General Questions

1. What is GlobalBridge's target market?
2. What do you mean by SMA/UMA and do you offer these?
3. How does the SMA/UMA platform work?
4. What are the benefits of an SMA/UMA over a mutual fund?
5. What are the benefits of using professional separate account management versus managing it yourself?
6. Does the GlobalBridge strategy allow our bank to manage a portion of the equity and fixed income portfolios?
7. How long has GlobalBridge been in business?

What is GlobalBridge’s target market? 
Banks with AUM of $250MM to $5 billion, and independent financial advisor services with assets under management of $100MM+ can best benefit from the various services GlobalBridge provides.

What do you mean by SMA/UMA and do you offer these?
Separately Managed Account (“SMA”): A single custody account that corresponds to a single investment strategy (sleeve). To hold multiple strategies (sleeves), a client must normally open multiple custody accounts. Unified Managed Account (“UMA”): A single custody account that houses multiple investment strategies (sleeves) which may include multiple investment vehicles such as stocks, bonds, mutual funds and ETFs. The leading-edge UMA trade order management and portfolio accounting technology utilized by GlobalBridge provides capability unavailable to most multi-manager platform providers. The account leverages a platform that enables an advisor to manage an investor’s portfolio in a comprehensive fashion and display it in a single report. We offer both SMAs and UMAs to our clients.

How does the SMA/UMA platform work?
GlobalBridge has contracted with over 70 institutional managers who provide their investment portfolio models to GlobalBridge throughout the trading day. GlobalBridge’s trading desk manages client portfolios based on these models, after adjusting for individual guidelines and restrictions including efficient and prudent tax liability management. This model arrangement allows participating managers to focus on their core function and value proposition – securities research, securities analysis, and portfolio construction, while GlobalBridge performs all middle-office and back-office functions including trading, settlement, reconciliation, compliance, proxy voting, reporting, billing and collection. GlobalBridge also conducts performance attribution, style adherence monitoring, and portfolio risk monitoring.

What are the benefits of an SMA/UMA over a mutual fund?
There are five key benefits of an SMA/UMA over a mutual fund: 1) Full transparency of transactions and holdings; 2) lower cost versus non-index funds; 3) more efficient cash management; 4) better tax liability management and 5) portfolio customization.

Transparency: Portfolio transactions and positions are not made available to mutual fund shareholders until at least 30 days after quarter-end. All transactions and positions in an SMA/UMA portfolio are made available daily.

Cost: Mutual funds typically have significant management fees, fund accounting expenses, shareholder accounting expenses, fund operations expenses, fund distribution expenses and fund board of director expenses. SMA/UMAs typically only have management fees and platform operating expenses.

Cash management: Another drawback of mutual funds pertains to cash management.  Because shareholders are constantly buying and selling their mutual fund holdings, the manager must maintain enough cash balance to meet potential redemptions.  If the forecasted redemptions are less than actual, the manager must sell securities to meet these redemptions or tap lines of credit each of which cost the investor.  If the forecasted redemptions are more than actual, the manager will have kept too much cash on hand resulting in less money invested pursuant to their policy. Managed accounts do not hold cash to support the cash needs of other shareholders, only the cash needs of the account owner and/or the manager’s portfolio model.

Tax liability management: Also, there can be tax advantages to owning an SMA/UMA portfolio versus a mutual fund. In an SMA/UMA, your client starts with a tax-basis equal to their investment. With a mutual fund, the investor will instantly assume the tax liabilities of the fund, exposing themselves to taxes on gains they never received.

Portfolio customization: Because the investor owns the securities in an SMA/UMA, they have the ability to restrict securities by industry or sector if there are some types of securities in which the investor does not want to invest.

What are the benefits of using professional SMA/UMA account management versus managing it yourself?
Here is a metaphor we like to use at GlobalBridge. One can liken investing to getting from point A to point B.  There are many methods each of which has benefits and drawbacks.  You could take the bus.  Taking the bus does not require a significant amount of investment and the driving is left up to someone else.  However, the bus makes several stops along the way picking up other people and dropping off others.  Taking the bus is much like investing in mutual funds.

Or you could drive yourself.  If you drive yourself you get to take the route you want when you want to.  However, as the driver, you will need the capital to obtain and maintain the car.  You will also have to research the specific route and any detours, provide your own navigation, and spend the time behind the wheel.  Driving yourself is much like managing your portfolio yourself.

Finally, you could take a limousine.  When you take a limo, you determine when you want to go and the final destination. But the driver, using their expert skill, determines the specific route to take to most efficiently and safely get you to your destination.  Taking a limo is much like using a profesionally managed SMA/UMA..

Does the GlobalBridge strategy allow our banks or advisors to manage a portion of the equity and fixed income portfolios?
Yes, many of our bank and advisor clients manage core equity and fixed income asset classes leaving GlobalBridge to manage satellite asset classes. We can also incorporate mutual funds or ETFs based on the client need and direction from our bank or advisor client.

How long has GlobalBridge been in this business?
We have been in this business since 2000. Our senior management has an average of 20 years experience in financial services. We were the first investment firm to adopt a model portfolio overlay process. We were the first multi-manager platform to adopt an open- custody business model that allows all our clients to maintain existing custody relationships. We have over 75 financial institutions who have selected GlobalBridge as their multi-manager unified managed account provider.

Bridge to Managers

1. How many managers are on the platform?
2. What are your sources to find managers to put on your platform?
3. What is your due diligence process?
4. Do you make manager recommendations?
5. Who provides ongoing monitoring of managers?
6. When do you remove a manager from the platform?
7. What types of information will be made available for us to review the managers?
8. Do we contract with each investment manager or globally with GlobalBridge?
9. Do the managers have minimum investment amounts?

How many managers are on the platform?
GlobalBridge maintains 70 managers offering 100 different products on the platform. Through the firm's relationship with FolioDynamix, GlobalBridge has access to another 100 managers to complement our current product offering.

What are your sources to find managers to put on your platform?
The Investment Research Group periodically screens the manager universe to identify managers on the rise as well as potential replacement managers. We use a variety of sources to screen the universe including database sources, current periodicals and news services, recommendations from other institutions and advisors, as well as the competition. The goal of screening is to identify those managers who have consistently outperformed their benchmark while maintaining adherence to investment style.

What is your due diligence process?
Our due diligence process is accomplished through two levels:
Our Level 1 Due Diligence subjects screened managers to a preliminary review consisting of general and background information on the firm and specific products. The objective of the preliminary review is to identify those managers who fail to meet our minimum standards and, therefore, require no additional analysis. Those managers that exceed our minimum standards are subject to a comprehensive review which includes an analysis of product staffing, marketing strategy, licensing and legal information as well as third party report review including SAS-70 reports, the ADV, and other third party reports. Product specific information is analyzed to determine the portfolio investment process, construction, and risk management procedures. Our Level 1 research is completed by subjecting the portfolio performance to style drift analysis, modern portfolio theory measurements, and a review of the consistency of returns through market cycles.

Our Level 2 Due Diligence utilizes two key analytical tools: Portfolio Opportunity Distribution or POD, and Barra Performance Analyst or BPA. The POD answers the key peer ranking questions: "Has the manager added value over the benchmark and is it significant?" while the BPA answers the key source of return and risk questions: "Where is the added value coming from and is it significant?"

Do you make manager recommendations?
Following Level 1 and Level 2 research, analysts and our investment committee will make recommendations for our advisors who request manager recommendations for their clients.

Who provides ongoing monitoring of managers?
The investment research group provides ongoing monitoring for all approved managers. We will continue to measure quarterly performance and firm data for those managers who are conditionally approved but will not add them for ongoing monitoring while non-approved managers may resurface for analysis following periodic manager screening but no ongoing measurement or monitoring is completed.

When do you remove a manager from the platform?
A manager may be removed from the platform in the event of a significant change in personnel, operations, firm ownership, or investment performance. Managers are monitored very closely for each of these types of changes because it is our belief that significant changes in people or operations often signal a change in investment performance.

What types of information on managers will be made available for us to review?
Monitoring for managers who have been approved and are on our platform is comprehensive and includes findings reports, research updates, and updates to the quarterly manager profile. The findings reports are issued whenever a new or existing manager is reviewed. The findings report is a brief summary of the firm, products offered, and data reviewed. The report will include key rationale for approval or rejection including manager downgrades. Research updates are issued periodically based on a review of issues or problems either with a specific manager or overall market change. The research update describes issues, problems, or cause for review and provides a recommendation to the advisor on whether a change in manager should be contemplated. In addition, the manager profile is updated quarterly to reflect the results of research information and latest investment performance. Changes in personnel and product information are included with each update.

Do our clients have to contract with each investment manager or globally with GlobalBridge?
GlobalBridge maintains firm-wide contracts with each of the managers on our platform.

Do the managers have minimum investment amounts?
Because GlobalBridge receives models from our investment managers and performs the trading and execution, we are able to offer products at substantially reduced account minimums. While many of our managers will have stated minimums of $1 million or more, we are able to offer the same product at a minimum of $50,000 to $100,000.

Bridge to Brokers and Custodians

1. What are your trading costs?
2. Who are the brokers you trade with?
3. Can you describe your trade execution?
4. What order management system (OMS) do you use?
5. Where are assets custodied?

What are your trading costs?
GlobalBridge has negotiated commissions with multiple institutional brokers ranging from 2 cents to 5 cents per share, with no minimum ticket charges. Average transaction cost in 2008 was less than 3 cents per share.

Who are the brokers you trade with?
We have a preferred relationship with BNY ConvergEx, Goldman Sachs, UBS, UNX, Pershing, JPMorgan/Bear, and Schwab.

Can you describe your trade execution?
All accounts are blocked together and routed to the broker that will provide best execution. Once the order is complete, all accounts will receive the same average price of the block trade. If a client elects for their trades to be directed to a particular broker that can be accommodated, however their orders will then be part of a rotation along with all other directed orders and will most likely not be a part of the "main" block that will always be executed first.

What order management system (OMS) do you use?
GlobalBridge uses the OMS provided by SS&C. This is considered by most to be the best model portfolio overlay technology in the market. We are happy to demo this system.

Where are customer assets custodied?
Most platforms require the client to move their assets to their preferred custodian. GlobalBridge was the first multi-manager platform that allowed bank or broker clients to retain their existing custody relationship. We built all connectivity to our customer’s portfolio accounting, trust accounting and custodian.

Technology

1. What are the key technology capabilities GlobalBridge has?
2. Which trust accounting systems do you work with?
3. Which portfolio accounting systems can you interface with?
4. What will be required of our operations staff?
5. Does all the connectivity with the trust accounting systems work the same way?
6. How quickly will trades appear on the portfolio accounting or trust accounting system?
7. How many banks do you have that are using your trust accounting technology?

What are the key technology capabilities GlobalBridge has?
We have developed connectivity to all major trust accounting systems, custodians, and brokers. Additionally, we have a leading-edge desk-top proposal generation system that is available to all our clients. We use the most sophisticated unified managed account (UMA) order management, portfolio accounting and reporting system available in the market.

Which trust accounting systems do you work with?
We currently have connectivity to all the major providers including, Trust/Rite, SunGard AddVantage, Infovisa, SunGard Charlotte, SEI 3000, Metavante, HWA International, and AccuTrust.

Which portfolio accounting systems can you interface with?
We can import transactions and position data into most portfolio accounting systems including those maintained by Schwab, Fidelity, TDAmeritrade, and any advisor using Advent and other portfolio accounting systems.

What will be required of our operations staff?
Very little.  Once the portfolio accounting or trust accounting connection is established, GlobalBridge will assume all trading and settlement responsibilities for the accounts on our platform.   You receive daily trade allocations from GlobalBridge that are directly loaded into the portfolio accounting or trust accounting system.

Does all the connectivity with the trust accounting systems work the same way?
No. Each trust accounting connection to GlobalBridge is unique.

How quickly will trades appear on the portfolio accounting or trust accounting system?
Trade activity/allocations will be transmitted to the trust accounting system approximately 30 minutes after the market close each day. It will depend on the trust accounting system, but they will reflect as pending trades no later than T+1.

How many client banks are using your trust accounting connectivity technology?
GlobalBridge has agreements with over 65 banks from all major trust accounting systems and over 10 independent advisors and brokers.

Bridge to Clients

1. How does the bank access manager information?
2. Do you provide assistance on manager selection?
3. Do you have Desktop Proposal Generation?
4. Do you provide asset allocation models?
5. What marketing materials are available from GlobalBridge that could be provided to our prospects?
6. What additional services are provided by your firm?

How does the bank or advisor access manager information?
Manager news, findings, research, and pitch-books are all posted on the internet with login and password rights assigned to each of our clients. Additionally, we post quarterly manager reports and profiles with performance updates within 30 days of quarter end.

Do you provide assistance on manager selection?
Yes, we can work with advisors in choosing the appropriate manager for their client. In addition, Manager Comparison reports can be created, via our website, for as many as 15 different managers. This is a comprehensive report of comparative analytics which is helpful in choosing a manager. This report is also produced as part of a client proposal.

Do you have desktop proposal generation?
Yes, all advisors have the capability to create proposals for client and prospect presentations directly from their desktop. This proposal will be customized with the advisor and client names and will include all the appropriate analytics for a professional and thorough client presentation.

Do you provide asset allocation models?
Yes, within the desktop proposal generation program, there is access to a client questionnaire which will produce an asset allocation with options to customize. The bank or advisor can also input its asset allocation models for clients and prospects.

What marketing materials are available from GlobalBridge that could be provided to our prospects?
Manager marketing materials, analytics, product updates and market commentaries are available for download from our website.

What additional services are provided by your firm?
Once a bank signs on with GlobalBridge, a team of professionals will be assigned. Assistance will be given in account set up and changes, manager selection, and answering RFPs for institutional clients. We will set up a monthly call with the bank to discuss current accounts, managers, updates, and answer any questions or concerns our client may have. We will also provide training on how to access information via our research library, how to produce proposals utilizing the desktop proposal system, and how to produce manager comparison reports.