What Is Our Post-DOL Value Proposition? Daniel Ciavarella – Vice President, Wealth Management Marketing Richard Whitworth – Managing Director, Business Consulting

An Industry in Disruption… We currently face three major headwinds: Regulatory Pressures Changing Investor Demographics & Expectations Accelerating Technology Innovation with Increasing Complexity

DOL Grief… Shock & Disbelief Denial Anger Bargaining Guilt Depression Acceptance & Hope

What Value do we Deliver Financial services doesn’t have the same resonance with clients/public as other industries… what can we do to move up the value chain????? How are your advisors positioned to understand client’s value drivers and how our services/solutions can help? How do we move towards “self-transcendence // hope // self-actualization?”

A Changing American Family Challenges Modern Family vs. Traditional Family FinSvcs Hasn’t Caught Up to Family Changes Blended Families Increasing Same Sex Couples Multigenerational Households Older 1st Time Parents Source: UBS: Beyond the Picket Fence – Financial Challenges of the Modern American Family, 2015.

Advisor and Client Demographics Financial life management… expense management… personal CFO Source: Cerulli Advisor Edge – Bank Advisor - 1Q16.

Does your Value Proposition Resonate? Source: Cerulli Advisor Edge – Bank Advisor - 1Q16.

What Clients Will Pay For What Advisors Would Sell Misaligned Expectations Abound What Clients Will Pay For What Advisors Would Sell Confidence Investment Management & Asset Allocation Reduced Complexity A Financial Plan Informed Choices Budgets Bespoke Solutions Insurance Peace of Mind Estate Plan Source: Cannon Financial Institute: Financial Advisors – Relevance Today & Tomorrow – Paper #1, 2016.

Welcome to the Re-Wired Investor Implications: Bespoke Multi-channel Multiple advice sources Rich digital front end Risk management as hedge Democratization of investments Source: Deloitte – 10 Disruptive Trends in Wealth Management, 2015.

Advisors Have to Change… DOL/FIDUCIARY Alpha generation TECHNOLOGY INVESTOR PREFERENCES Manager selection Asset allocation Tax optimization Behavior management Implications: Bespoke Multi-channel Multiple advice sources Rich digital front end Risk management as hedge Democratization of investments Financial planning Source: Fidelity, 2015.

THE progression OF A FINANCIAL ADVISORY FIRM …And so do their Practices THE progression OF A FINANCIAL ADVISORY FIRM PRACTICE ADVISOR IS PRACTICE BUSINESS ADVISOR IS LEADER / RAINMAKER ENTERPRISE STRATEGICALLY LED & PROFESSIONALY MANAGED 121 CLIENTS $46M AUM $139K INCOME* AUM 121 CLIENTS $46M AUM $139K INCOME* 121 CLIENTS $46M AUM $139K INCOME* *Pretax income per owner PEOPLE Source: Cerulli Special Quantitative Update: Registered Investment Advisor Market, 2011.

WEALTH MANAGEMENT FOCUS WEALTH MANAGEMENT FOCUS In a Commoditized World — What Defines Value? WEALTH MANAGEMENT FOCUS WEALTH MANAGEMENT FOCUS Profit Margins & Avg Client Revenue/Svc Model  what gonna do now that everything commoditized? How shift value proposition? What comes next???? Source: 2009 Moss Adams/ InvestmentNews Compensation and Staffing Study

Critical Value to Consider Collapsing Value Promise Technician to Clinician New Market Segments Disruptive Technologies Tenured Advisor Engagement Client IS the Family Source: Cannon Financial Institute – Financial Advisors: Relevance Today & Tomorrow Paper #1, 2016

Key to Advisor Productivity Maximizes use of technology Productivity Outsources & systematizes investment management Fee-based & recurring revenue-based economic model Segments clients strategically Works in teams Planning-centric Source: Fidelity, 2015.

What we are Hearing from our Advisors Source: Cetera Financial Group Business Consulting, Sept 2016.

DOL Practice Management Essentials Service Model and Fee Schedule CRM and Workflows Client Segmentation Advisor Teaming Staffing Model

Post DOL - Ahead of What’s Next Good news for banks/bank advisors  Bank Trust & Private Banks not perceived as major threat Bad news for banks/bank advisors  gotta staff better // increase your acumen & expertise Source: Cerulli Advisor Edge 2016.

And the Result? Plan for More Planning Source: Cerulli Advisor Edge 2016.

Success is Balancing Scale and Customization Source: Cannon Financial Institute – Financial Advisors: Relevance Today & Tomorrow Paper #1, 2016

Thank You & Questions