The Financial Planning Association

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The Financial Planning Association
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Opening Assumptions

• Future market growth will be slower
• than in the past.
• This greatly affects how you build your business
  going forward.

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Building Your Business in the 90s
Your Market Share
AUM
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Building Your Business in the 90s
AUM
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Building Your Business Today
AUM
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The Battle for the Affluent Market
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A Battle on Two Fronts
Fending Off Name-Brand Brokerage Firms
Regaining Investor Trust
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A Battle on Two Fronts
Fending Off Name-Brand Brokerage Firms
A battle you won in the past
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Two Key Factors
Differentiation
Flight to Quality
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The 1990s
Independent Advisors
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• Flight to Quality

Independent Advisor Affluent Market Share
1990
2004
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The Brand Game
Dean Witter
EF Hutton
Shearson
First Union
Prudential
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June 25, 2005
Citigroup and Legg Mason Release Details of
Asset Swap
In a widely anticipated deal that highlights the
financial and regulatory pressures facing Wall
Street, Citigroup and Legg Mason yesterday
announced the details of a 3.7 billion asset
swap that would catapult Legg Mason to the ranks
of the nations largest money managers.
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THE WALL STREET JOURNAL

February 15, 2006
BlackRock and Merrill Lynch Investment
Management to Combine, Forming One of the
Worlds Largest Independent Investment
Management Firms Combined Firm to Have 1
Trillion in Assets Under Management Will Operate
Under BlackRock Name Merrill Lynch to Have a
50 Stake
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Wall Street Firms
Off-loading their commoditized proprietary
products but keeping their sexy products,
such as hedge funds and private equity.
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The 1990s
Independent Advisors
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Today
Independent Advisors
Fee-based Services
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Independent Advisors
Fee-based Services
Hedge Funds
Private Equity
Mortgages
Credit Cards
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Huge Brand Disparity
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Affluent Investors Primary Advisors
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2004
Full-Service Broker
31
2005
18
2004
Investment Adviser
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2005
17
2004
Financial Planner
14
2005
9
2004
Investment Manager
10
2005
9
2004
Accountant
9
2005
3
2004
Discount/Online Broker
7
2005
2
2004
Trust Officer
2
2005
3
2004
Private Banker
1
05
Source The Spectrem Group Affluent Study 2005
cited in Investment News, 01/30/06.
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Several factors contributed to the increase,
includingthe chameleon-like ability of the
wirehouses to make their business models look
more like those of financial planners
George Walpert, president, The Spectrem Group
Source Quoted in Investment News, 01/30/06.
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A Formidable Adversary

• Camouflaged
• in Your
• Business Model

• Sexier
• Products

• Huge
• Brand
• Recognition

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The Second Front
Regaining Investor Trust
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Wall Street Analysts Exposed
Spitzer Takes on the Mutual Funds
Tyco Enron WorldCom
CEO Scandals
Accountancy Malfeasance
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April 17, 2006
Affluent assets flow away from advisors
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April 17, 2006
Affluent assets flow away from advisors
Source TNS Financial Services of Greenwich,
Conn., Annual Survey cited in Investment News,
April 17,2006.
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Diminishing Satisfaction
Affluent Investor Attitudes
Quality of service
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Satisfaction
Quality of advice
45
Satisfaction
Advisors knowledge
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Satisfaction
Investment Performance
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Satisfaction
Source The Spectrem Perspective The Affluent
Investor
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Affluent Investors Primary Advisors
24
2004
Full-Service Broker
31
2005
18
2004
Investment Adviser
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2005
17
2004
Financial Planner
14
2005
9
2004
Investment Manager
10
2005
9
2004
Accountant
9
2005
3
2004
Discount/Online Broker
7
2005
2
2004
Trust Officer
2
2005
3
2004
Private Banker
1
05
Source The Spectrem Group Affluent Study 2005
cited in Investment News, 01/30/06.
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New SEC Required Disclosure
Your account is a brokerage account and not an
advisory account. Our interests may not always
be the same as yours.
Please ask us questions to make sure you
understand your rights and our obligations to
you, including the extent of our obligations to
disclose conflicts of interest and to act in your
best interest.

We are paid both by you, and sometimes, by
people who compensate us based on what you buy.
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Advice Will Bifurcate
Distributors
Advisors

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The Merrill rule is a good sales tool for
advisors. The new rule advances the
distinctions between brokers and advisors,
between fiduciary and suitability. William
Donaldson Former SEC Chairman
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How will you make the distinction?
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Distributors
Advisors

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Sell-Side Platform

Proprietary Products
Either-Or Portfolios
Lack of Transparency
Biased Research
Conflicts
Middleman Fees
Complexity
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Distributors
Advisors

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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
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You change the game again
just like you did in the 1990s.
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Independent Advisors
They cant!
You can do this!
And, they wont!
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Business Solutions for Independent Advisors
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Portfolios
Efficient Frontier
Portfolio Optimization
A s s e t A l l o c a t i o n
Benchmarks
Style Purity
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Portfolios
Efficient Frontier
Portfolio Optimization
A s s e t A l l o c a t i o n
V
B
G
L
Benchmarks
M
S
Style Purity
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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does the Portfolio look like?
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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does the Portfolio look like?
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3-Tier Structure
Efficient Market CoreTM
Active RingTM
Alpha RimTM
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Two Key Premises
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Large Cap Efficient Market
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Institutional Investors
Management Optimization
Alternative Investments
Indexation
Traditional Actively Managed Investments
Efficient Market Exposure
Alpha Oriented
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40
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Two Key Premises
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Management Matched to Market Efficiency
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Fees Correlated to Value-Added
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Investors Are Receptive
Intuitive Transparent Fair Performance Advantage
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Example 1-Million Traditional Portfolio
Fixed Income

Sector Equity
Large-Cap Equity
International
Small-Cap Equity
Mid-Cap Equity
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Traditional Portfolio
Total Fee ()
Instrument Fee
Advisory Fee
Total Fee ()
Type of Investment
Amount
Firm
Symbol Investment
B/D 1
Managed Account
119,850
N/A
1.00
1.00
1,198.50
-- Lord Abbett Bond
FIXED INCOME
19,020
1.85
N/A
1.85
351.87
Mutual Fund
B/D 1
TBHYX Pioneer High Yield B
43,791
0.49
2.00
2.49
1,090.40
Mutual Fund
B/D 2
JMIBX JP Morgan Bond Instl
B/D 1
Managed Account
LARGE-CAP EQUITY
155,790
2.40
3,738.96
-- Lord Abbett Large Cap
N/A
2.40
B/D 1
Managed Account
223,350
2.40
5,360.40
-- Engemann Large Cap
N/A
2.40
B/D 1
Mutual Fund
45,600
N/A
912.00
PBODX Pioneer B
2.00
2.00
B/D 2
Mutual Fund
36,202
2.00
1,049.86
AIPGX AllianceBernstein Premier Gr Instl I
0.90
2.90
B/D 2
Mutual Fund
26,764
0.65
2.00
2.65
709.25
EQPIX Fidelity Advisor Equity Income Instl
direct
Mutual Fund
22,510
0.89
N/A
0.89
200.34
JANSX Janus
29,200
0.18
N/A
0.18
52.56
direct
Mutual Fund
VFINX Vanguard 500 Index
Managed Account
B/D 1
-- Roxbury Mid Cap
MID-CAP EQUITY
58,500
N/A
2.40
2.40
1,404.00
Mutual Fund
B/D 1
GABVX Gabelli Value A
16,440
1.44
N/A
1.44
236.74
Mutual Fund
B/D 1
SMALL-CAP EQUITY
14,475
GTSDX AIM Small Cap Growth C
2.02
N/A
2.02
292.39
Mutual Fund
B/D 2
30,558
FSCIX Fidelity Advisor Small Cap Instl
0.95
2.00
2.95
901.46
62,580
N/A
2.40
INTERNATIONAL
Managed Account
B/D 1
2.40
1,501.92
-- Brandes Investment Partners
15,690
N/A
2.17
340.47
Mutual Fund
B/D 1
2.17
TEDMX Templeton Developing Markets A
17,400
N/A
280.14
Mutual Fund
B/D 1
1.61
1.61
RABTX PIMCO RCM Biotechnology A
SECTOR EQUITY
19,300
0.99
N/A
0.99
191.07
Mutual Fund
B/D 1
FSPHX Fidelity Select Health Care
Mutual Fund
B/D 1
1.57
1.57
SLMCX Seligman CommunicationsInformation A
23,700
N/A
372.09
Mutual Fund
B/D 1
24,805
N/A
587.88
IARCX AIM Real Estate C
2.37
2.37
Mutual Fund
B/D 2
24,420
0.90
2.00
2.90
708.18
FIDIX John Hancock Financial Industries I
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Current Management
Total Fee ()
Instrument Fee
Advisory Fee
Total Fee ()
Type of Investment
Amount
Firm
Symbol Investment
B/D 1
119,850
Managed Account
-- Lord Abbett Bond
N/A
1.00
1.00
1,198.50
FIXED INCOME
B/D 1
19,020
Mutual Fund
TBHYX Pioneer High Yield B
1.85
N/A
1.85
351.87
B/D 2
43,791
0.49
2.00
2.49
1,090.40
Mutual Fund
JMIBX JP Morgan Bond Instl
B/D 1
LARGE-CAP EQUITY
155,790
Managed Account
-- Lord Abbett Large Cap
2.40
3,738.96
N/A
2.40
B/D 1
223,350
Managed Account
-- Engemann Large Cap
N/A
2.40
2.40
5,360.40
B/D 1
45,600
Mutual Fund
PBODX Pioneer B
2.00
N/A
2.00
912.00
B/D 2
36,202
Mutual Fund
AIPGX AllianceBernstein Premier Gr Instl I
0.90
2.00
2.90
1,049.86
B/D 2
26,764
Mutual Fund
EQPIX Fidelity Advisor Equity Income Instl
0.65
2.00
2.65
709.25
direct
22,510
Mutual Fund
JANSX Janus
0.89
N/A
0.89
200.34
direct
29,200
Mutual Fund
VFINX Vanguard 500 Index
0.18
N/A
0.18
52.56
B/D 1
Managed Account
-- Roxbury Mid Cap
MID-CAP EQUITY
58,500
N/A
2.40
2.40
1,404.00
B/D 1
16,440
Mutual Fund
GABVX Gabelli Value A
1.44
N/A
1.44
236.74
B/D 1
14,475
Mutual Fund
GTSDX AIM Small Cap Growth C
SMALL-CAP EQUITY
2.02
N/A
2.02
292.39
B/D 2
30,558
Mutual Fund
FSCIX Fidelity Advisor Small Cap Instl
2.00
901.46
0.95
2.95
B/D 1
62,580
INTERNATIONAL
N/A
2.40
Managed Account
-- Brandes Investment Partners
2.40
1,501.92
B/D 1
15,690
2.17
N/A
2.17
340.47
Mutual Fund
TEDMX Templeton Developing Markets A
B/D 1
17,400
1.61
N/A
1.61
280.14
Mutual Fund
RABTX PIMCO RCM Biotechnology A
SECTOR EQUITY
B/D 1
19,300
0.99
N/A
0.99
191.07
Mutual Fund
FSPHX Fidelity Select Health Care
B/D 1
23,700
Mutual Fund
SLMCX Seligman CommunicationsInformation A
1.57
N/A
1.57
372.09
B/D 1
24,805
Mutual Fund
IARCX AIM Real Estate C
N/A
587.88
2.37
2.37
B/D 2
24,420
Mutual Fund
FIDIX John Hancock Financial Industries I
0.90
2.00
2.90
708.18
Indexed
Alpha
Active
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Management-Optimization Overlay
Total Fee ()
Instrument Fee
Advisory Fee
Total Fee ()
Type of Investment
Amount
Firm
Symbol Investment
U s e I n d e x e s
B/D 1
119,850
Managed Account
-- Lord Abbett Bond
N/A
1.00
1.00
1,198.50
FIXED INCOME
B/D 1
19,020
Mutual Fund
TBHYX Pioneer High Yield B
1.85
N/A
1.85
351.87
U s e I n d e x e s
B/D 2
43,791
0.49
2.00
2.49
1,090.40
Mutual Fund
JMIBX JP Morgan Bond Instl
B/D 1
LARGE-CAP EQUITY
155,790
Managed Account
-- Lord Abbett Large Cap
2.40
3,738.96
N/A
2.40
B/D 1
223,350
Managed Account
-- Engemann Large Cap
N/A
2.40
2.40
5,360.40
U s e I n d e x e s
B/D 1
45,600
Mutual Fund
PBODX Pioneer B
2.00
N/A
2.00
912.00
B/D 2
36,202
Mutual Fund
AIPGX AllianceBernstein Premier Gr Instl I
0.90
2.00
2.90
1,049.86
B/D 2
26,764
Mutual Fund
EQPIX Fidelity Advisor Equity Income Instl
0.65
2.00
2.65
709.25
direct
22,510
Mutual Fund
JANSX Janus
0.89
N/A
0.89
200.34
direct
29,200
Mutual Fund
VFINX Vanguard 500 Index
0.18
N/A
0.18
52.56
B/D 1
Managed Account
-- Roxbury Mid Cap
MID-CAP EQUITY
58,500
N/A
2.40
2.40
1,404.00
B/D 1
16,440
Mutual Fund
GABVX Gabelli Value A
1.44
N/A
1.44
236.74
B/D 1
14,475
Mutual Fund
GTSDX AIM Small Cap Growth C
SMALL-CAP EQUITY
2.02
N/A
2.02
292.39
B/D 2
30,558
Mutual Fund
FSCIX Fidelity Advisor Small Cap Instl
2.00
901.46
0.95
2.95
U s e I n d e x e s
B/D 1
62,580
INTERNATIONAL
N/A
2.40
Managed Account
-- Brandes Investment Partners
2.40
1,501.92
B/D 1
15,690
2.17
N/A
2.17
340.47
Mutual Fund
TEDMX Templeton Developing Markets A
B/D 1
17,400
1.61
N/A
1.61
280.14
Mutual Fund
RABTX PIMCO RCM Biotechnology A
SECTOR EQUITY
B/D 1
19,300
0.99
N/A
0.99
191.07
Mutual Fund
FSPHX Fidelity Select Health Care
B/D 1
23,700
Mutual Fund
SLMCX Seligman CommunicationsInformation A
1.57
N/A
1.57
372.09
B/D 1
24,805
Mutual Fund
IARCX AIM Real Estate C
N/A
587.88
2.37
2.37
B/D 2
24,420
Mutual Fund
FIDIX John Hancock Financial Industries I
0.90
2.00
2.90
708.18
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Management-Optimized Portfolio
Average Instrument Advisory Tier
Amount Fee Fee INDEXED-Fixed
Income 163,641 0.15 0.50 INDEXED-Equity
601,996 0.15 0.50
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The Three Tier Advantage
Traditional Structure
Optimized Structure

Weighted Average Fee 0.92
Total Annual Fee 9,444
Weighted Average Fee 2.09
Total Annual Fee 21,480
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Hypothetical Performance Advantage
9,052m
Based on a 10 (pre-fee, pre-tax) rate of return.

m thousands (000)
Traditional Portfolio
6,915m
Management-Optimized Portfolio
5,861m
4,725m
3,795m
3,229m
2,457m
2,206m
1,591m
1,507m
1,030m
1,030m
Initial Value
5 Years
10 Years
15 Years
20 Years
25 Years
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Hypothetical Performance Advantage INCLUDING
TRANSACTION COSTS
8,541m
Based on a 10 (pre-fee, pre-tax) rate of return.

m thousands (000)
Traditional Portfolio
Management-Optimized Portfolio
5,595m
5,474m
3,919m
3,665m
2,806m
2,400m
2,009m
1,572m
1,438m
1,030m
1,030m
Initial Value
5 Years
10 Years
15 Years
20 Years
25 Years
Transaction cost assumptions Current portfolio
1.00 Skill-Weighted Portfolio 0.25. These
costs include trading expenses, spread costs,
market impact, interest expense and opportunity
cost (due to holding cash).
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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does Research look like?
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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does Research look like?
71
Best-of-Breed Manager Recommendations
RogersCasey
Independent, Unbiased
Actionable Intelligence
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Coverage of Major Custody Platforms
Fidelity Pershing Schwab TD Ameritrade
No Products! No Payments! No Conflicts!
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Manager Recommendations for SW Portfolios
Active Ring Defined by Asset
Class characteristics
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Alpha Rim Defining Characteristics
Talent Unobservable investment process Specific ROI expectation Strategy unconstrained Risk defined by capital loss Idiosyncratic (stock-specific) risk Low benchmark sensitivity Research-intensive Liquidity variable Willingness to hold cash High concentration Tactical Inefficient markets and/or complex Alternative securities / non-benchmark securities Currency skill
Talent
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Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does Reporting look like?
76
Client-Side Platform
No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
What does Reporting look like?
77
Clearer, More Realistic Expectations

78
Integrated With Methodology
79
Reflects Expectations
80
Reinforces Expectations
81
Client-Side Platform

• Differentiate from Distributors

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The Financial Planning Association