1
Making the Right Choices...for you
Kovack Advisors, Inc.
Featuring...Capstone Asset Management, Cumberland
Advisors, FDx Advisors, Groesbeck Investment
Management, Healthcare Trust of America and
Whats Your Advisory IQ?
2
Kovack Advisors, Inc.
Today were going to tell you...

• AM
• The KAI Investment Advisory Platform
• Online Resources...Theres no place like (KAI)
  Home
• QA
• PM
• New Technology
• Capturing Lost Revenue Through Program Expansion
• Whats Hot Whats Not...Removing Emotion
• The Relationship Focusing on What You CAN
  Control
• Fiduci-WHAT?
• Resources

• Advisory IQ Question 1 Assets in fee-based
  managed investment solutions comprise what
  percentage of the
• overall retail intermediary market?
• 9
• 17
• 31
• Answer B

3
Kovack Advisors, Inc.
The KAI Investment Advisory Platform

• The Right Solutions for You and Your Clients
• CHOICE Advisor
• Non-discretionary, Advisor-directed, fee-based
  brokerage account
• CHOICE SMA
• Access to disciplined, repeatable and time-tested
  institutional investment managers
• CHOICE Fund
• Professionally managed, multi-strategy mutual
  fund wrap investment program (Principled
  Portfolio Solutions Ron Madey)
• CHOICE UMA
• Uses a combination of investment vehicles in one
  core account
• CHOICE Annuity
• Used with existing VA investments

4
Kovack Advisors, Inc.
CHOICE Advisor Non-Discretionary /
Advisor-Directed

• Standard Account
• NFS
• Pershing
• 20 Basis Point Cost to Advisor
• 19.50 Transaction Charge to Client
• 50,000 Household Minimum

• Optional Account
• NFS
• Pershing
• 40 Basis Point Cost to Advisor
• No Transaction Fee to Client
• 50,000 Per Account Minimum

5
Kovack Advisors, Inc.
CHOICE SMA Professional Third-Party Investment
Management

• Access to industry-leading Investment Managers
• Stocks (All Cap, Large, Mid, SMID, Small, Micro,
  International, Global) Bonds (taxable/exempt),
  Balanced, REIT, ETFs
• Discretionary Trading Authority
• 90 Basis Points Average Cost to Rep
• 100,000 Average Account Minimum
• Custom Client Presentations
• Quarterly conference calls
• One-on-one client meetings

6
Kovack Advisors, Inc.
CHOICE SMA Current Manager / Discipline List

• AllianceBernstein
• Capstone Asset Management
• Clover Capital Management
• Cumberland Advisors
• Davis Selected Advisors
• Forward Uniplan Advisors
• Gannet Welsh Kotler
• Geneva Investment Management
• Groesbeck Investment Management
• Insight Capital Research Management
• John Hancock

• Lotsoff Capital Mgmt.
• MacquarieAllegiance
• MFC Global Investment Mgmt.
• Navellier Associates
• Newgate Capital Mgmt.
• Pinnacle Associates
• The Roosevelt Investment Group
• Sovereign Asset Mgmt.
• Transamerica Investment Mgmt.
• ValueWorks LLC
• Washington Crossing Advisors

• Advisory IQ Question 2 True or False? From
  1Q06 3Q08, the market share of SMA assets
  declined while increases were realized in Mutual
  Fund Advisory, Rep as Portfolio Manager an UMA
  segments.
• Answer True SMA market share fell 10

7
Kovack Advisors, Inc.
CHOICE UMA Unified Managed Account

• Definition The unified managed account is an
  evolution of the separate account, which is
  similar in that it is a professionally managed
  account which is rebalanced often but only
  contains one type of investment instrument (such
  as mutual funds). If an investor wanted to have a
  well-diversified portfolio of stocks, bonds and
  mutual funds, he or she would need to open three
  separate accounts. The UMA removes the need to
  have more than one account and combines all of
  the assets into one account with a single
  registration. Source Investopedia.com

Separate Accounts
ETF's
Rep Directed
Individual Equites
Mutual Funds
8
Kovack Advisors, Inc.
CHOICE Fund Professionally Managed
Multi-Strategy Mutual Fund Wrap

• 10 Mutual Fund Models (5 Taxable / 5 Tax Exempt)
• 30,000 account minimum
• 135,000 average account size
• Financial Intellectual/Human Capital

• Advisory IQ Question 3 According to a recent
  MMI study, what segment of the managed investment
  solution
• industry do investment managers expect the
  greatest opportunity for growth?
• Mutual Fund Advisory
• SMA
• UMA
• Answer C

9
Kovack Advisors, Inc.
CHOICE Annuity Used w/ Existing VA Investments

• Advisor Directed
• 40 Basis Point Cost to Advisor
• Bill from Annuity or Brokerage Account
• Not Paid on Payout Grid
• 25,000 Minimum
• Most Annuity Companies

10
Kovack Advisors, Inc.
Financial Plans

• Financial Profiles
• Kettleys
• NaviPlan
• Thomson One (Through NFS)
• Set your own fee schedules
• Provide Kovack Advisors a copy for compliance
• Paid on your payout level

11
Kovack Advisors, Inc.
What We Provide

• Billing- Monthly For New Accounts and Quarterly
  For All Accounts
• Performance Reports- Quarterly
• Account Reconciliation
• Drift Monitoring
• Technology- Website Advisory Platform
• Sales Marketing Support

• Advisory IQ Question 4 Recent research by MMI
  and Dover Financial Research found that what
  percentage of all
• financial advisors have a portion of their book
  (10 million or more) in fee-based advisory
  business?
• 10
• 40
• 70
• Answer 40

12
Kovack Advisors, Inc.
Online Resources...Theres no place like (KAI)
Home

• www.kovackadvisors.com
• Username kai
• Password advisor
• Program Overviews
• Account Opening/Funding Instructions
• Account Paperwork
• E-Mail Archives
• Marketing Library

• Advisory IQ Question 5 What broad trend has
  occurred over the last few years in the managed
  solutions
• industry?
• A shift away from product-specific solutions
  toward holistic wealth management solutions.
• A shift away from holistic wealth management
  solutions toward product-specific solutions.
• Sponsor firms acquiring asset management firms.
• Answer A

13
Kovack Advisors, Inc.
QA... Here are some to break the ice

• Are KAI forms available on LaserApp?
• Whats the average fee?
• Can I fund an account with securities or, in the
  case of mutual fund wrap, with mutual funds?
• When am I paid?
• How much should I discount my business?
• Whos responsible for firing a money manager?

• Advisory IQ Question 6 What percentage of
  assets in the managed investment solutions
  industry are in UMA?
• 3
• 21
• 49
• Answer 3

14
Kovack Advisors, Inc.
Mr. David R. Kotok, Chairman and Chief Investment
Officer of Cumberland Advisors - Outlook for the
Economy and Financial Markets, October 2009

• David R. Kotok is the Chairman and Chief
  Investment Officer of Cumberland Advisors.  He
  co-founded the firm in 1973 and has guided its
  investment strategy from inception.  Mr. Kotok
  holds a B.S. degree in economics from The Wharton
  School as well as dual masters degrees from the
  University of Pennsylvania.
• Mr. Kotok maintains an active global presence as
  the Director and Program Chairman of the Global
  Interdependence Center (GIC), a
  Philadelphia-based global trade and monetary
  policy think tank. Mr. Kotok is the global chair
  of the GIC 2009-2010 Capital Markets Series that
  will be held in successive meetings in Vietnam,
  China, Chile, Czech Republic, France, and
  Philadelphia.  He most recently chaired the GIC
  2009 Food Water Conference Series with meetings
  held in Philadelphia, Paris, Livingstone
  (Zambia), and Singapore.     
• Mr. Kotoks articles and financial market
  commentary have appeared in The New York Times,
  The Wall Street Journal, Barron's, and other
  publications. He is a frequent contributor to
  CNBC programs, including Morning Call, Power
  Lunch, Kudlow Company, Squawk on the Street,
  Squawk Box Asia, and Worldwide Exchange.
• Mr. Kotok is a member of the National Business
  Economics Issues Council (NBEIC), the National
  Association for Business Economics (NABE), the
  Philadelphia Council for Business Economics
  (PCBE), and the Philadelphia Financial Economists
  Group (PFEG).  He has also served as a
  Commissioner of the Delaware River Port Authority
  (DRPA), on the Treasury Transition Teams for New
  Jersey Governors Kean and Whitman, on the board
  of the New Jersey Economic Development Authority,
  and as Chairman of the New Jersey Casino
  Reinvestment Development Authority.

15
Kovack Advisors, Inc.
Mr. Peter M. Demirali, Vice President and
Portfolio Manager of Cumberland Advisors -
Outlook for the Economy and Financial Markets,
October 2009

• Mr. Demirali joined Cumberland Advisors in 2002
  as portfolio manager for Cumberland Advisors
  Taxable Bond style.
• Prior to that, Peter was a Senior Portfolio
  Manager at Smith Barney Asset Management from
  1990 to 1999. In that position, he initiated a
  corporate bond component for taxable fixed income
  portfolios. From 1999 to 2002, he was a partner
  in Anval, Inc., a commercial real estate
  brokerage company where he successfully developed
  new territories and clients for his firm. He
  traded zero coupon bonds at Yamaichi
  International, a Japanese securities dealer from
  1987 to 1989. Peter began his career at Chemical
  Bank from 1983 to 1987. At Chemical, he traded
  short and intermediate zero coupon bonds and
  Treasuries.
• His comments and analysis have appeared in
  Bloomberg Business News, Barrons, and The Bond
  Buyer. He has appeared on CNBC, Fox Business News
  as well as Bloomberg Television.
• Mr. Demirali holds a Bachelor of Science in
  Business Administration from Georgetown
  University. He is a member of the Philadelphia
  Council of Business. Peter resides in Mendham,
  New Jersey with his wife and son.

16
Kovack Advisors, Inc.
Mr. Alex MacGillivray - Healthcare Trust of
America, Inc.

• Focusing on the Eastern Division, Mr.
  MacGillivray is responsible for developing and
  implementing sales strategies, coordinating
  marketing and sales efforts and increasing the
  number of selling agreements with retail
  broker-dealers.
• Mr. MacGillivray brings extensive experience to
  Realty Capital Securities. Most recently, Alex
  served as managing director and President of his
  own 1031 wealth management company. He
  previously held key executive positions with
  three nationally recognized real estate sponsors,
  and has served as general partner and principal
  in numerous private placement equity offerings,
  specializing in structured finance and
  sales-leaseback financing.     
• Mr. MacGillivray received his Bachelor of Arts in
  Psychology from Creighton University and holds
  FINRA Series 7, 63 and 26 licenses.

17
Kovack Advisors, Inc.
LUNCH!

• 1200 100PM Buffet Lunch and Networking
• Grand Foyer

18
Kovack Advisors, Inc.
PM

• New Technology
• Capturing Lost Revenue through Product Expansion
• Whats Hot Whats Not...Removing Emotion
• The Relationship Focusing on What You CAN
  Control
• Fiduci-WHAT?
• Resources

• Advisory IQ Question 7 Over the last five
  years, the average all-in costs (i.e. advice,
  clearing/custody, manager
• fees) has held relatively steady at
  approximately
• 125 bps
• 170 bps
• 200 bps
• Answer B

19
Kovack Advisors, Inc.
Mr. Scott Frakes, Vice President and Mr. Scott
Wynant, Senior Vice President of Capstone Asset
Management Co. Investing in Retirement The Game
Has Changed...Or Has It?
SCOTT FRAKESVice PresidentBA - Bowling Green
University2001-present Capstone Asset
Management Company1996-2001     A.G. Edwards
Sons, Inc. Series 7 Registered Representative
SCOTT WYNANTSenior Vice PresidentBA University
of Oregon 2008-Present Capstone Asset Management
Company 1997-2008 AG Financial
Solutions 1982-1997 Shearson Lehman Brothers
Smith Barney 1978-1982 Sutton Financial
Corporation
20
Kovack Advisors, Inc.
BREAK Sponsored by Capstone Asset Management

• 245 315PM Afternoon Snack Break
• Grand Foyer

21
Kovack Advisors, Inc.
Mr. Robert P. Dainesi, Executive Vice President
of Groesbeck Investment Management Dividend
Investing and the Growth of Income Process

• Mr. Dainesi is the Director of Research and a
  portfolio manager. He joined the firm in November
  1993 and has 21 years of experience as an
  investment professional. His security analysis
  experience includes following several economic
  sectors and many industry groups. He has been a
  portfolio manager since 1991. He was a security
  analyst at Value Line and a portfolio manager
  with Sturdivant Co. Prior to joining the firm,
  Mr. Dainesi was a portfolio manager and security
  analyst with Asiel Co. Mr. Dainesi earned a BA
  degree in Economics from Queens College and an
  MBA in Finance from Bernard M. Baruch College. He
  is a member of the New York Society of Security
  Analysts and the CFA Institute.

22
Kovack Advisors, Inc.
Mr. Ron Madey, CFA, Chief Investment Officer of
Principled Portfolio Solutions Foundations for
Practice Growth and Client Success

• Ronald Madey is responsible for providing
  research and investment solutions to FDx
  Advisors, the renamed SunGard Advisor
  Technologies business acquired by FolioDynamix in
  2008. Before joining SunGard, Mr. Madey was vice
  president, National Director of Investments at
  Lincoln Financial Advisors/Sagemark Consulting.
  While there, he established a scalable,
  institutional quality investment process and
  designed sophisticated wealth management
  technologies utilizing Monte Carlo-based
  investment planning tools to serve the high net
  worth marketplace. Prior to joining Lincoln, Mr.
  Madey was National Director of Asset Consulting
  Services at Towers Perrin, where he was
  responsible for overseeing the firms asset
  consulting, asset allocation modeling and
  investment manager research units. Earlier, Mr.
  Madey held senior positions in portfolio
  management, research and proprietary trading with
  DuPont Capital Management, a subsidiary of E. I.
  du Pont de Nemours Company, as well as at
  Bridgewater Associates and Credit Lyonnais
  Securities.
• During his almost 25 years in investment
  management, consulting and financial services,
  Mr. Madey has applied risk-controlled investment
  strategies to areas ranging from fixed income
  portfolio management and multi-manager portfolio
  construction, to asset allocation and
  asset-liability management. He has spoken
  publicly on wealth management, investment
  strategy, risk management and liability driven
  investing at conferences for the American Bankers
  Association, the Money Management Institute, the
  CFA Institute, the Institutional Investor
  Institute and the Investment Management
  Institute. Mr. Madey is also a co-author of a
  Journal of Portfolio Management article on the
  "Advantages of Multi-period Portfolio Models."
• Mr. Madey holds a bachelor of business
  administration, cum laude, in finance and real
  estate, and a MBA, with a focus on planning and
  strategy, from Kent State University. He has a
  CFA and is a member of the CFA Institute and the
  CFA Society of Philadelphia.

23
Kovack Advisors, Inc.
PM Cont...

• Capturing Lost Revenue Through Program Expansion
• Whats Hot Whats Not...Removing Emotion
• The Relationship Focusing on What You CAN
  Control
• Fiduci-WHAT?
• Resources

Advisory IQ Question 8 True or False? The trend
toward bundling fees has increased in recent
years. False unbundling of fees is increasing

24
Kovack Advisors, Inc.
Whats Hot Whats Not...Focusing on What You
CAN Control

25
Kovack Advisors, Inc.
Whats Hot Whats Not...Focusing on What You
CAN Control Cont...

26
Kovack Advisors, Inc.
Whats Hot Whats Not...Focusing on What You
CAN Control Cont...

27
Kovack Advisors, Inc.
Fiduci-WHAT?

28
Kovack Advisors, Inc.
Resources

• www.kovackadvisors.com
• Marketing Material
• HOT OFF THE PRESS Slimjim!
• INVEST FOR LIFE Client Brochure
• Tips, Tools, Tactics, KAI News Notices, Meet
  Your Manager
• Manager Profiles, Comparisons, Manager Returns
  Sheets
• Custom Client Presentations
• www.kacfinancialservices.com

Advisory IQ Question 9 True or False? The
market share of the managed investment solutions
industry controlled by wirehouse firms increased
from 2Q08 2Q09. False Decreased from 68 to
60.
29
Kovack Advisors, Inc.

• Chris Mills
• Executive Vice President
• Kovack Advisors, Inc.
• Phone [phone]
• E-mail Chris_at_kovsec.com

Ryan R. Wyllys Vice President Kovack Advisors,
Inc. Phone [phone] E-mail Ryan_at_kovsec.com

Regina Schumaker Executive Administrative
Assistant Kovack Advisors, Inc. Phone
954-670-0621 E-mail Regina_at_kovsec.com
We look forward to being a partner in the growth
of your Advisory Practice!

• Advisory IQ Question 10 Based on a recent
  Dover/MMI study, sponsor firms expect to convert
  what percentage
• of their SMA assets to UMA?
• None
• 25
• 50
• Answer 50