SESSION TWO WORKBOOKDecisions and Notes for Modules 1 – 5

BSMARTer Business Simulation Management and Relationship Training

Your Vision

Our vision is to be recognized as Oregon’s premiere wealth management firm for families and small businesses, specializing in personalized financial planning.We are a growth oriented firm that will achieve $2B in AUM, $16M in top line revenue and an operating profit of 73%, by the year 2020.Our multigenerational approach towards our talent and our clients will highlight us as a firm that will be here for generations to come.

A vision statement describes what you want your firm to look like in the future, typically three to five years out, or longer, and is both an internal and an external message. If you keep it front and center, it can help you stay focused on your goals. It can also help inspire and motivate your staff, and instill confidence in clients that you know where you want to be in the future.As you craft a vision statement for your firm, ask:• What do we aspire to become in three to five years?• What does success look like for our firm over this period?• What does our end-state look like?

A vision statement describes the future state you are looking to create – your desired end-game for the firm in 2020.

Your Mission

The mission of Burns Simpson is to have a positive impact on our clients, employees and neighbors lives, for the long term. Our culture values a clear organizational structure, strong financial picture and a multigenerational approach that will ensure the preservation of our talent and our clients for generations to come.

We will provide an environment for our talent to grow and develop, for our clients to reach their personalized, financial goals, and for our neighbors to prosper from our giving back to the community.

A mission statement describes why you are in business, and is primarily used internally. It plays an important role in helping you assess your activities and determining if they are in line with your core purpose. It can be used to “sanity check” what you may be considering doing – if activities stray from your core purpose, you may decide not to do them or to reevaluate your mission.As you craft a mission statement for your firm, ask:• What is our purpose for being here? Why do we do what we do?• What needs do clients have when they come to us?• What are the most significant strengths of our business?• Why do clients choose our firm over other firms? What are our

differentiators?

A mission statement describes why the organization exists – its core purpose.

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Executive Summary

In early 2014, we received feedback from our employees that they weren’t completely happy and needed more direction from the management team. Wanting to better understand the issues at hand, the management team decided to hire Boston Consulting Group to do a detailed analysis of our firm and make recommendations to the management team on how to improve firm moral, financials and overall direction of the firm in the coming years. The recommended changes were focused on the following key areas:

Organization Structure Financial Management Client Segmentation Associate Sourcing/Development

Below are the four changes we have implemented in the late spring of 2014 based on the consultant’s recommendations:

(1) Organization StructureReorganization:We implemented a reorganization of the firm to create departments with department heads (i.e. Managing Partners and Business Leaders for different functions in the firm).

The overall goals for the reorganization are to achieve cohesiveness, permanent roles within the firm (with corresponding line items for salaries and bonuses) and to ensure employees understand their job responsibilities and functions within the firm.

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Executive Summary cont.

Reorganization cont:Additionally, we better defined the roles by adding job descriptions and accommodated for a new admin support staff that will need to be implemented in 2015 (Note: See Appendix for detailed Job Descriptions).

New Partner/CFO – Cat StevensWe also realized we had a key leadership position missing in our firm. As a result, we decided to bring in Cat Stevens as our new CFO/Partner. Cat was a successful EVP from RCP Capital Corp that made her name in M&A. Cat made a lot of money when RCP Capital went public a few years ago. Cat, in her early 50s, decided to retire at the time of the IPO; however, sitting at home knitting was not as fun as she originally thought, she desperately missed being in the financial business. She wanted to stay in her home state of Oregon and work at a smaller firm.

Cat Steven’s receiver her MBA at the University of Oregon with Ken Brock and is also a CFA. Cat’s background in the business is a welcome addition to Burns Simpson and fills a gap they were looking for in management.

Due to Cat’s great negotiating skills, she was able to finalize a Partner deal with Burns Simpson under the following terms: Immediate 16% Partner Shares fully vested for payout

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Executive Summary cont.

New Partner/CFO – Cat Stevens cont. Immediately responsible to assist in paying off the loan with Live Oak

with the rest of the partners in her equal 16% ownership share In order to keep things simple, Cat agreed to the same value Destiny

gave their own 16% share back in 2012. If there is ever a liquidity event or the other partners buy her out in the future, her 16% share would reduce her final pay out by the Current Estimated Worth of the 16%. The total current estimated worth of her share is based on Destiny’s original agreement.

Cat Steven’s 16% Share is worth in today’s value = $8.6M (2012 EBITDA $2,146,080 * 6 multiple * 67%)

(2) Financial ManagementBurns Simpson FinancialsDue to vast amount of changes made to our organization, we felt it was important to add supporting detailed financial explanations for each of our decisions that impacted our bottom line. Please reference the BS Financials document located in the Appendix. Each financial decision has supporting financial worksheet explanations: 2014 Given Financials Mid-2014 Financials Forward (through 2020) Live Oak Loan (Amortization Schedule) Partner Salary Adjustments Staff Salary Adjustments New Business Bonus Plan Explanation

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Executive Summary cont.

(3) Client SegmentationClient Service Support model Created two different support models for our clients, in order to be more supportive of our larger clients, be efficient with our employee’s time, create room for growth at our current staffing model and build out a support model to be competitive with the younger generation of investors. Support Models: Smaller than 500k of investable assets - smaller clients under 500k will

have a specific set of services and financial planning assistance to better leverage individuals time for larger clients and new initiatives for the firm going forward (also a solution to compete in the Robo advisor space for younger generations)

Greater than 500k of investable assets - larger clients will be provided with a full suite of financial planning and investment services. Individual Sr. Advisors, Jr advisors and an ops person will be assigned to each larger client

(4) Associate Sourcing/DevelopmentInternship ProgramWe created an internship program for three purposes: Employee training/hiring for the future Create an environment where the current staff and future staff begins to

get acclimated and maintain understanding of future generations (builds on the new idea of creating a firm that is being built for generations to come)

Inexpensive support for different areas of the firm Added a dress code to handle any potential challenges in managing the

new interns and younger employees’ choice of clothing at the office

Organizational Structure and Compensation

MODULE 1

Firm Organizational Chart

1

Example diagram of service team structure.

Managing PartnersEdna; Ken; Ned; Cat

Financial Planning

EdnaLarge acct segment

BenSmall acct segment

Intern

KenBD / Mktg

ApuBD support

Investments

NedCIO / CFO

Doug

Intern

Ops / Compliance

SelmaCOO / CCO

Zack & CaseyCSA’s – Large acct segment

RegiCSA – Small

acct segment

Admin:Two associates

Service Team Structure

1

Example diagram of service team structure.

Client service model for

<$500k

BenAdvisor

RegiCSAI Support

InternTBD

Client service model for

>$500k

Edna / KenManaging

Partner

Apu / BenAdvisor

Zack / CaseyCSA

Service Team Structure

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Service model details:

Service Model for Small Account Program:Accounts < $500k Dedicated juniorpartner One in-person meeting / year Reduced financialplanning model and services Model portfolios Online ongoing service support model and servicemodel metrics ABP fee only – No on-going FP fee

Service Model for LargeAccount Program:Accounts $500k + Dedicated managingpartner Back-up junior advisorsupport Two – four in-personmeetings / year Full financial planningengagement Model and additionalinvestment customization Dedicated CSA supportand service model metrics ABP fee plus an on-going FP annual fee

Compensation Benchmarking

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Determine base compensation for three employees in your briefing book. Complete the task using the next two pages.

Position Salary Bonus Total

Your Lowest-Paid Employee (Regie)

$64,220 $5,780 $70,000

Your Highest-Paid Employee (Edna)

$380,000 $380,000

Mid-range $185,000 $185,000

Benchmark Median (CEO only)

$200,000$265,000 (including bonus & commish)

$465,000

Benchmark Third Quartile (CEO only)

$260,000$500,000(including bonus & commish)

$760,000

See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study

Compensation Benchmarking

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The prior slide shows existing compensation as of today and will change with future enhancements.One of our initiatives will be to enhance all partner level compensation, including base, bonus, equity, etc.We hope this initiative will standardize total compensation based on not only industry metrics but also on role and ownership structure.This initiative is due to the fact of the firm’s high payout to (7 year note) DFP where the partners are not able to take advantage of their equity ownership. Restructuring of the note will align overall compensation for our longer term strategy.

What changes, if any, will you make to compensation?

Staff Selection and Performance Management

MODULE 2

Performance Evaluation

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Design a performance evaluation form. Follow the worksheet. (20 minutes)

Job Factor Explanation

1. Technical proficiency Client reporting, data reconciliation and technology connectivity

2. Self starter Examples of initiatives & projects

3. Team player Client and service team support

4. Responsiveness & accountability Service metrics (email; phone; etc.) Project and task timelines

5. Client satisfaction Client response / service results

6. Productivity

Breakdown of overall time management: new business, new accounts, service metrics / household servicing

Describe how the form will be used.

The Culture of Your Firm

MODULE 3

Organizational Culture

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Firm culture is changing rapidly with the departure of two founder / owners. Historically, our firm was client centric using only a “one generation concept” at it’s core.With the change of our ownership structure, the opportunity to address the multi-generation client base and create business continuity for the clients and our employees future is at it’s apex. The future culture continues to promote the client at the core of our focus; however we will also build upon the idea that the client has longevity and will be multi-generational. Our firm will compliment this strategy by building and growing a team based approach that will grow and mature with each generation.

Describe the culture of your firm. What changes would you make? How?

Incentive Compensation

MODULE 4

Partner Compensation

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Employee Non-partner: Base pay + Bonus is % of base pay based on performance + % of BD efforts (if applicable) + Discretionary based on firm profit

Partner (non-managing): Base pay + End-of-year payout based on % firm ownership and firm

profit % of BD efforts (if applicable)

Partner (managing): Base pay (higher) + End-of-year payout based on % firm ownership and firm

profit % of BD efforts (if applicable)

Overall firm compensation plan

Overall Firm Compensation Model

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New Business Development Bonus Plan

50% of total annual revenue is used per year (keeping 50% for the bottom line annually for two years)

New Business Development Bonus Paid as follows: Individual Sourcing the new client/lead = 20%Closing team divided equally = 80%

Example:$1m client account @ 1% annual fee = $10,000 annual revenuePayout for 1st year:

1k = Employee who sourced the lead (Edna)4k = divided among equally (Edna & Ben - closing team)

Payout for 2nd year:1k = Employee who sourced the lead (Edna)4k = divided among equally (Edna & Ben - closing team)

Total payout:$6k to Edna$4k to Ben

Partner Compensation

MODULE 5

Partner Compensation

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1. Two levels: managing partner & Business Leader partner2. Leveling managing director / partner level salary:

a) Same salary amount, add’l title descriptionb) Thinking: $300k – CEO; $250 managing partners

3. Business leaders:a) Given add’l responsibility (i.e. digital advisor & biz

dev) enabling them to increase overall compensation

b) Thinking: $170k for this role w/o added comp components

4. Please reference Burn-Simpson worksheet (attached) for overall partner compensation

Set the base compensation for your partners.

Partner Bonus Plan

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Please reference the firm’s entire financial overview in attached Financials – fourth tab titled ‘Partner Salary Adjustments'

Create, discuss and define incentive compensation for partners.

Other Initiatives

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Describe any other initiatives you will undertake as a firm. These may be outside of the scope of compensation and people but may be important parts of your case.

Notes

Initiative Explanation

1. Refinancing of outstanding note

Partners are not able to take advantage of their equity ownership due to firm’s high payout to DFP. A refinancing could enable this going forward.

2. Internship programProvides inexpensive support & will create an environment of understanding future generations.

3. Reorganization of org chart

The overall goals for the reorganization are to achieve cohesiveness, permanent roles within the firm, and to ensure employees understand their job responsibilities and functions within the firm.

4. Enhancements to mission and vision statements

Enhancements are needed to better align with the firm’s goal of an employee & client multi generational approach.

5. Revamp of firm compensation structure

Needed to inspire a culture of growth and specifically incent the behaviors required to meet the firm’s goals.

6. Redo of job descriptionsRequired to ensure employees have clarity and understanding of their job responsibilities and functions.

Appendix cont.

9

Review of Managing Partner and Executive Job Descriptions

Chief Executive Officer

Job Purpose

Provide leadership to position the company at the forefront of the industry. Develop a strategic plan to advance the company's mission and objectives and to promote revenue, profitability and growth as an organization. Oversee company operations to insure production efficiency, quality, service, and cost-effective management of resources.

Primary Job Accountabilities/ Responsibilities

Develop a strategic plan to advance the company's mission and objectives and to promote revenue, profitability, and growth as an organization.

Oversee company operations to insure production efficiency, quality, service, and cost-effective management of resources.

Plan, develop, and implement strategies for generating resources and/or revenues for the company.

Identify acquisition and merger opportunities and direct implementation activities. Approve company operational procedures, policies, and standards. Review activity reports and financial statements to determine progress and status in

attaining objectives and revise objectives and plans in accordance with current conditions.

Evaluate performance of executives for compliance with established policies and objectives of the company and contributions in attaining objectives.

Promote the company through written articles and personal appearances at conferences and on radio and TV.

Represent the company at legislative sessions, committee meetings, and at formal functions.

Promote the company to local and regional constituencies. Build a network using personal contacts, direct mail, special events, and foundation

support.

Chief Investment Officer

Job Purpose

The Chief Investment Officer (CIO) provides overall leadership for all aspects of the investment function and programs. The CIO is responsible for overseeing the company’s investment portfolio, including the research, evaluation, and selection of investments. He or she develops the firm’s investment philosophy and process, and is responsible for making investment decisions consistent with the firm’s strategy and goals.

Effective CIOs ensure that activities of the organization are consistent and in compliance and strive to maximize the level of investment returns. The CIO will chair the firm’s Investment Policy Committee.

Primary Job Accountabilities/ Responsibilities

Develop and implement the firm’s investment philosophy, strategies, and process: o Collaborate with leadership and investment committee to develop the firm’s long-

term and short-term investment philosophy and strategies consistent with the firm’s vision, strategy, and client value proposition.

o Coordinate and oversee the development, implementation, and oversight of the investment process.

o Ensure highest ethical standards and behaviors are achieved and implement necessary internal controls.

o Identify and manage strategic partnerships and third-party relationships, as needed.

Manage the development, maintenance, and monitoring of the asset allocation models and provide oversight of the portfolio management and trading practices: o Lead the investment research and analysis process and ensure timely and accurate

reporting. o Identify key metrics and ensure consistent and effective tracking and reporting of

performance data. o Perform due diligence to ensure legal and regulatory compliance and consistency

with the investment strategies and processes. o Perform needed functions as required.

. Monitor industry and market trends and provide updates and information, as

appropriate: o Provide expertise, assistance, and information to advisors, portfolio managers,

research professionals, analysts, and leadership, as appropriate.

Manage and develop investment and research staff: o Coach and develop team members for desired results, including setting

expectations and emphasizing accountability. Provide timely and quality feedback. o Assign work tasks and responsibilities based on individual strengths and abilities

and business priorities.

Qualifications/Requirements: Experience and Education

Bachelor’s degree in business, finance, or related field, or equivalent work experience required; MBA preferred

Previous experience in asset management, investment research, and/or portfolio management in the financial services industry

Previous experience in developing and implementing investment strategies

Chief Operating Officer

Job Purpose

Reporting to the Chief Executive Officer (CEO), the Chief Operating Officer (COO) will have overall strategic and operational responsibility for all programs and operational staff. As the chief program officer, s/he will provide leadership to the strategic planning process and will implement new programmatic strategic initiatives.

The COO will partner with her/his peers and will be responsible for developing, implementing, and managing the operational aspects of the annual budget.

Primary Job Accountabilities/ Responsibilities

Provide effective and inspiring leadership by being actively involved in all programs and

services, developing a broad and deep knowledge of all programs.

Identify opportunities to leverage cross-program strengths to take advantage of new

opportunities and/or to address organizational challenges.

Lead, coach, develop, and retain high-performance senior management team with an

emphasis on developing capacity in strategic analysis and planning and program

budgeting.

Develop and implement training programs and retreats to expand the capacity of all

staff.

Prepare and submit an annual operational budget, manage effectively within this

budget, and report accurately on progress made and challenges encountered.

Ensure the continued financial viability of operational units through sound fiscal

management.

Appendix cont.

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Operations Manager

Job Purpose

The Operations Manager is responsible for day-to-day operations and implementing the strategic direction. The Operations Manager has direct impact on employee retention and performance, organizational efficiency and effectiveness, risk management, and firm profitability. An effective Operations Manager frees up time for advisors to focus on client contact and growth.

Primary Job Accountabilities/ Responsibilities

Efficient and effective execution of day-to-day operations: o Design, manage, and improve business processes and workflow to meet desired

outcomes. o Manage back-office operations and foster a culture of continual improvement and

organizational effectiveness. Identify potential solutions to overcome difficulties and barriers to success.

o Develop and maintain client service standards resulting in client retention and satisfaction.

o Identify key metrics to help prioritize and monitor critical activities. Ensure consistent and effective tracking and reporting of data.

o Perform needed operations functions, as required. Manage compliance and data integrity:

o Manage recordkeeping for both client activity and office files. o Coordinate with the Compliance Officer to ensure transactions and operational

activity is documented and meets legal and regulatory compliance requirements and the firm’s policies and standards.

Effectively use technology to enhance operations: o Maintain systems and ensure data integrity and compliance. o Manage projects, vendors, partners, etc., as needed.

Manage and develop direct reports: o Coach and develop team members/interns for desired results, including setting

expectations and emphasizing accountability. Provide timely and quality feedback. o Assign work tasks and responsibilities based on individual strengths and abilities

and business priorities. Special projects, initiatives, and priorities

Client Services Manager

Job Purpose

The Client Services Manager is responsible for managing the client service experience, including achieving individual and team performance and results consistent with the firm’s client service strategy. The Client Services Manager is responsible for meeting service expectations, ensuring the accuracy of client account administrative activities, and developing collaborative relationships with clients and advisors. This role is responsible for creating a compelling client experience and providing a high level of service throughout the client lifecycle.

Primary Job Accountabilities/ Responsibilities

Provide accurate, timely, and effective support for clients, including processing account paperwork and addressing client inquiries and problems, and/or delegating these tasks to Client Service Intern.

o Process and follow up on account paperwork, set up client accounts, maintain client files and records, and generate appropriate statements and reporting.

o Promptly and effectively address client inquiries and requests and provide proactive communication and information, as appropriate. Research and resolve problems and appropriately escalate opportunities to the advisors/leaders.

o Complete cashiering responsibilities and ACH/wire/check requests. Provide leadership and guidance to Client Service Associate(s)/Interns, including

delegating tasks, prioritizing work, and providing development and support o Hire, manage, develop, and lead client service associates/interns and promote

a culture of teamwork, productivity, quality, and communication. o Coach client service associates/interns for desired results including setting

performance expectations and emphasizing accountability. Provide timely and quality feedback.

o Lead by example and foster a collaborative environment consistent with the firm’s values and priorities.

Build and maintain effective internal working relationships and support teamwork in meeting company goals.

o Provide support to advisors with coordinating client review meetings and may help provide appropriate materials and information.

o Initiate and/or participate in projects and/or initiatives as appropriate with the intent of continual improvement in processes, client experience, etc.

Chief Marketing Officer

Job Purpose

The Chief Marketing Officer (CMO) provides overall leadership for all aspects of the development of strategic plans and objectives for client acquisition and retention. The CMO is responsible for overseeing the company’s implementation of marketing or sales-related initiatives.

Primary Job Accountabilities/ Responsibilities

Develop and implement the firm’s marketing philosophy, strategies, and processes Facilitate the coordination of events, seminars and preparation of marketing materials Identify marketing messages, materials, method of delivery and other resources for

reaching target audience

Review of Marketing, Staff and Operational Team Roles

Appendix cont.

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Review of Administration, Financial Planning and Internship Program Job Descriptions

Administrative Assistant

Job Purpose

Facilitates the day-to-day office operations and ensures a productive, efficient, and effective office environment. Performs a variety of clerical duties including typing correspondence, memos, reports, and meeting notes; scheduling appointments and meetings; managing and operating office equipment; greeting and directing clients and other visitors; and screening and routing phone calls. Plays a critical role in the firm’s ability to service, and retain clients and reflects/promotes the firm’s culture and values. Self-motivated with excellent organizational skills and have the ability to adapt to changing business needs and priorities.

Primary Job Accountabilities/ Responsibilities

Effective office administrative practices consistent with the firm’s culture and client value proposition: o Provide leadership to establish a welcoming, service-oriented office environment.

Design and implement office processes and practices to meet desired outcomes. o Provide administrative support, including typing correspondence, producing reports,

creating presentation materials, scheduling appointments and meetings, and preparing client materials as requested/required.

o Ensure phones are promptly answered and routed appropriately, and clients and visitors are greeted promptly and professionally.

o Draft and coordinate internal and external communications as requested/assigned. o Maintain employee and office files and record retention consistent with policies and

requirements. o Coordinate with leadership to establish and implement office priorities and goals.

Make suggestions and communicate opportunities as appropriate. Provide office support functions as applicable to the firm’s needs and priorities:

o Coordinate vendor relationships, purchase office supplies and services, maintain service contracts, and manage day-to-day facility needs to ensure the office operates effectively and efficiently.

o Coordinate marketing and client activities and events as requested. Oversee office initiatives and participate in projects as needed and assigned.

Financial Planning Lead

Job Purpose

The Planning Lead oversees all aspects of the financial planning process in accordance with the firm’s strategic objectives. The Financial Planning Lead is responsible for overseeing the development of the financial plans, implementation of the plans and messaging/communication of the plans to clients for the firm.

Primary Job Accountabilities/ Responsibilities

Develop comprehensive plans focused on cash flow, tax, retirement planning, estate planning and risk management

Consult with clients on various cash flow, tax, retirement or estate issues Communicate with clients on the implementation of the financial plans Meet with clients’ CPA’s and Attorneys to collaborate on planning issues

Burns Simpson Internship Program and Rollout Plan

Summer 2014 – Initial Rollout

Term: Mid- May through Mid-August

Hiring Procedures and Phases:

Submit Job Descriptions to Business Schools by end of February 2014. Schools submitting for 2014 only: University of Oregon, University of Southern

California, Texas Tech, Stanford University

Interview & hiring time frame:

Collect resumes and conduct interviews until mid-April Offer job by end-April Interns start date depends on their finals and ability to report to work.

Evaluation and changes for 2015

Managing Partners will review and make changes in the following areas for the 2015 Internships:

Internship job descriptions Any changes to the types of positions for 2015 Terms for Interns/implement year round internships for the time frames below

o Fall internships typically start in September

o Winter internships typically start in November or December

o Spring internships typically start in January or February

o Summer internships typically start in May or June

Begin to create a more formalized Internship Program by adding more schools and possibly more

positions as the program becomes more successful and streamlined with the staff.

Intern Job Descriptions

MARKETING / BUSINESS DEVELOPMENT / ADVERTISING/ SOCIAL MEDIA INTERN

Description Our company is a forward-thinking, fast paced company looking to hire an intern with strong knowledge and understanding of marketing, business development, advertising and the digital media landscape, including various social media websites. Company is currently redesigning marketing and business development department, and will soon launch a social media campaign. The intern hired for this position

Appendix cont.

9

Firm Dress Code Review

Burns Simpson – Dress Code (Updated and Implemented in August 2014)

Burns Simpson expects employees to dress appropriately in business attire. Because our work environment sees frequent visits from clients, professional business attire is essential.

Men

Business attire for men includes suits, sports jackets and pants that are typical of business formal attire at work.

Women

For women, business attire includes pant and skirt suits and sports jackets appropriate to a formal business attire environment.

Summer Fridays

From Mid-May until the end of August, as long as clients are not in the office, all employees are allowed to wear jeans on Fridays.

Employees are expected to demonstrate good judgment and professional taste. Courtesy to coworkers and your professional image to clients should be the factors that are used to assess that you are dressing in business attire that is appropriate.

Employees who wear business attire that is deemed inappropriate in this workplace will be dealt with on an individual basis rather than subjecting all employees to a more stringent dress code for appropriate business attire.