asset management technology

Asset Management Technology

& Operations Survey ResultsFebruary 2007

Investment Adviser Association and SEI 1

Table Of Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Survey Findings and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Information Technology Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Website . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Investment Operations Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Investment Operations Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Investment Operations Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Trading, Brokerage, and Custody . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Legal and Regulatory Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Universe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

About the Sponsors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Table Of Figures

Figure 1: Measures of Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Figure 2: Determinants of Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Figure 3: Number of Employees per $100 million AUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Figure 4: Average Headcount by Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Figure 5: Focus of IT Spending in 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Figure 6: Percentage Change in IT Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Figure 7: Expected Changes to IT Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Figure 8: Website Features Offered or Under Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Figure 9: Percentage Change in Investment Operations Expenditures . . . . . . . . . . . . . . . . . . . . . 10

Figure 10: Systems Developed and Maintained In-House or Outsourced . . . . . . . . . . . . . . . . . . . 11

Figure 11: Functions Performed In-House or Outsourced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Figure 12: Portfolio Accounting System(s) Used and Satisfaction Level . . . . . . . . . . . . . . . . . . . . 12

Figure 13: Trade Order Management System(s) Used and Satisfaction Level . . . . . . . . . . . . . . . . 13

Figure 14: Initiatives Undertaken in Response to Legal and Regulatory Requirements . . . . . . . . . 14

Figure 15: Investment Products Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Figure 16: Client Types Serviced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Figure 17: Account Types Serviced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2 Asset Management Technology and Operations Survey Results

The Investment Adviser Association (IAA) and SEI are pleased

to present results of the first annual IAA/SEI Asset Management

Technology and Operations Survey. The IAA, a nonprofit industry

association with about 500 members, and SEI, a leading

global provider of outsourced asset management, investment

processing, and investment operations solutions, have jointly

created this ongoing survey program to highlight and track

the growing importance of technology to asset management

organizations. This initial edition of our survey covered a diverse

group of traditional mutual fund and separate account managers

with an average of $3.8 billion in assets under management (see

page 18 for more details).

Not so long ago, asset managers saw technology primarily

as an enabler of core operating functions—a way to increase

operational productivity and efficiency. Now technology has

also become a means to improve investment performance, build

relationships with clients, deliver a customized and differentiated

client experience, expand the range of products provided, tailor

product packaging and distribution to fit changing demand,

and manage compliance. In short, technology provides a critical

lever for improving overall business economics and increasing

quality across nearly all functional areas.

Moreover, we at the IAA and SEI believe the role and impact

of technology in our industry can only continue to grow. At a

time when investment products are becoming increasingly

commoditized and size and scale are no longer prime factors

in success, asset managers need to update the ways they think

about competitiveness. They must recognize that an asset

management business is much more than just a collection

of functions; it is a set of business processes orchestrated to

create capabilities in service of a strategic vision. In the future,

the ability to compete on capabilities will be a key driver of

competitive advantage.

This notion of competing on capabilities is both the context

for this survey program and a motivating force behind this

survey program. Clearly, asset managers cannot develop their

competitive capabilities without first building the necessary

infrastructure. For that reason, we believe the industry is

entering an era in which technology will be the focus of even

greater attention and investment than in the past.

Our survey, which was conducted at the end of 2006, is our

initial effort to capture these trends, and will provide a baseline

for similar efforts in the future. In order to elicit candid and

accurate responses, the survey was conducted online and

respondents were anonymous. The questionnaire was designed

to identify key trends, show how organizations are allocating

resources, and highlight best practices.

Our thanks to all of the investment management organizations

and individual respondents who participated. Their contribution

of time, effort, and data is greatly appreciated. Thanks are also

due to those who participated in designing and conducting the

survey, analyzing responses, and presenting results:

David Tittsworth, Executive Director, Investment Adviser

Association

Paul Schaeffer, Managing Director for Strategy and

Innovation, Investment Manager Services division, SEI

Steven Unzicker, Director, Langham Capital Ltd.

Ava Lala, Marketing Director, Investment Manager Services

division, SEI

Erika McDaniel, Marketing Associate, Investment Manager

Services division, SEI

We hope this survey will spark further discussion of technology

trends and issues, and we look forward to the next update

commencing in late 2007.

Introduction


Survey results paint a picture of an asset management industry

that is increasingly reliant on operational and technology

capabilities. Because respondents have come to see these

capabilities as critical to their success, they are continuing

to increase their investment in technology and are willing

to deal with the complexities accompanying technological

advancement.

Operational and technology capabilities are viewed as

important enablers, rather than indicators, of business

success. Survey respondents rank client service capability—a

function highly dependent on operational quality and technology

infrastructure—as the number one determinant of success,

followed by investment performance and employee retention.

Interestingly, operational and IT capabilities are seen as more

important success factors than sales, marketing, or distribution.

Not surprisingly, the top-ranked measures of success focused

on financial results, asset growth, and employee retention.

Most respondents say their IT budgets are currently focused

on maintaining and upgrading existing systems and operating

infrastructure. Only 13% report a focus on developing new

systems. This illustrates how deeply ingrained technology has

become in the operations of the average firm. Whereas IT used

to be seen as a cost of doing business, it is now simply the way

business is done.

IT spending continues to grow, with 60% of firms expecting to

increase their 2007 budgets over 2006 amounts. Key factors

driving higher spending include:

• Regulatory and compliance concerns.

• Increasingly complex accounting and reporting resulting

from growing product diversity and demands for

customization.

• Rising compensation for IT professionals as the competition

for talent heats up once again.

All of these present significant operational challenges to

managers.

Asset managers are dealing with growing operational

complexities. Survey responses indicate that:

• Many managers are struggling to manage proliferating

outsourcing relationships.

• Outsourcing of systems development and maintenance

is ubiquitous, but many managers still perform some

functions in-house, most notably portfolio accounting,

trading/order management, and client reporting. This

is particularly true outside of the mutual fund arena.

Managers are generally satisfied with the quality of their

outsourced products and services.

• Forty percent of managers report using more than one

portfolio accounting system.

• It is not uncommon for a manager to deal with eight or more

external data vendors, presenting a multitude of integration

and budgetary challenges.

• Trading environments are also subject to complications

and inefficiencies, including the use of multiple brokers

and custodians, use of multiple trade order management

systems (reported by 38% of respondents), and the

persistence of manual communication methods (e-mail,

fax, phone).

Legal, regulatory, and compliance concerns continue to

drive IT spending higher; 84% of firms said such issues have

had an impact on technology spending. The most commonly

cited initiatives undertaken in response to legal and regulatory

requirements include e-mail retention, disaster recovery, and

best execution monitoring.

Responses point to continued growth in IT spending, due to

continued demands by customers and intermediaries for new

and more customized products, as well as ongoing compliance

demands. In the absence of any external shocks such as Y2K

or the Era of Spitzer, however, IT spending may grow more

slowly than in the past. Asset managers nevertheless expect

technology and operations to represent a growing share of

overall budgets as they aim to differentiate themselves in an

increasingly crowded and competitive marketplace.

Conclusion


Survey Findings and Analysis

Business strategy

When survey participants were asked to name their three primary long-term business

objectives, asset growth was most commonly cited as the top priority. Improving client

service was a close second, and improving operational efficiency through the use of

technology was also named by a number of firms as an important goal.

When asked how they measured the success of their firms, financial considerations led

the way, with shareholder return most commonly cited as being very important. The only

measures commonly seen as unimportant are firm size and market share. (See Figure 1)

There is little debate over what determines success. Asset managers unanimously say that

client service capability is either important or, more commonly, very important. Investment

performance and employee satisfaction also rank highly. Less importance is attached to

technology and operations capability, although these are viewed as more critical than sales

and marketing in determining overall firm success. (See Figure 2, next page)

Shareholder Return

Profitability

Net Asset Growth

Employee Retention

Productivity Capability

Operational Capability

Technology Capability

Firm Size

Overall Market Share

0% 20% 40% 80% 100%60%

Very Important Important Not Important

Figure 1: Measures of Success

(percentage of firms)


Client Service Capability

Investment Performance

Employee Satisfaction/ Retention

Operations Capability

IT Capability

Sales Capability

Marketing &Distribution Capability

Investment ProductDiversity

20% 40% 80% 100%60%

Very Important


Important Not Important

Figure 2: Determinants of Success

0%

Personnel

Total firm headcount is very closely correlated to AUM size (See Figure 3, next page. AUM

on the Y axis is shown on a logarithmic scale in order to better illustrate the correlation).

There are some scale efficiencies when it comes to personnel, with larger firms requiring

less than one FTE per $100 million under management, while smaller firms typically require

two to five.

Only 39% of firms have an employee whose primary responsibility is overseeing firm-wide

systems and technology. Among those that do, this employee most often reports to the CEO

/ President and sits on the management committee more than half of the time (58%). Most

firms with over $1 billion AUM have at least one full time employee dedicated to systems

and technology. Smaller firms generally utilize someone on a part time basis or (in the

case of the smallest firms) do without. The average number of systems and technology

employees is 3.3 (see Figure 4, next page). Much more unusual are employees dedicated

to web-related and e-commerce activities. Only one participating firm reported having such

a person employed.


Figure 3: Number of Full Time Employees (FTEs) per $100 million AUM

0 1

FTEs per $100 million AUM

(number of FTEs)

AU

M (

logarith

mic

scale

)

2 3 4 5

100,000

10,000

1,000

100

10

Investment Mgmt

Sales & Marketing

Client Service

Investment Ops andPortfolio Acct

System & Technology

Trading Positions

Administrative

Legal & Compliance

Executive Management

Finance & Accounting

Strategic Planning

Human Resources

(number of FTEs)

Figure 4: Average Headcount by Function

10.8

5.0

4.6

3.3

.6

1.6

2.1

2.3

2.7

2.6

.4

5.2


Information technology budget

Information technology (IT) expenses account for a significant portion of overall costs at the

typical asset management firm.

• IT spending as a percentage of total expenses

– Average: 13.6%

– Median: 4.8%

• IT spending per employee

– Average: $11,900

– Median: $7,300

Given the time, complexity, and expense of evaluating, purchasing, and installing new

systems, it is not surprising that many companies (45%) are focused on maintenance.

Another third are focused on upgrading existing systems. Only 13% of respondents are

focused on buying new systems. (See Figure 5)

A growing number of managers are enlarging their technology budgets (see Figure 6).

Average annual IT spending in 2005 (including personnel, hardware, software, systems

and outsourcing) totaled $652,000. This rose to an average of $657,000 in 2006.

Median spending rose from $135,000 to $148,000. Just over half of the managers

surveyed increased IT spending during 2006, while 60% expect to do so in 2007. The

increased investment cannot be attributed to any one area, but regulatory and compliance

management is leading the way (see Figure 7).

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

(number of firms)

Figure 5: Focus of IT Spending in 2006

Other

6.5%

Buy new systems and

expand existing operating

infrastructure

12.9%

Upgrading existing system and operating infrastructure

35.5%

Maintain existing

systems and operating

infrastructure

45.2%


Figure 6: Percentage Change in IT Spending

Greater than 2005

53.3%

Lower than 2005

16.7%

Change in IT Spending in 2006


Same as 2005

30.0%

Greater than 2006

60.0%

Lower than 2006

3.3%

Expected Change in IT Spending in 2007


Same as 2006

36.7%

Figure 7: Expected Changes to IT Expenditures

0% 20% 40% 80% 100%60%

Increase No Change Decrease


Regulatory / compliance

management

Portfolio accounting

and client reporting

IT salaries and bonuses

Client service contact

management / database

Network / LAN /

WAN hardware

Website software, develop-

ment, maintenance

Marketing / sales contact management / database

Disaster recovery

Consulting / outsourcing

Investment research /

database

Network / systems security

Remote access / VPN

Workgroup and

knowledge mgmt.

Call center technology


Website

The vast majority (84%) of firms have websites. The few exceptions tend to be smaller firms.

Many websites could be characterized as brochure-ware, offering little more than general

firm information and marketing material. Not surprisingly, websites are seen as an important

platform to showcase a firm’s personnel in the form of biographies. Few managers offer

client reporting via their websites, and even fewer (12%) offer transactional capability. (See

Figure 8) Targeted content for specific client or intermediary segments is very rare, with only

three firms reporting that they offer this type of content on their sites.

Websites are often works in progress. Among firms that do not currently offer extensive

online features, a number are focused on making product performance data, client account

information, and original research available.

0% 20% 40% 80% 100%60%

Currently Available Under Development

Figure 8: Website Features Offered or Under Development


Biographies of key professionals

Product performance

Client account info.

ADV and other filings

Prospectuses

Job openings

Original research

Calculators (retirement, college, etc.)

Real-time account / fund info.

Portfolio allocation tools

Web conferencing


Investment operations budget

When asked to name the top operational issues facing their firms, managers listed a wide

range of priorities. Common threads included:

• Compliance

• Customized reporting

• Managing and integrating outsourced relationships

• Improving resource allocation and efficiency

• Improving reconciliation process

• Recruiting and training

• Cross-functional coordination

Spending on investment operations is accelerating. Not a single manager plans to decrease

spending in this area next year. (See Figure 9) The average spending increase on

operations is higher than IT generally.

Investment operations outsourcing

Outsourcing in investment operations continues to grow. The development of fund

accounting and custody systems, for example, is outsourced by all companies in the survey.

Systems developed in-house continue to be used in potentially idiosyncratic areas with

more customized features such as client reporting and partnership accounting. (See Figure

10, next page) When it comes to actually performing investment operations, managers are

generally comfortable outsourcing functions such as transfer agency and fund accounting.

Outsourcing is viewed as more difficult or less desirable for other functions such as portfolio

accounting and trade order management. (See Figure 11, next page)

Figure 9: Percentage Change in Investment Operations Expenditures

Greater than 2005

50.0%

Lower than 2005

3.6%

Change in Spending

on Operations in 2006


Same as 2005

46.4%

Greater than 2006

60.0%

Lower than 2006

0.0%

Expected Change in Spending

on Operations in 2007


Same as 2006

40.0%


Figure 10: Systems Developed and Maintained

In-House or Outsourced

0% 20% 40% 80% 100%60%

Outsourced In-house


Fund accounting

Custody

Shareholder services

Portfolio accounting

Partnership accounting

Client statement & reporting

Trading / Order Mgmt.

Figure 11: Functions Performed In-House or Outsourced

0% 20% 40% 80% 100%60%

Outsourced In-house


Custody

Transfer agency

Fund accounting

Fund administration

Shareholder services

Trust accounting & admin.

Tax preparation & compliance

Partnership accounting

Email retention

Client statement & reporting

Trading / order management

Portfolio accounting / reconciliation


Investment operations systems

Most firms use a single portfolio accounting system for all accounts, though several reported

using multiple systems. The use of multiple systems is positively correlated to firm size and

in all cases reflected distribution platform requirements associated with offering separately

managed accounts.

Half of all firms have portfolio accounting systems that feed data to their front-office

application’s risk and/or portfolio attribution tools. Sixty-eight percent utilize a portfolio

management system of some type to create and review proposed changes to a portfolio.

Sixty percent of firms report using a single portfolio management system across all

products. Most others use two systems, although one firm reported using four. Shadowing is

very common, with 83% of firms reporting that they complete all back-office processing for

all accounts for which investment decisions or recommendations are made.

The use of third-party data vendors (for pricing, corporate actions, security master, index

returns, etc.) varies considerably from one firm to the next. The average firm relies on four

data vendors (median = 3), though the use of eight or ten is not uncommon. When it comes

to clients receiving third-party data, half are supplied directly from the firm while the other

half receives it from the portfolio accounting partner. Less than half of all firms (46%) said

that the third-party data process is managed by their investment accounting system vendor.

Advent Axys is the most commonly used system, followed by SunGard and Checkfree APL.

Among the commercially available systems in use, Schwab Centerpiece provided the most

satisfaction, followed by CheckFree APL and Advent Axys. (See Figure 12)

Figure 12: Portfolio Accounting System(s) Used

and Satisfaction Level

(percentage of firms) System Used Meets Needs / Satisfied

Advent Axys 52% 71%

SunGard 29% 67%

CheckFree APL 23% 83%

Other 13% 100%

Schwab Centerpiece 10% 100%

Thomson Portia 10% 67%

In-house developed 10% 67%

Note: Other systems given as answer option but not reported being used include Eagle Starr, FMC

Pacer, and Princeton Financial PAM


Trading, brokerage, and custody

Managers use a variety of trade order management systems, and no single vendor claims a

dominant market share. Some firms (38%) use multiple systems (usually two but occasionally

as many as four). Satisfaction levels are generally higher than is the case with portfolio

management systems: most systems received 100% satisfaction ratings. (See Figure 13)

Used by three quarters of firms, trading applications remain the most common way to notify

brokers of allocations. Firms often use multiple modes of communication, with more than a

third relying on faxes, phones, and emails to some extent. Notifying custodians is different.

While 65% rely on trading systems, faxes are still used by 61% of firms and emails by 45%.

Phones are not used often. Faxes are most commonly used when notifying brokers of settle-

ment instructions for held away accounts. Trading systems are rarely employed for this purpose.

Other findings related to trading and custody:

• 55% of firms report that some trades are not executed electronically. Among these firms,

an average of 38% of trades are executed manually (median = 30%).

• Directed brokerage is becoming more rare: only 23% of firms reported that they choose

to direct their trades to brokers.

• The number of trades executed on a monthly basis varies wildly, but the median is 325

trades, with an average of 33% of these being block trades (median = 10%).

• Among firms on wrap platforms the average number of platforms used is 4.6

(median = 3.5).

• The median number of brokerage houses dealt with regularly is 10. The median number

of custodians dealt with regularly is 6.

Figure 13: Trade Order Management System(s) Used and

Satisfaction Level

(percentage of firms) System Used Meets Needs / Satisfied

Advent Moxy 42% 75%

Bloomberg 29% 100%

CheckFree APL 21% 75%

Customized system 21% 100%

Other 21% 100%

Charles River 13% 100%

Eze Castle 4% 100%

Linedata Longview 4% 100%

Note: Other system given as answer option but not reported being used included Macgregor XIP


Performance measurement

Less than half of all participating firms (45%) state that they are AIMR/GIPS compliant.

Most (87%) utilize a single performance system for all accounts and account types and

77% of the time it is a component of the firm’s existing accounting system.

The vast majority (93%) of firms surveyed calculate performance for individual accounts.

A third of them also calculate sector performance. Performance is calculated daily by two

thirds of firms, with the remainder calculating monthly. A small minority (16%) also review

performance calculations daily, although the majority (84%) prefers to review monthly.

Very few firms (6%) utilize a data warehouse for data management. Four out of five

companies have a periodic reconciliation process to verify the accuracy of performance data

against internal systems.

Legal and regulatory issues

Legal, regulatory, and compliance concerns drive organizational change and increased

spending (See Figure 14). When asked whether recent legal, regulatory and compliance

requirements had impacted technology spending:

• 83.9% said YES

• 16.1% said NO

Reported increases in spending range from 5% to 40%.

• Average increase: 17.6%

• Median increase: 20.0%

Figure 14: Initiatives Undertaken in Response to Legal and

Regulatory Requirements

0% 20% 40% 80% 100%60%


Email retention

Disaster recovery

Best execution monitoring

Personal trading monitoring

Compliance training

Customer data security

Proxy voting

Anti-money laundering

100.0%

93.5%

74.2%

71.0%

67.7%

54.8%

54.8%

41.9%


Methodology

Investment advisory firms filled out an online survey consisting of 98 questions about

technology and operations. The survey data was validated and outliers removed as

necessary. The quantitative analysis and written report were each reviewed extensively prior

to publication. The resulting report is believed to be a fair reflection of the survey responses

provided by IAA members, but neither SEI nor the IAA can claim responsibility for the

accuracy or reliability of the data provided.

Universe

Following are some key characteristics of the survey universe (see also Figures 15-17,

next page):

• 31 managers with AUM ranging from under $100 million to almost $40 billion

– Average AUM: $3.8 billion

– Median AUM: $937 million

• Total firm headcount ranging from low single digits to almost 200

– Average headcount: 29

– Median headcount: 15

• Assets per employee ranging from $22 million to $250 million

– Average AUM per employee: $76 million

– Median AUM per employee: $67 million

• Revenue per employee ranging from $115,000 to $840,000

– Average revenue per employee: $334,000

– Median revenue per employee: $249,000

• Fee realization ranging from approximately 20 bps to more than 110 bps

– Average fee realization: 54.7 bps

– Median fee realization: 51.0 bps

Background


Figure 15: Investment Products Offered

0% 20% 40% 80% 100%60%


Domestic Equity

Domestic Fixed Income

Balanced

International Equity

Alternative and Hedge

International Fixed

Other

94%

74%

58%

39%

26%

19%

10%

Figure 16: Client Types Serviced

0% 20% 40% 80% 100%60%


Individual HNW

Institutions

DC / 401k

Individual Retail

90%

68%

35%

23%

Figure 17: Account Types Serviced

0% 20% 40% 80% 100%60%


Individual HNW SMAs

Institutional Sep. Accts.

Mutual Funds

ETFs

Partnerships

Retail Sep. Acct.

Common & Collective Funds

72%

62%

47%

23%

23%

19%

10%


Investment Adviser Association

The Investment Adviser Association is a national not-for-profit organization that exclusively

represents the interests of federally registered investment adviser firms. The Association

was founded in 1937 and played a major role in the enactment of the Investment Advisers

Act of 1940. The IAA consists of about 500 investment adviser firms that collectively

manage in excess of $8 trillion for a variety of institutional and individual clients.

SEI

SEI (NASDAQ: SEIC) is a leading global provider of outsourced asset management,

investment processing and investment operations solutions. The company’s innovative

solutions help corporations, financial institutions, financial advisors, and affluent families

create and manage wealth. As of the period ending December 31, 2006, through its

subsidiaries and partnerships in which the company has a significant interest, SEI

administers $366.6 billion in mutual fund and pooled assets and manages $181.5 billion in

assets. SEI serves clients, conducts or is registered to conduct business and/or operations,

from more than 20 offices in over a dozen countries.

SEI’s Investment Manager Services division provides total operations outsourcing solutions

to investment managers focused on mutual funds, hedge and private equity funds,

separately managed accounts and institutional client services. The division applies

operating services, technologies, and business and regulatory knowledge to each client’s

business objectives. Its resources enable clients to meet the demands of the marketplace

and sharpen business strategies by focusing on their core competencies.

For more information on this report, please contact:

David Tittsworth Paul Schaeffer

Investment Adviser Association SEI

1050 17th Street, N.W., Suite 725 343 Sansome St., Suite 425

Washington, D.C. 20036-5503 San Francisco, CA 94104

(202) 293-4222 415-293-6507

[email protected] [email protected]

This information is provided for educational purposes only and is not intended to provide

legal advice. Neither SEI nor the Investment Adviser Association claim responsibility for the

accuracy or reliability of the data provided. Information provided by SEI Global Services, Inc.

© 2007 SEI Investments Developments, Inc.

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