1.

The Importance of Brand in the Asset Management Industry

Presentation prepared for Financial Services Forum.London, 25th June 2015.

The importance of Customer Experience in driving Brand Value 2.

How Brands drive business value

3.

How Brands drive Business Value

Brand Value

Brand Contribution

Branded BusinessBranded Business

Value of a single branded business operating under the subject brand/trademark

Brand Contribution Total economic benefit derived by a business from its brand

Brand Value Proportion of brand contribution which can be legally transferred via sale or licensing, i.e. the trademark (value in league tables).

What are we measuring?

4.

Brand Investment

Brand Investment

Brand Equity Brand Equity

Brand Performance

Brand Performance

BusinessPerformance

Brand Equity

CustomerBehaviour

• Investment rating

• Charging basis

• Marketing spend

• Service quality

• Distribution profile

Brand Drivers

BrandedCustomerExperience

$

• Functional(quality, price)

• Emotional(image, trust)

• Net cash flow

• Assets under management

• Fees

• Invest

• Hold

• Recommend

• Loyalty

• Awareness

• Preference

How Brands drive Business Value Managing the linkages across the brand value chain

5.

7.8

7.0

8.2

8.3

7.0

7.9

8.1

7.2

+ 0.4

+ 0.8

+ 0.4

0 5 10

Relationship

Loyalty

Quality Service

Brand

Price

CSR

Offer

Products 21%

Driver Importance

Brand investment expected to influence drivers in the following way

Driver Performance

20%

16%

13%

10%

9%

9%

3%

PotentialUplift

Brand Equity Statistical Relationship Business Value

R² = 0.8524

Market share

Brand equityCurrent Business Value

Uplift from Brand Investment

Cost of Brand Investment

Potential Business Value

For illustrative purposes only

How Brands drive Business ValueStrong brands drive market share and value

The importance of Customer Experience in driving Brand Value 6.

Brand Finance League Table results

7.

The strongest brands have the strongest business performance

0.5

1.0

1.5

2.0

2008 2009 2011 2012 2014

Brand Finance - Top 10Brand Finance - Top 100Brand Finance - Top 500S&P 500

8.

Banking Brand Values 2015 (US$bn)

2015 2014 BV% BV $m

Retail 407 388 +5% +19

Commercial 202 166 +22% +36

Investment 95 103 -8% -9

Wealth/Asset Management 66 68 -4% -3

Wholesale 61 64 -4% -3

Credit Cards 58 52 +11% +6

Other 19 18 +6% +1

Mortgages 12 15 -18% -3

9.

Brand Value

BV % change

Brand Rating

1 UBS 8,068 27% AA+

2 Deutsche Bank 4,781 -5% AA

3 Morgan Stanley 4,684 7% AA

4 Credit Suisse 4,445 -11% AA

5 Wells Fargo 4,361 24% AAA-

6 Merrill Lynch 3,606 -5% AA-

7 J.P. Morgan 2,870 28% AA

8 Royal Bank Of Canada 1,938 24% AA

9 Goldman Sachs 1,502 -48% AA+

10 Scotiabank 1,315 AA+

Wealth / Asset management BVs in Banks

10.

Asset Managers by AUM 2015 (US$bn)

AUM 2015

1 BlackRock 4,770

2 Vanguard Group 3,149

3 State Street Global Advisors 2,440

4 Fidelity 2,025

5 Allianz Asset Management 1,949

6 J.P. Morgan Asset Management 1,760

7 BNY Mellon Investment Management 1,740

8 PIMCO 1,590

9 Credit Suisse Group 1,420

10 AXA Group 1,383

Source: http://www.relbanks.com/rankings/largest-asset-managers

11.

Relationship between Brand Value and AUM

12.

13.

Natixis

Toronto DominionSchroders

Royal Bank of Canada

T. Rowe Price

Commonwealth Bank Of Australia

Resona Bank

NordeaInvescoBlackRock

BNP Paribas

SEB

Banco Sabadell

Morgan Stanley

The Bank Of New York Mellon

Wells Fargo

Macquarie

JP Morgan Ameriprise FinancialFranklin Templeton Investments

HSBC

State Street

Northern Trust

Janus

Deutsche BankDeutsche Bank

Lazard

Goldman SachsBBVA

Credit Suisse

UBS

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

-4.00% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00%

AU

M Y

oY G

row

th

BSI YoY Growth

• Seed sowers: Raising brand awareness and strength to capitalize on the rebound

• Despite market appreciation, their AUM did not grow due to low existing brand strength

• Brand strength and AUM growth go hand -in-hand

• Positive brand awareness is a crucial component in brand strength

• Greater brand strength will bring in new inflows

• Further investment in brand strength required to maintain AUM growth

• Market appreciation and high existing brand strength have contributed to AUM increase despite decrease in BSI

Brand strength and AUM growth go hand-in-handThose who invest in the brand will reap new inflows

The importance of Customer Experience in driving Brand Value 14.

Brands in Asset Management

15.

Market experience since the Global Financial CrisisNet new flow has been low but is gradually rising

• Market appreciation has been the biggest contributor to AUM increase• Net new flow has been low – investor confidence has been weak• However, as the financial market recovers, investor confidence is returning• But how much will your brand reap?

16.

• Brand > Product & Performance• When a potential client receives a sales call from an Asset Management Company,

brand recognition is essential• There needs to be a pre-established association between the Asset Management

brand in the client’s mind before even receiving the call

Hi, this is ABC Asset Management Company. Would you be interested in hearing about our products?

Brand awareness firstThe key to the first gate

Yes, let’s have a meeting and hear what you have

to offer

Client has existing positive brand

awareness

No, thank you.

Client does not have any brand awareness

17.

Business relationships crucial to brand value growthIn the retail business, intermediaries hold the key

• The purchasing of a mutual fund by an individual retail client is broken down thus1. Retail client visits an intermediary to purchase fund product2. Intermediary recommends the ‘hottest’ funds in the current market, reinforcing positive brand

associations in the client’s mind

• The ‘hotness’ of a fund is made up of more than just asset allocation and investment track record• The business relationship between the intermediary and the Asset Management Comnpany is as

important to the ‘hotness’ indicator of the fund• i.e. Quality of promotional/educational seminar sessions, business outings, etc.

What the client already thinks of the brand

What the intermediary thinks of the brand

Net client brand awareness

18.

• 20 years ago, ‘Asset Management’ did not exist in Korean Finance

• Fidelity was the first to invest in expanding its brand and industry awareness

• After 3 years, the Korean market came to know the brand and the industry

• Since then Fidelity has emerged as the top asset manager brand in Korea

Case Study: FidelityPioneer in the Korean Asset Management Market

19.

Growing strong Asset Management brands as the market recoversCapturing organic growth

• The global economy is rapidly recovering, with investor confidence steadily returning, particularly in the UK post-election honeymoon

• As spring returns to the industry, asset managers should begin investing in their brand strength in order to capitalize on the recovery in confidence

• Returning investors will turn to the ‘top-of-the-mind’ brands

The importance of Customer Experience in driving Brand Value 20.

Setting marketing budgets?

21.

21

Time

Sale

s

1. Short Term, “New”, Advertising Sales (from current and recent advertising)

2. Medium Term Repeat Purchases (“Secondary” Ad Sales)

Long Term “Conversion”

Advertising Measured by Brand Preference

What Drives and Sustains the Long Term “Conversion” Effect?Brand Finance’s approach to marketing ROI seeks to address and understand the short, medium and long term impact of brand building and advertising

22.

22

0%

10%

20%

PUSH: Operating Factors

+

Underlying Consumer Brand Preference and understanding the health of the brand in the long term is typically measured using drivers research.

Price, promotion and distribution effects in the short term are typically measured using marketing mix modelling techniques.

PULL: Consumer Demand

Overall Sales (e.g. number of accounts,

funds on deposit)

Sales Performance is the product of short & long term drivers

23.

23

TACTICAL

Geared to supportinglong term brand values:image, awareness

Longer term payback (typically 3 years)

Gives REASON to buy your brand

“BRAND PULL” activities

Targeted to stimulateimmediate Sales: Promotions, Distribution Drives

Should be expected to pay back within 12 months

Gives INCENTIVEto buy your brand

“BRAND PUSH” activities

STRATEGIC

Strategic v Tactical Marketing SpendMarketing spend can be divided into strategic (“Brand Pull”) and tactical (“Brand Push”) activities:

24.

24Segmented analysis allows for improved Resource Allocation and Strategy

Brand Segment Market Attractiveness

Brand Strength

IndexMarket Share A&P Brand Value ($)

A 1 76 55%

A 2 65 15%

A 3 48 12%

B 1 37 5%

B 2 43 5%

B 3 33 8%

Illustrative example

25.

Contact usDavid HaighChief Executive

Brand Finance, London

E: d.haigh@brandfinance.comM: +44 788 515 3725

3 Birchin Lane,London,EC3V 9BW

Brand Finance is the leading brand valuation and strategy firm, helping companies to manage their brands for improved business results.

www.brandfinance.com