2 Ways Advisors Can Crush Robo-advisors

Henry Bee

CEO, Cassia Research

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4 billion today.

in 3 years… 1 trillion.

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high net worth individuals are dumping billions into robo advisors.

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advisors must act.

this is an urgent matter.

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l e s s s c r e e n t i m e …

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more

golf

time

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robo advisor’s biggest weakness…

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Inferior investment process…

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2014 Returns

4.2% 4.2%

6.0%

10.3%

Robo Advisors The 99% The 1% Cassia

*Performance net of feesSource: www.hedgeable.com For Professional Advisor Use Only 14

client interaction…

600 hours 0 hours

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retention is key

12% Growth

25% Growth

80% Retention 95% Retention

Source: Forbes.com For Professional Advisor Use Only 17

-33%

-16%

advanced risk forecasting

Drawdown w/ simple variance

Drawdown w/ Cassia GARCH

*6% volatility system. For Professional Advisor Use Only 18

a better portfolio starts here

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find out more

cassia-research.com

@CassiaResearch

cassiaresearch.wordpress.com

778-389-4545

hbee@cassia-investment.com

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DisclosurePerformance. Past performance, does not guarantee future results and prospective clients should not assume that future performance will be profitable. Participation in this program carries the potential for profit or loss. "Backtested" or "hypothetical" performance represents theoretical results calculated by applying a particular investment strategy to historic financial data to show what might have been achieved had the strategy been traded. Backtested performance does not represent actual account performance and may not reflect the impact that material economic or market factors might have had on the manager's decision-making process. Further, backtested performance may differ from actual performance because the manager has the ability to adjust the strategy at any time, for any reason until desired or better performance results are achieved. It is thus unlikely the results shown could have been achieved without the benefit of hindsight. Those results indicated as "published allocations" are those hypothetical results after investment allocations had been adopted by CONCERT's investment committee without change until subsequent rebalancing. The fact that such allocations were fixed in advance of performance calculations reduces, but does not eliminate the risks of hypothetical performances presented above because they do not represent the results of an actual trading account.

Restrictions. Reasonable restrictions on security selection and trading will be accepted for all CONCERT models. Any such restrictions will cause differences from model performance.

Investments. The portfolio of accounts participating in the described programs will be invested in stocks, mutual funds or exchange traded funds/notes holding equity and non-equity securities of US and foreign companies of any size market capitalization. Each account's investments and therefore performance may vary depending on the specific funds available through the account's custodian. Larger accounts may also hold additional positions for diversification purposes, which may also alter relative performance. This investment program may be available to manage assets within a variable annuity contract. When the program is applied to a variable annuity, the corresponding or similar sub-accounts may be substituted for the funds used outside the variable annuity. Therefore, performance within a variable annuity contract will be different from that of an account traded outside a variable annuity. Other factors that may contribute to differing performance numbers include the mortality and expense ratio of the contract, any optional riders selected and different trading cut-off times among other reasons.

Fees. Hypothetical returns reflect reinvestment of dividends and other earnings, and are NET of estimated typical custodial and transaction costs, advisor fees of 1% and CONCERT's stated maximum annual investment program management fee, assessed monthly for the purposes of this illustration only (typically quarterly in-advance in practice). However, there would have been natural performance variations based on your actual selected custodian, agreed advisor fees, account size and other factors. Further information regarding investment management fees, as well as important information regarding CONCERT, its services, compensation and conflicts of interest is contained in its Form ADV, Part 2 or substitute disclosure document, available by request. The investment management fee paid to CONCERT is separate and distinct from the internal fees and expenses charged by funds. These fees and expenses are described in each fund's prospectus, and will generally include a management fee, internal investment, custodial, and other expenses, and a possible distribution fee. Prospective clients should consider all of these fees and charges when deciding whether to invest in the program. Performance results for this program do not reflect the impact of taxes. Program accounts may engage in a significant amount of trading. Gains or losses will generally be short-term in nature; consequently, this program will likely not be suitable for clients seeking tax efficiency.

Transaction cost. Assumes $8.95/trade on a $50,000 account. Based on the strategy shown, this translates into 1bp for a $1,000,000 account, 3bp for a $500,000 account, and 25bp for a $50,000 account. Smaller accounts may benefit from asset-based pricing (e.g. flat 20bp per year), depending on your brokerage offerings. Transaction cost will vary from year to year depending on portfolio turnover and market conditions.

This document may not be reproduced in any form without the express permission of Cassia Research and to the extent that it is passed on, care must be taken to ensure that any reproduction is in a form which accurately reflects the information presented here. Whilst Cassia Research believes that the information is correct at the date of production, no warranty or representation is given to this effect and no responsibility can be accepted by Cassia Research to the recipient of this document or end users for any action taken on the basis of the information contained herein. Opinions expressed herein reflect the opinion of Cassia Research and are subject to change without notice.

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Asset universe

Equities Bond Risk Premium Credit Risk Real Asset Premium

Buyback premiumSize, Value premiumDeveloped

- US- Germany- France

Emerging- China- Brazil- Russia

Frontier- Qatar- Kuwait- United Arab Emirates

Short Duration- US Treasury- US Municipal

Medium Duration- US Treasury- US Municipal

Long Duration- US Treasury- US Municipal

Short- Investment Grade- Emerging High Yield- International High

Yield- International

Investment GradeMediumLong

Commodities- Oil- Natural Gas- Gold- Copper- Zinc- Corn- Sugar- Wheat

Real Estate- US- International- Mortgage Real Estate

Inflation Linked Bonds

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Harvest the global growth engine

30+ risk premia100 countries

20,000 securities

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Dampen volatility

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0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Rolling 1-year volatility

Cassia S&P 500

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