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Morningstar Direct for Wealth Management - Trends & Roadmap

Elizabeth Brigham Head of Product MarketingNovember 14, 2019

2

7 Trends We’re Seeing in US Wealth Management

2

1. Data is the New Oil

2. Shift to Strategies and Models

3. Goals-Based Planning

4. Better Understanding and Communicating Risk

5. Sustainable Investing

6. Data Privacy in the Digital Age

7. Increased Regulatory Impact

3

Which of these trends has caused the biggest shift in the way you work?

3

1. Data is the New Oil

2. Shift to Strategies and Models

3. Goals-Based Planning

4. Better Understanding and Communicating Risk

5. Sustainable Investing

6. Data Privacy in the Digital Age

7. Increased Regulatory Impact

Poll Result

https://api.cvent.com/polling/v1/api/polls/sp-gbog7a

Trend 1Data is the New Oil

55

Data is the New Oil

6

personal

6

efficient innovative

Investor Data

Portfolio Data

Investment Data

The Data Triumvirate – What’s Important is How they Come Together

7

Investment Data Basics that Everyone Expects and Needs

Mutual Funds

Exchange-Traded Funds

Closed-EndFunds

Private and Public

Companies

HedgeFunds

SAs/CITs/Pooled Funds

Variable Annuity

Retirement Plan Data

Unit Investment

Trusts

Real-Time and Market Data

Group RetirementAnnuity

Indexes529 CollegeSavings Plans

Life, Pension,Insurance

8

Investment Data 2.0 Brings a Focus on Strategies and Sophisticated Analytics

Vehicle Agnostic ViewVehicle agnostic and institutional manager research data on strategies

Enhanced Portfolio Analytics• Calculated Fixed Income Stats• Environmental, Social,&

Governance Factors• Geo Segment Data• Risk Modeling

Emerging Data• Structured Products • Health Savings Accounts• Crypto Currencies• Proxy Voting

9

Personalization Of Advice

Layering on Investor Data Completes the Data Personalization Equation9

Investor + engagement

Investment Data

Investor Preferences

Trend 2:Shift to Strategies and Models

11

Institutional investors are adopting a more holistic investment

approach across public and private companies

We See the Convergence of Public and Private Market Investing as Interest Shifts to Strategies vs. Investment Vehicles

Traditional markets need access to both

private and public data

12

Model Portfolios are Gaining Prominence

Source: Ignites Research, Oct 2019 https://www.ignites.com/research/c/2546963/305973/modernizing_national_accounts_strategy_model_portfolios

https://www.ignites.com/research/c/2546963/305973/modernizing_national_accounts_strategy_model_portfolios

13

Morningstar Model Marketplace

Model Portfolios Let Advisors Focus on Scaling their Business, Driving Consistency and Differentiation

Trend 3Goals-Based Planning

What Investors Value

Source: Morningstar Research

Help reaching goals

Understands my needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Behavioral support

Clear fee structure

Can maximize returns

Knows tax consequences

Investors Say

Help reaching goals

Understands my needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Behavioral support

Clear fee structure

Can maximize returns

Knows tax consequences

Source: Morningstar Research

What Investors Value

Help reaching goals

Understands my needs

Skills and knowledge

Focus on best interest

Explains concepts well

Approachable

Good reputation

Behavioral support

Clear fee structure

Can maximize returns

Knows tax consequences

Source: Morningstar Research

Advisors ThinkInvestors Say

What Investors Value

26

“The reason people save and invest is to accomplish a goal; therefore, the goal itself should be the center of any portfolio or financial plan.”

David Blanchett, Morningstar Head of Retirement Research

19

Goals-Based Investing and Behavioral Coaching Can Help Advisors Add More Value

A goals-based approach to investment planning can help advisors prove their value.

Source: Blanchett, David. 2015. “The Value of Goals-Based Financial Planning.” Journal of Financial Planning 28 (6): 42–50.

20

Morningstar Goal Bridge Connects Goals to Investment Plans

Trend 4Better Understanding and Communicating Risk

22

Headlines Are Alarming!

23

Confirm or Deny “Headline Risk” Based on Actual Holdings

24

Marrying Morningstar Research with Quantitative Analysis Helps Advisors Better Prepare for Challenging Conversations

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