The Ultimate, Customizable, Comprehensive Outsourcing Solution for RIAs

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2 FPS Company Background Comprehensive support system created by advisors for advisors Established in 1990 founder Brent Hicks transitioned $65M to fees, building systems to significantly grow his client base Today that RIA manages over $600 million Spun off FocusPoint as the back office support engine to other RIA firms on a private label basis Good business owner, great planner, clear goals Spun off FocusPoint as the support engine to other RIA firms on a private label basis Currently 70+ advisor partners nationwide

3 No two practices are alike Fee-based or fee-only? In growth mode? Seeking lifestyle balance? Enjoy managing investments? Ideal client? Unique niche and experience?

4 What does your perfect practice look like? A lifestyle practice? $30-50 million, ~ client relationships, managing a small staff Work with the clients you enjoy most Growth across multiple advisors and/or locations? Minimal staff and multiple advisors plugged into the same systems from various locations You feel peace of mind that tools are in place for oversight

5 Solutions: Some basic principles Take a long-term view of all decisions Envision the light at the end of the tunnel Make a plan to get you there Know that smart business people can also be client-centered advisors Recognize there s a whole lot more to compensation than just price Compile an objective inventory of everything you do for clients and determine what that s worth Document your processes and then develop systems to support them

6 Back office outsourcing: Should you let someone else do it for you? Look at it from a business owner s perspective Reevaluate what you re doing today What do you enjoy doing? What are you best at? What drew you to this business? What is your time worth? Can someone else do it better? Faster? Cheaper? Do you enjoy managing people? If you don t want to hire, you can still outsource

7 Benefits of outsourcing your back office Many advisors free up 20-50% more of their time Back office, trading, administrative, and other activities can be outsourced in a cost-effective, capacity-building manner You re able to focus more on helping clients with financial planning and building better client relationships You can spend more time growing your business by marketing and developing relationships with centers of influence Your staff is more motivated as the focus is now geared toward more client-centric activities You can still maintain control over client experience The intangibles

8 Outsourcing today Back office Systems, platform, service team Technology CRM, portfolio management, online document storage, server/ hosting Investment research/management Take signals and execute yourself, outsource everything Virtual assistant Compliance assistance Etc.

9 Choose the right outsourcing providers Maximize technology Think more about integration and big picture, less about specific features Get clear about the end result you want what do you want your technology to do for you? Select the right tools and resources to manage and execute your processes Use resources Advisor referrals and reviews Ask your custodian for suggestions

10 Do your homework History For how long have they been supporting advisors? Are they a viable, nimble company? Service/support level How experienced is their staff? Will you be assigned to a dedicated manager or team? Customization Is it a one-size-fits-all solution? Can you choose the pieces that best suit your business? Technology Will it fit/integrate with what you re already using? Will they help train you and your staff? Maintaining data Make sure it always belongs to you

11 They re your clients (Not like we need to remind you) Do not allow partners or vendors to dictate how they think you should do business Choose options which offer you resources, leverage, and TRUE INDEPENDENCE

12 The biggest issues advisors face = Time to outsource? Need to free up time in general Burned out (on minutiae, back office, etc.) Compliance concerns Capacity issues Don t want to hire additional staff Hostage to employee(s) Controlling costs Streamline processes Succession planning Practice valuation

13 #1: Not enough time or balance I want more time to spend with my clients and financial planning I want to market and grow my business I don t even have enough time to handle what s on my desk, let alone think about my long-term goals and vision I m burned out on back office and other minutiae My time is valuable and I m not doing what I got into this business to do

14 SOLUTION: Outsourcing = Advisors find they now have 20-50% more of their time available Able to focus more on helping clients with financial planning and building better client relationships Focus on growing their business by marketing and developing relationships with centers of influence New lease on life

15 #2: Capacity and/or hiring concerns I ve hit The Wall I m not sure I can accommodate new business with my current systems Will hiring additional staff solve my issues, or is it just a short-term fix? Do I enjoy managing people? Do I feel like a hostage to any of my current employees? Take this as a signal to get clear about my goals and vision

16 SOLUTION: Outsourcing = Back office, trading, and administrative activities are handled by a dedicated relationship manager and supporting team You ve built in the capacity to add a large number of new client relationships Outsourcing provider should offer training as necessary All data should belong to you Your staff is more motivated as the focus is now geared toward more client-centric activities

17 #3: Controlling costs How do I offer my clients a high-touch, unique, incredible, consistent experience while increasing my revenue and potentially bringing in new clients at the same time? How much should I invest in my business and how quickly will I make that investment back? If I ve left a BD or other firm, how can I replace those services and systems in a cost-effective way? Cost prohibitive options = Catch-22

18 SOLUTION: Outsourcing = Outsourcing = better systems = more efficiency More efficiency = lower overhead, more time, more valuable business More time = happier clients and growth Business becomes more attractive and its intrinsic value increases

19 #4: Messy business processes Our workflows are not automated I have assets in several different places I just don t feel like I have my arms around everything I m not able to manage all accounts in the same manner What level of employee will I need to hire next?

20 SOLUTION: Outsourcing = Streamlining all processes allows other advisors and/or staff coming in to plug into the same system without client disruption Business becomes significantly more attractive and valuable to potential buyers/successors The right systems to ensure you ve built the infrastructure and capacity to support your long-term goals

21 Benefits of systemization You will have better relationships with your clients You will have more time for your clients You will be more efficient You will lessen your compliance burden Your business becomes significantly more attractive, valuable, and easily transitioned to potential buyers or successors New staff or advisors can join your firm with minimal client disruption You can work ON your business, not in it

22 #5: Managing the compliance burden I m not as comfortable or confident as I want to be with my current systems I know certain areas of my business could really use assistance but I m not sure what I need

23 SOLUTION: Outsourcing = Plugging into systems ensures that repeatable, documented, and streamlined processes are in place for all advisor activities Create a paperless, virtual office Create systems that make compliance automatic ( s, scanned docs, client meeting notes and other activities in CRM, daily account values, standardized filing system for all clients, daily backups) Make sure you can document everything else you promise in your ADV/client agreements

24 What can I delegate to FocusPoint? Daily administrative and account-related activities Complete reporting and billing services Trading activities Technology/software/virtual office Investment management support Advisor communications and market research/intelligence Advisor transitions Compliance support

25 Case Study 1: Breakaway Advisor Seeking a Lifestyle Practice SITUATION (THEN): 1 advisor managing $35 million 350 households Independent broker/dealer affiliation Wanted to narrow to 125 relationships and maintain income stream ADVISOR S MAIN ISSUES/GOALS: Free up time in general Want to work on business, not in it Burned out on minutiae/too many client relationships he didn t enjoy Didn t want to hire additional staff Succession planning SOLUTION (NOW): FPS helped advisor to go fee-only After 2 years, now works with ~125 clients (with whom he greatly enjoys HIS relationship), managing $40 million 1 full-time staff

26 Case Study 2: Overstaffed Hybrid RIA with Compliance Concerns, Seeking to Streamline Processes and Increase Profitability SITUATION (THEN): 6 advisors managing a total of $280 million Business mix included TAMPs, A, B, and C shares, annuities, and REITs 11 staff BD relationship ADVISOR S MAIN ISSUES/GOALS: Compliance concerns BD forcing them out of B/C shares but no assistance/guidance Capacity issues Too many staff Streamline Advisor processes No common message/investment philosophy/vision Valuation 75% of revenue was overhead (including advisor payroll) SOLUTION (NOW): FPS helped firm to develop a standardized client message/investment philosophy Firm moved 70% of business to a fee-based model Helped firm restructure to an S Corporation After 2 years, staff of only 5 (3 support people, 1 office manager, 1 receptionist) Overhead is now < 50% (including advisor payroll) Using a 2.25 multiple, business valuation went from $4 to $7 million

27 Case Study 3: Emerging Breakaway Advisor Seeking Significant Growth, Minimal Staff, and a Solid Succession Plan SITUATION (THEN): 1 advisor managing $15 million Goal of 10 x growth ADVISOR S MAIN ISSUES/GOALS: Free up time in general Want to work on business, not in it Capacity Didn t want to hire additional staff as a short-term fix Couldn t hire the caliber of staff he felt he needed in order to reach his growth goal Succession planning SOLUTION (NOW): Affiliated with FPS; after 10 years grew to $150 million without adding staff Currently phasing out of his business with ease to a successor 2 advisors 2 full-time staff **Similar case study in which advisor grew from $75 million to $180 million today firm consists of 2 advisors supporting 350 households with 1 full-time staff

28 Case Study 4: Existing RIA Seeking to Grow to $1B by Adding IARs and Outsourcing All Back Office/Investment Management SITUATION: 1 advisor managing $120 million, all fees Another colleague with BD interested in coming under RIA Interested in streamlining investment management across all accounts Want to outsource all back office, trading, and non-fps investment management ADVISOR S MAIN ISSUES/GOALS: Need to transition all clients to new investment process while increasing fees across all accounts Bring three books of business together under one RIA Grow to $1B by adding other advisors in multiple remote locations SOLUTION: Affiliated with FPS and currently transitioning $120 million Developed a plan to transition colleague s fee business under RIA 2 advisors 2 full-time staff

29 Case Study 5: Existing Hybrid RIA Seeking to Streamline Business Via Outsourcing Back Office and Portfolio Implementation SITUATION: 2 advisors managing $150 million, mostly fees Principal/founder and main operations person phasing into retirement Want to outsource all back office, trading, and non-fps investment management ADVISOR S MAIN ISSUES/GOALS: Need to implement new investment process while increasing fees across half of accounts Need help maintaining in-house mutual fund models across half of accounts Need assistance transitioning junior advisor to main point of contact to clients Need many years of data migrated from Advent SOLUTION: Affiliated with FPS and currently transitioning $120 million Provided assistance with all client agreements and fee structure 2 advisors 1 full-time staff

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