For broker/dealer use only. Not for use with the public. INVESTMENT PRODUCTS: NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE

For broker/dealer use only. Not for use with the public.

CLICK TO EDIT MASTER TITLE STYLE Today’s agenda The evolving landscape and implications for private wealth advisors Components of a well-crafted value proposition Methods of delivery Action steps For broker/dealer use only. Not for use with the public.

The evolving landscape and implications for private wealth advisors

UNCOVERING THE NEEDS OF THOSE WITH SIGNIFICANT MEANS For broker/dealer use only. Not for use with the public. The 2011 World Wealth Report published by CapGemini provides comprehensive details on the investing and purchasing behaviors of high net worth and ultra high net worth individuals and families. High net worth investors are defined as those having investable assets between $1 and $30 million, excluding primary residence, collectibles, consumables, and consumer durables. Ultra high net worth investors are defined as those having investable assets over $30 million, excluding primary residence, collectibles, consumables, and consumer durables Features many valuable statistics on the wealthy – their investment preferences, demands, desires, etc. Uncovers key implications for advisors/firms based on the research.

Demographic shifts and changing behaviors THE EVOLVING STATE OF THE WEALTHY The number of wealthy women continues to grow Number of women high net worth investors is increasing o 27 % in 2010, up from 24% in 2008 The emergence of the younger high net worth investor Number of younger high net worth investors (45 and below) is increasing o 17% of the population in 2010, up from 13% in 2008 o Currently, advisors lose an estimated 49% of assets under management during generational wealth transfer For broker/dealer use only. Not for use with the public. Source: World Wealth Report 2011.

Demographic shifts and changing behaviors THE EVOLVING STATE OF THE WEALTHY Wealthy are looking for a more harmonized and consistent service offering and access to a wider range of resources and complex capabilities through one point of contact. Trust in advisors has been restored but dynamic has shifted In 2010, 98% of wealthy investors stated they had trust and confidence in their wealth management advisors and 88% in their firms. In 2008, 50% of wealthy investors stated they were losing trust in advisors and firms. For broker/dealer use only. Not for use with the public. Source: World Wealth Report 2011.

Demographic shifts and changing behaviors THE EVOLVING STATE OF THE WEALTHY Those with significant means are looking to their advisors to leverage additional capabilities from their firm’s other business units – that is, “enterprise value”. “Enterprise Value” could help deliver some important benefits, including: A more global overview of wealth, which could be especially important to high net worth investors with extensive business interests who might need investment banking and commercial banking services. Potential access to investment opportunities once reserved for institutional clients. A more harmonized and consistent service offering. Access to a wider range of resources and complex capabilities through one point of contact. For broker/dealer use only. Not for use with the public.

KEY IMPLICATIONS FOR PRIVATE WEALTH ADVISORS For broker/dealer use only. Not for use with the public. Source: World Wealth Report Emerging demographics may have different needs than long-standing wealthy clients Advisors cannot assume their existing value propositions will continue to resonate Advisors have to consider the needs of the next generation of the wealthy/younger investors Women investors may have different goals for their wealth and have stronger reliance on a wider network

KEY IMPLICATIONS FOR PRIVATE WEALTH ADVISORS For broker/dealer use only. Not for use with the public. Source: World Wealth Report Higher value placed on expertise and skills Wealthy will place high value on investment expertise, trustworthiness, financial expertise, communication and attention to detail Effective leveraging of “Enterprise Value” can significantly drive client satisfaction Highest priority should be placed in areas where the wealthy see substantial value but are less satisfied to date o Cross-enterprise expert advice teams o Unique investment opportunities through the investment bank o Preferred financing for entrepreneurs o Advice/expertise from the private bank and the investment bank during the wealth creation process

How your private wealth practice needs to evolve ADDRESSING THE IMPLICATIONS Ensure that practice has a global and holistic approach – one that includes a broad array of advice on the following: Overall finances (including coordinating tax consulting) Investment opportunities in international markets Partnerships with wealth-transfer attorneys and accountants Assess business operations, processes, protocol to provide clientele with enhanced: Transparency Efficiency, technology and convenience For broker/dealer use only. Not for use with the public. Source: World Wealth Report 2011.

For broker/dealer use only. Not for use with the public. THE CHALLENGE THE OPPORTUNITY HOW LEGG MASON CAN HELP

Components of a well-crafted value proposition

COMPONENTS OF A WELL-CRAFTED VALUE PROPOSITION For broker/dealer use only. Not for use with the public. Your mission statement Your approach to working with clients (client experience) Your investment management process Your wealth management services (“enterprise solutions”/firm capabilities) Your service model

What do you do? MISSION STATEMENT Should be a brief (1-2 paragraphs) summary that can be used to introduce your practice in conversation, in printed materials and on your website It should be true to who you are and how you work with clients Three important elements: o Who you work with o What services you offer o Vision/philosophy statement For broker/dealer use only. Not for use with the public.

EXAMPLE For broker/dealer use only. Not for use with the public. “At (a leading private bank) our mission is simple: first class business… in a first class way. In everything we do, excellence and integrity are the guiding principles. Excellence means more than 160 years of experience and knowledge that comes from solving the complexities of significant wealth, day in and day out. We augment this knowledge with some of the boldest, most innovative thinking today. Integrity means keeping your interests front and center always and carrying out our work with utter discretion.”

HOW COULD WE IMPROVE ON THIS MISSION STATEMENT? For broker/dealer use only. Not for use with the public. Consider incorporating the following elements: Target market (specific types of people you work with) Challenges and complexities your clients face Relationship focused vision/philosophy statement

EXAMPLE For broker/dealer use only. Not for use with the public. “Managing substantial wealth requires resources typically available only to institutions and corporations. As one of the most established and innovative family wealth advisory groups, the XYZ Family Office draws on a powerful array of global resources to meet the complex needs of individuals and multigenerational families. Working with families and their advisors, this specialized group delivers sophisticated financial, tax and estate planning solutions to address lifestyle, family, business, philanthropic and entrepreneurial needs. Integrated investment consulting includes extensive asset allocation advice and manager selection, while our fiduciary and administrative services include partnership accounting, information aggregation and performance measurement and reporting. Families and family members also gain access to a full range of customized banking, treasury and credit solutions.”

PHRASES AND WORDS TO PROVIDE FOCUS For broker/dealer use only. Not for use with the public. If you do not have a clearly defined target market, consider using the following: Individuals and families of significant means Members of the entertainment and sports community Highly discerning investors such as wealthy families, business owners and corporate executives Our clients are senior executives at Fortune 500 companies, as well as the top decision makers of numerous hedge fund, private equity and real estate firms

EXAMPLE For broker/dealer use only. Not for use with the public. “Family Office Group offers a wide range of financial, wealth planning, and life management services to members of the entertainment and sports community. Our clients include musicians, actors, athletes, writers, and models and entertainment executives, among others. Comprised of seasoned investment professionals and certified public accountants, Family Office Group applies proven expertise with the upmost discretion and attention to guide your financial life and protect your future.”

EXAMPLE For broker/dealer use only. Not for use with the public. “At the XYZ Group, we work with highly discerning investors such as wealthy families, business owners, and corporate executives, who require optimal financial strategies which link to their financial goals and reflect their individual constraints. We place our clients’ interests first and carefully grow relationships proactively and responsively through mutual trust, shared values and open communication. Equally important, is our focus on anticipating changes and challenges in our clients’ lives, and proactively identifying solutions, based on a comprehensive understanding of the life you envision. Over the years, our clients have positioned us in their trusted inner circle, thereby designating us as their primary wealth advisors.”

EXAMPLE For broker/dealer use only. Not for use with the public. “We work exclusively with individuals and families of significant means acting as vigilant risk managers and thoughtful stewards of their money. Since we work only with a select number of clients, we can focus more intimately on you – understanding your life, your business, your legacy, and the significant issues and concerns that strategically impact your financial decisions. As ongoing advocates, we are dedicated to helping you discover new possibilities for what your wealth can do for you today and in the years to come.”

EXAMPLE For broker/dealer use only. Not for use with the public. “At the XYZ Group, we believe the wealth management process is more than managing assets. We see the process as our clients’ life story that captures the values, traditions, and unique circumstances that define them. We provide sound financial advice to help clients write their stories chapter by chapter. We believe that no story is the same. Therefore, our goal is to make sure that the asset management strategy and personal planning we provide is customized for each client.”

ADDITIONAL PHRASES TO CONSIDER “We limit the number of clients in our practice so that we can provide concierge- level service and so that each of our clients has the best possible experience.” “We offer comprehensive, objective financial advice to clients who desire a high level of personal service.” “We believe in long-term relationships and work to earn your continued trust.” “Help families leverage their financial, human and intellectual capital to sustain wealth for generations to come.” “Enhancing the financial lives and enriching the family legacies of our clients.” “We earn the trust of our clients through a combination of insights into their unique situation, thoughtful attention to their personal needs and flawless execution.” “We have the privilege of collaborating with other members of our client families’ advisory teams.” “We act as your advocate in all wealth matters” “Quality of life” “Productive use of wealth” “360° approach” “Customized investment solutions” “Superior client service” “Results-oriented” “Team-orientation” “Thoughtful stewards of our clients’ assets and legacy” “Wealth management clarifies the valuable role your values play in shaping your financial world and your legacy.” For broker/dealer use only. Not for use with the public.

ADDITIONAL WORDS TO CONSIDER For broker/dealer use only. Not for use with the public. Integrated Collaborative Expansive Personalized Efficient Respect Trust Thoughtful Global Diverse Advocates Results Customized Solutions Realistic Commitment Passionate Proactive Unwavering Objective Accuracy Integrity Accountability Independent Unbiased Comprehensive Legacy Institutional Consistent Specialized

Your approach to working with clients CLIENT EXPERIENCE Provide specific details on how you work with clients Present the details in a way that will help clients visualize the relationship Set expectations with clients Create a roadmap for how you want to run your practice For broker/dealer use only. Not for use with the public.

CLIENT EXPERIENCE For broker/dealer use only. Not for use with the public. Sample

Your investment management process should describe the process you employ for the investment aspect of the relationship. INVESTMENT MANAGEMENT PROCESS Consider the following list of activities when crafting this portion of your value proposition: Establish goals and objectives Determine risk tolerance Develop investment policy statement Develop an asset allocation strategy Select portfolio managers, products, and advisory platforms Evaluate managers and monitor performance Monitor changes in the market and/or the economy that could potentially affect risk/returns Adjust portfolio and investments, if necessary, to address changes in goals or lifestyle For broker/dealer use only. Not for use with the public.

Sample Part I – The visual INVESTMENT MANAGEMENT PROCESS For broker/dealer use only. Not for use with the public.

INVESTMENT MANAGEMENT PROCESS Sample Part I – The words For broker/dealer use only. Not for use with the public. Establish portfolio objectives and risk parameters Our investment process is based on a full understanding of your needs and aspirations, including your long- and short-term objectives, risk tolerance, current portfolio mix, tax situation and other, unique circumstances. We believe that our clients’ goals for their wealth can best be achieved through an integrated, diversified, valuation-based and tax- aware approach. Develop investment policy statement Based on our comprehensive discovery, we develop an Investment Policy Statement (IPS) based on our client’s objectives, risk tolerance and other interests. This document outlines asset allocation guidelines, benchmark and performance metrics, buy and sell disciplines/process, risk management policies, special accommodations and communications protocol. The IPS is the basis from which all investment decisions are made. Conduct rigorous due diligence We pride ourselves on the rigorous due diligence we conduct when we construct portfolios. We utilize a comprehensive array of institutional-quality analytics and tools along with fundamental, quantitative and qualitative analysis as in our investment selection process. Evaluate progress of portfolios and recommend adjustments Thoughtful and ongoing assessment of your investment portfolios allows us to determine if your portfolios are properly positioned based on your evolving goals, long- and short-term objectives and your tax situation. We will make recommendations based on our assessments and our in-depth due diligence processes.

Explain your approach to offering comprehensive solutions to your clients. You may wish to consider the following list of enterprise solutions as you create this part of your value proposition. WEALTH MANAGEMENT SERVICES “Enterprise solutions”/Firm capabilities Personal and Business Risk Management Advisory Executive Compensation Management (stock option, concentrated stock, restricted stock) Business Succession Planning (including business valuation) Private Banking Services Investment Banking Services Securities Based Lending Trust Advisory Estate Planning Philanthropic Consulting Services Art Advisory Service Custody Services* Aircraft Advisory and Finance* For broker/dealer use only. Not for use with the public.

Sample Part 1 – The visuals Wealth Management Services “Enterprise solutions”/Firm capabilities) For broker/dealer use only. Not for use with the public.

Wealth Management Services (“Enterprise Solutions”/Firm capabilities) Trust advisory In close coordination and collaboration with your legal and other advisors, we can review and recommend appropriate trust structures to meet your unique needs, including: revocable and irrevocable life insurance, charitable remainder, total return, gift, dynasty and personal trust through the XYZ Trust Company. Estate planning Our estate planning services are designed to help you create a legacy that transfers wealth to the next generation while defining and fulfilling your goals. To help you best define your goals, we help you focus on what you value, before you focus on the value of what you own. Once your goals have been defined, we will work closely with you and your trusted advisors to identify beneficial trust structures offering tax advantages, while integrating your plan with your financial and personal objectives. Our services include the following: Review and illustration of estate plan Creation and communication of estate planning recommendations Development and implementation of estate planning recommendations Estate plan reviews and monitoring Trust services Philanthropic consulting services With thoughtful understanding of the legacy you wish to leave, we offer assistance in helping you carry out your philanthropic mission. Core and central to our approach is the care we take in helping you devise a systematic, managed approach to your philanthropic giving that looks to ensure tax-efficiency and a flexible charitable legacy for future generations. We provide you with a better understanding of the benefits (from tax reduction and wealth transfer, to legacy creation) of charitable structures (including family foundations, charitable trusts and donor-advised funds). As part of our approach, we also offer: education on philanthropy; next generation involvement; shared values and giving interests identification; philanthropic mission statement development; and charitable structure evaluation. Our ultimate goal is to facilitate a strategy that delivers optimum financial benefits and personal rewards. Art advisory services We offer comprehensive fine-art consulting services and management capabilities, including sourcing artwork, personalized acquisition strategies, guidance on building a collection, negotiating purchases and sales, and managing every aspect of collection administration. Financing against qualified art collections is also available. For broker/dealer use only. Not for use with the public.

Creating a great client experience can be a true differentiator for your practice. Choose from the following when developing this portion of your value proposition, adding others that you provide, adding any others that you may provide: PERSONALIZED SERVICE OFFERING Personalized Communication Protocol Client Accountability Meetings (Client Reviews) Financial Report Preparation Analysis and Review Investment thought leadership and distinctive intellectual capital Coordination with your circle of trusted advisors and professionals – tax attorney, estate planning attorney, business advisors Tax Planning Consulting and Preparation Facilitation of Family Meetings Family Governance and Dynamics Lifestyle Management Services Primary and Vacation Property Management Domestic Employment Matters Concierge Services Health Care Advisory Multi-Generational Education Business/Family Security For broker/dealer use only. Not for use with the public.

DELIVERING THE MESSAGE For broker/dealer use only. Not for use with the public. Verbal execution Integrated with entire team Written communication/brochure Website Social media profiles For illustration purposes only. Please make sure that you work with your firm’s compliance and marketing departments and follow all guidelines and rules of your firm’s approval process.

Are you what you say you are? Crafting a value proposition is one thing; fulfilling it is quite another. Ultimately, the only way you’ll know whether you are adequately delivering on your value proposition is by asking your clients. A client advisory board would be a great place to explore this issue. Another best practice of top private wealth advisors is to periodically survey your best clients on various elements of your practice. THROUGHOUT THE CLIENT RELATIONSHIP Communicate o At every client meeting, reiterate value proposition Reassess value proposition on an annual basis to ensure continued relevance o Has anything changed (i.e., processes)? o Have specialties or qualifications been added to your team? o Have team members changed? Modify elements of value proposition as necessary For broker/dealer use only. Not for use with the public.

ACTION STEPS For broker/dealer use only. Not for use with the public. Systematize your approach Using the guidelines provided today, draft the components of your value proposition Utilize your Legg Mason Sales Director and Management team as a sounding board Create a custom brochure or pitchbook to communicate your value proposition Make your value proposition the foundation of the static content on your web site and social media profiles. Be sure to communicate a consistent message

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40 For broker/dealer use only. Not for use with the public. LMTAPP.com youtube.com/leggmason Brandywine Global ClearBridge Investments Martin Currie QS Investors Permal Royce & Associates Western Asset Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long term, actively managed investment strategies. A broad mix of equities, fixed income, alternatives and cash strategies A diverse family of specialized investment managers, each with its own independent approach to research and analysis Over a century of experience in identifying opportunities and delivering astute investment solutions to clients The Advisor Partnership Program (TAPP)® is Legg Mason’s landmark value-added offering, featuring a wide range of multidimensional workshops and seminars that empower financial advisors to build successful practices and educate their clients. TAPP delivers value in three areas of importance to advisors: branding and marketing, business management, and client needs. Branding and Marketing Your Business offers comprehensive resources for developing a value proposition and leveraging social media and the wired world for communication, brand building and client acquisition. Running Your Business showcases tactical tools and real-life insights into practice management. Addressing Client Needs provides in-depth materials to help advisors engage and inform their clients on a variety of topics. For broker/dealer use only. Not for use with the public. The Advisor Partnership Program (TAPP) ® and Our Experience. Your Potential are registered trademarks of Legg Mason Investor Services, LLC. © 2015 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc. 5/15 FN