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

2. 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

3. 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

4. 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.

5. 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.

6. 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.

7. 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

8. 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

9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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.

22. 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.

23. 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

24. 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)

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

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. 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.

38. 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.

39. 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

40. 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