Wealth Advisory Solutions

1. WealthAdvisory Solutions Independent Advisor Platform

2. Wealth Advisory Solutions Independent Advisor Platform • Transition Support • Compliance • Software/ IT • Administrative Support • Business Continuity Planning • Succession Planning www.EnvisionRIA.com

3. Wealth Advisory Solutions Business Continuity Planning • Catastrophic Plan (Proverbial Bus Scenario) • Critical for Sole Practitioners and Key Relationship Personnel • Advisor Can No Longer Fulfill Their Duties (Death or Disability) • What Happens to Your Clients? Your Staff? Your Family? • Business Continuity Plan Provides • Peace of Mind • Client Retention • Organized Transition • Monetary Benefit to Family www.EnvisionRIA.com

4. Wealth Advisory Solutions Succession Planning • Succession Planning • A process, not a transaction • Key Considerations • Why are you looking to sell? • Internal or External Succession? • What is your Timeframe? • Primary Objectives of a Succession Plan • Create an exit plan for the owner • Ensure clients are taken care of • Secure the firms future 19% of RIAs that generate between $150,000- $500,000 in revenue have a formal succession plan www.EnvisionRIA.com

5. Practice Valuation & 10 Steps To Prepare Your Practice To Sell Anthony Whitbeck, CFP, CLU CEO of Key Management Group http://www.keymanagementgrp.com

6. Key Management Group Services Transitioning Team Practices • CEO Thinking • Brand Building • Protecting Equity Escrow All of KMG’s Services have been carefully designed to move advisor’s up the productivity curve and overcome the obstacles that are preventing maximum success. Deal Making Service Advisor Legacy Advisors w/Support • Organization • Systems • Delegation Succession Planning AFA Analysis • Finding the Right Successor • Deal Negotiation • Transitioning Acquisition Consulting Solo Advisors • Client Service • Marketing • Everything! Practice Protection Human Resources • Specialized Assessments • Business Valuations • Online Assessment • In-Depth Assessment • Practice Protection • Human Resources Practice Management Guardian/Continuity Planning Financial Planning Case Preparation Executive Coaching

7. Practice Valuation http://www.keymanagementgrp.com

8. Why Financial Advisors Get Valuations • Financial Advisors seek professional Business Valuations for many reasons, the most common are: • Charting the value of your practice to measure growth • Before entering a Buy/Sell Agreement • Before dividing the practice between key members • To facilitate succession planning discussions • Acquiring a practice • Securing bank financing • And more…

9. Types of Valuations The reason WHY you are getting a valuation will determine the type of valuation that you need. The terminology and definitions are defined by American Institute of Certified Public Accounts (AICPA). • Key Management Group offers all three types of valuations, plus special valuations for: • OSJs • Other Industries • Divorce Proceedings • Estate and Gift Tax • Owner Disputes • Partnership Equity Agreements • We are a trusted valuation provider for bank partners: • Live Oak Bank • PPC Loan • Oak Street Funding • Salt Creek • Succession Lending • Three Types of Valuations • Calculation Engagement • Most common • Calculated Value • Business Valuation • More in depth • Conclusion of Value • Other Appraisal • Least Common • Specific Situation

10. Valuations can range greatly based on several factors – “rule of thumb” metrics are inaccurate and unreliable There’s almost $400,000 price difference depending upon whether it is a top 20% or bottom 20% practice. Numbers based on approximately 300 valuations performed in 2017-2018

11. How Is Your Practice Value Determined? Continuity Planning Options Do you know the factors that influence the value of your practice? Market Approach Income Approach • Value based primarily on business operations • Team • Systems • P&L • Discount Rate utilizing various risk factors inherent in your practice • Value based primarily on the client group • Quality of revenue • Client age • Asset Velocity • Compared to benchmark

12. What Drives Value in Your Practice? Continuity Planning Options Client Segmentation

13. 2018 Year-End Valuation Metrics Best Worst Best Worst Best Worst Worst Best *All data presented based on a sample of 477 valuations run in 2017

14. What Drive Practice Value – Up and Down? • Top 3 Metrics That Drive Practice Value Up: • Recurring Revenue • Operating Profit • Revenue from High Value Clients • Top 3 Metrics That Drive Practice Value Down: • Client Age • Number of Low Value Clients • Number of Professionals in Firm *All data presented based on a sample of 200 valuations run in 2018

15. Getting a Valuation A valuation will help you manage the equity in your practice and help you prepare months or years in advance of a sale. Partner Firms: $1,295 $ 895

16. To purchase an assessment – visit: www.keymanagementgrp.com • Easy to buy online • Get instructions emailed right away • Simple data collection process • Results usually delivered in about a week • 1:1 Consultation with an M&A Experts to review

17. 10 STEPS TO PREPARE YOUR PRACTICE FOR SALE Toll-free: 888-848-3349 info@keymanagementgrp.com www.keymanagementgrp.com

18. SELLING A PRACTICE IS AN EMOTIONAL JOURNEY THAT TAKES CAREFUL PREPARATION. • Start preparation as far in advance as possible to ensure a smooth transition. • The clearer you are about why, how, what, and in what way you are selling, the higher likelihood of success. • Sellers Checklist • 1. Start with ‘why’ • 2. Know your worth • 3. Tell your story • 4. Take inventory • 5. Handle attrition • 6. Segment & communicate • 7. Log opportunities • 8. List major expenses • 9. Record business services • 10. Make an org chart

19. 1. START WITH WHY • Have a clear understanding of why you are selling. • Complete a written statement of why you are selling and what your post-work goals are. Plan to share these statements with prospective buyers.

20. 2. KNOW YOUR WORTH • Complete a formal practice valuation. • This is a critical step to establish an expert opinion of the value of your practice and to provide many other data points for making informed decisions about the sale.

21. 3. TELL YOUR STORY • Write a message to buyer prospects. Write 1-2 paragraphs for each item: • Description of your practice, yourself, and the type of buyer that you want.

22. 4. TAKE INVENTORY Take inventory of client deliverables; especially financial plans that have been paid for but not delivered.

23. 5. HANDLE ATTRITION RISKS • Aging clients represents a risk of client/asset attrition. Demonstrating generational planning will reduce the risk perceived by the buyer. • Create a simple report for each ‘A’ client indicating ‘yes’ or ‘no’ for generational planning with a note about who is involved (children, etc.)

24. 6. SEGMENT AND COMMUNICATE • Segment clients for your transition communication and meeting strategy. • Talk to clients early about your transition plan and reassure them of the process.

25. 7. LOG FUTURE OPPORTUNITIES • Document future opportunities with existing clients. • These should be well-confirmed opportunities or work-in-progress.

26. 8. LIST MAJOR EXPENSES • Create a detailed outline of all transferrable expenses. • This should list meaningful expenses like office lease (including terms), staff compensation, marketing, etc.

27. 9. RECORD BUSINESS SERVICES • Create a detailed list of all business/office services you subscribe to, their contact information and any terms of service. • Include items like phone service, equipment leases, etc.

28. 10. COMMUNICATE YOUR ORG CHART • Complete a staff overview document. • This should include all staff, titles, duties, compensation, and your recommendations for retention.

29. Overview of how we help advisors find the right buyer on our Advisor Legacy™ platform. INITIAL CONSULTATION MAKE DEAL CONDUCT INTERVIEWS GATHER DATA INVITE BIDS IDENTIFY PROSPECTS Average time frame is 4 months Advisor Legacy fees range from 2.00% - 6.00% of the practices trailing revenue.

30. Wealth Advisory Solutions Key Take-Aways • Implementing a Business Continuity Plan is Critical for Independent Advisors • Understand What Drives the Value of Your Practice • Succession Planning is a Process- Important Considerations if You Are Thinking About a Transition www.EnvisionRIA.com

31. Questions? • Wealth Advisory Solutions • Ty Needler • Ty@EnvisionRIA.com • 317-559-0687 • Key Management Group • Anthony Whitbeck, CFP, CLU • awhitbeck@keymanagementgrp.com • 248-785-3603 www.EnvisionRIA.com

32. Schedule your free 30-minute consultation today or take our free online assessment: www.keymanagementgrp.com 1-888-848-3349 Anthony Whitbeck, CFP, CLU CEO, Key Management Group O: 248-785-3603 awhitbeck@keymanagementgrp.com http://www.keymanagementgrp.com