The Future of Financial Services: Delivering

Advice to All

Daniel Egan, MSc

@daniel_egan @betterment

2010 –

Automated advice era

1990 – 2000

Onlinetrading era

1975 – 1990

Discounttrading era

1924

First open-end mutual fund established

1993

1st Internet stock trade completed

1991

1st Consumer ETF and Target Date Fund launched

2010

1st Automated financial advice service

1975

Discount brokers and index funds are born

1920 – 1950

Rise of the mutual fund era

This is a unique moment in the history of financial advice.

1

You are likely responsible for your retirement, and you want advice.

Defined Benefit Plans

Defined Contribution Plans

7%

69%

0.2%mass market with fiduciary advisors

83%of plan participants

want advice

$10,000average annual cost/client

for fiduciary advice

Investors want advice… but advice is expensive… if you can even access it.

Participants covered by plan type

2

Financial advice is evolving, adapting to our times.

Accessible | Aligned | Intelligent

Accessible

Aligned, intelligent advice will be available to everyone

There is a massive opportunity to make investment advice accessible.

5

$17.4T

$10.8T

$5.2T

$28T85% of assets

118 mm99% of households

116.2mm

2.2mm

0.2mm $10mm+

$2 - $10mm

<$2mm

TraditionalAdvisorTargets

Net Investable Assets per HH:

Households by wealth

$10mm+

$2 - $10mm

<$2mm

Net Investable Assets per HH:

Assets by household wealth

TraditionalAdvisorTargets

Sources: Cerulli: U.S. Retail Investor Advice Relationships 2014; State of U.S. Retail and Institutional Asset Management 2012.

ACCESSIBLE

UnderservedUnderserved

Customer expectations around aligned, holistic advice has expanded into other markets.

6

Participants

Plan sponsorsAdvisors

Clients

$5T 401(k) Market

Self-Directed Customers

$2.5T RIA Market$5T Direct Market

ACCESSIBLE

Customers are migrating to mobile, and they expect to be able to do more than check their balance.

7

ACCESSIBLE

These are the early days for the changes we see coming.

8

Total U.S. consumer financial assets$34T

Total non-pension financial assets$22T

Citi’s projection for robo-advisor market in a decade$5T

Aligned

Customers and regulators will push for aligned business models

Intelligent

Holistic advice and planning will put power in the hands of investors

Customers are saving for multiple goals and expect tailored advice for each of them.

11

INTELLIGENT

Customers are being educated to look for the best long-term, post-tax returns.

12

INTELLIGENT

Personalized tools will increasingly help customers plan how much to save and if they’re on track.

13

INTELLIGENT

Tools will become more powerful, providing more personalized advice.

14

INTELLIGENT

Through behavioral data and analytics, automated advice will increasingly manage customer behavior.

Tax impact preview has

prevented 62% of tax-costly

transactions, curbing

behaviors that lead to long-

term underperformance

15

INTELLIGENT

Daniel Egan@daniel_egan