Financial Advisor Succession Planning A StepbyStep Succession Planning

Financial Advisor Succession Planning: A Step-by-Step Succession Planning Process Tiburon Research January 9, 2020

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 2

Financial Advisor Succession Planning Issues can be Organized Into Three Key Points, Including Succession Planning Importance, Succession Planning Propensity, & Succession Planning Challenges Financial Advisor Succession Planning Context Setting Succession Planning Importance Succession Planning Propensity Succession Planning Challenges Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 3

Over One-Third of Financial Advisors Plan to Retire within Ten Years Financial Advisors By Share Retiring Over the Next Ten Years Source: 11/5/19 Financial Advisor Magazine; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 4

Over One-Third of Financial Advisors Plan to Retire within Ten Years Financial Advisors By Retirement Plans Source: 12/16 Cerulli Associates; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 5

Almost Half of Financial Advisors are Very Likely to Sell their Firm to a Third-Party Financial Advisors By Likelihood to Sell Firm to a Third Party Source: 1/24/19 Franklin Resources Report; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 6

Over One-Third of Financial Advisors Plan to Sell their Firm in One to Three Years Financial Advisors By Propensity to Sell Firm Source: 1/24/19 Franklin Resources Report; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 7

Financial Advisors’ Median Age is 47, Down From 50 in 2015 Financial Advisors Median Age Source: 8/9/17 Investment News (TD Ameritrade Institutional); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 8

Over Three-Quarters of Financial Advisors are Over the Age of 40 Financial Advisors By Age Source: 10/12/18 The Street (Ernst & Young); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 9

Almost Half of Certified Financial Planners are Over the Age of 50 Certified Financial Planners By Age Source: 10/12/18 The Street (Ernst & Young); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 10

Financial Advisor Firms are Increasingly Hiring New Primary Owners Financial Advisor Firms Share Hiring a New Primary Owner Not Hiring New Primary Owner Source: 8/9/17 TD Ameritrade Institutional Survey; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 11

Financial Advisor Succession Planning is Important for Three Key Reasons, Including Client Retention, Ethical Responsibility, & Potential Regulatory Mandate Financial Advisor Succession Planning Importance Factors Client Retention Ethical Responsibility Potential Regulatory Mandate Source: 5/98 Chase Vista Funds Brochure; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 12

Less Than One-Third of Financial Advisors Have Succession Plans Financial Advisors By Propensity to Have Succession Plans Do Not Have a Succession Plan Source: 1/24/19 Franklin Resources Report; 4/25/18 Think Advisor (Financial Planning Association (FPA)); 11/19/15 Investment News; 6/9/14 Barron’s (Fidelity Investments); 3/26/14 TD Ameritrade Email (Schweiss) (Financial Planning Association); 10/18/11 Financial Advisor; 1/24/11 Investment News (Moss Adams); 12/24/01 Fund Marketing Alert; 12/01 Investment Advisor; 4/99 Ticker (Downer & Company); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 13

Financial Advisors of All Types Generally Lack Succession Plans, Including Amongst Fee-Based Financial Advisors & Independent Reps Financial Advisor Succession Planning Propensity to Have Succession Plans By Type Fee-Based Financial Advisors Independent Reps Independent Advisors & Third. Party Advisors Wirehouses & Other Captive Brokers CPA & Law Firms Real Estate & Mortgage Brokers Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 14

Financial Advisor Succession Planning Has Specifically Been Challenged by Ignorance of the Issues and Industry Health & the Lack of Threats Financial Advisor Succession Planning Challenges Issue Ignorance Industry Health & Lack of Threats Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 15

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 16

Financial Advisor Succession Planning Emerged in the 1980 s and Has Subsequently Evolved through its Haphazard, Clarification, & Maturization Phases Financial Advisor Succession Planning Market History Financial Advisor Succession Planning Origins Approximate Dates: Key Steps: Haphazard Phase 1980 s • XXXX: -- 1991 - 2000 • XXXX: -- Maturization Phase Clarification Phase 2001 - 2010 • XXXX: -- 2011 - 2020 • • Financial Advisor Succession Planning Today 2020 2011 -2016: Financial advisor industry debated fiduciary responsibility to have continuity plan including potential regulatory mandate 2011: Investment News hosted webinar called Creating a Succession Plan that Works for You 2015: Silver Lane Advisors published book The Art of M&A Valuation and Modeling: A Guide to Corporate Valuation 2015: Gladstone Associates published newsletter story: Bringing Succession to a Crossroads Source: 12/8/15 Gladstone Advisors Email (Colbridge); 12/5/15 Savant Capital Email (Brodeski); 12/15 Accounting Today; 11/28/15 Accounting Today; 11/20/15 Investment News; 11/9/15 Investment News; 10/13/15 Andrew Barile Letter (Barile); 4/23/12 Wall Street Journal; 12/5/11 Investment News; 11/22/10 Investment News; 3/28/11 Investment News; 3/4/11 Investment News; 1/24/11 Investment News; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 17

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 18

There are Six Key Steps to Successful Financial Advisor Succession Planning, Including Identifying Appropriate Financial Advisor Coaches; Clarifying Objectives; Obtaining a Preliminary Business Valuation; Considering Alternatives; Execute Internal Transition (if Chosen); and Execute a Fallback Business Continuity Plan Financial Advisor Succession Planning Step-by-Step Process Identify Appropriate Financial Advisor Coaches Clarify Objectives Obtain Preliminary Business Valuation Consider Alternatives Execute Internal Transition (if Chosen) Execute Fallback Business Continuity Plan Source: 6/26/14 Financial Times; 6/26/14 Wall Street Journal; 8/22/02 HD Vest Financial Services Share Shop Meeting Notes; 8/6/02 HD Vest Financial Services Conversation (Klein); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 19

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 20

Financial Advisor Succession Planning’s First Step is Identifying Appropriate Financial Advisor Coaches Comments • -- Source: 1/24/11 Investment News; 6/04 Financial Planning; 8/22/02 Tax Professionals Written Survey; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 21

Over Half of Financial Advisors Expect to Use a Financial Advisor Coach to Create a Formal Succession Plan Financial Advisor Succession Planning By Propensity to Use a Financial Advisor Coach Source: 1/24/19 Franklin Resources Report; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 22

Three-Quarters of Financial Advisors Expect to Use a Business Valuation Financial Advisors By Propensity to Use a Business Valuation Financial Advisor Source: 1/24/19 Franklin Resources Report; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 23

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 24

Financial Advisor Succession Planning’s Second Step is Clarify Objectives Comments • -- Source: 12/15 Accounting Today; 11/30/15 Investment News; 11/9/15 Investment News; 6/26/14 Financial Times; 6/04 Financial Planning; 5/11 North Bay Biz; 8/19/02 Moss Adams Presentation (Tibergien); 7/23/02 CPA 2 Biz; 2/6/02 FP Transitions Web Site; 10/18/00 FP Transitions Web Site; 10/98 Florida CPA Net Link; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 25

Financial Advisors Should Clarify their Goals; Some May be Seeking Retirement, Partial Retirement, and Ongoing Employment (Become Part of Something Larger) Financial Advisor Succession Planning Sellers Possible Motivations Dreaming of Retirement Partial Retirement Ongoing Employment (Becoming Part of Something Bigger) Source: 5/98 Chase Vista Funds Brochure; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 26

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 27

Financial Advisor Succession Planning’s Second Step is Obtain Preliminary Business Valuation Comments • -- Source: 12/15 Accounting Today; 5/11 North Bay Biz; 10/01 Bloomberg Wealth Manager; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 28

Financial Advisors can Obtain Preliminary Professional Valuations from Investment Bankers, CPA Firms, & Business Brokers Financial Advisors Succession Planning Preliminary Professional Valuations Sources Financial Advisors Preliminary Professional Valuations Sources Investment Bankers CPA Firms Business Brokers Source: 5/11 North Bay Biz; 1/24/11 Investment News; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 29

There are Four Common Valuation Techniques, Including Discounted Cash Flows, Multiples, Return on Investment, & Book Value Financial Advisor Succession Planning Common Valuation Techniques Discounted Cash Flows Percentage of Assets Under Management Multiples Multiple of Revenue Return on Investment Book Value Multiple of Profits or Cash Flows Source: 8/19/02 Moss Adams Presentation (Tibergien); 8/12/02 Moss Adams Presentation (Tibergien); 5/02 Journal of Financial Planning; 3/25/02 FP Transitions Conversation (Goad); 3/4/02 Wealth Builders Conversation (Schriber); 9/01 Financial Planning; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 30

Several Issues are Worth Consideration in Valuations Including Small Firm Economics & Multiple Versus Growth Rate Financial Advisor Succession Planning Valuation Issues Small Firm Economics Multiple Versus Growth Rate Source: 11/19/99 Centurion Meeting (Durand); 4/13/99 M Group Conversation (Spitzer); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 31

There are Many Reasons to Calculate a Firm’s Value, Including Retirement, Buy/Sell Agreements, Partnership/ESOPs, Divorce, Estate/Gift Planning, Insurance Planning, & Financing Needs Financial Advisor Succession Planning Reasons for Valuations Retirement Buy & Sell Agreements Partnerships & ESOPs Divorce Estate & Gift Planning Insurance Planning Financing Needs Source: 8/12/02 Moss Adams Presentation (Tibergien); 7/30/02 BAM Advisory Services Email (Zimmerman); 2/27/02 Moss Adams Brochure; 2/22/02 FP Transitions Letter (Goad); 1/30/02 Ohio Society of CPAs Web Site; 7/6/00 The Planner’s Weekly; 7/27/99 Electronic Accountant; 3/99 Ticker; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 32

Fee-Based Financial Advisors Has Six Owners Fee-Based Financial Advisors Number of Owners By Total Assets Under Management Ranges Source: 1/16 Fidelity Benchmarking Study; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 33 33

Client Demographics are the Fourth Important Value Driver Financial Advisor Succession Planning Client Demographics Factors Average Client Size • Benchmarking data including assets, revenues, and profits per client Other Factors • Other client base demographic factors that may be included in firm records and/or can be learned through client surveys • Average client age • Average client tenure • Average client satisfaction Source: 8/22/02 HD Vest Financial Services Share Shop Meeting Notes; 5/02 Journal of Financial Planning; 3/4/02 Wealth Builders Conversation (Schriber); 2/27/02 i. Value Web Site; 12/01 Personal Financial Planning Monthly; 10/01 Bloomberg Wealth Manager; 9/7/01 Moss Adams Presentation (Tibergien); 10/12/98 Investment News; 7/98 RWB Conversation (Bowen); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 34

Financial Advisor Have 2. 7 x Average Revenue Multiples, Up From 2. 2 x in 2014 Financial Advisors Average Multiples Source: 1/21/19 Succession Resource Group; 3/15/17 Markets Insider; 7/8/14 Wealth. Management. Com; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 35

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 36

Financial Advisor Succession Planning’s Third Step is Considering Alternatives Comments • -- Source: 11/9/15 Investment News; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 37

Financial Advisors Should Consider Alternatives, Including Possible Succession Solutions Financial Advisor Succession Planning Considering Alternative Scenarios Sale Possible Succession Solutions Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 38 38

Financial Advisors Should Consider the Alternative Buyers, Including Strategic Buyers, Financial Buyers, Competitors, Partners, & Employees Financial Advisors Succession Planning Buyer Alternatives Strategic Buyers Financial Buyers Competitors Partners Employees Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 39

At Least Three Models for Equity-Based Compensation can be Used to Transfer a Business to Employees, Including Leveraged Recapitalization or Employee Stock Ownership Plan (ESOP), Earn-In Program, & Equity Purchase Rights Financial Advisor Succession Planning Equity-Based Compensation Models Leveraged Recapitalization or Employee Stock Ownership Plan (ESOP) Earn-In Program Equity Purchase Rights Source: 2/03 Bloomberg Wealth Manager; 1/03 Financial Planning; 9/19/02 HD Vest Financial Services Email (Takamatsu); 8/22/02 HD Vest Financial Services Share Shop Survey Notes; 4/30/02 Wall Street Journal; 1/02 Financial Advisor; 11/18/99 Assante Corporation Conversation (Roush); 1/18/99 Investment News; 11/16/98 Investment News; 6/97 Investment Counseling Presentation (Schaffer); 7/91 Personal Financial Planning; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 40

Other Succession Solutions May Also be Worthy of Consideration, Including Selling in Pieces, Selling of Partial Book by Non-Retiring Principals, Virtual Partnerships, & Retaining Ownership & Add a CEO Financial Advisor Succession Planning Other Possible Succession Solutions Selling in Pieces Sale of Partial Book by Non-Retiring Principals Virtual Partnerships Retain Ownership & Add a CEO Source: 3/14/11 Investment News; 8/21/01 The Daily Deal; 7/31/01 New York Times; 6/01 Investment Advisor; 11/27/00 Wall Street Journal; 12/8/99 Centurion Meeting (Doede); 11/19/99 Moss Adams Conversation (Tibergien); 10/4/99 Investment News; 9/6/99 Investment News; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 41

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 42

Financial Advisor Succession Planning’s Fifth Step is Execute Internal Transition (if Chosen) Comments • -- Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 43

A Proper Financial Advisor Succession Plan Should Include Client Communications, Data Access & Transition, Custodial Access, & Paper Files Access Financial Advisors Succession Planning Succession Plan Components Client Communications Data Access & Transition Custodial Access Paper Files Access Source: 11/28/15 Accouting Today; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 44

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 45

Financial Advisor Succession Planning’s Sixth Step is Execute Fallback Business Continuity Plan Comments • -- Source: 11/9/15 Investment News; 3/14/11 Investment News; 6/04 Financial Planning; 8/22/02 HD Vest Financial Services Share Shop Meeting Notes; 8/22/02 Tax Professionals Written Survey; 8/6/02 HD Vest Financial Services Conversation (Klein); 8/2/02 Tax Professionals Written Survey; 4/01 Registered Representative; 1/00 Moss Adams Survey; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 46

There are Key Steps for a Successful Fall-Back Business Continuity Plan, Including Document Exchange, Combined Marketing Events, & Shared Client Meetings Financial Advisor Succession Planning Fallback Business Continuity Plan Key Steps Document Exchange Combined Marketing Events Shared Client Meetings Source: 11/9/15 Investment News; 3/14/11 Investment News; 6/04 Financial Planning; 8/22/02 HD Vest Financial Services Share Shop Meeting Notes; 8/22/02 Tax Professionals Written Survey; 8/6/02 HD Vest Financial Services Conversation (Klein); 8/2/02 Tax Professionals Written Survey; 4/01 Registered Representative; 1/00 Moss Adams Survey; Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 47

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 48

Financial Advisor Succession Planning Future Predictions Include Financial Advisor Succession Planning to Demand More Attention and Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity Financial Advisor Succession Planning Future Predictions Financial Advisor Succession Planning to Demand More Attention Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 49

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 50

Financial Advisor Succession Planning will Receive More Attention Comments • -- Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 51

Outline • Financial Advisor Succession Planning Market Evolution – Context Setting – Market History • Financial Advisor Step-by-Step Succession Planning Process – Identify Appropriate Financial Advisor Coaches – Clarify Objectives – Obtain Preliminary Business Valuation – Consider Alternatives – Execute Internal Transition (if Chosen) – Execute Fallback Business Continuity Plan • Financial Advisor Succession Planning Future Predictions – Financial Advisor Succession Planning to Demand More Attention – Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers, & Custodians to Treat Issue as Crisis or Opportunity 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 52

Wirehouses, Regional Broker/Dealers, Independent Broker/Dealers and Custodians May Treat the Succession Planning Issue as a Grave Threat or a Terrific Opportunity Financial Advisor Succession Planning Possible Responses Threat Opportunity Source: 6/04 Financial Planning; 4/10/02 Tax Professionals Written Survey; 3/5/02 FP Transitions Conversation (Goad); 3/1/02 HD Vest Financial Services Conversation (Ochs); 2/22/02 HD Vest Financial Services Conversation (Klein); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 53

There are Many Potential Value Added Services Independent Broker/Dealers & Custodians can Deliver in Regards to Succession Planning, Including Conference Presentation, Conference Workshop, and Workbook or Web Site Financial Advisor Succession Planning Independent Broker/Dealers & Custodians Potential Value Added Services Conference Presentation Conference Workshop Workbook or Web Site (Educational Materials) Valuation Tool Supermarket Of Buyers & Sellers Financing Package Transition Office Fallback Purchase Offer Buyer’s Kit Source: 6/04 Financial Planning; 4/10/02 Tax Professionals Written Survey; 3/5/02 FP Transitions Conversation (Goad); 3/1/02 HD Vest Financial Services Conversation (Ochs); 2/22/02 HD Vest Financial Services Conversation (Klein); Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 54

Tiburon Strategic Advisors Comments • Focus on corporate-level strategy - Serve senior executives only at financial services companies - Key services: market seminars, market research, & strategy consulting - Served over 450 corporate clients and completed over 2, 200 projects since 1998 - Host semi-annual CEO Summits, offer free weekly research releases, and offer free business benchmarking tools for all types of advisors • Chip Roame background - Mc. Kinsey & Company - Charles Schwab & Company - Tiburon since 1998 Source: Tiburon Research & Analysis 20. 01. 09 – Financial Advisor Succession Planning © Tiburon Strategic Advisors, LLC™ 55