group options
• Invoice preparation and mailing

Revenue Recognition Support

• New account welcome letters
• Monthly / Quarterly portfolio valuations and
  transaction detail
• Quarterly investment summary and performance
  analysis
• Annual mailings (ADV, privacy policy, proxy
  policy)

Private Label Reporting
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Technology Platform
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Technology PlatformSchematic
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Implementation Methodology
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Implementation MethodologyStrategy

• Deliver superior implementation services that
  differentiate State Street from its competitors
• Foster effective teamwork, collaboration and
  communication
• Recruit high caliber individuals who have proven
  project management experience
• Leverage WMS successful implementation
  methodology
• Repeatable controlled yet flexible
• Timely delivery of all work products
• Comprehensive execution of project management
  techniques
• Develop internal centers of expertise across all
  implementation initiatives

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Implementation MethodologyCustomer Lifecycle
Outsourced Servicing
Implementation Process
Establish Terms Pre Contract
Scope andBusinessAssessment
ProductionServicingand Support
RelationshipCultivation
Discovery
Client Implementation Methodology
NonDisclosureAgreement
Letter of Intent
Service LevelStandards
PMO
Business Development
NY Service Center
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Implementation MethodologyDetailed Approach
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Implementation MethodologyClient Service
Experience

Implementation Steering Committee (ISC) Senior
stakeholders from WMS and Client Involves
activities related to implementation(i.e.
monitoring and key decision making)
Joint Steering Committee (JSC) Once the
implementation process is complete,the ISC is
disbanded and the JSC is created.The JSC is the
governance structure and is madeup of key
stakeholders from both firms.
Project Management Office (PMO) Manages the
activities for each project phase(i.e. status
reporting, issues management, change request
management,quality review and risk assessment)
Service Level Reporting The JSC is the forum for
dissemination of allService Level Reporting
based on contractualService Level Standards.
Workstreams Specialist teams focused on segments
of the project(i.e. defining the project,
developing and executing the specificrequirements
of the project plan application
configuration,training, performance measurement
etc.)
Relationship Management Monthly meetings are
scheduled to address allissues related to the
servicing of the relationship. Strategic
discussions are also held aroundnew products,
sponsors, technologyand industry-related
initiatives.
PMO
NY Service Center
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Service Level Overview
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Service Level OverviewAttributes

• Reporting provides
• Precise definition of service expectations
• Clear accountability and transparency for the
  service delivery
• Timely feedback on performance vs. service
  standards
• Flexibility to adapt to changing requirements

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II. Monthly Operational Support ReviewMetrics
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II. Monthly Operational Support ReviewMetrics
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II. Monthly Operational Support ReviewMetrics
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III. Monthly Operational Support ReviewStatistics
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Workflow Solution
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Workflow SolutionAutomated Workflow Distributor
(AWD)

• Workflow management and document imaging system
  that electronically routes work throughout an
  organization

• Supports multiple communication channels and the
  blending of workflow and process automation
  through system integration

• Applies predefined business rules in streamlining
  business processes, limiting human interaction
  while processing data movement

• Provides customer-specific automated service
  level reporting data

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Workflow SolutionAWD Terminology

• Custom Screen Design (CSD)
• Created to meet an organizations specific
  business needs
• Work Type
• Identifies the transaction to be processed
• Status
• Designated step in the workflow which determines
  where a work item is sent for the processing
• Queue
• Holding area where work items await selection for
  the next step in the workflow

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Workflow SolutionWorkflow Process

• Work request is faxed/scanned to an Image Server
• System automatically creates a work object and
  source
• Item is indexed Upon review of scanned image
  activity is identified and required data fields
  are entered into CSD

CLIENT NAME
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Workflow SolutionWorkflow Process (continued)

• Status is changed within workflow as tasks are
  completed changes in status drive next step in
  processing
• Quality control checks performed by New York
  Service Center. Items that do not pass
  inspection will be routed accordingly for
  re-evaluation
• Upon completion of flow, all items and images are
  maintained in the database for reference and
  reporting purposes

CLIENT NAME
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AWD Screen ShotsWork Retrieval using Get Work
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AWD Screen ShotsWork Retrieval with Customized
Lookups
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AWD Screen ShotsLookup Results to Initiate Work
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AWD Screen ShotsIndexing Process and Account
Verification
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AWD Screen ShotsNew Account Setup Screen Design
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AWD Screen ShotsNew Account Setup Prompts
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AWD Screen ShotsNew Account Client Defined
Suitability
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AWD Screen ShotsQueue for Account Processing
Funding Verification
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AWD Screen ShotsQuality Checking
51
AWD Screen ShotsTrader Notification / Action
Queue
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AWD Screen ShotsAWD History
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AWD Screen ShotsHistorical Data/Image Retrieval
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Manager Dashboard Solution
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Manager Dashboard Solution Managed Objects
Service Level Manager

• Key Performance Indicator Tracking, Analysis and
  Reporting System
• Supports SLA compliance in real time and
  historically
• Provides predictive early-warning to SLA
  non-compliance
• Facilitate root cause analysis
• Manager Dashboard content includes

• Volumes by service category based on user
  defined intervals
• Performance vs. target
• Metrics analysis for process evaluation

• Arrival time, in hourly increments
• Elapsed time end-to-end (with and without
  breaks)
• Elapsed time per queue (with and without
  breaks)
• Break analysis per break

• Length of break
• Comments/reason

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Key Takeaways

• State Streets infrastructure, scale, commitment
  and market leadership
• Experienced professionals
• Proven implementation methodology
• Referenceable clients

57
Thank You

• Tom McKee
• Senior Vice President
• 971-790-4423
• tmmckee_at_statestreet.com