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rr Sh Brokers Takeaways In brokers, GS presented, while MS hosted 1-1 meetings with investors. During the conference we polled the audience on several topics including the outlook for capital markets revenues. Investors modestly positive on capital markets over next 1-2 years Given the election outcome, recent rise in rates, potential for higher growth and de- regulation, and lower corporate tax rates, we asked investors about their outlook for capital markets over the next 1-2 years. The majority of investors (78%) were positive about the capital markets sector, with 56% who expect modest improvement in regulation, revenue growth of 5-10%, and returns of 10-12% and 22% who think we could see significant improvement in regulation, revenues growth of 10%+, and returns 12% +. Chart 5: Based on the backdrop and the election outcome, what is your outlook for the capital markets over the next 1-2 years 60% 56% 50% 40% 30% 20% 10% 0% Little tono change in _ Little to no change in Modest improvement in Significant regulation, flattish regulation, but regulation, revenues improvement in revenues, andstable improving revenues (5-10%), and returns —_ regulation, revenues returns (5%) and returns (10-12%) (10%+), and returns (10%+) with GDP (12%+) growth Source: BofA Merrill Lynch Global Research Asset Manager Takeaways In asset management, four of the largest public managers, IVZ, EV, LM, and AB either presented or engaged in fireside chats, while several other firms including AMG, APAM, BLK, CNS, OMAM, and VRTS hosted 1-1 meetings with investors. During the conference we polled the audience on several topics including the outlook for DOL (in the panel section), the outlook for fixed income given the recent rise in rates/expected rate hike and outlook, active vs passive market share, M&A, and pricing/fee structures. Fixed income outlook more muted Given the recent rise in rates, a looming rate hike in December, and the potential for a higher growth/inflation outlook for the economy, we asked investors their outlook on fixed income performance and flows vs equities. The majority of investors believe we will see weaker fixed income performance and flows offset by stronger equity performance and flows (52%). Weaker fixed income/equity performance and flows was the second most popular answer at 24% while flat flows and performance came in third at 16%. Only 8% of the audience think we will see stronger fixed income/equity performance and flows, while nobody thinks fixed income will be stronger and equity will be weaker (both flows and performance). BankofAmerica <2” 4 2016 Future of Financials Conference | 17 November 2016 Merrill Lynch HOUSE_OVERSIGHT_014318