1. Path to a Fee-Based Practice
Part 1: Third Party Managers
Dial-In Number: 1 (213) Webinar ID:
OCTOBER 2016

2. Welcome Sarah Molitor Stoyan Petev David Hoff
Dial-In Number: 1 (213)
Webinar ID:

3. Heartland Huddle: November 2
November 2nd 2016
Learn how to generate Managed360 Proposals in NetX360
Find out where to view products and models offered through Managed360

4. Study Group Series: Path to a Fee Based Practice
October 20: Identifying 3rd Party Managers November 17: Mastering Fee-Based Asset Management

5. Objectives Series Objective: Develop a successful fee based practice
Today’s Objective: Provide a greater understanding of 3rd Party managers and their relative strengths

6. Agenda: 3rd Party Managers
Why would I want to use them?
Who are they?
Where do they fit?
What are their strategies?
What investment types do they use?
What are their minimums?
How much will it cost to use them?
How have they performed?

7. Introductions
Sarah Molitor
Stoyan Petev
David Hoff

8. Why use 3rd Party Managers?
Save Time
Eliminate Ticket Charges
20%
Increase
In Advisor Compensation
Keep Client Cost the Same
Increase Income

9. Why use 3rd Party Managers?
20% Increase in Advisor Compensation
Growth Fund of America1
Managed360: Vanguard2
Internal Expense: 0.65% Cost to Client 0.65% Net Expense Ratio % Advisor Fee 1.65% Total Cost to Client Rep’s Retention: 0.90%
Internal Expense & Platform Fee: 0.57%
Cost to Client
0.10% Expense Ratio
0.30% Manage 360 Fee
0.17% FHC Platform Fee
% Advisor Fee
1.65% Total Cost to Client
Rep’s Retention: 1.08%
1. American Funds The Growth Fund of America, Class A. (U.S. Stock: 80.46% Bonds/Cash/Non US Stock/Other: 19.54%)
2. Vanguard’s 80/20 (equity/fixed income)Portfolio

10. Global Assets Under Management
Portfolios leverage Vanguard’s 40 years of experience in portfolio construction and indexing
Low-cost, passively managed portfolios comprised of Vanguards proprietary ETF’s
Emphasize the benefit of low cost investing to achieve long term success
Inception
Minimums
Global Assets Under Management
Investment Type
1975
$25,000
3.5 Trillion1
ETFs
Home Page About Vanguard
1. As of 6/30/16

11. Global Assets Under Management
The world’s largest fiduciary manager with local presence in every major market, including 65 offices in 30 countries1
Creates targeted income models using a combination of low cost iShares and mutual funds
Portfolios can be used as a core investment strategy or to compliment an existing strategy
Inception
Minimums
Global Assets Under Management
Investment Types
1988
$25,000
$4.89 Trillion1
ETFs and Mutual Funds
Home Page About BlackRock
1.BlackRock. Based on $4.89 trillion in AUM as of 6/30/16

12. Global Assets Under Management
Deliver retirement specific investment solutions for early, middle and late stages of retirement
Portfolios created leveraging Ibbotson’s expertise in strategic asset allocation and Morningstar’s manager research capabilities
Portfolios are more actively managed and use mutual funds as their primary investment vehicle
Zero Proprietary Funds
Inception
Minimums
Global Assets Under Management
Investment Types
1984
$50,000
$185 Billion
Mutual Funds
About Morning Star

13. Global Assets Under Management
Offers solutions for a wide range of investor needs including building, preserving and extending wealth
Research and select managers from around the world to create multi-asset portfolio solutions
Implement portfolios with proprietary mutual funds
Creator of the Russell2000 Small Cap Index
Inception
Minimums
Global Assets Under Management
Investment Type
1998
$25,000
$244 Billion
Mutual Funds

14. What Are Their Strategies?
Strategy
Income / Retirement Focus
Strategic Asset Allocation
Strategy Explanation
focused on maximizing income then growth during retirement years.
based on client risk/return objectives.
Can be re-allocated on a periodic basis back to the targeted allocation on a quarterly, semiannual or annual basis.
3rd Party Manager

15. A Quick Comparison Investment Types Minimums 3rd Party Manager
BlackRock
ETFs and Mutual Funds
MorningStar
Mutual Funds
Russel Investments
Vanguard
ETFs
3rd Party Manager
Minimum
BlackRock
$25,000
MorningStar
$50,000
Russel Investments
Vanguard

16. Client Expense Internal Expenses Manage360 Fee Additional Manager Fees
(Applies to BlackRock & MorningStar)
FHC Platform Fee
Rep Fee
Dollar Amount
Program Fee
First 500K
0.30%
Next 500K
0.25%
Over 1M
0.20%
Additional
Fee
BlackRock
0.10%
Morning Star
0.25%
Flat Fee
0.17%
Total Client Cost

17. Client Expense: Vanguard Example
Third Party Manager: Vanguard
Asset Allocation: 80/10
Client Invests: 500K
Source
Fee
Internal Expense
(Asset weighted expense ratio)
10 bps
Manage360 Platform Fee
30 bps
FHC Platform
17 bps
Rep Fee
108 bPs
Client Total Cost
165 Bs (1.65%)

18. Performance

20. Performance

21. Performance

22. Where can I find more information?

23. David
Questions for us?
Stoyan