Northern Trust

1
Technology Trends in Wealth Management
Subir Chatterjee CEO, Fi-Tek
Ramsey El-Fakir CIO, Fi-Tek
2
Wealth Management Business Drivers
Technology trends are primarily being driven by
several key business drivers.

• Continued Asset Accumulation by Baby Boomers
• Continued aging of baby boomers
• They will hold a significant portion of personal
  trust assets
• Large growth expected in High Net Worth
  households
• Increased Regulation and Compliance
• Compliance will continue to be a key business
  priority
• KYC, AML, pre and post trade compliance
  Sarbanes-Oxley
• This will continue to increase in light of
  impending regulations
• Selling Clients Multiple Products
• WM model has been fragmented by products
  investments, brokerage, banking, credit,
  insurance, trust, retirement
• The challenge is how to bring the client under
  one roof with a single RM supported by Product
  Specialists
• Cross sell
• Open Architecture Adoption for Products
• Need for integrating more third party independent
  products vis-à-vis in-house ones
• Integration challenges
• Potential regulatory scrutiny in light of what
  happened in 2008

3
Wealth Management Business Drivers

• Customer Centricity
• Most wealth management firms would like to be
  trusted advisor to their clients
• Especially transaction providers like B/D want to
  get into advice to increase asset stickiness
• FP, advisory, data integration tools
• Rise of the Mass Affluent
• Defined by clients with assets between 500K to 2
  MM
• Under-serviced by WM
• Need better tools for economic servicing of
  clients have to lower unit cost of service
  delivery
• Increased Customer Sophistication
• Baby boomers will be challenging clients
• A lot of do-it-yourselfers in the group will
  demand sophisticated tools for research, analysis
  and reporting
• Competitive Business Environment
• WM firms of all sizes small-medium-large are
  getting ready to mount an assault on acquiring,
  keeping and increasing the wallet of their
  clients
• Technology will be a key differentiator

4
Wealth Management Technology Trends
Technology plays a key role in addressing these
business challenges.

• Customer Data Integrations
• Firms find it challenging to have a common
  platform for CRM to integrate all client info
• ML has gone to SalesForce.com goes to show the
  length to which they will go to accomplish this
• Many are struggling with 2-3 platforms internally
• Integrated or Seamless Compliance Tools
• To meet with regulatory issues many have brought
  in KYC, anti-money launderingsystems at a
  firm-wide level
• Extremely important to have automated Reg-9
  reviews, investment reviews
• Pre and post trade compliance to reduce risk and
  automate process
• Financial Planning and WM analytics
• Asset allocation and modeling
• Validation of third party models or internal
  models in different market conditions
• Tactical Financial Planning goal based approach
  or return based approach
• Trust Life Expectancy analysis
• What-if analysis
• Proposal generation
• Client Reporting
• Consolidated reports with drill down capabilities
• Performance reporting with trends and
  benchmarking
• Multiple targets for data client advisors,
  FAs, clients and their contacts

5
Wealth Management Technology Trends

• Account Aggregation
• Clients are driving this they want to see all
  their assets in a single report
• WM firms want to increase their size of clients
  wallet and would need to see full data to be the
  trusted advisor
• Challenges remain reliability of third party
  data
• Advisory Workstation Integrated Desktop
• This is extremely critical for efficient
  management of information and processes
• Reduce risk (compliance alerts)
• Identify opportunities (client gets new cash into
  the account)
• Enhanced client service delivery model
• Data Risk Management
• We live in the age of ID theft
• Huge liability with secured client data
• Secured client communication tools like Tumbleweed

6
How Does Fi-Tek Address These Trends?
Fi-Tek and Northern Trust have developed an
integrated solution for the trust and investment
management community addressing many of these
trends
TrustPortal with Wealth Management
Institutions Clients
Integrated Desktop
Wealth Management Platform
Data Vendor
Prospect Management
Financial Planning
Account Workflow
Enhanced Performance
Asset Allocation Modeling
Electronic Fixed Income
Accounting
Investment Management
Reviewer
Reporting Statements
Client Reports
Web Based Reports
Adhoc Reporting
Contact Mgmt
Equity Brokers
Service Providers
OFAC Compliance
Auto Asset Setup
Third Party Applications
Extraction
Consolidation Database
Assets Held Elsewhere
Production Database
Generic API
Phase 1 incorporate 3rd party held assets to
report or query alongside of held assets
Replication
Third Party Information
Models
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Integrated Total Solution

• Brand new .NET Technology with scalable database
• Integrated with Northerns Custody and Global
  Processing Capabilities
• Completely integrated straight thru solution to
  help you grow your business

8
Major Functionalities

• Wealth Management Analytics and Financial
  Planning tools
• Investment Management and Transaction Processing
• Portfolio Management
• Trading
• Market execution
• Compliance pre and post trade, rules driven set
  up
• Accounting and Securities Processing
• Full trust accounting with the PI split
• Tax lot accounting
• Most robust accounting platform in the industry
• Automated Account Review
• Performance Measurement
• Reporting
• Internal operations, compliance and
  administration reports
• External investors or client reports and
  statements online
• Third Party Interfaces for pricing, tax,
  compliance etc.

9
Appendix
About Fi-Tek Integrated Wealth Management Solution
10
About Fi-Tek

• Provides industry leading business solutions for
  wealth management
• Started operations in 1998 by combining
  technology with business knowledge
• Run by senior managers from Fortune 500 financial
  services companies
• Expertise in our clients business and work to
  solve the right problem!
• Over 150 financial institutions with over 700 Bn
  dollars in assets under servicing are using
  Fi-Tek software to run their key business
  functions
• Work with major financial institutions like
  Citigroup, Morgan Stanley Smith Barney, JP Morgan
  Chase, Bank of New York-Mellon, State Street,
  Northern Trust, and some of the major hedge funds
• Excellent financial health with a strong
  balance sheet and high DB rating
• Successfully competing with the majors SunGard,
  Metavante, Advent and SEI

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Business Solutions Overview

• TrustPortal Wealth Management Platform
• Trust and investment management on a single,
  web-based platform for trust banks and
  institutions
• HedgeTek Hedge Fund Partnership Allocation
• Industry-leading, fully integrated book and tax
  allocation platform for hedge funds, and other
  securities partnerships requiring 704C
  allocations

12
Solution for Trust Banks

• Fi-Tek and Northern Trust have developed a total
  solution for the trust and investment management
  community primarily geared towards the trust
  banks
• Northern Trust is a leader in Wealth Management
  and provides all banking related services such
  as custody, research, securities lending and
  short term investments
• Fi-Tek provides the state of the art TrustPortal
  platform to deliver a suite of functionality for
  front, middle and back-office services

13
Portal Dashboard

• Portal Dashboard
• Efficient tool for everyday work with quick
  access to function that are used on regular
  basis
• Customized per user so they see the functions
  that they use the most
• Look up Account / Contacts
• Efficient manage Account upcoming events /
  Ticker through Calendar Widgets
• Create customized memo ticker for each Account on
  different areas that need attention.
• Get alerts on the Calendar
• Release the tickler when you have done with them
  so they cycle to the next period
• Customize your news as RSS feed. Be actively
  alerted for any market activity
• Use our Map widget to locate the address for a
  onsite visit to client. Pull up the contact and
  map widget will give you the destination plotted.
• Get Alerts
• Work on Account exception than going through all
  Accounts
• Alerts
• Excess Cash
• Cash shortfall
• Out of variance alerts for Account associated to
  Asset allocation Model
• Be informed if Account has securities not on
  your approved list.

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Wealth Management Analytics

• Full suite of wealth management analytics to help
  develop asset allocation models based on customer
  risk profile and provide tools to generate
  financial planning options
• Enable portfolio managers to define investor
  needs through a series of questions
• Set risk tolerance, as well as goals and
  objectives
• Define current conditions of investor
• Through sophisticated analytics generate
  portfolio models to meet investor needs based on
  current and future scenarios
• Provide portfolio managers tools to match the
  simulated models with the models currently used
  adjusting the likelihood of attaining goals

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Illustration Base Plan
Some goals are not met in over 25 of the
projected futures. Plan adjustments are needed
for a better guarantee of success. ? May need to
adjust goals to increase likelihood of success
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Investment Widgets

• Proactive Alerts on dashboard helps you manage
  accounts efficiently
• Can customize the widgets for a users workflow
• Rearrange to suit your needs
• Most often used and important functions can be
  displayed
• Fi-Tek can create custom widgets

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Life of a Trade
Portfolio Manager Proposes Trades Executes Trades
1
Broker confirms trade Northern Auto affirms
2
Northern confirms Trades Operations imports
confirms reconciles and settles
3
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Portfolio Modeling

• Proactive alerts on dashboard help you to manage
  accounts that needs rebalancing
• Create / import models and make Model of Models
  to better organize
• Associate accounts and set rebalance variables
• Create rebalance exclusion for non-traded
  securities in a position
• Create cash exclusion to cover recurring
  obligation
• Rebalance the account or invest cash to get the
  market spread

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Modeling and Rebalancing Summary

• Investment Management allows you to
• Create and Manage a
• Comprehensive Model (Mix of Equity / Fixed
  Income / ETF / Cash / Real Estate etc)
• Base Model (Like Equity or ETF / Mutual Fund only
  Model)
• Consolidated Model (Model of Model) to create
  Models reflecting the Bank / Portfolio Manager
  Investment objectives.
• Associate Models with Account
• Rebalance Account or Model
• Invest / Divest Cash as per the Model
• Get Alerts on Portal page for Accounts not in
  line with Model objective

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Modeling Creating Models

• Creating Models
• Name a Model
• Create Model hierarchy (Levels)
• Assign asset allocation
• File Models by Portfolio Manager and / or
  Investment Objective.
• Save Model
• Manage Models

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Modeling Import Models

• Importing Models
• Name a Model
• Define Model hierarchy (Levels)
• Import the Model from Spreadsheet
• File the Models as per PM and Investment
  Objective
• Save Model

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Modeling Associate Models to Accounts

• Use Models to manage Investment strategies
• Associate multiple Accounts to a given Model
• Set Rebalance parameters
• Minimum trade Amount
• Effective date
• Rebalance strategy
• Portion of Model to rebalance.
• Easy to learn and use

23
Rebalancing Summary

• Investment Management allows you to
• Easily rebalance any selected Accounts to an
  associated Model
• See the proposed trades and fine tune them
• See the expected Gains / Losses with estimated
  changes to net Income.
• See the effect of Rebalancing to your cash
  position
• Get what-if reports showing impact on Position
  before and after, trades per Account, trades per
  Security or Proposed Holdings report
• Save the session or Block and execute with one
  click

24
Trade Execution

• Comprehensive Trade blotter that can be
  customized to show all Trades for the
  organization or be restricted to the Accounts
  you are managing.
• Allows you to create a trade advice and keep it
  on the blotter for Market to move for trade
  execution.
• Allows pre-trade blocking of like trades for
  better execution, reduce fees and charge
• Allows post-trade blocking if your Broker
  supports
• Control release of a trade (slice a trade) for
  thinly traded stock so you are not moving the
  market
• Electronic execution of Common Stock / ETF to 450
  Brokers of your choice.

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Reporting

• Feature rich reports help projecting account
  overview along with in-depth details
• Can be run for today or can go back as-of any
  date in past.
• Extensive equities and fixed income reporting to
  help answer client / users need
• Can be output to PDF / EXCEL / RTF
• Create a report packet and mix and match report
  to prepare for client presentation.
• Create as many report packets and save the
  criteria for one touch packet generation for
  future

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Trust Accounting
Comprehensive and integrated trust accounting
with detailed PI split and tax lot accounting

• Cash Management
• Income Accounting
• Amortization and Accretion
• Accrual
• Automated Fee Processing
• Audit Trail
• Operational Management
• Common Funds
• Full regulatory and compliance reports
• Production Scheduler

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Statements Options / Production Process

• Configurable Statement Packages
• Large Repository of Statement Report Formats
• EB Statements, Market to Market Summary,
  Holdings, Transaction, Taxlots
• Court Accounting, GASB Reporting, Chart Reports
• Ability to attach notices and letters
• Customized Cover pages per package with Logo
• Customizable Schedules for Accounts and / or
  Recipients
• Automated Through Night work or On Demand (both
  Ad-hoc and Production)
• Delivery to Secure Web site, encrypted email or
  Printed Copy
• Statement Formats PDF, DOC, RDF

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Compliance

• Compliance Reporting such as Schedule RC-T, 13F
  Reporting, 13G Reporting
• Audit Compliance using audit trail and RFM logs
• Automated Account Reviews with customizable
  questions and workflow
• Auto approval of Reviews for No Breach
  accounts.
• Trust Committee, Administrative and Investment
  Reviews
• Rich repository of Account Review Report formats

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Client Internet Access Functionality

• Graphical Representation of Account Portfolio and
  Holdings
• Views Transaction Overview, Pending Trades, Tax
  Lot Information
• Statement upload facility
• Supports multiple account and consolidated views
• Accessible 24X7 via RSA Secure Risk Based
  Authentication
• Ability to upload Adhoc documents
• Data refreshed every night automatically thru
  night work
• Ability to white-label site with Client Logo and
  Color Scheme

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Performance Reporting

• TrustPortal has integrated performance reports
  and statements.
• The reports are available in the Report Manager
  for internal use or in the Statement Package for
  distribution to end clients
• The reports can be set up from the inception of
  the account
• Reports are expandable to meet client needs

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Automated Account Review
The TrustPortal offers a powerful and streamlined
solution that enables Trust Providers to create
regulatory and ad-hoc reviews. It eliminates the
need to gather information and coordinate efforts
from different parties throughout your
organization.

• Web Based Account Review
• Regulatory ad-hoc reviews
• Business Process Integration
• Review Team Collaboration Tools
• Email Notifications

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Online Reporting
The TrustPortal provides clients secure web based
access to their trust account to view, sort,
download, and print daily account activity and
access their monthly statements securely over
the Internet.

• Web Based Account Reporting
• Five Detailed Reports
• Portfolio
• Holdings
• Transactions
• Taxlots
• Pending Trades
• Strong Authentication
• Secure Electronic Statement
• Delivery
• Auto Secured Data Uploader

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Thank You.
Subir Chatterjee CEO, Fi-Tek
Ramsey El-Fakir CIO, Fi-Tek