2. 1 ©Copyright 2001, Financeware, Inc. All rights reserved Ignoring “Timing Risk” Can Cause Your Financial Plan to Fail… Advisors That Apply “Wealth Care” Consider Timing Risk Source: Financeware.com – Study of over 5,000 Investors

3. 2 ©Copyright 2001, Financeware, Inc. All rights reserved If You Have No Goals, If You Aren’t Saving or Spending Money, You Can Ignore Timing Risk If So, Then Timing of Returns Makes NO DIFFERENCE Does This Describe You? No Savings? No Spending? No Taxes?

4. 3 ©Copyright 2001, Financeware, Inc. All rights reserved But Most Investors Have REAL Goals Some Are Distributing Wealth… Better To Have The Bull Market Early Rather Than Later… Or… We Could Assume There Are No Bull or Bear Markets … It Should Be Close Enough!

5. 4 ©Copyright 2001, Financeware, Inc. All rights reserved And Some Are Accumulating Wealth It Hurt To Have The Bull Market Early Rather Than Later… Or… We Could Assume There Are No Bull or Bear Markets … It Should Be Close Enough!

6. 5 ©Copyright 2001, Financeware, Inc. All rights reserved Can Wealth Forecasts Based On Assuming The Same Return Each Year Really Be That Far Off? Harry - 56 Year Old, Retiring at 65- Projected Portfolio Values at age 95: Assumed Return of 11.78% EACH YEAR: $11.3 Million Market Reality : Actual Market at 11.78% (’60-’98): Actual Market at 12.12% (’61-’99): Actual Market at 8.78% (’36-’74): Broke @ Age 88 Broke @ Age 95 $2.6 Million What Do You Think The Results Will Be If We Simply Use The Actual Returns In The Order They Actually Occurred?

7. 6 ©Copyright 2001, Financeware, Inc. All rights reserved Being “More Conservative” In Our Assumed Return Doesn’t Really Help Harry - 56 Year Old, Retiring at 65- Projected Portfolio Values at age 95: Assumed Return of 9.91%: $2.2 Million Market Reality: Actual Market at 9.91% (’30-’68): Actual Market at 8.78% (’36-’74): Actual Market at 12.12% (’61-’99): Broke @ Age 78 $2.6 Million Broke @ Age 95 Ignoring This Risk is leaving your future to the flip of a coin…

8. 7 ©Copyright 2001, Financeware, Inc. All rights reserved This is how Monte Carlo analysis can help you understand your odds Most plans assume you will achieve the AVERAGE return each year and IGNORE Bull & Bear markets. With probability analysis, we project many results including both Bull & Bear Markets.

9. 8 ©Copyright 2001, Financeware, Inc. All rights reserved By running these tests we can then forecast your “odds” of success Having never done this analysis, your current odds of success may not be very good

10. 9 ©Copyright 2001, Financeware, Inc. All rights reserved But, while most advisors simply increase the return & risk… Adjusting your asset allocation may not be the best choice in meeting your objectives… Growth Allocation Aggressive Growth Allocation

11. 10 ©Copyright 2001, Financeware, Inc. All rights reserved Sometimes less risk is better… We can customize your plan to meet your goals without necessarily increasing risk Aggressive Growth Allocation “Customized” Plan with Growth Allocation Growth Allocation