Casey, Quirk & Associates Post the Debacle

Tracking the “Client” Process

February 26, 2009

(Understanding the unfreezing of the Tundra)

1) What has happened to our investment program

2) Where are we now

3) Where do we want and need to be going in the future

4) Who do we want to work with and in what capacity

Tracking the “Client” Process

Clients and their advisors face a litany of issues1) “Do I rethink my asset allocation strategy?”

2) “Do I rebalance?”

3) “Should I fire my consultant/advisor?”

4) “What regulatory requirements will I be subjected to?”

5) “Are big advisory firms safer and more stable?

6) “Which manager will be stable/survive?”

7) “Which managers do I fire/keep?”

8) “How do I think about hedge funds and other alternative strategies?”

9) “How much transparency do I need and who will teach me to use it?”

10) “Do I have the next Madoff in my portfolio?”

All Investors have a Cost of Capital

Expected Return Gap

Expected Return

Expected Risk

Target Return (Cost of Capital)

(Our best sense 24 to 36 months)

Clients will need plenty of input and seek thoughtful advice

The most bullish aspect of the four step process comes down to one fact:

“PEOPLE HAVE TO INVEST”

The Duration of the Four Step Process

An industry dealing with Loss and Opportunity

– All managers are strained, have cut heads and bonus comp…

– …and will move to cutting non-core business lines

– When investors unfreeze re-examination is certain…

– Poorly managed, underperforming, irrelevant managers of all types will not survive

– Ultimately people have to invest

– …re-allocation and rational decision-making

– Managers with high quality ownership, leadership and investment capabilities can gain clients…

– …top grade talent

– … and acquire capabilities

– High quality advice from credible managers differentiates, doesn’t save bad product

The Loss The Opportunity

The four step client process will apply to hedge funds. It will move from “Blind Faith”

and collecting firms to how they fit within individual clients investment structures.

“Staffing Arbitrage” will continue to help Fund of Funds.

Your sales process will be to interrogate and advise clients on their use of hedge funds.

The selection process maybe far more situational versus historical practices.

Thus: Marketing, Sales and Client Service will be a major effort for your firms as not all

clients will emerge alike in this unfreezing phase.

Be skeptical of your investment professional colleagues, don’t let them impart their

business dogma in the client marketplace on you who are actually dialoguing and

listening to clients and potential clients.

Make sure if there are any gaps in our 2004 “Requirements for Institutional Success”

(See Appendix) you fill them quickly.

Historical Ranking of Expected Search Activity

Source:: “2009 Consultant Search Forecast” by Casey Quirk and eVestment Alliance

Rank 2007 2008 2009

1 Domestic Equity Hedge Funds / FoHFs International / Global Equity

2 International / Global Equity International / Global Equity Domestic Equity

3 Hedge Funds / FoHFs Domestic Equity Core / Core Plus Fixed Income

4 Real Estate Real Estate Hedge Funds / FoHFs

5 Core / Core Plus Fixed Income Private Equity Real Estate

6 Private Equity Core / Core Plus Fixed Income High Yield Fixed Income

7 Commodities LDI / Long Duration FI Private Equity

8 LDI / Long Duration FI Commodities LDI / Long Duration FI

APPENDIX

About Casey, Quirk & Associates LLCCasey, Quirk & Associates LLC (“Casey Quirk”) is a management consulting firm that focuses exclusively on serving investment management organizations. Our mission is “to work with our clients and partners to build great investment management companies.” The firm, founded in February 2002 by the senior principals of Barra Strategic Consulting Group, draws on over 20 years of experience advising asset management companies.

Based in Darien, Connecticut, Casey, Quirk & Associates is led by its four founding members. John Casey, founder of both RogersCasey and Barra Strategic Consulting Group, serves as the firm’s Chairman. The other founding members include David Bauer, Jeb Doggett, and Kevin Quirk, all of whom have worked as a team since the mid-1990’s. A new partner, Yariv Itah, was appointed in 2006. The firm’s services include: 

Firm Evaluation & Business Strategy DesignM&A/Transaction AdvisoryStrategic Investments & PartnershipsInvestment Monitoring Advisory ServicesOngoing Strategic/Business Advisory Services

 Our broad knowledge of the marketplace is unique, and we are committed to continually researching the industry. Our members have authored many leading industry white papers including: Success in Investment Management: Building and Managing the Complete Firm (with Merrill Lynch in June, 2000), Style is dead. Long live style! (August, 2001), Fund of hedge funds—Rethinking resource requirements (September, 2001), The Search for Investment Quality—A Survey of Investors, Consultants, and Managers (May, 2003), Success in Investment Management: Three Years Later (with Merrill Lynch in October, 2003), Institutional Demand for Hedge Funds: New Opportunities and New Standards (with The Bank of New York in September, 2004), 2005 Business Benchmarking Survey: Long-Term Incentive Alignment Drives Success (with McLagan Partners in July, 2006), Institutional Demand for Hedge Funds 2: A Global Perspective (with The Bank of New York in October, 2006), and The Brave New World: Winning Product Strategies for a Changing Global Market (with Merrill Lynch in September, 2007).

Our members use proprietary strategic frameworks, leading investment analytic tools, and broad market perspective to support our advisory services. The firm’s members have broad experience working in all of the major global markets, in all of the industry’s primary market segments, and in every asset class.

Biographies

JOHN F. CASEYChairman, Casey, Quirk & Associates John is a founding partner of Casey, Quirk & Associates, a management consulting firm focused on advising investment management organizations. Prior to the formation of Casey Quirk, John was Chairman of both RogersCasey and Barra Strategic Consulting Group, of which he was also a co-founder in 1976. He was a member of the Barra Board of Directors from 1996 through mid-2001.

John has over 40 years of experience in the investment industry. Following its founding and during John’s tenure as Chairman, RogersCasey grew to be among the largest and most influential pension consultants to Corporate and Public pension funds in the U.S. Barra Strategic Consulting Group, predecessor to Casey, Quirk & Associates, emerged as the premier management consultant to investment management firms. John has participated in the firm’s highly-regarded investment management industry whitepapers.

Before co-founding RogersCasey in 1976, he and Stephen Rogers worked together at Dreher, Rogers & Associates. Prior to that, John was a founder of investment manager research at Paine, Webber, Jackson & Curtis, predecessor to Evaluation Associates, and served as a Director and head of manager research at Callan Associates.

John received, along with Ed Callan, the first McArthur award from the Investment Management Consultants Association in 2000 in recognition of his leadership and innovation in the investment consulting profession.

John earned a B.A. at Milton College in Wisconsin.

Casey, Quirk & Associates LLC

19 Old King’s Highway South

Darien, CT 06820

(203) 899-3000

www.caseyquirk.com