, senior vice president, state street wealth manager services

State StreetWealth Manager Services

Presentation to: Money Management Institute

Technology Spotlight Workshops: Outsourcing for SMA Operations

Date: March 1, 2006

Proprietary and Confidential

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Investment Servicing Investment ManagementInvestment Research

and Trading

> Custody, Accountingand Administration

> Consulting, Outsourcing,and Implementation

> Transfer Agencyand Recordkeeping

> Capital Lending, Liquidity> Performance, Risk,

Compliance> Investment Operations

Outsourcing> 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

Investment Management Investment Servicing

State Street CorporationCore Capabilities

Wealth Manager Services

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Organization Chart

Stephen NazzaroSenior Vice PresidentPrivate Client Services

Charles DuvalVice President

Tax, Compliance and Risk Management

Thomas M. McKeeSenior Vice President

Managed Account Services

Anne P. TangenExecutive Vice President

Division Head

Meg M. KelleherSenior Vice PresidentBusiness Development

Stanley J. WasilauskiSenior Vice President

Chief Technology Officer

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> $156 billion in assets under administration

> 59,000 accounts> Attractive pipeline

> United States> United Kingdom

> 463 employees > Experienced and

proven leadership team> Significant market

and industry expertise

> PrivateClient Services

> Managed Account Services

Provide integrated, strategic partnership solutions customized for the wealth managementmarket by leveraging State Street’s global perspective and local expertise, dedicationto customer service, superior technology, and extensive product mix

Business Lines Growth Locations Team

Mission

Managed Account Services

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Organization Chart

Thomas M. McKeeSenior Vice President

Head of Managed Account Services

Joe KennedyVice President

Technology Integration

Cheryl CohenVice PresidentOperations &

Client Services

Peter AmatoVice President

Project Management

Donna AntonacciVice President

Client Implementations

Meg KelleherSenior Vice PresidentBusiness Development

Arlene ValloneExecutive Assistant

Nicole DeBloisProject Manager

MaryAnn DeGeorgesConversion and Implementation

Laura RileyTeam Leader

Account Administration

Roger Jones

Jonathan Ferrara

Jennifer Koszta

Natasha Ramkishun

Jasdeep Chanana

Nick BiancardoPerformance Measurement

Pilar IvanovTeam Leader

Recon & Settlements

Nelly Verbovetskaya

Ewa Ryczek

Andrea Huerta

Zandi Zungo

Brian Waterman Anthony DiGangiConsultant

Dean DacoConsultant

Raffaela GallaceAdmin. Assistant

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Provide a world class servicing platform, delivered through state-of-the-arttechnology, that exceeds the needs of investment managers participatingin the managed account marketplace.

Managed Account ServicesCommitment

“I see managed accounts as a servicing opportunity that has tremendouspotential for us because of the large embedded expense base for managersrunning managed account programs…”“…this is like mutual funds were for us 25 years ago.”

State Street’s CEO Ron Logue – Global Custodian, October 2004

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State Street

– World’s 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

– Reconciliation tools

– Messaging

References

Satisfied clients are the key to success

Wealth Manager Services

Managed Account ServicesDifferentiators

Our Services

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Service Offering

Finance

Compliance

New Account Notification

ContributionNotification

TerminationNotification

WithdrawalNotification

RestrictionsUpdate

AccountMaintenance

Asset Transfer

Registration Changes

StrategyChanges

Brokers

Corporate Actions

Tax Harvest requests

New Accounts

Inquiries

WMS

Refund Calculations

Trading/Portfolio Management

TerminatedAccounts

Technology

Networking

Client Refunds

Asset Selection / Model Changes

CS & Operations

WMS Relationship Mgmt

Account ActivityNotification

CORE

Dedicated Client Service Team

Monies Received

Reporting

Post-Trade Monitoring

Collection

Sponsors / Custodians / Financial ConsultantsAlex Brown Paine Webber Lehman Brothers Envestnet NBFWachovia Merrill Lynch Lockwood NBC Securities Nesbitt BurnsOppenheimer Fidelity AG Edwards LPL LPAAdvest Bear Sterns First Boston Pershing UBSMorgan Keegan Financial West First Albany Dain Rauscher Bank of AmericaGage-Wiley Legg Mason Advisorport IBT Janney MontgomerySchwab Morgan Stanley Wells Fargo Wood Gundy US TrustSmith Barney Scotia Piper Jaffery Raymond James Bank of BermudaGoldman Sachs Access Partners Hilliard Lyons McDonald & Co. Wilmington Trust

New Accounts

Inquiries

Issue Resolution

Management Reporting

Reconciliation

InvoicesAnnual Mailings

Reporting

Issue Resolution

Account Acceptance

Invoice Review

Invoices

Proxy Voting

SEC Filing

Performance

AIMR Compliance

Clients

Account Servicing

Workflow Automation

Settlement Process

Investment Accounting

Reconciliation

Performance Measurements and

Reporting

PREMIUM

Compliance

Portfolio Administration

Trade Support

Private Label Mailing

Revenue Recognition Support

Voluntary Corporate Action Voting

Across the Board Trading

Step-Outs

Other Non-Outsourced Trading Activities

Tra

de

Exe

cutio

n

Tra

deP

lace

men

t

Trade Execution

TradePlacement

Private Label Mailing Support

Outside Party Relationship

Manager

Data Feeds

Data Feeds

Reporting Analytics

Client/Broker Communications

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Managed Account ServicesCore Services

> 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

> 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

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Account Servicing


Workflow Automation



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Account Servicing


Workflow Automation



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

Settlements Process

> Validation of portfolio accounting records with sponsor / custodial records(as provided by sponsor / custodian)

– Security positions– Cash activity and balances

Reconciliation

> 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

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


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Settlements Process



Reconciliation





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Settlements Process



Reconciliation





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Settlements Process

Reconciliation







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Managed Account ServicesPremium Services

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


> 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


> 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

> 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

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Trade Support








Compliance

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Trade Support








Compliance

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Trade Support








Compliance

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Trade Support








Compliance

Technology Platform

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Technology PlatformSchematic

Data Feeds

Outsourcing Client

Account Administration

Notification

APL

Bowne CORE

Performance

Trade Order ManagementFlexPack

Client Reporting

Extracts

Data Feeds

Billvue

Billing

Tax Optimizer(ITG & MARS)

CRM

Fulfillment

Sponsor / 3rd Party Custodian Technology

Client Mailings

Data Feeds

Compliance Monitoring (CTI)

Trading Applications (Charles River,

Minerva)

Data Transformation

Center

Accounting

Performance Tools (CAPS)

Data Warehouse

Sales Tracking

AWDDocument Imaging

and WorkflowData Feeds

Data Feeds for New Accounts/

Recon Monitoring &

Processing

Website Fax Email Mail

Electronic Files

Data Feeds for Transactions

Posting / Recon

Enhancements

Short Modeling Functionality

Managed ObjectsManagement

Reporting

(production 2Q06)

Omgeo

Trade Suite

AlertBilling

ByAllAccounts

Electronic Files

Data Feeds for Cash Movements

& Recon

Data Feeds Trading

Trade Settlement

Reconciliation

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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RelationshipCultivation Discovery

Scope andBusinessAssessment

Client Implementation Methodology

ProductionServicingand Support

Outsourced ServicingImplementation ProcessEstablish Terms Pre Contract

PMOBusiness Development NY Service Center

Implementation MethodologyCustomer Lifecycle

Letter of Intent

NonDisclosureAgreement

Service LevelStandards

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Implementation MethodologyDetailed Approach

PMO Kick-Off− Detailed Plan − PMO Processes

Assessment by Workstream− Detailed Questionnaire

Documentation− Processes− Sponsor Matrix− Gaps− Risks− Conversion Approach

Agreements− Detailed Scope of Services− Service Levels for All Areas− Legal Contract

Operational Readiness− Workflow Configuration− Application Set-Up− Infrastructure Set-Up− Development (if needed)− Transition & Cutover Plan

Conversion

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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.

PMO NY Service Center

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 ReportingThe JSC is the forum for dissemination of allService Level Reporting based on contractualService Level Standards.

WorkstreamsSpecialist 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 ManagementMonthly 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.

Implementation MethodologyClient Service Experience

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

Area of Measurement Metric(s) Total Breaks Exceptions # Within SLS % Within SLS Rating

Account Opening (Benchmark = 98%)

Number of new accounts set-up within 1 business day following receipt of completed documentation for cash only accounts

35 4 4 35 100% ■

Number of new accounts set-up within 2 business days following receipt of complete documentation via electronic / soft copy form via Security APL and within 5 business days upon receipt of complete documentation in hard copy form for cash and securities accounts

45 3 3 45 100% ■

Account Closures (Benchmark = 98%)

Number of accounts where client is notified within 1 business day if complete instructions are received from Program Sponsor by 1:00 p.m., and by 9:30 a.m. the next business day if notification received after 1:00 p.m.

33 0 0 33 100% ■

Number of occasions where account is restricted from trading activity within 1 hour of receipt of Program Sponsor notification

33 0 0 33 100% ■Intra-day Contributions and Withdrawals (Benchmark = 98%)

Number of intra-day cash contributions, withdrawals and transfers processed within 2 hours if notification is received by 1:00 p.m., and by 9:30 a.m. the next day, if notification received after 1:00 p.m.

152 4 2 150 99%■

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Restrictions (Benchmark = 98%)

Number of restriction changes as provided by Program Sponsor and underlying clients, processed on APL by end of business day if received or identified by 1:00 p.m. and by 9:30 a.m. the next business day if received or identified after 1:00 p.m.

14 0 0 14 100% ■

Account Reconciliation (Benchmark = 98%)

Number of times the daily status email is sent by 9:30 a.m.

Number of times automated reconciliations are not completed same-day

Number of manual reconciliations not completed within 30 days of month-end

21

21

450

0

0

5

0

0

0

21

21

450

100%

100%

99%

■■■

Style Changes (Benchmark = 98%)

Number of modifications processed within2 hours of receipt of notification by Program Sponsor, if received by 1:00 p.m. and by9:30 a.m. the next business day if receivedafter 1:00 p.m.

1 0 0 1 100% ■

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Performance Measurement (Benchmark = 98%)

Number of new accounts correctly placed in or excluded from composites

80 0 0 80 100% ■

Number of existing accounts correctly placed in or excluded from composites 0 0 0 0 100% ■

System Access and Management of Interruptions(Benchmark = 98%)

Number of system problems reported within 1 hour of identification by WMS

1 0 0 1 100% ■Security APL Outbound Interfaces (Benchmark = 98%)

Number of times the Softpak interface is sent by 7:30 a.m. daily

21 0 0 21 100% ■Number of times the standard interfaces are sent by 11:00 a.m. daily

21 0 0 21 100% ■Overall Performance (Benchmark = 98%)

Overall Performance 99.5% ■

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III. Monthly Operational Support ReviewStatistics

This Month Last Month Percent Change

Number of new account set-ups 80 87 -8.05%

Number of account closings 33 21 57.14%

Contributions and Withdrawals 152 120 26.67%

Restriction Items 14 5 180.00%

Style Changes 0 1 -100.00%

Number of auto reconciliations 168 168 0.00%

Number of manual reconciliations n/a n/a n/a

Workflow Solution

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

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

> Provides customer-specific automated service level reporting data

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

Workflow SolutionAutomated Workflow Distributor (AWD)

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> Custom Screen Design (CSD)– Created to meet an organization’s 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

Workflow SolutionAWD Terminology

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> 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

Workflow SolutionWorkflow Process

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> 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

Workflow SolutionWorkflow Process (continued)

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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

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AWD Screen ShotsTrader Notification / Action Queue

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AWD Screen ShotsAWD History

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AWD Screen ShotsHistorical Data/Image Retrieval

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

Key Takeaways

>State Street’s infrastructure, scale, commitment and market leadership

>Experienced professionals

>Proven implementation methodology

>Referenceable clients

Thank You

Tom McKee

Senior Vice President

971-790-4423

[email protected]

, senior vice president, state street wealth manager services

Documents

account services anne

managed account programs

managed account marketplace

managed accounts

investment manager of

broad range of services

wealth management market

investment restrictions