SHARING SUCCESSIntrinsic Long-Term Incentive Plan (‘LTIP’) Scheme

Intrinsic Long-Term Incentive Plan

At Intrinsic, we know what it takes to create a successful business – hard work, confidence, and working in partnership towards a common goal and importantly delivering great outcomes for our clients.

They are also the principles behind our new Long Term Incentive Plan (LTIP, hereafter referred to as ‘the Scheme’). We want to incentivise ARs and Partners to continue to deliver great outcomes for clients and grow their businesses. Ultimately, we want to reward those of you who contribute to the overall profitability of the Intrinsic Group through high quality business. We have hugely exciting plans for Intrinsic, which translates into a fantastic opportunity for every AR and Partner to share in our success.

This booklet outlines the basics of the Scheme, and aims to answer the more common questions you may have. Please note that this is an overview only.

1. What is the Scheme and how much money is available?

The Scheme is a cash-based bonus scheme under which participants (ARs and Partners) will be entitled, subject to achieving quality thresholds, to share in a bonus pool.

Old Mutual Wealth have agreed that a pool of between £12.5m and £25m will be available for the scheme. The amount of the bonus pool is triggered by the post-tax profitability of the Intrinsic Group meeting or exceeding certain minimum criteria (see below). The actual funding of the pool is provided from the accumulated Advice Profits of the Intrinsic Group over the scheme period and these need to be at a sufficient level to fund the pool made available:

• If the post-tax 2016 profit is less than £10.25m, the bonus pool will be nil.

• If the 2016 profit is £10.25m or higher, the bonus pool increases, on a straight-line basis, from £12.5m (where the post-tax 2016 profit is £10.25m) to £25m (where the post-tax 2016 profit is £20.5m).

2. Who is eligible and how is the bonus pool split?

Every Appointed Representative and Partner in the Intrinsic Group on or before 31 March 2016 is eligible to qualify for the Scheme. All ARs and Partners will have the opporunity to receive a share of the pool dependent on their advice channel.

• Restricted Financial Planning

• Mortgage & Protection

• Independent Financial Planning

The overall bonus pool will be split according to the actual profitability of each channel in 2016.

Your share of your allocated bonus pool is determined by your firm’s individual contribution to the Advice Profits.

3. How do I qualify?

ARs and Partners qualify based on business performance AND quality measures.

i) Performance measures:

Your entitlement under the scheme is determined by your weighted retained fee income in 2016 as a proportion of the weighted retained fee income of all participants in your allocated bonus pool.

Your retained fee income is calculated by applying your retention rate for 2016 (as determined in accordance with your membership contract with Intrinsic or Positive Solutions) to your weighted fee income for 2016.

Your weighted fee income is calculated based on:

• Initial fee & commission income = x 25%;

• Ongoing income = x 100%.

The relative weighting reflects the greater value that ongoing revenues contribute to capital creation when compared with one-off revenues.

Minimum performance standards apply

• For ARs/Partners with 3 advisers or less - minimum performance standards are dependent on the adviser mix within the firm. If the firm includes an FPA then the minimum weighted fee income will be £70k. If there is no FPA then the minimum weighted fee income will be £25k. The additional productivity requirement is then driven by the type of additional advisers, e.g. £30k is added for each FPA and £7.5K for each MPA or GIA.

• For ARs/Partners with more than 3 advisers - if the AR/Partner has one or more FPA, the minimum

performance standard required is £130k. If the AR/Partner consists of MPA or GIA advisers only, the minimum performance standard is £40k.

If an AR or Partner’s fee income for 2016 falls below these levels, then there will be no entitlement to any bonus payment.

ii) Quality measures

Your quality performance will be measured against a scorecard of Key Performance Indicators (KPIs) that will deliver an overall score made up of:

• 70% Customer Outcome (function of advice quality; complaints; ongoing service delivery; client surveys);

• 30% Adviser behaviour (Breaches; AIV; T&C).

The scorecard and measures will be available by the end of 2014. Quality scoring for the Scheme starts from 1 January 2015, and we will keep you regularly updated on your performance against the scorecard.

Should any AR or Partner fall below the anticipated normal range in terms of quality scoring, they will lose up to 20% of any of their three bonus instalments (see ‘4 – When are the payments made?’). This money is redistributed back into the allocated pool to be shared amongst those ARs and Partners in the respective channel with a quality score above the normal range. In the event that any significant quality issues are identified there is discretion for awards to be reduced further or cancelled entirely if warranted.

Regardless of the size of the bonus pool or the advice channel performance, a productive high quality adviser will receive more than a poor quality adviser.

Weighted retained fee income example:

An Intrinsic AR has actual fee income of £100,000 in 2016.

This comprises ongoing income of £80,000 (x 100% = £80,000) and initial fee & commission income of £20,000 (x 25% = £5,000).

Total weighted fee income for 2016 = £85,000

The AR’s retention rate for 2016 is 20%.

Example AR’s weighted retained fee income = £17,000

4. When are the payments made?

The bonus payment will be made in three instalments:

If your total bonus payment is valued at £20,000 or less, we will make the payment in one single instalment in 2017 (as soon as is practicable after the publication of the audited financial statements of Intrinsic for the financial year ended 2016).

Payments will be made in cash via your Payment Account, and you will be responsible for any tax due.

5. What happens if I leave Intrinsic or cease to be an AR or Partner?You will not have any entitlement to any part of the bonus payment due to be paid after the date on which you cease to be a Partner or AR (or, if earlier, the date on which you give notice that you will cease to be a Partner or AR).

You will not have to repay any bonus instalments already paid to you, unless as noted above you received all three instalments in a single payment in 2017 and subsequently ceased to be an AR or Principal before the publication of the audited financial statements of Intrinsic in 2019. In the event that you have received all three instalments in a single payment in 2017 and subsequent quality issues are identified, there is discretion for these paid out awards to be clawed back in part or in full.

• 50% paid in 2017 (as soon as is practicable after the publication of the audited financial statements of Intrinsic for the financial year ended 2016);

• 25% paid in 2018 (as soon as is practicable after the publication of the audited financial statements of Intrinsic for the financial year ended 2017);

• 25% paid in 2019 (as soon as is practicable after the publication of the audited financial statements of Intrinsic for the financial year ended 2018).

All Awards are £k / Firm Channel

Weighted Fee Income (£k) Restricted Independent M & P

2016 £1000 233 129 252

(£k) £750 175 97 189

£500 116 64 126

£450 105 61 113

£400 99 57 96

£350 86 50 84

£300 74 44 72

£250 65 37 63

£200 52 30 50

£175 46 27 46

£150 39 23 40

£125 33 19 33

£100 27 16 26

£75 21 12 21

6. Example scenarios

Assuming Intrinsic hits its overall post-tax profitability targets, and that overall adviser quality scores are as predicted,then illustrative bonus payments could be as follows (assumes average retention rate in each channel):

Please note these figures are for illustration only, assume that quality measures have been met and the actual amounts will depend on a number of variables as outlined throughout this booklet.

Summary

We hope that the Scheme provides you with an incentive to continue to deliver great outcomes for clients and grow your business. Now we are part of Old Mutual Wealth we believe we are in a fantastic position to hit our 2016 business plan and achieve the £25m target.

Fundamentally, we are in this together. The initial size of the bonus pool is dependent on overall Intrinsic Group profits, and we will all play a part in ensuring we hit our targets. The payments to ARs and partners will then be determined by their contribution and the quality of the business they write. All ARs and Partners will contribute regardless of the market they operate in, and therefore all ARs and Partners have the chance to participate in, and benefit from, the Scheme.

We look forward to sharing our success with you in the future.

Intrinsic Financial Services Limited Wiltshire Court Farnsby Street Swindon SN1 5AH

t | 01793 647400 f | 01793 521259 e | info@intrinsicfs.com w | intrinsicfs.com

Intrinsic Financial Services Limited is the Holding Company of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited.

Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited are authorised and regulated by the Financial Conduct Authority (FCA).

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