SESSION TWO WORKBOOKExcelsior Decisions and Notes for Modules 1 – 5

BSMARTer Business Simulation Management and Relationship Training

Organizational Structure and Compensation

MODULE 1

Service Team Structure

Example diagram of service team structure.

Wealth Management Professional

Tax professional Investment professional Client service

Client service

Lead Partner

*all firm partners are available to clients based on the clients needs and the partners expertise

Service Team Structure

2

Draw a picture of your service team structure.

Service Team Structure

3

• Senior partner involvement shows commitment to the client access to senior leadership for decision making and to ensure that no one advisor at Exelsior family office can walk out the door with a relationship

• The wealth management professional will lead the relationship and be responsible for directing firm resources based on clients needs be ultimately accountable for the relationship and will be the primary point of contact

Provide an explanation of your service team structure.

Compensation Benchmarking

4

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

Your Highest-Paid Employee

Mid-range

Benchmark Median

Benchmark Third Quartile

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

Compensation Benchmarking

5

• The first and biggest change is to eliminate Rondas salary of $2M (at the same time we will be reducing Rondas management fee from 85bps to 45bps)

• Reduce base compensation of partners to 75% of current compensation and structure it as a base and bonus..The remaining 25% or greater will be made up with an onwership based structure.

• Allocate 30% of EBIT to bonus pool (year 1 Partners only and year 2 + other employees 20% of increased) need to make partners (allocation of bonus) based on performance (peer, chairman, CEO) distribute 50% (refine the numbers)

• Allocate 10% of EBIT profit sharing (all non owners)

• Initiate equity compensation plan. We will create a plan to allow Rhonda to grant or sell equity to partners and other key long term employees.

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

Staff Selection and Performance Management

MODULE 2

Job Advertisement

6

DO NOT COMPLETE!!!

Design a job ad for the position specified in your briefing. (20 minutes)

Performance Evaluation

7

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

1.Client development/executionWe want all employees to participate and embrace the need to grow the firm

2. Contribution to new client development

Same as above

3. culture/engagement - employee and client

Major initiative-we are integrating two firms, some employees do feel an appropriate work life balance

4. Operational efficiency

5. leadership

6. Peer and client evaluations-NPS business owner education/proficency

Describe how the forum will be used.

Feedback to all associates will be give daily and immediately following all client interactions.Monthly informal feedbackAnnual Formal review

Notes

The Culture of Your Firm

MODULE 3

Organizational Culture

8

Current culture: we are in the process of integrating two different cultures. Some employees are not engaged, feel left out and do not have an appropriate work life balance.We will create a culture of engaged, enthusiastic employees that understand their role and are empowered to act for the benefit of the client and firm and are recognized for their contribution.Excelsior will be based on meritocracy.We believe the engaged employees, that understand each other, that enjoy coming to work ultimately deliver the best client experience.

Changes:Friday lunches with the whole officeMentoring of all employees with the goal of improving moral, sense on belonging and to create leaders within the firm for succession. We need to have a engagement committee to sponsor fun events and recognize employees contribution.We will create a culture of recognizing people doing good things and announce them firm wide.Review our office bldg and see if we can create an open floor plan with no offices other then for meetings with clients.

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

Incentive Compensation

MODULE 4

Partner Compensation

9

What is the position what are you going to do about it and why?

Design Advisor Bonus Plan

Partner Compensation

MODULE 5

Partner Compensation

10

base compensation for our partnersDetermine who our partners areDetermine what there base compensation should be Salary payouts or bonus does not include dividendsHow much of that should go to salary and to production base compensationDo we really need bonouses

Set the base compensation for your partners.

Partner Incentive Compensation

11

3 components BaseBonusParticipation in the growth of the firm threw equity

1/3 to half your total comp should be your base

Create, discuss and define incentive compensation for partners.

Other Initiatives

12

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

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