Distribution Channel Definitions - Strategic Insight

SIMFUND PRO, 7.0 ? DISTRIBUTION CHANNEL & TOP DISTRIBUTOR DESCRIPTIONS

Distribution Channel Descriptions

Wirehouse

The Wirehouse channel encompasses a number of the largest wealth management firms in the U.S. These firms account for more than 50,000 financial advisors nationwide and represent a very substantive proportion of overall U.S. mutual fund industry sales. From an asset perspective, Wirehouses account for in aggregate over $1 trillion in total U.S. mutual fund assets.

Independent/Regional Broker Dealers

Independent and Regional Broker Dealers are comprised mainly broker dealer firms whose financial advisors operate as independent contractors (as opposed to Wirehouse advisors who are employees of their firms). The Independent/Regional BD marketplace is made up of a majority of small firms but also several large and growing players. This channel represents an important advisor-sold mutual fund distribution avenue in the U.S.

Registered Investment Advisors (RIAs)

The RIA channel encompasses independent and largely fee-only advisors whose primary means of accessing mutual funds is via supermarket platforms such as Schwab, Fidelity, etc. While the RIA channel has been an emerging area of focus for many of the large, traditionally broker dealer sold fund firms in the U.S., much of the established mutual fund presence within the RIA community has been concentrated largely among no load boutique and specialized fund managers.

Dual Registered

The Dual Registered channel includes RIAs who are dually licensed as both a registered investment advisor and a registered representative. Such RIAs are able to operate both fee-based and transaction-based business models with their clients.

Strategic Insight an Asset International Company 805 Third Avenue, 21st Floor, New York, New York 10022 / (212) 944-4455

Simfund PRO, 7.0 Distribution Channel & Top Distributor Descriptions

Private Bank

The Private Bank channel typically includes the wealth management arms of banks which specialize in offering personalized financial and banking services the bank's high net worth clients. In addition to providing exclusive investment-related advice, private banking typically goes beyond managing investments to address each high net worth client's comprehensive financial situation.

Bank

The Bank channel includes mutual fund assets held through a number of sources within banking organizations - including through bank-affiliated financial advisor networks, as well as institutional custody and retirement services platforms.

Trust Company

The Trust Company channel encompasses firms, usually associated with a bank or law firm, that manages investments, administers trusts, and settles estates. In these roles a trust company may either act as an agent, trustee, or executor depending on the type of account relationship. Trust companies fall under the jurisdiction of state or federal banking regulators depending on whether or not it is a state-chartered or federally-chartered trust company.

Retirement Platforms

The Retirement Platform channel represents the third-party DC plan retirement platforms that are captured in the Simfund 7.0 dataset. *Note that these platforms exclude affiliated recordkeepers of asset management firms and also exclude mutual fund and ETF assets held via insurance companies. Thus, the Retirement Platform channel in Simfund 7.0 is not reflective of the comprehensive DC retirement assets held within U.S. mutual funds (which as of the end of 2012 were $2.5 trillion according to the ICI).

Discount

The Discount channel includes mutual fund and ETF assets purchased by individual investors through a "do-it-yourself" trading platform such as E*Trade Securities, Scottrade, or other such platforms. This channel includes only assets purchased by individuals through such platforms and does not include assets sold directly by a fund company to an investor.

Top Mutual Fund Distributors

CHARLES SCHWAB & CO., INC.

NATIONAL FINANCIAL SERVICES LLC

MERRILL LYNCH (1) JPMORGAN EDWARD JONES PERSHING LLC MORGAN STANLEY WEALTH MANAGEMENT FIDELITY INV. RET. SVCS CO WELLS FARGO ADVISORS, LLC (2)

UBS FINANCIAL SERVICES INC. NORTHERN TRUST COMPANY WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION (2) AMERIPRISE FINANCIAL

Top Distributor Descriptions

Distributor Firm Type

Firm Description

Primary Lines of Business

Clearing Firm

Clearing Firm

Wirehouse Private Bank Independent/Regional Broker Dealer Clearing Firm

Wirehouse Retirement Platform Wirehouse

Wirehouse Private Bank Bank Independent/Regional Broker Dealer

Leading Custodian and Clearing firm for RIAs and TPAs. OneSource is the leading fund supermarket platform in the U.S.

Leading Custodian for IBDs, RIAs and TPAs. Also includes Fidelity Brokerage offices. Featured Funds Network supermarket platform. Largest Wirehouse Firm with combined Wealth Management Services from BofA Leading Private Banking Firm. Services also include brokerage, wealth management and custody. Leading Independent Brokerage Firm with local offices throughtout the US.

Leading Custodian for IBDs and RIAs. Also includes Pershing Brokerage offices. Second Largest Wirehouse Firm with combined Wealth Management Services from Morgan Stanley (fomerly Morgan Stanley Smith Barney).

Fidelity Retirement Services

Wells Fargo Wealth Management Services and part of overall Wells Fargo Financial Services Complex, which is categorized as a Wirehouse firm. Wirehouse Firm with combined Wealth Management Services from UBS Bank. Leading Private Bank, Custodian and Manager of High Net Worth Assets

Part of Wells Fargo Complex with primary services in banking.

Independent Broker Dealer offering Brokerage and Wealth Management Services.

Custody, Discount Brokerage & Correspondent Clearing

Custody, Discount Brokerage & Correspondent Clearing

Brokerage, Wealth Management & Institutional Private Banking & Wealth Management

Brokerage & Wealth Management

Brokerage & Correspondent Clearing

Brokerage, Wealth Management & Institutional

Retirement & Trustee

Brokerage, Wealth Management & Institutional

Brokerage, Wealth Management & Institutional Private Banking, Trust & Wealth Management

Private Banking

Brokerage & Wealth Management

LPL FINANCIAL RAYMOND JAMES & ASSOCIATES, INC. BNY MELLON

Independent/Regional Broker Dealer

Independent/Regional Broker Dealer

Private Bank

Independent Broker Dealer offering Brokerage and Wealth Management Services.

Independent Broker Dealer offering Brokerage and Wealth Management Services.

Leading Private Bank, Custodian and Asset Management Firm.

Brokerage & Wealth Management Brokerage & Wealth Management Banking & Wealth Management

CHARLES SCHWAB BANK (3) TD AMERITRADE CLEARING, INC J.P. MORGAN CLEARING CORP. (4) WACHOVIA NATIONAL BANK (2)

Retirement Platform Clearing Firm Clearing Firm Bank

Schwab Bank, Trustee and Retirement.

Leading Custodian and Clearing firm for RIAs and TPAs. Fund Supermarket for Retail Direct Investors Custodian for IBDs and RIAs. Also includes JP Morgan Brokerage offices.

Part of Wells Fargo Complex with primary services in banking.

Retirement & Trustee

Custody, Discount Brokerage & Correspondent Clearing Brokerage & Correspondent Clearing

Banking & Wealth Management

BANK OF AMERICA, NATIONAL ASSOCIATION FIRST CLEARING, LLC (2) RBC CAPITAL MARKETS CORPORATION U.S. BANK PNC BANK, NATIONAL ASSOCIATION

Bank Clearing Firm (categorized under Wirehouse due to affiliation with Wells Fargo) Independent/Regional Broker Dealer

Bank

Private Bank

Banking, Wealth Management and Custody Part of Wells Fargo Complex with Primary Services as Custodian and Clearing Agent for IBDs and RIAs, to include Wells offices. Independent Broker Dealer offering Brokerage and Wealth Management Services.

Banking, Wealth Management and Custody

Banking, Wealth Management and Custody

Banking & Wealth Management Brokerage & Correspondent Clearing Brokerage & Wealth Management

Banking & Wealth Management

Banking & Wealth Management

(1) Merrill Lynch data is incorporated within the Wirehouse channel aggregate totals in Simfund Pro, 7.0, but ML is not broken out as a standalone distributor. (2) Part of Wells Fargo Financial Services (3) Part of Charles Schwab & Co. (4) Part of JP Morgan

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