Impressionist TEAM WORKBOOK Decisions and Notes for Modules 1 – 5 BSMART Business Simulation Management and Relationship Training

Vision, Mission & Strategy The Foundation of a Business MODULE ONE

Your Vision * From a Managerial, Financial, Operational and Human Resources perspective we will operate as one firm. From a client perspective (front office) we will operate as two independent firms. *$4B firm, 50% on WM $2B AUM & $2B AUM in IM businesses *Broad based ownership, clear understanding of partnership requirements, well developed career paths for all employees. *Geographic expansion on WM side into second tier cities (Denver, Tucson, Albuquerque, Kansas City, Omaha..) *Employer of choice in 2 nd tier markets in which we operate. A vision statement describes what you want your firm to look like in the future, typically three to five years out, or longer, and is both an internal and an external message. If you keep it front and center, it can help you stay focused on your goals. It can also help inspire and motivate your staff, and instill confidence in clients that you know where you want to be in the future. As you craft a vision statement for your firm, ask: What do we aspire to become in three to five years? What does success look like for our firm over this period? What does our end-state look like? A vision statement describes the future state you are looking to create – your desired end-game for the firm in 2020.

Your Mission Empower individuals (clients, employees & advisors) to achieve financial freedom in pursuit of their goals and dreams. We will support local communities through community outreach (charitable activities, community involvement). A mission statement describes why you are in business, and is primarily used internally. It plays an important role in helping you assess your activities and determining if they are in line with your core purpose. It can be used to “sanity check” what you may be considering doing – if activities stray from your core purpose, you may decide not to do them or to reevaluate your mission. As you craft a mission statement for your firm, ask: What is our purpose for being here? Why do we do what we do? What needs do clients have when they come to us? What are the most significant strengths of our business? Why do clients choose our firm over other firms? What are our differentiators? A mission statement describes why the organization exists – its core purpose.

Your Strategy *We house wealth management and investment management capabilities under one roof. *WM in Sante Fe –Dominant competitor with size and scale advantages. *IM-We have 3 year track record. IM – We know what it’s like to manage money for high net worth individuals (taxable accounts) as opposed to Institutional Money Managers who fail to appreciate the tax consequences of their strategies. IM expertise helps us better select investment vehicles in addition to our in house strategies on the WM side. Planning and Investment expertise ensure good outcomes for our clients. Questions that may help: What makes us better than the competition? Why do customers choose us? What makes us unique? What do we have that others do not? What do we do that cannot be replicated? Why are we successful? What created our success to date? Our competitive advantage is…

SWOT Analysis StrengthsWeaknesses * 3 yr track Investment track record Lack of alignment – two separate entities for ownership. Premier Wealth Mgmt in SW for both WM and Investments. No clear distinction between ownership and voting control. Quality employees (experience and education). Limited employment options for those who want to live in Santa Fe allow us to attract quality. Increased valuation has made ownership very expensive for next generation. Size and scale advantages in SW. Only RIA with > $1B AUM. Lack of ideal client profile Location – perceived on IM side as being away from noise of Wall Street. IM growth still reliant on revenue sharing with referral sources

SWOT Analysis OpportunitiesThreats Next Generation talent - training Organization structure – running two separate entities – friction between the two. Increase distribution on investment side to take advantage of 3 year track record. Revisit revenue share. Investment styles can go out of favor Expand WM footprint to become a dominant Regional provider Retaining talented employees who only have limited ownership opportunities Leverage increasing value of IW & I investment to invest back into biz. Offer succession plan to IM clients (RIAs) – tuck in to IW & I RIA Competition for resources between WM and IM side Target talented employees looking to live in SW. (ex pats living in NYC) Growing WM side can be seen as competition to RIAS using us on IM side New products on IM side (40 act funds, new strategies) Regulatory actions regarding revenue share (paying for referrals)

Initiatives and Notes Initiatives for Improvement Write down and agree on Strategy initiatives in your firm and elect a “champion” for each initiative. Notes Improvement OpportunityWho Will Complete 1.Develop career tracks - need to show existing staff how they can progress in their careers here Edgar Degas 2.Define partnerships tracks/requirements – need to retain our best and brightest Claude Monet 3.Geographic expansion on WM side – second tier cities – focus on SW Eddie Manet 4.Redeploy WM resources to IMMary Cassatt/Fred & Paul 5.Product/geographic distribution expansion Mary Cassatt/Edgar Degas 6.Explore succession solutions/IM clients –can Impressionist provide succession plan solutions to those firms? Can we incorporate this into # 3 above? Claude Monet

Growth Building the Firm MODULE TWO

CHARACTERISTICS OF THE IDEAL CLIENT CHARACTERISTICS OF THE NOT-SO-GREAT REFERRAL Business You Would Like To Win Client who utilizes other professional services (CPA) Do it yourself investor Client with $3m-$5m in investable assets Less than $3m in investable assets lives in New Mexico, Western TX, Colorado, AZ Lives outside of specified locale Complex needs Person in transition who has tax and estate planning considerations CHARACTERISTICS OF THE IDEAL COI CHARACTERISTICS OF THE NOT-SO-GREAT COI COI Relationships You Would Like To Have CPAs CPA w/in house RIA Tax and Estate Planning Attorneys Insurance Agents Ideal Profile WM Business

Investments CHARACTERISTICS OF THE IDEAL CLIENT CHARACTERISTICS OF THE NOT-SO-GREAT REFERRAL Business You Would Like To Win Mid sized RIA firms who do not in house investment resources RIA firms with in house solutions Institutional accounts (Based on strong 3 yr track record) RIA who have a passive investment philosophy Firms who are looking for active/tactical sleeve Small firms who do not have growth plans Firms concerned with tax liability or looking for moderate volatility CHARACTERISTICS OF THE IDEAL COI CHARACTERISTICS OF THE NOT-SO-GREAT COI COI Relationships You Would Like To Have National Study Groups National RIAs who outsource investments Manages Account Platforms (Envestnet) Custodian Separate Account Networks Wholesaler on retainer/Investment Consultant Groups Ideal Profile Investment Business

Initiatives and Notes Initiatives for Improvement Write down and agree on Growth initiatives in your firm and elect a “champion” for each initiative. Notes Improvement OpportunityWho Will Complete 1.Geographic expansion WM sideEddie Manet 2.Product line IM side (40 act funds, new strategies) Mary, Edgar 3.Expand COI networkFred 4.Establish BD role on IM side (review internal candidates) Mary 5.Review comp plans-make sure it incentivizes business development capabilities. Claude Monet

Staffing and Compensation Attracting, Retaining and Organizing Talent MODULE THREE

Organizational Chart *Work in Progress/One of our initiatives Draw your firm’s organizational chart. Label the positions. Claude Monet CEO Investment Mgmt Portfolio Managers Portfolio Analysts Edgar Degas COO/CFO IM Client Services WM Client Services Advisor Assistants Wealth Mgmt 21 Advisors 13 Advisor Employees 8 Senior and Junior Partners Eddie Manet President

Compensation Philosophy At IW & I our goal is to compensate our people in the second quartile. We establish salary ranges based on industry survey data and adjust for geographic location (COLA). Within salary ranges, employees can advance based on their experience, responsibilities, relevant degrees/designations and increasing contribution within the firm. In addition to salary, we also provide incentive compensation. Depending on the role, incentive compensation can add between 5% to 100% of the salary to an employee’s compensation. The incentive contribution is driven by both individual performance and firm performance. The total pool for incentive compensation will be determined by firm performance, individual shares of that pool will be determined by individual performance. Incentive compensation will be paid annually. Equity ownership will be offered (chance to buy in) to select individuals based on their contributions and long term value to IW & I. Equity will be valued annually by an independent source. We will offer a second quartile level of health care and retirement benefits. What is your compensation philosophy?

Initiatives and Notes Initiatives for Improvement Write down and agree on Human Capital initiatives in your firm and elect a “champion” for each initiative. Notes Improvement OpportunityWho Will Complete 1.Develop career path, track roles and responsibilities in order to attract and retain the most qualified individuals and lessen ambiguity around progression Edgar Degas 2.Define partnerships track/requirements and voting rights of shareholders to instill confidence in the attainability of ownership and input on future decisions Claude Monet 3.Review compensation plan to ensure it incents business development, integrity in all decisions and internal collaboration Claude Monet 4.Redeploy resources WM-IM side to align skills, career tracks and experience level and strive to support our growth strategy Mary Cassatt/Fred & Paul 5. Create opportunities and incentives for associates to refer qualified candidates for roles in our future expansion Eddie Manet Handouts in the Appendix Advisor HR Solutions Sample Compensation Profiles

Operations and Technology MODULE FOUR

Role of Operations Service and Deliverables Component-level Role Develop Key Performance Indicators (KPI’s) to help evaluate and compensate employees. This will also assist in determining FTE per department Itemize, evaluate and eliminate duplicative technology silos (i.e. multiple people updating spreadsheet with the same/similar data) Develop department leads and project leads and assign appropriate staff to those roles Document existing workflows for: new accounts, account maintenance, money movement, problem resolution, trading and hierarchy for exception approvals Evaluate workflows and ensure the proper checks and balances are in place without being overly redundant Financial PlanningInvestment Management Develop KPI’s Evaluate order management system Develop Operations Lead Roles Develop Head Trader Roll Evaluate workflow system, not just an imaging solution Tighten controls on trade corrections

Wealth Management List and Documents Services Process New account opening Service level expectations Account maintenance Money movement Problem resolution Exception processing Document storage and work flow Purpose Onboard new clients seamlessly and smoothly Assist clients with account changes and transferring money Facilitate compliance requirements for books and records Resolve client issues quickly Budget Imaging and Workflow - $150k initial, $25k annually including professional services New accounts – 3 FTE Problem resolution – 2 FTE Account maintenance – 4 FTE Money movement – 2 FTE Resources Evaluate how well resource components are satisfied. AvailableScalable AttainableSustainable KPI’s - Edgar with 2 FTE Written RFI for Imaging and Workflow - Fred Bazille and 1 FTE Document workflows – Operations lead and 4 staff Document Silos – Paul Cezanne and 2 FTE * Please note 1 slide for Wealth Management division and 1 for Investment Management division

Investment Management List and Documents Services Process New Advisor relationship onboarding Service Level Agreements Trading and trade corrections Performance reporting Trade allocations Exception processing Purpose Onboard new Advisors utilizing our strategies seamlessly and smoothly Efficient trade processing minimizing risk and errors Delivery accurate performance reports in a timely manner Budget Order Management - $100k annually Onboarding new advisors – 1 FTE Trading and trade corrections – 3 FTE Performance reporting – 2 FTE Resources Evaluate how well resource components are satisfied. AvailableScalable AttainableSustainable KPI’s - Edgar with 2 FTE Order Management System – Mary Cassatt and 2 FTE Document Silos – Paul Cezanne and 2 FTE * Please note 1 slide for Wealth Management division and 1 for Investment Management division

Initiatives and Notes Initiatives for Improvement Write down and agree on Operations initiatives in your firm and elect a “champion” for each initiative. Notes Improvement OpportunityWho Will Complete 1.Automate workflow process (Salesforce) Edgar Degas 2.Improve trade order efficiencies & risk controls Edgar Degas 3.Crosstrain WM associates on IM business (excess capacity currently in WM business) Edgar Degas Handouts in the Appendix Six Tell-Tale Signs That Your Business Processes May Need Attention

Financial Management Making the Numbers Work MODULE FIVE

Initiatives and Notes Initiatives for Improvement Write down and agree on Financial initiatives in your firm and elect a “champion” for each initiative. Notes Improvement OpportunityWho Will Complete 1.Review WM pricing – consider blended tier of existing schedule for new clients. Eddie Manet 2.Attempt to re-negotiate referral fees – max payment of 25% Mary Cassatt 3.Increase revenue per professional on WM side to $400k by Claude Monet/Fred & Paul 4.Evaluate ownership alignment (Ex: Edgar Degas owns 20% of IM but 0% of WM) Claude Monet 5.Too many professionals on WM side. Look to redeploy 3 to IM side by 2016 Claude Monet 6.Install $7500 minimum fee on WM side - $12,500 Revenue per client target by Fred & Paul Handouts in the Appendix Key Drivers of Firm Valuation