The future of platforms Presentation to Capstone Conference 2010 Nick Blue: Business Development Manager

Today’s agenda The history of platforms The current trends and issues A timeline of the platform industry. The current funds under advice (FUA) and flows analysis. The current trends and issues What will legislative change mean? The future of wraps What will the market look like? What will platforms focus on? What will this mean to Advisers?

The history of the platform market Uptake share of net inflows Next generation platforms launched First non discretionary Mastertrusts Baby platforms launched First discretionary Mastertrusts Wraps Launched Super Wraps Launched Early 1990’s Mid 1990’s 2010 Oct 1997 Early 2000’s

The history of the platform market March 2010 Market inflows Market outflows Market net flows $ millions Source: Plan for Life, QDS Admin, All Master Funds (competitors manually selected) – March 2010. 4

The history of the platform market Wrap market FUA BT Wrap % share of FUA Source: Plan for Life, QDS Admin, All Master Funds (competitors manually selected) – March 2010. 5 5

The history of the platform market Source: Plan for Life, QDS Admin, All Master Funds (competitors manually selected) – March 2010. 6 6

Current Issues/Trends - Legislative change Impact on Initiative Description Payments Remove conflicted remuneration structures Prospective banning of commissions and any form of payment relating to volume or sales targets Percentage based fees can only be charged on un-geared products Retail clients to annually renew (by opting in) to an adviser’s continued services Product neutral adviser charging regime Adviser duties and standards Statutory fiduciary duty for advisers Advisers to act in best interest of their clients, ahead of their own when providing advice Removal of accountant’s exemption to allow advice on SMSFs Review of professional standards Advice and investor scope Other Expand provision of low cost simple advice Distinction between sophisticated/unsophisticated investor to determine relevant financial service provider obligations Source: ‘The future of financial advice’ information pack, Hon Chris Bowen MP 26/4/2010 7

Trends/Issues in the current platform market They now make up 30.9% of all super assets $369b There are 417,000 funds with 30,000 new funds being established each year Only 50% of them are being advised on SMSF assets have grown at 20% pa for the 10 years The fee for service debate continues Building a CVP for 2012 Expected change in structure of fee Fee differential between SMSF and other investments A move away from managed funds A move to Exchange Traded Funds A move to Dimensional Funds Management Re-ignited emphasis placed on cash and term deposit solutions Trends and Issues in the platform market Growth in SMSF’s How Advisers charge Cost of platforms Investment Choice Total cost to client Aggregation of fees Margin to dealer group 70% of advisers believe cost of managing equities on wrap is too expensive

Trend/Issue – Change in investment choices Source: Investment Trends “Planner and Direct equities Report – June 2010” 9

Trend/Issue – growth in SMSF market Source: Investor Trends SMSF Investor Report – May 2009

Trend/Issue – How Advisers charge Source : Investor Trends – Planner Business Model Report September 2009 11

Trend/Issue – How Advisers charge C-Wrap Statistics Total BT Wrap Statistics Source : BT Wrap – May 2010 12

The future of platforms Issue Item Description #1 Regulatory change Outcome of the reviews may be that scale rewards are banned. Outcome of review may mean that margin made from badges may not be possible. #2 Competitor intensity Competition will ↓Price, ↑ service and functionality. It will also see continued entrants from new sophisticated providers. Planner software diversifying their offering. #3 Focus on SMSF market Platforms will look to capitalise on this growth segment and look to position to move more SMSF’ on platforms. Platforms will continue to integrate with third parties involved in SMSF’s #4 Equities Platforms will develop more sophisticated equity solutions to capture this growing market. #5 Retirement opportunity Platforms will look to develop products to meet the needs of an aging population. Platforms will look to capture more accumulators. #6 Integration With accountants and their software. With planning and risk software. With stockbrokers (SMA’s) #7 Mass affluent segment The mass affluent segment is large and attractive but platforms yet to target segment. #8 Self Service Maintain client as key relationship but allow client access. 13

What will platforms focus on - SMSF 32% of SMSF are held in direct equities (30 June 2009) Share allocation in portfolios expected to double of the next 5 years More SMSF will move to drawdown phase Equities Cash and Term Deposits Reporting SMSF clients demand more sophisticated reporting 31% of SMSF Trustees said they would pay 2.5% for consolidated reporting Intergration SMA integration with brokers Model portfolios with brokers Linkage of wrap to accountants Client access 26% of SMSF are held in Cash or Term Deposits (30 June 2009) Logic Commenced a 3 year transformation program in 2009 Delivered bulk trading, contra trading, improved corporate actions market information Delivering model portfolios in September 2010 Scoping SMA capability in 2011 Delivered Cash notations in March 2010 Will deliver improved functionality in 2011 Implementing a CMA in 2011 Improved Term Deposit Maturity process – August 2010 Scoping consolidated reporting Will provide tax parcelling from 1 July 2011 BGL data downloads Scoping SMA’s Improving tax statements What is BT doing Opportunity for advisers Do you have a strong value proposition for equities ? More than 50% of SMSF are unadvised Administrative efficiencies Opportunity to maintain revenue Further improve your CVP Ability to re-engage or improve referral relationships

Key messages of today The platform industry is highly competitive, dominated by banks and moving through a period of rapid development. The biggest issue in the platform industry is what will legislative change mean. This will have impact on the price of platforms, the investments adviser choose and how advisers charge their clients. Wraps will focus on growth areas of SMSF, equities and retirement products going forward. 15