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Retirement Advice was the main driver of the revenue increase in 2010. We primarily earn license-based fees for the advice and guid- ance services we provide through our Retirement Advice platform. Revenue for these services increased in 2010 primarily from Advice by Ibbotson, after declining in 2009 because of several smaller client non-renewals. Investment Consulting and Managed Portfolios also contributed to the revenue increase in 2010, but to a lesser extent. Higher revenue from Investment Consulting in 2010 was partially offset by a client non-renewal that occurred in the fourth quarter of 2009. 

The revenue increase in 2010 represented a positive change from trends in 2009. In 2009, Investment Management revenue was down 17.4%, driven by two Investment Consulting non-renewals. In 2009, Investment Consulting, which was a leading contributor to revenue growth in previous years, accounted for about three-fourths of the segment’s revenue decline. One client did not renew its contract when it expired in the fourth quarter of 2008 and another client did not renew its contract in May 2009. Combined, these contracts represented about $17 million of revenue in 2008. Acquisitions contributed $3.7 million to segment revenue in 2009, partially mitigating the revenue decline. 

We had approximately $67.7 million in revenue from asset-based fees in 2010, an increase of approximately 21% compared with $56.0 million in 2009. In 2008, revenue from asset-based fees was $66.6 million. Revenue from asset-based fees made up approximately 12% of consolidated revenue in both 2010 and 2009, down slightly from 13% in 2008. Within the Investment Management segment, revenue from asset-based fees made up approximately 60% of seg- ment revenue over the past three years. 

Total assets under advisement and management were $132.9 billion as of December 31, 2010, an increase from $82.6 billion as of December 31, 2009 and $78.8 billion as of December 31, 2008. About $39.0 billion of the total assets as of December 31, 2010 reflects a new fund-of-funds program that began in May 2010 for an existing Morningstar Associates client. Previously, Morningstar created model portfolios for the same client, so the increase in assets rep- resents incremental growth for an existing revenue stream. Excluding assets from the new fund-of-funds program, total assets under advisement and management increased, mainly reflecting positive market performance. Total assets under advisement also include approximately $3.4 billion from the Intech acquisition in July 2009. 

The asset totals as of the end of each year don’t fully reflect the change in average asset levels during the year. The asset-based fees we earn are primarily based on average asset levels during each quarter. Average assets under advisement and management (calculated based on available quarterly or monthly data) were approximately $102.3 billion in 2010, up about 35% from $78.6 bil- lion in 2009. In 2009, average asset levels declined from substantially higher levels in 2008. Average assets under advisement and man- agement were $103.9 billion in 2008. 

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We provided Investment Consulting advisory services on approxi- mately $107.2 billion in assets as of December 31, 2010, compared with approximately $61.4 billion as of December 31, 2009 and approximately $66.2 billion as of December 31, 2008. The asset totals include relationships for which we receive basis-point fees, including consulting arrangements and other agreements where we act as a portfolio construction manager for a mutual fund or variable annuity. We also provide Investment Consulting services for some assets under management for which we receive a flat fee; we do not include these assets in the total reported above. Excluding changes related to new contracts and cancellations, changes in the value of assets under advisement can come from two primary sources: gains or losses related to overall trends in market perfor- mance, and net inflows or outflows caused when investors add to or redeem shares from these portfolios. As mentioned above, assets under advisement as of December 31, 2010 includes approximately $39 billion related to a new fund-of-funds program that began in May 2010 for an existing Morningstar Associates client. Excluding assets from the new fund-of-funds program, assets under advise- ment for Investment Consulting increased slightly over 2009, mainly reflecting positive market performance partially offset by a client non-renewal that occurred in the fourth quarter of 2009. 

