An audit of the industry and competition of PIMCO from a marketing perspective.

1. PIMCO Marketing Audit
Thursday 18 August 2011

2. About today
Industry and Audience Perspective
Marketing Audit
Additional items we’d like to explore
Preliminary Opportunities
Questions & Discussion

3. Industry and Audience Perspective

4. Industry and Audience Perspective
Foundational Principles
Target Audience
• Institutional Investors
• Financial Advisors
• Investors

5. Foundational Principles
• The industry is heavily relationship driven. Although - The financial crisis dislodged substantial assets. It
consumer trust in financial institutions is shaken, their is estimated that half of the assets that moved
confidence and faith in their advisors remains high and is during that time relocated to perceived safe
the linchpin of the industry’s success. havens, at least temporarily.
• Investors have shown a willingness to sacrifice returns - Market volatility has become the new norm, with
for decreased volatility in their portfolios, and are the European debt crisis, Middle East political
unnerved by personnel turnover in their investment unrest, and natural disasters from tsunamis to
relationships. droughts further impacting investment
reallocation.
- As Baby Boomers reach retirement age there is a
scramble to capture rollover funds and allocate
assets to more income-oriented investments.
• The last few years have seen a tremendous amount of
assets in motion

6. Audience – Institutional Investors
• Institutional investors are incredibly savvy and • Pension plans represent 39% of total assets, and when
sophisticated, and have the expertise, influence, and at other buyers such as endowments, foundations and
times desire, to affect fund and corporate investment insurance companies are tallied, the institutional share rises
strategies. to 46%
- They are becoming more demanding of all aspects of - 401(k) and pension fund managers are conscious of fees,
their relationships with asset managers, including research long-term returns, and risk-mitigation within their
demands, more customized solutions, and probing into portfolios, as well as handling the contribution and
investment processes and philosophies. distribution needs of their participants
- Regulatory changes, such as Solvency II legislation, are - Plan rollovers (such as when an employee leaves a
influencing objectives and making it more difficult to company) are critical junctures in which moneys can shift
achieve their desired yields. into and out of funds. Brokers aggressively seek to
• Fund managers’ jobs are getting harder as they react to the capture rollover dollars, while fund managers are making
market changes in the last few years. strides to keep customers in the plan.
- They want to remain diversified to limit exposure, but
recognize that’s not enough to mitigate risk.
- Many are realizing they need to be more nimble, and are
seeking liquidity to handle market fluctuations, despite the
drag on their portfolios.

7. Audience – Distributors & Investment Advisors
• RIA’s and brokers break down domestically between those • Many of these advisors have limited direct interaction
affiliated with the large wirehouses and independent with their clients, and have similarly limited knowledge of
advisors the products they offer or advice they give.
• Furthermore they exhibit different behaviors based on - For the majority of customers quarterly contact with
the nature of their practices and their form of an advisor is the equivalent of the relationship.
compensation, which impacts how products are positioned - The diversity of products available leads to
to them: substantial competition for shelf space and “share of
- Product sellers, who seek more transactional based mind” for distributors. To compensate firms need to
business strengthen sales support, including better training on
- Asset gatherers, who focus on increasing assets under products, backing up advisors on specific investment
management solutions, and being an active partner with
- Investment managers, who are more analytical in their distributors on new sales approaches.
approach to portfolio management
- Financial planners, who offer comprehensive financial
planning processes and are often fee-based
- Wealth managers, who serve the needs of high net
worth individuals

8. Audience – Individual Investors
• An aging affluent population is seeking stability • There is a growing diversification among high net
- They are approaching retirement, living longer, and worth individuals.
concerned about health care costs and succession - More than 1 in 4 globally are women, with the
planning number reaching 37% in North America
- A recent Fidelity Investments study estimated that a - Although 83% are over 45 globally, that number
boomer couple retiring at 65 will need approximately varies by region. For example, in Asia-Pacific
$200,000 to cover 20 years of out-of-pocket outside of Japan 41% are 45 or younger
healthcare expenses. - Advisors lose an estimated 49% of assets under
management during generational wealth transfer,
• The wealthy: entrepreneurial in spirit, middle class affirming a need to address next-generation client
at heart needs
- 90% created their own wealth. 50% mostly rely on
themselves when it comes to their finances
- 81% describe themselves as middle class. 89% don’t
want others to know they are wealthy

9. Audience – Individual Investors
• 42% of online investors are seeking
stability and reliability in their firm,
and is considered most important across all
age groups
• Thirty-six percent of US online investors
cited a long history of good performance
as the mark of a qualified firm.
• One in three online investors feel that a firm
is well qualified for retirement planning if it
does what's best for its customers, not
just its own bottom line.

10. Marketing Audit

11. Marketing Messages
Blackrock/iShares American Funds PIMCO
Philosophy Belief that our clients’ needs are of paramount Consistency is key. For 80 years, To be the leading investment
importance and our sole business is managing American Funds has applied a consistent management firm in the world by
our clients’ assets on their behalf. philosophy and consistent approach to consistently managing risk and delivering
generate consistent long-term results. returns for our clients, across asset
classes and risk exposures
Key Messages • iShares: We believe in a way of investing • We take a conservative long-term • Your global investment authority
that is transparent, fair and effective. approach that’s consistent with the
• We are agents of change, empowering our needs of most people saving for the
customers with the confidence to achieve future.
their goals. • Believe in the value of professional
• Blackrock: Globally efficient and locally advice.
effective
Audience Focus Institutional clients and investment advisors Financial advisors and conservative Institutional clients and investment
investors seeking to meet long-term goals advisors
Strengths & Global expansion and distribution. Leaders in A long-term, value-oriented approach. Thought leadership. Strong product
Differentiators ETFs. Multiple portfolio counselor system. performance and brand reputation.

12. Marketing Messages
Vanguard Fidelity Investments PIMCO
Philosophy Vanguard's mission is to help clients For 65 years, Fidelity has maintained a To be the leading investment
reach their financial goals by being the commitment to continuous improvement management firm in the world by
world's highest-value provider of and peerless customer and client service. consistently managing risk and
investment products and services. delivering returns for our clients, across
asset classes and risk exposures
Key Messages • One goal: to help you reach your • Turn Here • Your global investment authority
financial dreams. • Advantages for every investor
• With Vanguard, you can stay
focused on what matters to your
long-term success
Audience Focus Consumer/investor-focused Consumer/investor-focused Institutional clients and investment
advisors
Strengths & Client-owned, no-load. High general Highly investor focused. Offer a Thought leadership. Strong product
Differentiators market awareness. Most index funds. complete suite of consumer retail performance and brand reputation.
products. 24/7 advice and support.

13. Paid Media Landscape
Blackrock / iShares American Funds PIMCO
Total marketing spend Too little to be reported Total Paid media: $3m
from Annual report: $295m Digital: ?
Heavily product focused
(iShares ETFs)

14. Paid Media Landscape
Vanguard Fidelity Investments PIMCO
Total Paid media: $40m Total Paid media: $295m Total Paid media: $3m
Digital: $16m (41%) Digital: $150m (51%) Digital: ?
Education, Low cost, Products Conversion, Tools, Products, Guidance

15. Owned Media Landscape
Blackrock / iShares American Funds PIMCO
Affirm brand position as the world’s Create a fast deep dive into timely Personify and legitimize the brand by
preeminent investment management content, news and executive POVs. showcasing opinion and thought
firm. leadership.

16. Owned Media Landscape
Vanguard Fidelity Investments PIMCO
Entice investors to participate in the act Get investors started by presenting an Personify and legitimize the brand by
of “Vanguarding.” array of tools, offers, services and showcasing opinion and thought
CTAs. leadership.

17. Social Media Landscape
Blackrock / iShares American Funds PIMCO
Broadcast Opinion,
Announcements Thought
Leadership
Low Engagement
Low
Engagement

18. Social Media Landscape
Vanguard Fidelity Investments PIMCO
Customer Service Annements Customer Service Announcements Opinion,
Med-high Engagement Med-high Engagement Thought
Leadership
Low
Engagement

19. Highlights
• Segmentation and targeted messaging to the financial advisor audience is going to be important in
the creation of a marketing platform
• 3 of the 4 companies we researched are spending significant dollars in marketing and paid media
• Blackrock are shifting away from an acquisition approach to a marketing approach through
committing to spend hundreds of millions of dollars on marketing to build their brand in the the
retail market over the next few years
• Through the leveraging of its credibility PIMCO is taking a clear leadership position in the social
space especially around Thought Leadership

20. Additional items we’d like to explore
• What is the right way to segment investment advisors and their clients? By behavior? By professional
maturity? Others?
• What is the decision-making process for advisors to select the funds they offer their clients? How does
that vary based on advisor attitudes and practices?
• How does an investors understanding of and attitude towards investment brands impact their selection of
products and their discussions with their advisors?
• What are the points in the advisor and investor journey in which brand marketing and messaging can
impact consideration or purchase? What form of message is best suited for those moments?
• How do we optimize the marketing across these targets to achieve the best ROI for PIMCO?
• What are the regulatory restrictions applied to paid and social media?
• Are there any established ROI and specific success metrics for the planned marketing spend?

21. Preliminary Opportunities

22. Leveraging the power of your Thought Leadership
• PIMCO Credibility and Thought Leadership leads the industry and while Financial Advisors
have a different level of sophistication when it comes to information understanding and
consumption, we believe there is an opportunity to leverage the power of your credibility with
Financial Advisors.
• The opportunity is to take that Thought Leadership and make it relevant and useful to
Financial Advisors
• Thought Leadership as a toolset for Financial advisors engage with their customers

23. The relationship between Thought Leadership, Life Events
and Products
Thought
Leadership
Area of
Products Life
Opportunity
Events

24. An Integrated Marketing Platform
• Integrated, Planned, Purposeful, with Intent
• Creating a highly focused and strategic marketing platform
• All marketing activities are highly integrated with other PIMCO activities

25. Questions & Discussion

26. Thank You

27. Regional Differences
Europe The Americas Asia/Pacific
• 2011 has seen positive net inflows into • Strong inflows into fixed-income funds and • 2011 has seen outflows across all traditional
mutual funds, hybrid funds, and ETFs ETFs in 2010 have slowed in 2011, while asset classes. They also have a higher
there has been some recovery in equities propensity to pursue returns in real estate
• In the UK retail distribution is dominated by (excluding Japan)
IFA’s, and it has a similar regulatory • The tremendous diversity of products means
environment to US increased competition for shelf space and • Developed markets like Australia and Japan
share of mind with both professional buyers bear many similarities to the US and UK
• In Continental Europe is dominated by retail within distributors and RIA’s
banks. Well-differentiated products, top- • Developing markets like China, India,
level service to distributors, and a strong • Mexico, Brazil, and Chile have seen some of Taiwan, and South Korea have been largely
reputation are critical the strongest growth in assets under served via regional hubs in Hong Kong and
management over the last year. Singapore where there is a more robust
• Institutional clients vary by market, with financial infrastructure. China in particular
some being primarily insurance focused is more restrictive, requiring the right
while others have significant pension fund partner for joint ventures.
markets featuring varying levels of
intermediation