1. Investing Essentials The Benefits of Managed Accounts MACS 481
(Welcome your guests, and thank your host…)
I’m here today to discuss the benefits of managed accounts, which I’m sure you’ve been hearing a lot about lately.
Some of you may already be familiar with managed accounts, although you may have heard them mentioned by another name – like managed money, or wrap accounts or even separate accounts.
I’d like to begin by reviewing the development of managed accounts, who they’re suitable for, and how your clients can benefit from managed accounts.
For Broker/Dealer Use Only. Not to be reproduced or shown to the public or used in oral or written form as sales literature.
MACS 481
© 2001 Phoenix Investment Partners, Ltd.

2. What is a Managed Account ?
Investing Essentials
What is a Managed Account ?
A managed account is a separate portfolio of investments owned directly by the investor and managed continuously by a professional money manager, for a fee.
Phoenix’s managed accounts are offered exclusively through financial advisors at selected firms.
(Read text of slide…)
I want to stress that a managed account is managed for the individual. Unlike a mutual fund where your clients’ money is pooled with other investors, your client actually owns the stocks or bonds in the managed account portfolio -- and they receive confirmations on all trades.
Another benefit is that the portfolio is managed by an institutional-caliber manager – who is typically independent of the selling or marketing arms of the financial services firm.
I can help you choose from the universe of independent managers offered through [firm’s MA program name] to find one or more of these managers’ investment styles that can match your clients’ personal goals and risk tolerances.
And instead of your clients’ paying for your advice and service each time they buy or sell a security, they’ll only be charged one annual fee that’s based on the size of their assets.
That fee, by the way, covers a lot of things, including the manager search, custody of the securities and cash, along with portfolio management, transaction costs and ongoing monitoring. That’s all included in one fee. There are no individual transaction costs with a managed account.
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3. Industry Growth of Managed Accounts
Investing Essentials
Industry Growth of Managed Accounts
$111.4 bn
$290 bn
It’s obvious from this slide that managed accounts have been greatly increasing in popularity.
From 1995 to 2000, their assets more than doubled. That’s because managed accounts are an attractive alternative to more traditional investments and offer a number of benefits, which I’ll explain over the next few slides.
Source: Cerulli & Associates. As of 12/31/00
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4. Where’s the Money Coming From?
Investing Essentials
Where’s the Money Coming From?
Personal wealth creation
Retirement plan distributions
Sale of small businesses
Stock options
Inheritances
First, let’s look at some of the investors who are choosing managed accounts for their portfolios:
Individuals who have accumulated substantial assets and no longer have the time, desire, or ability to manage it properly.
Those with company retirement plan distributions.
Those who sold small businesses. These businesspeople are often particularly keen on having their sales proceeds managed with the kind of diligence and skill they dedicated to building their businesses.
Those who have exercised stock options.
And heirs to inheritances.
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5. The Managed Account May Be Suitable for:
Investing Essentials
The Managed Account May Be Suitable for:
Investors with sizeable investable assets
Investors with a need for specialized, professional asset management
Investors who are willing to give discretionary control to the investment manager
Managed accounts may also appeal to your clients if:
They have sizeable investable assets.
They have a need for specialized, professional asset management.
– or need to meet investment restrictions.
– or need help in meeting fiduciary responsibilities.
And they are willing to give discretionary control to the investment manager.
Remember, with a managed account, once your clients document their goals and objectives and select the appropriate investment managers, they turn over daily portfolio management decisions to the Investment Manager.
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6. The Managed Account Process
Investing Essentials
The Managed Account Process
Investment
Strategy
Investment
Manager
Selection
Ongoing
Monitoring
The managed account process works through a disciplined, four-step process:
First, you’ll work together with your clients to develop a well-articulated investment strategy based on their long-term goals and risk tolerance.
Then you’ll use the Investment Policy Statement to select one or several investment managers to build a well-diversified portfolio.
That investment manager will provide your client with active, professional portfolio management.
And your clients can count on ongoing monitoring and reporting with their managed account.
Let’s walk through the process step by step...
Portfolio
Management
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7. The Managed Account Process
Investing Essentials
The Managed Account Process
Investment Strategy Development
Articulate your goals and objectives in a written Investment Policy Statement before selecting an investment manager
Investment
Strategy
Portfolio
Management
Manager
Selection
Ongoing
Monitoring
Of course, the cornerstone of a sound investment strategy is the written Investment Policy Statement.
It helps your clients articulate their goals and objectives before they select an investment manager.
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8. The Managed Account Process
Investing Essentials
The Managed Account Process
Investment Strategy Development
The Investment Policy Statement Identifies:
Time horizon
Risk tolerance
Goals and objectives
Desired rate of return
Restrictions
Liquidity needs
Investment “personality”
Investment
Strategy
Portfolio
Management
Manager
Selection
Ongoing
Monitoring
The Investment Policy Statement helps clients articulate:
Their time horizon.
Risk tolerances.
Goals and objectives.
Preferences and risk/reward characteristics.
Liquidity needs.
And their investment “personality.”
The Investment Policy Statement will serve as the clients’ guide to selecting Investment Managers capable of helping them achieve their goals, and it will provide the manager(s) with the parameters the clients’ want to place on their portfolio.
Additionally, it will be a critical document for your quarterly portfolio reviews with your clients.
And it should always be amended when there are any changes to a client’s financial goals and objectives.
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9. The Managed Account Process
Investing Essentials
The Managed Account Process
Investment Manager Selection
Rigorous Due Diligence Investigates:
Years of experience
Assets under management
Consistency of investment
discipline/style
Consistency of management team
Performance evaluation
Risk/return analysis
Investment
Strategy
Portfolio
Management
Manager
Selection
Ongoing
Monitoring
The next step in the process is manager search and selection. Your firm has performed extensive and rigorous due diligence in selecting Investment Managers to include in [advisor’s program name]. Each money manager is scrutinized on factors such as:
Years of experience.
Assets under management.
Consistency of investment discipline and style.
Performance.
And risk-return analysis.
The managers available to your clients have all been “pre-qualified.” You’ll work together to select managers for your clients’ portfolios.
By using several managers, clients can lower volatility in their overall portfolio, and potentially achieve more consistent returns.
Multiple managers can also provide ongoing diversification and asset allocation into different market segments.
But, keep in mind that managers do underperform from time to time, and even a multiple-manager approach cannot protect clients from this.
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10. The Managed Account Process
Investing Essentials
The Managed Account Process
Portfolio Management
Asset allocation
Socially responsible concerns
Consistency of style
Complementary managers
Investment
Strategy
Portfolio
Management
Manager
Selection
Ongoing
Monitoring
Once your clients have identified their investment objectives and selected managers for their managed account portfolio, each manager will review the client’s Investment Policy Statement and address any special requests such as:
Maximum and minimum allocation requests or stock restrictions.
Any socially responsible concerns a client may have.
Consistency of style.
And the use of complementary managers.
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11. The Managed Account Process
Investing Essentials
The Managed Account Process
Ongoing Monitoring
Investment
Strategy
Portfolio
Management
Manager
Selection
Ongoing
Monitoring
Ongoing due diligence
Quarterly reporting
Quarterly performance review
Annual review of investment objectives
Portfolio rebalancing
The fourth step in the process is ongoing monitoring and review.
Not only is performance scrutinized, but also how strictly the manager is adhering to the management guidelines and style.
This ongoing due diligence is carried out by [firm name] on both a client account and Investment Manager basis.
You’ll review your client’s portfolio activity and performance each quarter and hold an annual review where you should refer back to the client’s Investment Policy Statement and address issues like rebalancing and asset allocation.
That’s important, especially if over the course of the year a client’s portfolio has strayed from the original plan or if the client requires a change in the plan.
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12. Investing Essentials Why Managed Accounts? Investor Benefits
Active account management tailored to specific investment goals, risk tolerance and time horizon
Access to institutional managers
Work with financial advisor to develop a written statement of investment objectives
Ability to exclude certain types of investments; for instance, stocks of companies deemed socially irresponsible
Now that we have reviewed the managed accounts process, let’s review the many benefits of a managed account.
Access to institutional managers. Before the managed money concept, an investor had to have at least a million dollars to gain access to the services of an institutional manager. Now, often with $100,000, they have access to a broad range of institutional managers representing many investment styles to match their individual goals.
Objective third-party evaluation of managers.
Risk. Emotional and financial risk tolerance are determined in advance and outlined in the Investment Policy Statement, so the account can be tailored to a client’s specific risk/ reward objectives.
Control. Managed accounts let the client exclude certain types of investments, such as stock in companies deemed socially irresponsible. Unlike mutual funds, managed accounts can cater to individual client needs and requests.
Investors should note that there are fees associated with financial advisory services, and depending upon the account chosen, investors will pay transactional fees or advisory fees. There are no assurances that an investor employing financial advisory services will outperform one who does not. For broker/dealer use only.

13. Investing Essentials Why Managed Accounts? Investor Benefits
Strategic tax planning
Flexibility to offset capital gains with losses
Investor owns actual security, which prevents buying into a tax liability
Ongoing monitoring of investment managers after selection
A lack of conflict of interest
Regular performance reporting and record-keeping
All-inclusive fee
Managed accounts also offer investors many benefits over other, more traditional investments.
Tax advantages. Because a managed account is a separate account, not a pooled account like a mutual fund, clients are not buying other investors’ capital gains. Individualized management can provide clients with tax-planning flexibility – allowing them to request gains or losses to offset other investment activities.
Ongoing reviews and disclosure. Clients receive full disclosure of all investment transactions and comprehensive performance reviews to measure the management of the portfolios against their own long-term objectives.
No conflict. With an independent Investment Manager making the buy and sell decisions, there is no longer the potential for conflict of interest. You and your client are “sitting on the same side of the table.”
Regular performance reporting and record-keeping.
An all-inclusive fee. There are no surprise charges with a managed account. Just one fee covers the manager search, custody of securities, portfolio management, most transaction costs and continued monitoring of the manager, as well your services as their financial advisor.
Investors should note that there are fees associated with financial advisory services, and depending upon the account chosen, investors will pay transactional fees or advisory fees. There are no assurances that an investor employing financial advisory services will outperform one who does not. For broker/dealer use only.

14. Investing Essentials Why Managed Accounts? Advisor Benefits
Customized products and higher minimums bring you affluent investors and may help you upgrade your client book.
Allows you to spend time with your clients and your practice.
Extensive, objective due diligence simplifies the manager selection process.
The selected money manager executes trades and performs research.
You can annuitize your business and establish an ongoing stream of income.
In addition to offering your clients all of the benefits we’ve discussed, there are some very attractive benefits for financial advisors.
Managed accounts let you customize your products, and the higher minimums bring you affluent investors and may help you upgrade your client book.
They give you more time to spend with clients and to build your practice.
– Extensive, objective due diligence simplifies manager selection.
– The selected money manager executes trades and performs research.
And managed accounts allow you to annuitize your business and establish an ongoing stream of income.
Investors should note that there are fees associated with financial advisory services, and depending upon the account chosen, investors will pay transactional fees or advisory fees. There are no assurances that an investor employing financial advisory services will outperform one who does not. For broker/dealer use only.

15. Annuitize Your Business
Investing Essentials
Annuitize Your Business
$1,500
$1,000
$500
10% 9% 8%
Fees in $ Thousands
By building up your managed account business, you can build an “income annuity” – a continuing, growing stream of income – for your practice.
Start working to actively convert your traditional transaction-based accounts to fee-based compensation so that you can begin to build that stream of income – and start to “annuitize your business.”
As the value of your client’s portfolio increases, so will your fees.
A managed account will pay you on a quarterly basis for your service and support, rather than getting paid as each client transaction is carried out.
This allows you to continue to build a trusting relationship with your clients, rather than worry about “making the sale.”
1 Yr 5 Yrs 10 Yrs 15 Yrs 20 Yrs
$1,000,000 production per year, starting at $1,000,000. Assumes fee of 2.44% with rep payout is 50% of annual fee. For broker/dealer use only.

16. Partner with Phoenix Investment Partners
Investing Essentials
Partner with Phoenix Investment Partners
Complementary Investment AnalysisSM
(Click each slide to reveal each benefit…)
Let Phoenix Investment Partners be your partner and coach in converting your business. We offer a number of tools and investor educational pieces as well as my one-on-one support to help you do just that.
First, let me introduce you to the Complementary Investment AnalysisSM.
We talked earlier about the sound reasoning behind selecting multiple managers in a managed account program. This concept makes much more sense to your clients when they can actually see how two or more managers’ styles complement one another. Phoenix’s exclusive Complementary Investment AnalysisSM does just that, and it’s available to you and your clients.
If you want to take advantage of this specialized service, just give me a call and tell me your client’s name, the proposed amount of investment, the managers you are considering and the asset allocation you want.
Within 24 hours, you’ll receive an attractive, bound presentation with the client’s name and hypotheticals showing accumulation of capital, annual returns and risk factors for each manager, as well as for the composite. It will show your client the benefits that complementary managers offer. And it’s simple to use!
For broker/dealer use only.

17. Partner with Phoenix Investment Partners
Investing Essentials
Partner with Phoenix Investment Partners
Complementary Investment AnalysisSM
Premier Educational Materials
I can also share with you a number of our premier educational materials. At Phoenix, we recognize it’s not just the product that brings investor success – it’s also the investment plan and the investor’s ability to stick to it.
We’ve developed training and educational materials that can help you grow your managed accounts business. Among our offerings are brochures explaining how to help:
Build a fee-based business.
Utilize the powers of persuasion.
Offer perspectives on investing.
Teach clients to diversify and invest for the long term.
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18. Partner with Phoenix Investment Partners
Investing Essentials
Partner with Phoenix Investment Partners
Complementary Investment AnalysisSM
Premier Educational Materials
Client Seminars
Timely Investment Manager Commentary
High Quality Marketing Materials
Talented, Experienced Managers
We also offer client seminars that you can give or that I can present.
Seminars can be a great way to introduce managed money because investors don’t feel the pressure of being in a one-on-one sales meeting.
These materials, combined with timely commentary and marketing pieces for each of Phoenix’s talented money managers, will give you the proper tools you need when meeting with your client.
For broker/dealer use only.

19. Committed to Investor SuccessSM
I hope this presentation has clearly demonstrated the benefits that a managed account can bring to you and your clients.
Managed accounts can offer you the opportunity to annuitize your business with a steady stream of income while offering your clients the prestige of an individualized portfolio that is custom tailored to their investing goals.
I look forward to helping you build your managed account practice by offering you the expertise of Phoenix Investment Partners, one of the industry’s top providers of managed accounts and a company that’s committed to advisor and investor success.
Thank you for your time, and now I’ll be glad to answer any of your questions.