brinker capital: dol fiduciary rule & destinations...

Brinker Capital, a Registered Investment Advisor.

For financial advisor use only in the Destinations and due diligence reallocation webinar.

ideas. discipline. outcomes.TM

Brinker Capital: DOL fiduciary rule & Destinations updates




DOL fiduciary rule update

For financial advisor use only in the Destinations and due diligence reallocation webinar. 2

■ We are not issuing the full Best

Interest Contract

■ Level fee fiduciary

■ Brinker Capital will simplify pricing

of product offerings on our platform

by moving to one fee schedule

■ Full transparency removes any

potential conflicts

■ All client notices will be negative

consent

■ Eliminating new client signatures

or repapering

Maintaining simplicity in a complex environment

Brinker Capital’s DOL Fiduciary Rule response

■ Educating on the Brinker Capital

value proposition

■ Alignment with the DOL Fiduciary

Rule with transparency of fees

■ Robust investment process providing

fully diversified portfolios with

unbiased manager/fund selection


Brinker Capital existing fee schedule


Asset tier Fee schedule

Up to $100,000 0.64%

$100,000 to $1 million 0.50%

Next $1 million 0.45%



Over $5 million Negotiable

Brinker Capital fee■ Brinker Capital fee is a

blended account fee

schedule

■ Wealth Advisory and

Retirement Plan Services

provide differentiated

services and these

platforms will have

separate fee schedules

Brinker Capital level fee schedule




Destinations funds overview


Evolution of Destinations mutual funds

Asset allocation

■ Risk-based modeling with

active/passive investment approach

Manager research

■ Initial and ongoing due diligence of

sub-advisors

Portfolio management and

implementation

■ Mutual funds will create portfolio

management efficiencies by reducing

turnover directly in client accounts

Multiple client benefits

■ Reduced expenses

■ Level fees

■ The potential of

enhanced investment

outcomes

■ Tax efficiencies

A series of 40-Act multi-asset class sub-advised mutual funds that

provide investment solutions based on Brinker Capital’s core capabilities of:

Reduce minimum

account size to $10,000


Investment team, philosophy & process unchanged

■ Seek to provide

consistent risk-adjusted

returns over time

■ The ideals that tie our

strategies together are

diversification,

innovation and active

management

We add value through:

■ Asset allocation and portfolio

construction

■ Broad diversification

■ Long-term strategic asset

allocation + short-term

tactical shifts

■ Core-satellite approach

■ Manager/strategy selection

and due diligence


Consistent Destinations

product experience through

use of Brinker Capital mutual

funds vs. third party mutual funds

Clients will see both the

Destinations mutual funds and

underlying sub-advisor details

in the proposal, marketing

materials and quarterly reports

Destinations 22-year track

record will be retained at the

portfolio level as the portfolio

construction, risk tolerance and

philosophy have not changed

Depending on the model, clients

will own 6-9 mutual funds within

an advisory account utilizing the

same Brinker Capital multi-asset

class framework employed within

Destinations

The funds will be comprised of

multiple sub-advisors to fulfill

investment styles within each

asset class

Reallocations will take place

both within the mutual funds

and across the client portfolio

to execute both manager selection

and asset allocation decisions

Please note that Destinations model allocations and/or investment components are subject to change. There is no guarantee the results of the models discussed will be met.

Evolution of Destinations mutual funds


Destinations mutual fund line-up

Source: Brinker Capital. For illustrative purposes only. Please note that Destinations model allocations and/or investment components are subject to change. There is no guarantee the results

of the models discussed will be met.

Destinations Mutual Fund Benchmark

Target #

of Sub-

Advisers

Large Cap Equity Fund Russell 1000 Index 5-7

Small-Mid Cap Equity Fund Russell 2500 Index 3-5

International Equity Fund MSCI All Country World Index ex USA 4-6

Core Fixed Income Fund Bloomberg Barclays U.S. Aggregate Index 2-3

Municipal Fixed Income FundBofA/Merrill Lynch 1-10 Year US

Municipals Index1-3

Global Fixed Income Opportunities Fund Bloomberg Barclays Universal Index 3-6

Multi Strategy Alternatives Fund HFRX Global Hedge Fund Index 4-8

Equity Income Fund S&P 500 Index 2-4

Low Duration Fixed Income FundBofA/Merrill Lynch 1-3 Year US Treasury

Index2-4

Real Assets Fund MSCI World Index 1-4


Destinations Moderate (Q) holdings comparison

Holdings/managers

subject to change.

Shown for illustrative

purposes.


When we use passive When we use active

Rationale Example

Core asset class/beta

exposure

All traditional asset

classes

More direct or

concentrated exposuresUS REITs

Rationale Example

Strategies not available

in a passive format

Multi Strategy

Alternatives Fund

Less efficient asset

classesMicrocap equity

Take advantage of a

consistently successful

active manager

Various

Active/passive investment approach


Destinations Mutual Fund

Current

passive

allocation

Expected

passive

allocation

Passive

strategies

utilized

Large Cap Equity Fund 15% 34% S&P 500

Small-Mid Cap Equity

Fund0% 28%

Russell Midcap,

Russell 2000

International Equity Fund 0% 28%MSCI EAFE,

MSCI EM

Core Fixed Income Fund 42% 40%Barclays US

Aggregate

Municipal Fixed Income

Fund0% 0% n/a

Global Fixed Income

Opportunities Fund0% 0% n/a

Multi Strategy Alternatives

Fund0% 0% n/a

Equity Income Fund 0% 24%MSCI US High

Yield Dividend

Low Duration Fixed

Income Fund0% 25%

Barclays

Universal 1-5

Year

Real Assets Fund 0% 30% MSCI US REIT

Total Passive (% of

Moderate)13% 28%

■ Portfolio construction

methodology remains

core-satellite

■ Passive allocation will

increase and will be

used more broadly

across asset classes

Destinations active/passive allocation

Holdings/managers subject to change. Shown for illustrative purposes.




Destinations funds comparison of expenses


Brinker Capital Destinations fee schedule comparison

Asset tierOriginal fee

schedule

Interim fee

schedule*

$25,000 to $50,000 0.75% 0.55%

$50,000 to $100,000 0.55% 0.35%

Over $100,000 0.25% 0.25%

Asset tier Net fee schedule

Up to $100,000 0.25%

$100,000 to $1 million 0.11%



Over $3 million -0.04%

Brinker Capital level fee schedule(Destinations Mutual Funds)

Current fee schedule

*The Destinations Interim Fee Schedule was made available in the second half 2015


Brinker Capital Destinations fee changes

■ Brinker Capital level fee will be offset by the Brinker Capital management fee

within the Destinations Funds

■ Brinker Capital level fee will be a blended account fee schedule

■ Existing clients will generally see total fee savings of 10-32 basis points

depending on portfolio allocation and current Brinker Capital fee

− Smaller accounts may see reductions as high as 62 basis points

■ In our client communications:

− The Brinker Capital fee reduction will be listed

− The total new and old fees will be listed

*The Destinations Interim Fee Schedule was made available in the second half 2015




Destinations funds

portfolio transition


Destinations qualified models

■ All existing Destinations qualified models

on the Brinker Capital platform will be

reallocated according to the transition

schedule beginning the week of April 3rd,

2017

■ Beginning April 3rd, 2017, new accounts

will be using the updated Destinations

qualified models that will hold the

Destinations mutual funds

Destinations taxable models

■ All existing Destinations taxable

models on the Brinker Capital

platform and Envestnet will be

maintained in their current

Destinations models

■ Beginning April 3rd, 2017, new

accounts on both the Brinker

Capital platform and Envestnet

will be using the updated

Destinations taxable models

that will hold the Destinations

mutual funds

Destinations transition


April 4, 2017

• Large Cap Equity

• Core Fixed Income

April 5, 2017

• Small-Mid Cap Equity

• Low Duration Fixed Income

• Multi Strategy Alternatives

April 6, 2017

• Global Fixed Income Opportunities

• Equity Income

• Real Assets

April 7, 2017

• International Equity

■ Destinations qualified portfolios will

be updated each day selling and

buying funds based on above

schedule

■ Coordination among fund companies

and fund custodian to move securities

and cash between funds will occur

each night

Trading overview

Fund rebalancing timeline (qualified portfolios)




Communication plan and timeline


Communication process / timeline

Financial advisors

■ Destinations reallocation and fee changes communicated via email on February 8,

2017

■ A second notification to be distributed last week in February

Client notification

■ March 1, 2017 – begin mailing client letters to all existing Destinations qualified

accounts

■ Notices will contain account-specific fee comparison (old vs. new)

Financial advisors will be able

to view their client list and the

client notices through a report

on the My Brinker page of

BrinkerCapital.com


Destinations sub-advised marketing pieces

brinker capital: dol fiduciary rule & destinations...

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