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"Presenting the Wealthcare Value Proposition - Do You Perceive a Contradiction?" William B. Akers, CWA VP Financeware, Inc. Wealthcare Capital Management.

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Presentation on theme: ""Presenting the Wealthcare Value Proposition - Do You Perceive a Contradiction?" William B. Akers, CWA VP Financeware, Inc. Wealthcare Capital Management."— Presentation transcript:

1 "Presenting the Wealthcare Value Proposition - Do You Perceive a Contradiction?" William B. Akers, CWA VP Financeware, Inc. Wealthcare Capital Management

2 ©Copyright Financeware, Inc All rights reserved Building PAGE 2 “Everything that can be invented has been invented…” Charles H. Duell Commissioner, U.S. patent office, 1899 “If you perceive a contradiction, check your premises…” Ayn Rand Atlas Shrugged

3 ©Copyright Financeware, Inc All rights reserved Building PAGE 3 “Everything that can be invented has been invented…” Charles H. Duell Commissioner, U.S. patent office, 1899 We know the best practices… -Have they all been invented already? -Should we just execute the steps of the best practices? -How has the market responded to our best practices? -MPT is more than 50 Years Old…Modern or Antique? -Do we perceive any contradictions? “If you perceive a contradiction, check your premises…” Ayn Rand Atlas Shrugged

4 ©Copyright Financeware, Inc All rights reserved Building PAGE 4 What does it take for ANY product or service to be successful? 1- Meet Target Market NEED or DESIRE » We do not VOLUNTARILY spend money for something we don’t need or want 2- Easy to Use & Understand – CONVENIENT » We do not seek to complicate our lives for things we do not understand 3- Reasonably Reliable…A “Good” Product » Too unreliable = Doesn’t deliver as promised = ultimate failure

5 ©Copyright Financeware, Inc All rights reserved Building PAGE 5 What does it take for ANY product or service to be successful? 1- Meet Target Market NEED or DESIRE » We do not VOLUNTARILY spend money for something we don’t need or want 2- Easy to Use & Understand – CONVENIENT » We do not seek to complicate our lives for things we do not understand 3- Reasonably Reliable…A “Good” Product » Too unreliable = Doesn’t deliver as promised = ultimate failure

6 ©Copyright Financeware, Inc All rights reserved Building PAGE 6 What does it take for ANY product or service to be successful? 1- Meet Target Market NEED or DESIRE » We do not VOLUNTARILY spend money for something we don’t need or want 2- Easy to Use & Understand – CONVENIENT » We do not seek to complicate our lives for things we do not understand 3- Reasonably Reliable…A “Good” Product » Too unreliable = Doesn’t deliver as promised = ultimate failure

7 ©Copyright Financeware, Inc All rights reserved Building PAGE 7 What does it take for ANY product or service to be successful? 1- Meet Target Market NEED or DESIRE » We do not VOLUNTARILY spend money for something we don’t need or want 2- Easy to Use & Understand – CONVENIENT » We do not seek to complicate our lives for things we do not understand 3- Reasonably Reliable…A “Good” Product » Too unreliable = Doesn’t deliver as promised = ultimate failure Have we ever examined financial services “best practices” from the criteria that ANY product or service MUST HAVE to make it? Do our best practices MEET A TARGET MARKET NEED/DESIRE? Are they EASY & CONVENIENT? Are they RELIABLE?

8 ©Copyright Financeware, Inc All rights reserved Building PAGE 8 Examine the “best practices” of: Financial Planning & Investment Consulting 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall- “ Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” -Meet Need/Desire? -Easy to Understand… Convenient? -Good/Reliable?

9 ©Copyright Financeware, Inc All rights reserved Building PAGE 9 Examine the “best practices” of: Financial Planning & Investment Consulting 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall- “ Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” -Meet Need/Desire? -Easy to Understand… Convenient? -Good/Reliable?

10 ©Copyright Financeware, Inc All rights reserved Building PAGE 10 Do You Perceive a Contradiction to: Meeting a Target Market Need or Desire? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” How Much Pain Can You Bear? Position You To Experience It Sacrifice Your Lifestyle… SAVE MORE & RARELY Less Tell You What Happened… Evade What it Means to You… Go to Doctor AFTER YOU ARE DEAD!

11 ©Copyright Financeware, Inc All rights reserved Building PAGE 11 Do You Perceive a Contradiction to: Meeting a Target Market Need or Desire? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” How Much Pain Can You Bear? Position You To Experience It Sacrifice Your Lifestyle… SAVE MORE & RARELY Less Tell You What Happened… Evade What it Means to You… Go to Doctor AFTER YOU ARE DEAD!

12 ©Copyright Financeware, Inc All rights reserved Building PAGE 12 Do You Perceive a Contradiction to: Meeting a Target Market Need or Desire? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” How Much Pain Can You Bear? Position You To Experience It Sacrifice Your Lifestyle… SAVE MORE & RARELY Less Tell You What Happened… Evade What it Means to You… Go to Doctor AFTER YOU ARE DEAD!

13 ©Copyright Financeware, Inc All rights reserved Building PAGE 13 Do You Perceive a Contradiction to: Meeting a Target Market Need or Desire? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” How Much Pain Can You Bear? Position You To Experience It Sacrifice Your Lifestyle… SAVE MORE & RARELY Less Tell You What Happened… Evade What it Means to You… Go to Doctor AFTER YOU ARE DEAD!

14 ©Copyright Financeware, Inc All rights reserved Building PAGE 14 Do You Perceive a Contradiction to: Meeting a Target Market Need or Desire? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” CONTRADICTION? How Much Pain Can You Bear? Position You To Experience It Sacrifice Your Lifestyle Tell You What Happened… Evade What it Means to You CONTRADICTION?

15 ©Copyright Financeware, Inc All rights reserved Building PAGE 15 Do You Perceive a Contradiction to: Easy To Use? Understand? Convenient? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Insurance, Budgets, Benefits… What do Millionaires Spend on Cable Bills? Retirement, Education, Estate= R1000 Growth/Mid Cap Value Loaded With Jargon…Greek Literally Greek…Alpha/Beta CLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE TIME ON MEANINGLESS DETAILS CONTRADICTION?

16 ©Copyright Financeware, Inc All rights reserved Building PAGE 16 Do You Perceive a Contradiction to: Easy To Use? Understand? Convenient? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Insurance, Budgets, Benefits… What do Millionaires Spend on Cable Bills? Retirement, Education, Estate= R1000 Growth/Mid Cap Value Loaded With Jargon…Greek Literally Greek…Alpha/Beta CLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE TIME ON MEANINGLESS DETAILS CONTRADICTION?

17 ©Copyright Financeware, Inc All rights reserved Building PAGE 17 Do You Perceive a Contradiction to: Easy To Use? Understand? Convenient? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Insurance, Budgets, Benefits… What do Millionaires Spend on Cable Bills? Retirement, Education, Estate= R1000 Growth/Mid Cap Value Loaded With Jargon…Greek Literally Greek…Alpha/Beta CLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE TIME ON MEANINGLESS DETAILS CONTRADICTION?

18 ©Copyright Financeware, Inc All rights reserved Building PAGE 18 Do You Perceive a Contradiction to: Easy To Use? Understand? Convenient? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Insurance, Budgets, Benefits… What do Millionaires Spend on Cable Bills? Retirement, Education, Estate= R1000 Growth/Mid Cap Value Loaded With Jargon…Greek Literally Greek…Alpha/Beta CLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE TIME ON MEANINGLESS DETAILS CONTRADICTION?

19 ©Copyright Financeware, Inc All rights reserved Building PAGE 19 Do You Perceive a Contradiction to: Easy To Use? Understand? Convenient? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” CONTRADICTION? Insurance, Budgets, Benefits… What do Millionaires Spend on Cable Bills? Retirement, Education, Estate= R1000 Growth/Mid Cap Value Loaded With Jargon…Greek Literally Greek…Alpha/Beta CLIENT MUST SPEAK OUR LANGUAGE (INSTEAD OF US SPEAKING THEIRS) & WASTE TIME ON MEANINGLESS DETAILS

20 ©Copyright Financeware, Inc All rights reserved Building PAGE 20 Surely Our “Conservative” Projections Are Reasonably Reliable In Meeting Clients Goals… 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” CONTRADICTION?

21 ©Copyright Financeware, Inc All rights reserved Building PAGE 21 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

22 ©Copyright Financeware, Inc All rights reserved Building PAGE 22 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

23 ©Copyright Financeware, Inc All rights reserved Building PAGE 23 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

24 ©Copyright Financeware, Inc All rights reserved Building PAGE 24 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

25 ©Copyright Financeware, Inc All rights reserved Building PAGE 25 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

26 ©Copyright Financeware, Inc All rights reserved Building PAGE 26 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

27 ©Copyright Financeware, Inc All rights reserved Building PAGE 27 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

28 ©Copyright Financeware, Inc All rights reserved Building PAGE 28 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

29 ©Copyright Financeware, Inc All rights reserved Building PAGE 29 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million + 9 yrs Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

30 ©Copyright Financeware, Inc All rights reserved Building PAGE 30 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

31 ©Copyright Financeware, Inc All rights reserved Building PAGE 31 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

32 ©Copyright Financeware, Inc All rights reserved Building PAGE 32 Current “Best Practices” Identify risk tolerance, optimize asset allocation, & do a financial plan... For Example, Harry Abernathy Year Old, $900,000 Portfolio, Saving $16,000 a year, Retiring at 61 with a retirement income goal of $112,500 - Projected Portfolio Values at age 94 based on??? 10 Yr Return of 15.2%? 20 Yr Return of 15.8%? 40 Year 12.23%? $23 Million Estate ….CRATS, CRUTS, and ILITs !! Market Reality: Actual Market at 12.23% (’60-’99): Actual Results: Age 85 Actual Market at 12.09% (’61-’00): $1.5 Million Actual Market at 9.79% (’35-’74): $5.7 Million “BEST” Practice OR MALPRACTICE?

33 ©Copyright Financeware, Inc All rights reserved Building PAGE 33 Of Course, This Is Due To Assuming ZERO RISK... Even Though We Identified This Risk Which Looks Like This As Downside Risk: Standard Deviation Of Course…Monte Carlo Simulation Solves This Problem…

34 ©Copyright Financeware, Inc All rights reserved Building PAGE 34 Of Course, This Is Due To Assuming ZERO RISK... Even Though We Identified This Risk Which Looks Like This As Downside Risk: Standard Deviation We Will Assume ZERO Standard Deviation in His Plan Of Course…Monte Carlo Simulation Solves This Problem…

35 ©Copyright Financeware, Inc All rights reserved Building PAGE 35 Of Course, This Is Due To Assuming ZERO RISK... Even Though We Identified This Risk Which Looks Like This As Downside Risk: Standard Deviation We Will Assume ZERO Standard Deviation in His Plan Of Course…Monte Carlo Simulation Solves This Problem…

36 ©Copyright Financeware, Inc All rights reserved Building PAGE 36 Because with Monte Carlo we include risk and show the important information that he will end up: Somewhere between: $242 million Age 67

37 ©Copyright Financeware, Inc All rights reserved Building PAGE 37 Because with Monte Carlo we include risk and show the important information that he will end up: Somewhere between: $242 million Age 67

38 ©Copyright Financeware, Inc All rights reserved Building PAGE 38 But we can get Harry to the HIGHEST Probability of “Success” (So he won’t have to worry about eating cat food in retirement) By getting them used to the taste NOW! (Requires $250k A YEAR in SAVINGS)

39 ©Copyright Financeware, Inc All rights reserved Building PAGE 39 But we can get Harry to the HIGHEST Probability of “Success” (So he won’t have to worry about eating cat food in retirement) By getting him used to the taste NOW! (Requires $250k A YEAR in SAVINGS)

40 ©Copyright Financeware, Inc All rights reserved Building PAGE 40 And Leave Him With A 75-90% Chance By getting him used to the taste NOW! (Requires $250k A YEAR in SAVINGS)

41 ©Copyright Financeware, Inc All rights reserved Building PAGE 41 And Leave Him With A 75-90% Chance By getting them used to the taste NOW! (Requires $250k A YEAR in SAVINGS) Of Dying On A Death Bed Stuffed With Money He Wished He Had Spent!

42 ©Copyright Financeware, Inc All rights reserved Building PAGE 42 Do You Perceive a Contradiction to: Reliable? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Retirement Age? “Financial Independence”? Sacrifice Goals You Want, for those you DO NOT VALUE Financial Independence? 3-6X Estate Goal?

43 ©Copyright Financeware, Inc All rights reserved Building PAGE 43 Do You Perceive a Contradiction to: Reliable? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Retirement Age? “Financial Independence”? Sacrifice Goals You Want, for those you DO NOT VALUE Financial Independence? 3-6X Estate Goal? Either: Ignore Risk…UNRELIABLE Include Risk…Nearly Certain Sacrifice to One’s Only Life

44 ©Copyright Financeware, Inc All rights reserved Building PAGE 44 Do You Perceive a Contradiction to: Reliable? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Retirement Age? “Financial Independence”? Sacrifice Goals You Want, for those you DO NOT VALUE Financial Independence? 3-6X Estate Goal? Either: Ignore Risk…UNRELIABLE Include Risk…Nearly Certain Sacrifice to One’s Only Life CONTRADICTION?

45 ©Copyright Financeware, Inc All rights reserved Building PAGE 45 Do You Perceive a Contradiction to our Best Practices? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Inconvenience All Clients Data Points, Not Priorities How Much Pain Can You Bear? Position You To Experience It! Measure Markets Not Goals Ignore Risk – Unreliable Include Risk – Certain Sacrifice Save More, NOT Less! In Greek and Ignore Uncertainty of Underperforming Show What Happened, NOT what it means to you… Repeat Initial Inconvenience… “Regularly” What We “Say”What it REALLY MEANS! CONTRADICTION!!!

46 ©Copyright Financeware, Inc All rights reserved Building PAGE 46 Do You Perceive a Contradiction to our Best Practices? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Inconvenience All Clients Data Points, Not Priorities How Much Pain Can You Bear? Position You To Experience It! Measure Markets Not Goals Ignore Risk – Unreliable Include Risk – Certain Sacrifice Save More, NOT Less! In Greek and Ignore Uncertainty of Underperforming Show What Happened, NOT what it means to you… Repeat Initial Inconvenience… “Regularly” What We “Say”What it REALLY MEANS! CONTRADICTION!!!

47 ©Copyright Financeware, Inc All rights reserved Building PAGE 47 Do You Perceive a Contradiction to our Best Practices? 1- Obtain Complete Financial Profile 2- Determine Financial Goals 3- Identify Risk Tolerance 4- Optimize Asset Allocation (highest return for risk tolerance) 5- Establish Performance Benchmarks 6- Project Future Resources Based on Conservative Assumptions 7- Determine Savings Shortfall-“Gap” 8- Search for Best Funds/Managers Based on Policy 9- Monitor Performance and Update Plan “Regularly” Inconvenience All Clients Data Points, Not Priorities How Much Pain Can You Bear? Position You To Experience It! Measure Markets Not Goals Ignore Risk – Unreliable Include Risk – Certain Sacrifice Save More, NOT Less! In Greek and Ignore Uncertainty of Underperforming Show What Happened, NOT what it means to you… Repeat Initial Inconvenience… “Regularly” What We “Say”What it REALLY MEANS! CONTRADICTION!!! WOULD YOU BUY THIS???!

48 ©Copyright Financeware, Inc All rights reserved Building PAGE 48 We Need To Start From Scratch! NEW PREMISES OF WHAT FINANCIAL ADVICE IS: How about this for a value proposition? I help clients make the most of the one life they have… How do you do that? By CONFIDENTLY achieving the goals each client uniquely values - Without needlessly sacrificing their lifestyle - And avoiding unnecessary investment risks

49 ©Copyright Financeware, Inc All rights reserved Building PAGE 49 We Need To Start From Scratch! NEW PREMISES OF WHAT FINANCIAL ADVICE IS: How about this for a value proposition? I help clients make the most of the one life they have… How do you do that? By CONFIDENTLY achieving the goals each client uniquely values - Without needlessly sacrificing their lifestyle - And avoiding unnecessary investment risks

50 ©Copyright Financeware, Inc All rights reserved Building PAGE 50 Resolution to Contradictions of FORMER Best Practices… 1- Obtain Only What is Needed/Material 2- Identify Ideal Dreams and Acceptable Compromises…AND PRIORITIES 3- Avoid Unnecessary Risk 4- “Benchmark the beach house” Measure progress toward goals 5- Provide Comfort…rational confidence… Avoid too much: Uncertainty OR Sacrifice 6- Solutions based on acceptable compromises to achieve priorities 7- Speak clients’ language and avoid implementation uncertainty 8- Progress toward goals, and changing goals or priorities…on demand & proactive Inconvenience All Clients Data Points, Not Priorities How Much Pain Can You Bear? Position You To Experience It! Measure Markets Not Goals Ignore Risk – Unreliable Include Risk – Certain Sacrifice Save More, Never Less! In Greek and Ignore Uncertainty of Underperforming Show What Happened, NOT what it means to you… Repeat Initial Inconvenience… “Regularly” RESOLUTIONS based on NEW PREMISESOLD Contradictions: RESOLUTIONS!!!

51 ©Copyright Financeware, Inc All rights reserved Building PAGE 51 Resolution to Contradictions of FORMER Best Practices… 1- Obtain Only What is Needed/Material 2- Identify Ideal Dreams and Acceptable Compromises…AND PRIORITIES 3- Avoid Unnecessary Risk 4- “Benchmark the beach house” Measure progress toward goals 5- Provide Comfort…rational confidence… Avoid too much: Uncertainty OR Sacrifice 6- Solutions based on acceptable compromises to achieve priorities 7- Speak clients’ language and avoid implementation uncertainty 8- Progress toward goals, and changing goals or priorities…on demand & proactive Inconvenience All Clients Data Points, Not Priorities How Much Pain Can You Bear? Position You To Experience It! Measure Markets Not Goals Ignore Risk – Unreliable Include Risk – Certain Sacrifice Save More, Never Less! In Greek and Ignore Uncertainty of Underperforming Show What Happened, NOT what it means to you… Repeat Initial Inconvenience… “Regularly” RESOLUTIONS based on NEW PREMISESOLD Contradictions: RESOLUTIONS!!!

52 ©Copyright Financeware, Inc All rights reserved Building PAGE 52 The resolutions enable us to have a completely different and meaningful process, but also require us to change… OUR VALUE PROPOSITION HOW WE PROFILE HOW WE DESIGN RECOMMENDATIONS HOW WE IMPLEMENT HOW WE MONITOR & SERVICE Other than changing these things about our business… Everything else IS THE SAME?!

53 ©Copyright Financeware, Inc All rights reserved Building PAGE 53 The resolutions enable us to have a completely different and meaningful process, but also require us to change… OUR VALUE PROPOSITION HOW WE PROFILE HOW WE DESIGN RECOMMENDATIONS HOW WE IMPLEMENT HOW WE MONITOR & SERVICE Other than changing these things about our business… Everything else IS THE SAME?!

54 Personal Wealthcare for: Sample Client A. Good Advisor Good Advisor Consulting Providing W E A L T H C A R E

55 ©Copyright Financeware, Inc All rights reserved Building PAGE 55 A completely new advice process designed to: Help you live the one life you have, the best way you can The Premises of Wealthcare Advising: » Confidence in achieving goals YOU value » Without UNDUE sacrifice to your lifestyle » Avoid UNNECESSARY investment risk

56 ©Copyright Financeware, Inc All rights reserved Building PAGE 56 A completely new advice process designed to: Help you live the one life you have, the best way you can The Premises of Wealthcare Advising: » Confidence in achieving goals YOU value » Without UNDUE sacrifice to your lifestyle » Avoid UNNECESSARY investment risk

57 ©Copyright Financeware, Inc All rights reserved Building PAGE 57 Wealthcare is an easy process that puts everything together: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities

58 ©Copyright Financeware, Inc All rights reserved Building PAGE 58 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

59 ©Copyright Financeware, Inc All rights reserved Building PAGE 59 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

60 ©Copyright Financeware, Inc All rights reserved Building PAGE 60 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

61 ©Copyright Financeware, Inc All rights reserved Building PAGE 61 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

62 ©Copyright Financeware, Inc All rights reserved Building PAGE 62 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

63 ©Copyright Financeware, Inc All rights reserved Building PAGE 63 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

64 ©Copyright Financeware, Inc All rights reserved Building PAGE 64 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

65 ©Copyright Financeware, Inc All rights reserved Building PAGE 65 This new process has many benefits compared to traditional services: “Stress Test” Goals Acceptable & Ideal Goals Define Major Life Goals Prioritize Goals Recommendation “In Balance” Comfort & Confidence Implement Allocation Monitor Progress New Goals or Priorities Traditional Financial Services WealthcareBenefit Complicated questionnaires asking for meaningless details Focus on what is important Easier Goals compromised to maximize investment amount Identify aspirationsAchieve goals otherwise ignored Identify maximum risk tolerance… Position you to experience it! Evaluate whether risk is necessary Avoid unnecessary risk Solutions based on sacrifice (additional savings) Solutions based on YOUR priorities Avoid unnecessary lifestyle sacrifice Monitor performance (what happened?) Monitor PROGRESS (will I meet my goals?) Identify problems & opportunities in advance Update annually at best Update on demandMore choices and better decisions Confidence completely unknown Confidence (comfort) calculated, monitored and kept in “balance” Comfort that goals can be achieved

66 ©Copyright Financeware, Inc All rights reserved Building PAGE 66 Sample: Aspirations (Ideal) and Traditional Goals (Acceptable) Traditional advisory services focus on maximizing the size of your investment portfolio by minimizing your spending, maximizing your savings and positioning you in a portfolio with the highest risk you can tolerate. Achieving goals otherwise ignored and minimizing investment risk is what the Wealthcare process is all about. For most people, some goals are more important than others. Your primary financial goals as determined in our goal assessment are outlined above.

67 ©Copyright Financeware, Inc All rights reserved Building PAGE 67 “Stress Testing” Uncertain <75% A confidence level below 75% means that there is too high of a chance you may not achieve your goals. Adjustments need to be made to your goals, your allocation or your investments Sacrifice >90% A confidence level above 90% indicates that you are needlessly sacrificing your financial goals. You could take less investment risk, achieve larger or more goals and still maintain confidence in your financial future. Confidence & Comfort (in “balance”) A confidence level between 75% and 90% should give you confidence that your goals can be met. This reading indicates a set of goals that is manageable and avoids unnecessary investment risk. You may find at some future date minor changes may be suggested, but they are likely to be small, easily manageable and exposed well in advance through ongoing monitoring. How does “Stress Testing” Work? Central to the Wealthcare process is the Confidence calculation. This analysis simultaneously evaluates your goals, your investment allocation and your assets to determine how confident you can be that your goals will be met. The Wealthcare process subjects your goals and investment strategy to this sophisticated ‘stress testing’ process which simulates 1000 market environments, both good and bad. Your Confidence or Comfort is the percentage of the 1000 simulations that achieve your goals. For example, if you achieved all of your goals or more in 830 of 1000 tests your confidence is 83%.

68 ©Copyright Financeware, Inc All rights reserved Building PAGE 68 “Stress Test” Results For Your Goals Your Comfort Level… Indicates the overall confidence in achieving your most important life goals. Remember, below 75% means you may be disappointed and above 90% means you are making needless sacrifices to your lifestyle. Comfort Zone Too Much Compromise

69 ©Copyright Financeware, Inc All rights reserved Building PAGE 69 Recommendation Your Recommended Goals are custom designed based on your priorities. This recommendation is designed to avoid undue sacrifices to your financial lifestyle and if possible avoid unnecessary investment risk. With these objectives in mind, our recommended goals and investment strategy falls within balance so that you can be confident that any future modifications to your goals will be moderate and manageable through ongoing monitoring.

70 ©Copyright Financeware, Inc All rights reserved Building PAGE 70 Achieving Your Goals Monitoring Your Progress… As financial markets, financial goals and priorities change, we monitor your progress on an ongoing basis. The Wealthcare process identifies in advance the future portfolio values needed to maintain balance between confidence and undue sacrifice. This monitoring process enables us to track where your current portfolio falls so we can alert you of potential problems, or help you achieve additional goals you may have. Additionally, this dynamic process recognizes that throughout your life, goals and priorities change. In such cases we will design new recommendations for you Age $3,000,000 $1,800,000 $200,000 Sacrifice Uncertain Your Portfolio

71 ©Copyright Financeware, Inc All rights reserved Building PAGE 71 Updating Changing Goals As your goals and priorities change… So will your lifetime plan. Please use this form to update us on any changes you would like to make to your goals or inform us of new goals you may have. We will work with you to redesign your recommended goals for changes you may desire. Please tell us about any new goals you may have: ____________________________ ____________________________ Please tell us about any changes to your goals you would like us to review by entering them in the amendments section to the right: Current StatusUpdates* Retirement Age Client65 Spouse61 Retirement Need Client$120,000 Target End Value$500,000 Avg. Annual Savings Pre-Retirement$32,411 Default Inflation Rate3% EducationYes Median Return8.33% Risk Std. Deviation12.12% Downside (95%-tile)-9.73% Other Goals Gifting to SonNo Jamaica Trips$25,000

72 ©Copyright Financeware, Inc All rights reserved Building PAGE 72 Asset Allocation By implementing this allocation strategy along with your recommended goals, you should have a sufficient confidence level in achieving your most important goals with risks of changes being minor and manageable.

73 ©Copyright Financeware, Inc All rights reserved Building PAGE 73 Wealthcare Benefits for Sample Client Retire THREE YEARS EARLIER $10,000 MORE in Retirement Income $20,000 MORE for Travel $21,000 LESS in Annual Savings 1/3 LESS Investment Risk Wealthcare Benefit: Life With Wealthcare Life With Traditional Services Retirement Age6568 Retirement Income$120,000$110,000 College FundingYesSome Retirement Travel$25,000$5,000 Savings$32,411$53,404 Estate Goal$500,000$100,000 Asset AllocationBalancedGrowth Average Return8.33%9.93% Downside Risk-9.73%-15.07% Confidence & Comfort83Unknown Comfort that goals can be met Fully Fund Education $400,000 MORE as a Legacy

74 ©Copyright Financeware, Inc All rights reserved Building PAGE 74 Summary – Wealthcare Benefits: Easier Achieve goals otherwise ignored Avoid unnecessary risk Avoid unnecessary lifestyle sacrifice Identify problems & opportunities in advance More choices and better decisions Comfort that goals can be achieved


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