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Larry Zimpleman, Chairman, President,

and Chief Executive Officer

IIS Conference, 8 June 2010

Impact of the Recession on World Economies

Freezing Up of world economies in late 2008/early 2009 Re-Build of World Economies is happening at different rates
Real GDP Growth (Annual Percent Change)

Asia leads the way China, Australia, India, ASEAN

Latin America continues to move forward Chile, Brazil USA is having slow but steady recovery Europe and Japan are lagging
IMF, World Bank, CIA Factbook, 2009 and 2010 estimates

15 Australia and New Zealand 10 Brazil China, People's Republic of Germany 5 India Japan 0 2007 -5 2008 2009 2010 Mexico Spain Thailand United Kingdom United States -10

Impact of the Recession in the U.S.

Workers with less than $10,000 in Savings

Closer to Retirement but with depleted savings Average deferral rates are 6-7% but need to be higher

45% 43%

41% 39% 36%


33% 2009 2008 2007

Asset Allocation mismatch 27% of participants aged 5665 have at least 90% of portfolio in Equities

% of Portfolio Exposed to Equities for Participants Aged 56-65


11% 10% < 60%

> 90%



27% of participants aged 56-65 have at least 90% of their portfolio in Equities

Employee Benefit Research Institute, Profit Sharing Council of America, Bloomberg

Impact of the Recession in the U.S.

Change in Average Account Balances (by Age and Tenure) From Jan 2008 to Dec 2009
110% 90% 70% 50% 30% 10% -10% 1 to 4 5 to 9 10 to 19 20 to 29 25-34 100.9% 53.9% 35-44 72.6% 22.0% 10.8% 45-54 54.9% 15.1% 3.1% -1.8% 55-64 46.7% 13.8% 2.2% -2.9%

Baby Boomers are getting back to even

2007 401(k) Account Balances: Tabulations from EBRI/ICI Participant-Directed Retirement Plan Data Collection Project; 2008 and 2009 Account Balances: EBRI estimates. The analysis is based on all participants with account balances at the end of 2007 and contribution information for that year.

Impact of the Recession in the U.S.

Average 401(k) balance

Average person has $70,970 balance in 2009, compared to $79,570 in 2007 Cant rely on equity markets alone
Return to S&P 500 in 2009 was 23% Will be difficult to repeat in slow growth environment









Average Social Security payment around $1,000/month

Profit Sharing Council of America, Bloomberg, Hewitt

How do we address the Retirement Shortfall?

Middle Class Population Growth
700 600 500 400 300 200 100 0 China India SE Asia Brazil
SE Asia includes Indonesia, Malaysia, and Thailand

Growth of middle classes in large core emerging markets

population in millions



2008 2025 135 122 84


Top 7 Nations shifting to middle income

Goldman Sachs, UN World Report, CIA FactBook, IBGE, Deutsche Bank, McKinsey, ADB, Chulalongkorn Univ, Central Bureau of Statistics and estimates

Most customers simply want professional help - Do It For Me

Can get the education how they want it Blended portfolios appropriate to age or risk tolerance Focus on adequate levels of savings, NOT 6-7%
Hewitt indicates 15.7x salary needed: 4.7x from Social Security, 13.3x from savings and 401k, gap of 2.4x
Hewitt, May 2010

Help Me Do It Myself for a smaller portion of customer base

Allow customers to pick their allocation, let it age with them, rebalance, stay static or any combination Use third party advisor for investment advice

Simple, Understandable Message

Focus on customers need for help Message from customers - Do NOT start with Products Awareness, Education, Guidance, Solutions
Initial response to downturn
50% 41% 40% 36% 28% 24% 20% 10% 10% 18% 13% 30%

Response to downturn after receiving advice



Neither work longer nor save more

Save more only

Work longer only

Save more and work longer

Center for Retirement Research at BC, Feb 2010, Sass, Monk, Haverstick

Client Focus
Bundled Packaged Solutions
Target Date or Target Risk Solutions

Transparent, Simple Design

Addresses clients lack of deep financial sophistication

Invest in Knowledge Transfer to Distribution

Make the financial advisor the expert


Center for Retirement Research at BC, Feb 2010, Sass, Monk, Haverstick

Rebuilding Message works around the World

Makes us recognize the importance of a global strategy No markets were spared
Although some performed better than others

Concept of Rebuilding financial assets is appropriate everywhere


Rebuilding Message Resonates


Thank you!