©2018 Morningstar, Inc. All rights reserved.

Elizabeth Brigham, Head of Product Marketing, SoftwareDecember 5, 2018

Advisor Market &Wealth Management TrendsMorningstar Perspective

12

There’s never been a better—or more important—time for great advice.”

“

3

Wealth Management Market Trends

Advisor Behavior

Investor Behavior

Rise of Technology

Transformation

4

The US Retail Wealth Market Will Top $40T by Year 2020 in Client Assets. RIAs Experienced the Highest Growth In Assets.

Source: Cerulli Associates Advisor Metrics 2017, Cerulli Intermediary Distribution

0

5

10

15

20

25

2013 2016 2017E 2021E

Wirehouse Regional BD Indy BD RIA Bank B/D Insurance B/D OtherBank TrustsPrivate BanksCAGR = 4%

CAGR 19%

CAGR 5%

CAGR 8%

CAGR 9%

Total Client Assets Across Industry Segments: 2013 – 2021E ($ Billions)

$23.3T$27.6T

$40.1T

$30.6T

$5.8 $8.4

$4.5

$2.4$1.9

$3.7

$2.4

$6.5

$5.8

$2.9

$2.4

$3.9

$6.4

$3.3

$2.8

$4.7

$7.2

5

0

50000

100000

150000

200000

250000

300000

350000

2013 2016 2017E 2021E

FINANCIAL ADVISORS BY SEGMENT

Insurance BD IBD Wirehouse Regional RIA Hybrid RIA2 Retail Bank

The US Advisor Segment – Representatives Growth rate (Brokerage and Fee-Based)

Source: Cerulli Associates Advisor Metrics 2017

While overall advisor populations are estimated to shrink by 2021, both RIAs and IBDs are estimated to add over 6,000 advisors combined vs. 2017.

6

Changing Advisor Behavior

Transparency Scale Service & Value

7

“As technology puts more pressure on advisors to justify their fees in the first place, more and more advisors are starting to offer comprehensive financial planning, which is why (despite the lack of growth overall in the financial advisor headcount) a record number of people have been sitting for the CFP exam for the first time in recent years.”

7

Michael Kitces

Financial Advisor Industry Influencer

8

Changing Investor Behavior

Holistic Advice Ease & Convenience

Transparency & Lower Fees

What Investors Value

Advisors Think Investors Say

Source: Morningstar Research

Help reaching goals

Understanding needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Avoids common mistakes

Clear fee structure

Can maximize returns

Knows tax consequences

Low Value High Value

What Investors Value

Advisors Think Investors Say

Source: Morningstar Research

Help reaching goals

Understanding needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Avoids common mistakes

Clear fee structure

Can maximize returns

Knows tax consequences

Low Value High Value

Advisors Think

What Investors Value

Advisors Think Investors Say

Source: Morningstar Research

Help reaching goals

Understanding needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Avoids common mistakes

Clear fee structure

Can maximize returns

Knows tax consequences

Low Value High Value

Investors SayAdvisors Think

12

Rise of Technology

AI & Machine Learning

Integrations

Mobility & On-Demand Service

13

Transformation

Digital Client Experience

Behavioral Finance

Fully-integrated Platforms

14

On-Demand Expectations

15

Market Developments We’re Tracking

Rep as PM ESG/Sustainability Generational Asset Growth

16

Rep as Portfolio Manager Programs Continue to Attract Assets; CAGR should stabilize around 15% in 2018 through 2021

Sources: JPMorgan Asset Management, Cerulli Associates

$70.3 $69.7 $62.3 $79.6 $108.3 $139.0 $193.0 $258.6 $212.9

$309.9 $397.2

$459.5 $578.9

$755.6

$923.9 $982.4

$1,150.4

$1,492.6

$1,721.1

$1,982.4

$2,281.8

$2,624.8

-0.8%

-10.6%

27.8%

36.1%

28.3%

38.8%

34.0%

-17.7%

45.5%

28.1%

15.7%

26.0%

30.5%

22.3%

6.3%

17.1%

29.7%

15.3%15.2%

15.1%15.0%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

$2,200

$2,400

$2,600

$2,800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E

Rep-as-portfolio-manager program assets Growth rate

17

Steady Growth in ESG Interest and Evaluation within Morningstar Cloud

ESG Data and analytics usage in Morningstar Cloud

18

Wealth Transfer across generations indicates growth with Baby Boomers and GenX in next decade

Source: 4/4/18 Hearts & Wallets Presentation (Varas) (United States Census Bureau)

Consumer Households, Investable Assets by Generation

12

There’s never been a better—or more important—time for great advice.”

“

©2018 Morningstar. All Rights Reserved.

Appendix

22

What Morningstar Direct Users are Reading

Active v. Passive

Market Trends

Asset Flows