Elevating Value and Experience in a Best Interest World Docupace VISION 2017 May 9, 2017

Best Interest Solutions Elevating Value and Experience In a Best Interest World Empowering the Modern Advisor – Why The Modern Advisor – Defined Best Interest Solutions – Defined Elevating Value and Experience in Best Interest World – How Experience Using Two Use Cases – Illustrate Advisors moving from commission to fee-based leads to increased: “opening” of local markets for product distribution use of lower cost investment solutions (Active, Passive, Strategic Beta) investment outsourcing numbers of unadvised investors (advice gap) use of technology in servicing clients, including “robo” solutions Focus on suitability, transparency and reporting leads to increased: use of risk-profiling and portfolio monitoring tools and multi-asset solutions focus on client service to support fee-based model outsourcing of new operational requirements across AM and Advisor firms

Best Interest Solutions Global Acceleration of Existing Trends Empowering the Modern Advisor – Business models, Products and Technology will need to adapt Advisors moving from commission to fee-based leads to increased: “opening” of local markets for product distribution use of lower cost investment solutions (Active, Passive, Strategic Beta) investment outsourcing numbers of unadvised investors (advice gap) use of technology in servicing clients, including “robo” solutions Focus on suitability, transparency and reporting leads to increased: use of risk-profiling and portfolio monitoring tools and multi-asset solutions focus on client service to support fee-based model outsourcing of new operational requirements across AM and Advisor firms Business Price Pressure Efficiency Focus Consistency of Advice Shift to Service Model Client Segmentation Product Shift to Passive Rise of Pre-Packaged Solutions Outsourcing Client Alignment Technology Automation Rise of D2C Digitalized Advice Hybrid Propositions

Best Interest Solutions Empowering Modern Advisors Morningstar is helping Financial Institutions and advisors around the world, modernize their practices to succeed and empower the Modern Advisor. Modern Advisors: Put investors first. They seek to always put investors first and offer varied advice solutions, which may include one-time or ongoing fee advice solutions, aligned to the need or goal of the investor Define and elevate value. They combine independent research, analytics, and holistic financial planning techniques to define and enhance their clients’ goal outcomes. They actively seek opportunities to add value to client investment strategies, whether through hands-on investment management or outsourcing parts of the value chain. Coach and collaborate with investors. They employ behavioral science methods to act as financial coach, counselor, educator, and motivator for their clients to understand what truly matters. Strive for simplicity. Technology has evolved to make what was previously considered “ideal,” “theoretical,” or “time-consuming” possible. They embrace technology to enable and illustrate the vision and to simplify the complex and achieve greater differentiated experiences for investors.

Best Interest Solutions Determine, Demonstrate, and Document Morningstar is helping Financial Institutions around the world, determine, demonstrate, and document that the products and advice their advisors offer are in the client’s best interest by reinforcing their: Product Shelf or Product Lineup The firm’s investment lineups must serve the best interest of their clients. Firms are accomplishing this by adding solutions ranging from: Combined data and research Outsourced fiduciary investment strategies via managed portfolios Tools to prove they’re building appropriate product lineups. Define and Elevate Value through Advice Solutions The advice proposals advisors prepare for clients must clearly communicate the value they are delivering and how the advice is goal-aligned and in the client’s best interest. *Fiduciary Services are offered through Morningstar Investment Management LLC, a registered investment adviser and subsidiary of Morningstar, Inc.

Best Interest Solutions The Product Shelf or Product Lineup Decision We unite the strengths of Morningstar’s independent investment research, data, and tools to help firms empower investors to meet their financial goals. “Do It Yourself” “Do It With You” “Do It For You” Advice Our world-class investment management organization is built on a foundation of proprietary research, data, and analytics that uniquely positions us to provide a more complete perspective on the markets. Information services listed are provided by Morningstar, Inc.  Advisory services listed are provided by one or more of the entities which are included in the Morningstar Investment Management group and which are authorized in the appropriate jurisdiction to provide such advisory services. Information While other companies may offer software, data, research, or ratings, what sets us apart is the ability to combine and deliver them all in whatever way is best for our clients.

Product Shelf Solutions A Complete Due Diligence Solution from Morningstar Manager Research Morningstar’s Product Shelf Solutions helps firms that manage their product shelves internally. “How can we justify the investments on our product shelf?” “How do we integrate Morningstar’s research into our workflow?” “Can we talk with your research team and leverage their insights?” “How can you help evaluate our entire product shelf?” Forward-Looking Ratings Morningstar Direct Analyst Access Due Diligence Scorecards

Product Shelf Solutions Due Diligence Scorecard Morningstar delivers due diligence scorecards, screens, watchlists, and monitoring reports for a home office team to evaluate every investment on the product shelf. When an investment doesn’t have qualitative coverage from an analyst, scorecards provide valuable insight. Example: Scorecard calculated in Morningstar Direct; Exported to Excel

Best Interest Advice Solutions Elevating Value and Experience in Best Interest World We have accelerated and expanded our integration initiatives in key areas to enable a better, more scalable advisor and investor experience for Financial Institutions: Deepening integrations with select providers, as well as including several new integrations Extending our advice proposal experience into new account opening and document retention Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Proprietary Solutions Note: Connections to custodians facilitated through The Athene Group (Skience) Document Management - An API is available to both Albridge and Docupace, respectively, for 17a-3 and 17a-4 books and records retention

Best Interest Advice Solutions Elevating Value and Experience in Best Interest World Use Case #1: 401(k) to IRA Rollover

Best Interest Advice Model – Client Needs Assessment (EMX) Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Note: Working design, subject to change

Best Interest Advice Model – Client Needs Assessment (MGP) Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Asset Allocation & Product Type Allocation Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Asset Allocation & Product Type Allocation Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Note: Working design being leveraged for user testing; subject to change

Security, Model, Annuity Selection Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Note: Working design being leveraged for user testing, subject to change

Account Open/ Fund/Trade/ Doc. Mgmt. Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering The output submission is a backend process triggered by clicking “Generate & Archive” and uses the firm-level configuration to direct the output to the appropriate Books & Records (17a-3/17a-4) provider.

Account Open/ Fund/Trade/ Doc. Mgmt. Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Once proposal is complete, user selects either “Generate & Archive” or “Send Data”, where all relevant information and proposal documents are sent for storage in Docupace The output submission is a backend process configured and triggered by clicking either “Generate & Archive” or “Send Data” uses the firm-level configuration to direct the output to the appropriate provider.

Best Interest Advice Model – Best Interest Assessment Narrative Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Document Management Integration Best Interest Proposal System 3rd Party Systems Push API Contact your Relationship Manager for details Meta Data (Identifying attributes) Proposal Data PDF Report (in binary format)

Best Interest Advice Solutions Elevating Value and Experience in Best Interest World Use Case #2: Annuity Income

Best Interest Advice Model – Client Needs Assessment (MGP) Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Client Needs Assessment (EMX) Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Client Needs Assessment (EMX) Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Note: Working design, subject to change

Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Security, Model, Annuity Selection Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Security, Model, Annuity Selection Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Security, Model, Annuity Selection Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Security, Model, Annuity Selection Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Security, Model, Annuity Selection Best Interest Advice Model – Guaranteed Income Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Account Open/ Fund/Trade/ Doc. Mgmt. Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering The output submission is a backend process triggered by clicking “Generate & Archive” and uses the firm-level configuration to direct the output to the appropriate Books & Records (17a-3/17a-4) provider.

Account Open/ Fund/Trade/ Doc. Mgmt. Best Interest Advice Model Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering Once proposal is complete, user selects either “Generate & Archive” or “Send Data”, where all relevant information and proposal documents are sent for storage in Docupace The output submission is a backend process configured and triggered by clicking either “Generate & Archive” or “Send Data” uses the firm-level configuration to direct the output to the appropriate provider.

Best Interest Advice Model – Best Interest Assessment Narrative Needs Assessment Service Offering Prospecting Asset Allocation Security, Model, Annuity Selection Best Interest Assessment Account Open/ Fund/Trade/ Doc. Mgmt. Surveillance + Monitoring + Archiving Data Gathering

Best Interest Solutions Roadmap Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Rule Effective Rule Applicable Apr 2017 Jul 2016 Dec 2016 Proposal Annuity Workflow Questionnaires Benefit/Contract Selection Modeling, Reports Integration Input (financial planning) Output (document/account opening) Proposal Summary Report Training & Education Module 2: Applying the DOL Fiduciary Rule Data Fixed and Fixed Indexed Annuity Data Annuity Intelligence Advisor Workstation Data Feed Best Interest Proposal, phase 1 Retirement Plan Intelligence: Plan Fee Data API (5500 and 404a5 data) Product Shelf Low Minimum Target Risk ETF Model Portfolios Proposal Fee Disclosure Report: (MF, ETF, MM, CE) Data DOL Data Package July 2017 Proposal Interface Improvements Fee Inputs Retirement Plan Data Plan Lookup (5500 data) Fee Disclosure Reports Single Portfolio Portfolio Comparison Training & Education Module 1: Understanding the DOL Fiduciary Rule Plan Sponsor Fiduciary Services Morningstar® Plan AdvantageSM Sep 2016 Proposal Improved navigation Retirement Plan Data Plan Lookup (404a5 data) Best Interest Scorecard & Scorecard Report Data Fixed and Fixed Indexed Annuity Data Best Interest Proposal, phases 2 & 3 Proposal Interface Improvements Fee Disclosure Report: (VA) Training & Education Fiduciary Foundation More detail on interim annuity deliverables in the Best Interest Proposal Tool: Annuity Fit Questionnaire and Annuity Decision Report: 24-Mar Fixed Index Annuity #1 (contract type = lifetime withdrawal benefit + crediting strategy type = spread ): 24-Mar Fixed Rate Annuity: May SPIA: May DIA: June Fixed Index Annuity #2/#3 (crediting strategy types = participation rate or cap): July ** ** pending WFE modeling work Roadmap as of 3/13/17, subject to change