WealthTouchSESSION THREE WORKBOOKDecisions and Notes for Modules 1 – 6

BSMARTer Business Simulation Management and Relationship Training

Fundamentals of Equity

MODULE ONE

Changes in Equity

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1) Cohesive relationship – Given WealthTouch’s aggressive growth plans, the management team was disappointed in Cohesive's lack of appetite for investing in these growth initiatives, namely the variable comp plan and partner salaries. Some partners wanted to explore buying-out Cohesive altogether. Nevertheless, a decision was made to maintain our relationship with our passive partner, Cohesive. With our aging founders, we felt that a workable succession plan took precedence. While we felt that Cohesive’s passivity could hinder our longer term growth plan, we had to weigh that against the transition to retirement of our founders and implementation of a formal succession plan. Furthermore, a buy-out of Cohesive would be an expensive endeavor, potentially burdening the remaining partners and the firm at large. In summary, even though we had a disagreement with our partners at Cohesive, they could prove to be a valuable resource in terms of lending and support for the succession of our founders and we will continue to work together.

2) Retirement of co-founders Paula & Art – WealthTouch needs to move away from the “Art & Paula/Mom & Dad” mindset and transition their ownership and involvement over time. We propose creating and implementing a 5-year earn-out plan for Art, 4% per partner per year to the remaining and new partners; and a 7-year earn-out for Paula, approximately 3% per year. This staggered earn-out structure will help ensure a smooth transition of client relationships and overall firm operation over time. We will utilize debt financing through Cohesive Capital as needed. This will also act as an “olive branch” with respect to the tension that has developed between Cohesive and the existing partners.

3) Addition of Wendy as a partner – after a thorough vetting/interview process, the partners unanimously agreed to invite Wendy into ownership/partnership of WealthTouch. As part of a 5-year earn-out, Paula and Art would sell a portion of their ownership to Wendy, with a target of 10% for Wendy. Wendy will be expected to buy-in, leveraging Cohesive Capital as needed.

Changes in Equity

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4) Wendle’s request for more equity – given Wendle’s significant contribution to asset and revenue growth, the partnership team unanimously approved Wendle’s request for more equity. This decision wasn’t just based on Wendle’s immediate and quantitative results, but also his growth contributions that will position the company for future growth for years to come. Wendle has brought value to the firm; talent enrichment to our staff, support of our company’s vision & mission for a number of years and highly referencable client relationships. These other considerations are important to note, as the partners at WealthTouch want to make it clear that someone doesn’t deserve initial or additional equity in the company just because he/she had a good revenue producing year or two. Cohesive is ok with the increase, stipulating that it come from other partners, which will be satisfied by transitioning ownership from Art and Paula’s stake. We target a 20% stake for Wendle, again leveraging Cohesive Capital as needed. That will also leave an opportunity for Carry and Chuck (or new future owners) to purchase the remaining stakes of Art and Paula over the transition period. In addition, Wendle’s increased equity will come with increased responsibility – he will be expected to be an active participant on the Executive Committee.

Valuation Principles and Experience

MODULE TWO

Firm Value - Summary

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WealthTouch will require an every other year professional valuation of the firm. This third-party verification is a transparent assessment and benchmark that provides all owners – WealthTouch and Cohesive – as well as prospective buyers and sellers of equity a fair value of the firm. Prior to the outside valuation, we ran numbers using straight industry formulas. WealthTouch estimates that the value of WealthTouch is between $17.1m and $17.8m:

Additionally, we built best and worst case forecasts for WealthTouch utilizing assumptions around growth as well as employee and client attrition that would impact the value of the firm. We utilized Fidelity’s Internal Succession Guide, Fidelity’s Economics Estimator as well as data from the Fidelity Benchmarking Study to inform our forecasts.

Please see the following pages for the detailed models, assumptions and forecasts.

Best case scenario 5-year assumptions:

• Revenue growth maintained at current rate of 21%

• Employee and client retention stable - no employee and minimal client attrition

• Ownership liquidity/transfers addressed - new owner in 2016, Art and Paula retire in 2019

Worst case scenario 5-year assumptions:

• Revenue growth reduced to 5%

• Employee and client attrition

• Ownership and rainmaker attrition

We identified two key takeaways from the forecasting exercise – one, the value of growth and two, opportunities for improvement. Value of growth: The business development culture that WealthTouch has begun to institutionalize has tremendous value for current owners and more significantly for future owners as evidenced by the firm value more than doubling in 5 years if growth rate continues. Opportunities for improvement: We recognize the need to address owner/employee succession, to enable and pass the success and succession to the next generation of owners/leaders in the firm (addressed in later sections). Additionally, we identified a gap in our technology investment for the firm. While we recognize the investment may drive down the operating profit for the short term, there are long term growth and P&L benefits to be gained. We are enlisting our Fidelity Relationship Manager and Technology Consultant to help us drive a technology plan.

Firm Value - Forecasts

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Best Case

Worst Case

Firm Value

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Technology – an opportunity to be addressed.

Assets Start Up Year 1 Year 2 Year 3 Year 4 Year 5 Total Assets $1,294,312,000 $1,566,117,520 $1,895,002,199 $2,292,952,661 $2,774,472,720

Revenue Comission Based Revenue $0 $0 $0 $0 $0

Fee Based Revenue $7,131,242 $8,628,803 $10,440,851 $12,633,430 $15,286,451 Other Revenue $0 $0 $0 $0 $0 Total Revenue $7,131,242 $8,628,803 $10,440,851 $12,633,430 $15,286,451

Estimated ExpensesNon Advisor Staff Comp (Salaries, Taxes, & Benefits) $674,160 $707,868 $743,261 $780,424 $819,446

Non-Owner Advisors Compensation $1,690,153 $1,774,661 $1,863,394 $1,956,563 $2,054,392 Occupancy (Rent) $203,000 $213,150 $223,808 $234,998 $246,748

Utilities $21,394 $22,463 $23,587 $24,766 $26,004Business Development & Marketing $106,969 $112,317 $117,933 $123,830 $130,021

IT Software $99,837 $104,829 $110,071 $115,574 $121,353IT Hardware $21,394 $22,463 $23,587 $24,766 $26,004

IT Related Consulting or Outsourcing $42,787 $44,927 $47,173 $49,532 $52,008Business Insurance $49,919 $52,415 $55,035 $57,787 $60,676

Office Expenses (Office Supplies & Postage) $92,706 $97,341 $102,209 $107,319 $112,685Registration & Regulatory Fees $28,525 $29,951 $31,449 $33,021 $34,672

Subscriptions / Associations / Research $0 $0 $0 $0 $0Other Technology - Bloomberg Terminal $0 $0 $0 $0 $0

Travel & Expenses $64,181 $67,390 $70,760 $74,298 $78,013Equipment Leases, Purchases, & Maintenance $28,525 $29,951 $31,449 $33,021 $34,672

Training, continuing education, professional dues/licensing $21,394 $22,463 $23,587 $24,766 $26,004 Other Miscellaneous Costs $213,937 $224,634 $235,866 $247,659 $260,042

Professional Services (Legal & Accounting) $92,706 $97,341 $102,209 $107,319 $112,685

Assumptions from 2013 Fidelity RIA Benchmarking Study $3M-$5M $5M-$10M >$10MCategoryPercent of Revenue - Business development & marketing 1.70% 1.50% 3.10%Percent of Revenue - Equipment leases, purchases and maintenance 0.50% 0.40% 0.40%Percent of Revenue - IT - Software 2.00% 1.40% 1.40%Percent of Revenue - IT - Hardware 0.40% 0.30% 0.40%Percent of Revenue - IT-related consulting or outsourcing 1.00% 0.60% 0.70%Percent of Revenue - Business Insurance (P&C, E&O, etc.) 0.80% 0.70% 0.60%Percent of Revenue - Offi ce Expenses 1.20% 1.30% 1.10%Percent of Revenue - Utilities 0.50% 0.30% 0.20%Percent of Revenue - Professional services 1.40% 1.30% 1.50%Percent of Revenue - Taxes and licenses, excluding payroll taxes 0.30% 0.40% 0.40%Percent of Revenue - Training, continuing education, professional dues/licensing 0.40% 0.30% 0.40%Percent of Revenue - Travel 1.10% 0.90% 1.40%Percent of Revenue - Other/miscellaneous 0.90% 3.00% 3.80%

Fidelity Benchmarking Survey

WealthTouch’s current revenue is $7m and technology spend is $52k or 0.7% of revenue. Fidelity’s Economic Estimator shows firms of our size spend $162k (revealing $100k gap) and Fidelity’s Benchmarking Survey shows firms of our size spend over 2% of revenue on technology (revealing 1.3% gap).

New Partnership Admission

MODULE THREE

Criteria for New Partners

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First and foremost, Invitation to partnership/ownership will be a function of a candidate’s contribution to the firm:

• Measureable contribution to business development/revenue growth. Guideline: $1 million book revenue; demonstrated 20% increase in CAGR revenue.

• Measureable contribution to expense reduction. Guideline: demonstrated 10% reduction in CAGR expenses.

In addition to the metrics above, candidates for partnership/ownership will go through a formal application process for review and acceptance by current partners, based upon the following criteria:

• Embraces WealthTouch’s vision and core values.

• Demonstrated leadership abilities.

• Entrepreneurial spirit – understands the difference between running a business and a book of business.

• Management skills – people, processes, compliance & risk management.

• Unquestionable character – honesty, ethics, team-player, maturity, overall business acumen.

• Presence/impact in the community.

Formal application process will include the following:

• Letters of recommendation from two partners, at minimum.

• Formal packet/resume prepared demonstrating candidate’s skills and accomplishments in ownership/partnership criteria.

• Multi-year process.

• WealthTouch partnership team will strike appropriate balance between meaningful ownership and affordable ownership for each candidate. Outside lending facility will be made available when appropriate.

Partnership Agreements

MODULE FOUR

Partnership Agreements

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We have an existing partnership agreement in place, but it is outdated. The suggested updates below were suggested/designed by the active ownership (70% ownership share) team (does not include input from Cohesive – silent 30% owner). The goal of these recommendations is to put the firm into a more stable management structure towards achieving long term future growth and succession planning. Updates include:1) Board of Directors – currently the agreement states the Board will consist of CEO (currently

Paula), President (currently Art), and a Cohesive rep. As it pertains to the BOD, we need to expand this BOD to include next generation ownership and/or Art or Paula’s replacement. Possible expansion to include fourth member due to the Succession Planning to be executed in the strategic plan to deal with Art/Paula’s retirement. Before we take action, time will be spent to identify this candidate and groom them to help with the ultimate transition. We need to convince Cohesive of these changes in order to ensure the future success of WealthTouch up to and beyond the departure of Art & Paula.

2) Create Executive Committee – The goal of this newly formed committee is to vote on executive decisions and to help train the new CEO (Wendle) for a period of 5 years as Art and Paula wind out of their ownership stake. This is an important component of our plan since we’ll be transitioning the business responsibilities and developing the firm’s future leadership. Also, we plan to introduce and appoint Chuck as the new President to work with the 3 person Executive Committee. Ultimately, over the course of this succession plan, it is our goal to introduce a broader ownership group, groom leaders and test out the next generation of leadership.

3) Firm Valuation – We will seek an updated valuation every two years from a 3rd party valuation expert (TBD), likely using one of valuation methodologies (EBOC 5x and EBITDA 6x) outlined in slides 6-8. We will determine which final valuation methodology after feedback/input from the 3rd Party firm we end up selecting. This will allow us to value the firm for ownerships issues. When offering ownership to internal associates we will discount the value 15% as a benefit to our associates and to make it more affordable for them to participate in the offering. Any sale to outside owners would be a the stated valuation (i.e. no discount).

4) Ownership Criteria – the Partnership agreement should state that to be offered ownership one needs to be either a Sr. Advisor or maintain a departments head role (Wealth Management, Investments, Service/Operation, Compliance).

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Partnership AgreementsContinued

5) Owner Retirement – The agreement needs to outline the process for an owner that wishes to retire. This process should identify the timeline (ex 3 yrs) in advance and then create a process to transition that persons responsibilities and equity. This agreement will be consistent with the Succession Plan outlined in this workbook.

6) Corporate Governance – Decisions need to be approved by a simple majority with each board member being provided a vote. We need to address altering/rescinding the veto rights currently held by Cohesive, very unlikely, but this will be part of our short term strategy to engage Cohesive. Per the active owners, the goal would be to persuade Cohesive to give up the veto powers. Looking at this from a long-term perspective, the goal would also include a buy out of the Cohesive relationship (post Art & Paula’s transition and a review of the capital in place to afford such a buyout). However, short term needs are the focus that include developing a clear Succession Plan, solidifying a transition plan for Art & Paula, firm valuation. The short term strategy would be to find ways to work with Cohesive to help drive continued success of the firm.

Partnership Agreements

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Draft - Updated/Revised Term Sheet:

A. Entity and Business 1. WealthTouch is an LLC registered as Investment Advisor (RIA)

B. Board of Directors 1. The company will be managed by the Board of Directors and the executives elected by the Board.2. The Board will consist of the CEO, President and a representative elected by Cohesive Capital. Subsequent to recommended changes in future, see page/slide 12 - item #1.3. Wendle is not happy that the three other owners are shut out of the board but Cohesive will not agree to changes in the board Changes recommended, see page/slide 12 - item #14. The board will make decisions on most matters by simple majority, except for the veto rights held by Cohesive and listed below. See page/slide 13 - item #65. Each board seat has one vote on all matters6. The board will meet quarterly or as needed to make decisions. - Entire Process Under Review, see page/slide 12 – item #1

C. Members andOwnership Interest

1. The current ownership is:Cohesive Capital – 30%Paula – 20%Art – 20%Carry – 10%Wendle – 10%Chuck – 10% 2. Paula is a strong supporter of opening up ownership to their top advisors – Wendy, Michael and Maris. However, there is concern about what the criteria will be and how that will impact the Cohesive deal. See page/slide 12 - item #4. See page/slide 10 under New Criteria for Partners. See page/slides 18-20 under Succession Plan. 3. Wendle is developing a lot of new business and feels that at some point his ownership should increase. Cohesive is OK with the increase but feels that the increase should come from the other partners. The partners are not on board with that idea and do not want to sell Partners feel it is now in the best interest to add to ownership and position firm for future growth, succession and firm valuation. See page/slide 12 - item #4. See page/slide 10 under New Criteria for Partners. See page/slides 18-20 under Succession Plan. 4. Each member agrees that they will not compete with the firm for a period of 5 years after their resignation from the firm and that they will not solicit clients away from the firm for a period of 5 years following their departure. No changes..

Partnership Agreements

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D. Compensation for Owners

1. Owners will receive compensation as follows:Paula - $250,000Art - $250,000Carry - $125,000Wendle - $125,000Chuck - $125,000 2. Each partner can also participate in the new AUM bonus. 3. The board approves all partner salaries

E. Ownership Transfers

1. The board has to approve all new owners and can reject new owners for any and no reason 2. The board can terminate an owner at its discretion with a super-majority vote, * with the exception of Cohesive. 3. There is no defined mechanism for retirement of partners – partners have to make their own plans but those plans have to be approved by the Board. See page/slide 13 – item #5 and Succession Plan outline pages/slides 18-20. 4. There are no buy-sell agreements in the case of death or disability and Cohesive opposes any such obligation unless it can be insured. Unfortunately Art is not insurable due to a prior illness. See Succession Plan outline pages/slides 18-20

5. Partners who leave the firm have to forfeit all their shares. No changes.

F. Management ofthe Firm

1. The firm is managed by the board of directors and the CEO appointed by the board.

2. Adding Executive Committee – decision making body for the firm. See page/slide 12 – item #2

Partnership Agreements

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G. Special Decisions

1. Cohesive capital has the right to veto any of the following decisions: See page/slide 13 – item #6, recommendation, but unlikely.a. Changes in compensation to employees that result in more than $30,000 estimated impactb. Changes in executive compensationc. Hiring of new employees with compensation over $100,000 a yeard. Budget of the firm for the next fiscal year. If no budget is approved the company will execute the same budget as in the prior yeare. Changes in client pricing implemented across the client basef. Any addition of a new owner - See page/slide 10 and Succession Plan page/slides 18-20g. Borrowing more than $100,000h. Transferring more than $100 million in AUM to a new custodian

H. Distributions and Capital

1. The firm is obligated to pay $600,000 in preferred dividend to Cohesive capital – * short term yes, but see page/slide 13 – item #6

2. Of the remaining profits, the firm will distribute at least as much of its profits as necessary to meet the resulting tax liability to partner.

3. Each partner is responsible for filing their own tax return and making estimated payments – Short term yes, but Exec Committee to meet to discuss providing tax prep for Partners to reduce potential liability issues.

4. The firm cannot force partners to contribute more cash or other assets to the firm

I. * Buy/Sell Process Preparation

We will seek an updated valuation every two years from a 3rd party (TBD) using a valuation process that will be chosen after consulting with vendor. This will allow us to value the firm for ownership opportunities, questions and mitigate issues.

J. * Partnership Requirement Proposal

To reduce firm risk, proposal to add Tax Preparation through outside Tax firm for Partners as today they are free to manage and file their own tax returns. Possible to add as part of Executive Compensation Plan.

K. * Other See Other Initiatives Slide - page/slide 22

* - New recommendations/additions to agreements

Founder Succession

MODULE FIVE

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Succession Plan

WealthTouch’s preferred approach to its succession plan is structured around an internal succession planning model with the ultimate goal of preserving the legacy and culture of the firm. Its important to the firm that we maintain the continuity of client service and ensure a smooth client transition during the process. This plan also provides us with flexibility as well as, control of the timing and terms of the implementation of the succession plan to ensure a successful transition.

Set up the future success of the firm by establishing a succession plan for both Art and Paula by bringing in younger generation of talent which will ensure the long term success of the firm. This will also be a great selling point to clients as well.

As part of the succession strategy, we plan to introduce a 3 member executive committee comprised of Art, Paula and Wendle. The goal of this newly formed committee is to vote on executive decisions and to help train the new CEO (Wendle) for a period of 5 years as Art and Paula wind out of their ownership stake. This is an important component of our plan since we’ll be transitioning the business responsibilities and developing the firm’s future leadership. Also, we plan to introduce and appoint Chuck as the new President to work with the 3 person Executive Committee. Ultimately, over the course of this succession plan, it is our goal to introduce a broader ownership group, groom leaders and test out the next generation of leadership.

While Cohesive is currently a passive partner of WealthTouch, the partners feel they need to play a more active role in the future success of the firm. This can be achieved by Cohesive helping finance the next generation of owners. This will help Cohesive protect their investment for the long term by aligning their interests with the partners of the firm. Although we had disagreements with Cohesive in the past, we feel that this financing opportunity will serve as an ‘olive branch’ and will demonstrate to Cohesive that we value their partnership.

Process of buying in for new partners will be to pay for the shares up front with an 8 year note financed by Cohesive Partners at a negotiated rate of Prime + 1%. If Cohesive does not agree to these terms, we will finance through Live Oak bank at a rate of Prime + 2%. As a strategic partner, we expect Cohesive to agree to these terms and we will also require a 15% down payment from the new owner so they have ‘skin in the game'. All shares will be owned at the outset and paid for through a long term payment plan of 8 years. Taking into account tax considerations, (based on a 35% tax rate), we feel that stretching the payment over a period of 8 years provides a more palatable payment for the new owner. The dividend payment can be used to help finance the new partners debt and, from our projections, we expect the dividend payment to grow over the years making the payment easier to digest.

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Succession Plan

Create an ownership path for Wendy and increase % ownership for Wendle. Wendy has demonstrated that her ability to drive revenue and capacity to contribute meaningfully to the WealthTouch organization has made her an integral part of the team and adding her as an owner would be welcomed by all partners. Paula and Art will each initially sell 5% ownership in the firm within the first 3 years. Wendle plans to purchase an additional 5% stake in the firm, making him a 15% owner and Wendy plans on purchasing the other 5%, making her a 5% owner.

Over the course of the next 7 years and through a detailed succession planning agreement, Art and Paula will provide a path to ownership and sell additional shares of their ownership to Michael and Maris through and other potential Next Gen owners through a ‘marketplace’ that the firm establishes (See chart for detailed changes in ownership). Carry and Chuck plan on increasing their ownership shares to 15% during this transition to we’ll have equal ownership of the 3 partners. Also, because Art’s health is in question, we have him working towards retirement at a faster pace than Paula and, after 5 years, Art will only have 0% ownership in the company. After 7 years, Paula will be retired as well. Paula is Ok with this plan because she wants to make sure everything is done in the best interest of the firm. This will help WealthTouch further diversify firm ownership and help management achieve the much needed transition away from the ‘Mom and Dad’ culture and move towards a more structured leadership team.

Implement a process where every 2 years we have a 3rd party valuation done so that the multiple is reliable. Use the same multiple every year to ensure consistency.

Also, since there is no buy/sell agreement in place, WealthTouch will need to purchase a life insurance and disability policy to protect the firm in case of Paula’s death or disability. Since Art is not insurable due to a prior illness, we will structure an agreement with the existing partners to acquire Art’s share of the in the case of an unforeseen incident. This agreement will come at a (50%) discount of the current valuation of his shares. This decision is based on projected available cash flow and we’ll commit to an accelerated payment over the course of 2 years.

All of this work will ultimately help us reinforce the management/executive committee/board model vs an ‘owners’ business model from previous years and will encourage the next generation of ownership.

The chart below illustrates WealthTouch’s succession plan over the next 7 years in terms of percentage ownership throughout the firm, the transition of % ownership broken out in 3, 5 and 7 year timelines, next steps as it relates to our partners new roles within the organization (i.e., executive committee etc.) and a roadmap for the next generation and % ownership for key employees that have been identified as potential next generation owners.

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Succession Plan

Current Ownership Structure Ownership Structure in 3 years

Name % Ownership Name % Ownership

Cohesive Capital 30 Cohesive Capital 30

Paula 20 Paula (Executive Committee) 15

Art 20 Art (Executive Committee) 15

Carry 10 Carry 10

Wendle 10 Wendle (Executive Committee) 15

Chuck 10 Chuck (President) 10

Wendy 5

Ownership Structure in 5 years Ownership Structure in 7 years

Name % Ownership Name % Ownership

Cohesive Capital 30 Cohesive Capital 30

Paula 10 Paula 0

Art 0 Art 0Carry (Executive Committee) 10

Carry (Executive Committee)15

Wendle (Executive Committee) 15

Wendle (Executive Committee)15

Chuck (President) 15Chuck (Executive Committee)

15Wendy (Executive Committee) 10 Wendy (President) 10

Michael 5 Michael 5

Maris 5 Maris 5

Next Gen Employee TBD 5

Other Initiatives

MODULE SIX

Other Initiatives

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Describe any other initiatives your firm will undertake.

Notes

Initiative Explanation

1. Perform Technology Assessment Work with Fidelity RM & Tech Consultant to perform a comprehensive technology assessment. Expose process/efficiency/expense gaps and opportunities to improve profitability and drive growth.

2. Develop Sales Training (Curriculum & Process)

Work with A&P to develop training for next gen talent. based on firms growth/success/mission from the two founders and rainmakers that drove this business . Opportunity for role mentor, meetings with A&P, etc.

3. Implement Growth Reference Guide/Activity Plan

To drive new growth and add accountability for next gen of rainmakers. Blueprint of identifying, tracking, and measuring key business development steps/opportunities – i.e. # of COI meetings per month, # of Referral interactions, # of Bus Dev events. # of top client meetings to discuss referrals & growth.

4. Increase Community/Next Gen/Industry Development

Work with local academic institutions on educating next gen on the industry, career opportunities, mentor program. Leverage relationships with industry experts.

5. Increase Community Presence

Improve WealthTouch brand recognition within local community or community of top client segment. Increase referral opportunities for jr. Advisors and future equity owners. Sponsor industry & non-industry events, guest speakers, etc.

6. CEO Development

Work with Art, Paula and Executive Committee to develop CEO criteria & knowledge transition plan towards grooming and selecting firms next CEO