A Perspective on Outsourcing Brandywine Asset Management State Street Wealth Manager Services

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A Perspective on Outsourcing(Brandywine Asset
Management State Street Wealth Manager Services)
The Money Management Institute Yale Club of New
York March 1, 2006

• Frank Natale
• Director, Private Client Group
• Brandywine Asset Management

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Brandywine at a Glance
Data as of 12/31/05
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Brandywine at a Glance
Data as of 12/31/05
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Brandywine at a Glance
Assets Under Management (By Business Line)
Private clients 3.9B
Institutional 22.3B
Data as of 12/31/05
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Considerations

• Predominantly an institutional asset manager with
  an expanding focus on private client
• Meaningful operational differences across
  institutional and private client business lines -
  fixed infrastructure is vastly different and
  integration not efficient
• Logically, our IT strategy could not be equally
  committed to two paths
• Our clients are best served with a provider that
  has an unwavering focus and commitment to
  operations allowing BAM to focus on investment
  management

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Considerations (Cont.)

• Fully prepared for the growing relationships with
  our sponsor firms and higher account volume
• Mitigation of risk factors inability to shadow
  accounts and ensure comprehensive compliance
• Economics
• Future use of current infrastructure

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I. Exercise in Self Awareness
Evaluate Your Current, Intermediate and Long Term
Business Model

• Intermediaries/Sponsor Distribution
• Current Products and Product Development
• Client Demographics

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I. Exercise in Self Awareness (Cont.)

• Intermediaries/Sponsor Distribution

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I. Exercise in Self Awareness (Cont.)

• Current Products and Product Development

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I. Exercise in Self Awareness (Cont.)

• Client Demographics

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I. Exercise in Self Awareness (Cont.)
Additionally

• Identify operational strengths and weaknesses
• Acknowledge existing appetite for dealing with
  operational complexities
• Estimate required capital expenditures on
  technology and infrastructure
• Calculate your cost per account
• Answer the question Do we prefer a variable or
  fixed cost structure when asset flows/levels are
  variable? Think of it as a basic swap

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II. Provider Evaluation

• Technology Platform - Capable of integrating into
  core systems of advisor and sponsor
• Experience and Commitment - Proven
  implementation skills and a commitment to
  technology and process development
• Operational Excellence Focused on operational
  perfection across account set up, trade support,
  settlement, portfolio accounting and compliance,
  billing and client support/reporting

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II. Provider Evaluation (Cont.)

• Culture of compliance including due diligence,
  suitability, knowledge and experience applying
  securities law and regulations
• Ability to provide metrics and management
  reporting
• Stable platform, cost and the ability to leverage
  infrastructure
• Extension of your current organization
  Confidence factor FIND THE CORRECT FIT

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III. Implementation
Change the Tire with the Car Still Running

• Focus on Service Level Agreement
• Duration of the transition process/integration
• Drain on current resources opportunity
  cost/additional costs
• Designate an operational liaisons

Anticipated problems are rarely problems