© 2007 Northern Trust Corporation northerntrust.com The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. © 2007 Northern Trust Corporation northerntrust.com Doug Regan, EVP President The Wealth Management Group September 11, 2007 Nancy Felton-Elkins, SVP Director of Fiduciary Services The Wealth Management Group Serving The Complex Needs of Ultra-Affluent Families and Family Offices

2 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What Will We Do Today? What is The Wealth Management Group? How are we serving the Ultra High Net Worth client? What may be changing?

3 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. The Wealth Management Group Founded in highly trained professionals on staff  Our relationship managers have 18 years average industry experience  Wealth Management staff in Chicago, New York, Los Angeles and London $185 billion in assets under administration $30 billion in assets under management 34% of Wealth Management Group clients utilize a single family office which represent 72% of AUA We serve 22% of the Forbes 400 families Average client relationship size is $439 million Over 30 client relationships with $1 billion or more in Assets under Administration 381 family relationships, with clients located in 48 states and 15 countries Services offered:  Global Asset Servicing and Reporting  Investment Management  Investment Consulting  Performance Measurement and Risk Assessment  Fiduciary  Private Banking

4 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. Education Family Financial Forum  For Families and their Family Office Executives  Pre-conference for Family Office Executives Inspiring Human Capital  Exclusively for Family Members  Learning and networking  Defining values and passing them on to future generations Global Wealth Alliance  Education for our largest clients’ Family Office Executives Client Advisory Board  For the heads of Family Offices to network with each other and to aid in improving the overall quality of services we provide to our mutual clients ― the Family. Financial Executives Group  Networking Group for Family Office Financial Executives

5 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. Wealth Passport With a quarter-century of experience working with Family Offices, Northern Trust understands their complex structures and can deliver comprehensive, customized solutions. Wealth Passport’s secure environment empowers wealth owners and family offices to conduct business more efficiently, make strategic decisions and focus less time on administrative functions.

6 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. Acquirors vs. Inheritors Acquired  Transition in socio-economic class  Identity is established partially or wholly prior to acquiring the wealth  Acquiror’s Quandary  Incorporating wealth into personal identity  How much do I assimilate Inherited  Maintenance of socio-economic class  Identity is tied up with wealth  Inheritor’s Quandary  Growing an identity out of a wealth environment

7 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What is Making My Phone Ring? Intergenerational Wealth  Is the client an acquiror or an or an inheritor?  Acquiror:Concern that the next generation will have too much money  Inheritor:Concern that the next generation will not have enough money-needs to work; entitlement

8 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What is Making My Phone Ring? Interest in Dynasty Trusts  Family Offices becoming investment companies or multifamily offices  Aggressive tax strategies  Investment performance requests for complex portfolios to review managers and consultants

9 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What is Making My Phone Ring? Buying Unusual Assets or Placing Them in Trusts  Estates with staffs  Art  Jewelry  Timber  Natural gas wells  Yachts with crews  Planes with gas bills?

10 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What is Making My Phone Ring? Questions About Reporting: Challenges of Information  Wealth Passport encourages customization and aggregation  Some folks want it simple  Electronic reporting, CD’s, or paper?  Fear of computers “I’ve been elected. What should I do?”

11 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. Where In the World Do I Go? What states don’t have state “death” taxes? Should I avoid moving to a Community Property state? What does de-coupling mean? Will I pay more death taxes in the state I call home? What states don’t have state taxes? Where can I have a Dynasty Trust with no Rule Against Perpetuities? Should I have an Asset Protection Trust in Delaware? In Guernsey? I know some states have better laws for Special Needs Trusts. Which ones? If Northern Trust in Chicago is co-trustee with my attorney in California, will my Irrevocable Trust be taxed in California if I am a California resident? Where is it best to establish a Private Trust Company (PTC)? We have a PTC but want Northern Trust for:  Asset Servicing/Information Delivery / Global Assets  Co-Trustee with powers limited to making discretionary distributions  Consultant on investments, discretionary decisions, being a trustee

12 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. The Yale Syndrome Asset Allocation Challenges with Alternative Asset Classes

13 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. The Yale Syndrome Percentage recommendations of consultants and investment committees range from 25-80% Passive versus Active Investments Knowing the Trust and family objectives, goals for advisors, and risk tolerance: family meetings Need for pooling assets, LLC’s, layered entities, schematics

14 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. The Yale Syndrome Lack of sophistication, need for education

15 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What In the World Are You Doing? Facilitating Family meetings Working with multiple attorneys from several firms Reforming, Remodeling or Decanting trusts Clients willing to pay for strong attorneys and accountants Engagement letters

16 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What In the World Are You Doing? Retainers or pay as you go and expenses Bias to big law firms with global capabilities Global capabilities for international legal, trust and estate planning You wear many hats

17 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. What May Be Changing? EVERYTHING!  The Tax Law  Strategies to unbundle fees  New Congress in 2009  Global Issues  AML for every country  Information Imperatives  Next Generation Issues  Succession planning  Philanthropy

18 The Northern Experience A C C E S S. E X P E R T I S E. S E R V I C E. THANK YOU!