The Decision to Outsource:

1
The Decision to Outsource A Managers Perspective
March 1, 2006
Christopher J. Bell, CPA Chief Operating
Officer Fifth Third Asset Management, Inc.
2
FTAM OVERVIEW
Who Are We?
Assets by Style as of 12/31/05 Total Firm
Assets 21.5 b

• Multi-Disciplined Investment Manager
  headquartered in Cincinnati, OH with offices in
  New York, NY, Cleveland, OH, Pittsburgh, PA,
  Grand Rapids, MI and Minneapolis, MN
• Investment products distributed through
  Institutional Separate Accounts, Mutual Funds and
  Retail SMA Offerings

Value 2.1 b
Core 1.6 b
Quantitative 1.0 b
Growth 2.5 b
Fixed Income 13.0 b
Other 1.3 b
3
BUSINESS STRATEGY EXPANSION
Retail SMA

• In Early 2005, FTAM Decided to Enter the Retail
  SMA Space. Why?
• SMAs Represent a Significant Growth Opportunity
  for our Investment Strategies
• To Complement our Existing Institutional Separate
  Account and Mutual Fund Businesses
• To Distribute and Leverage our Competitive
  Investment Strategies on a National Scale

4
SMA OPERATIONS
Pre-Outsourcing

• Our SMA Environment (December 2004)
• 350 Accounts 175 Million in AUM
• No Dedicated Resources for SMA Operations
  Supported by Institutional Operations Group
• Manual Processes and Procedures

5
OUTSOURCE DECISION CRITERIA
To Build or Not to Build

• Focus on Core Competencies Investment and
  Client Management
• Delegate Back Office Duties to Third Party
  Provider
• Speed to Market
• Economics of an Outsource Arrangement

6
THIRD PARTY PROVIDER SEARCH
Key Considerations

• Vendor Connectivity and Relationships within the
  Sponsor Network
• Integrated Workflow
• Model Management Capabilities for Equity and
  Fixed Income
• Operational Expertise, Support and Scalability
• Other Capabilities Performance Reporting,
  Suitability, Account Restrictions, Corporate
  Actions, etc.

7
DEFINED ROLES RESPONSIBILITIES
Clarity of Ownership
FTAM Investment Strategy and Decision
Making Model Maintenance Account Rebalancing
Third Party Provider Account Opening
Maintenance Portfolio Accounting Account
Reconciliation Trade Settlement Trade
Processing Performance Reporting Billing,
Remittances Fulfillment
8
KEY FOCUS AREA
Service Level Standards

• New Accounts Opened Reconciled
• Account Maintenance and Performance Measurement
• Cash Flows
• Trades Affirmed Security Pricing
• Reporting

9
KEY DECISION FACTORS
BISYS WealthSolutions

• Technology Workflow Integration of Operating
  Activities with Trading Modeling Functionality
• Mutual Commitment to Service Levels Contractual
  Risk Sharing
• Quality of Personnel Experienced, Tenured
  Industry Professionals
• Business Partnership Alignment of Business
  Interests New Business Development Efforts

10
POST IMPLEMENTATION IMPRESSIONS

• Workflow is Out of Sight, Out of Mind
• Very Strong Partnership on New Business
  Development
• Excellent Working Relationship between Teams
• Ability to Focus on our Core Competencies
• Investment and Client Management

11
SUMMARY
Keys to Successful Outsourcing

• Operational Expertise, Support and Scalability
• Clearly Defined Roles and Responsibilities
  between Manager and Third Party Provider
• Integration of Operating Activities
• Aligned Business Interests