1. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004 -2008 All rights reserved P r o v i d i n g W E A L T H C A R E W E A L T H C A R E Profiling “The Keys to the Kingdom” Presented by: David B. Loeper, CIMA ®, CIMC ®

2. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 2 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? A) Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they would like to achieve “financial independence?” B) Toss them a questionnaire and say, “Here…fill this out?” C) Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? D) Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more?

3. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 3 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? A) Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they would like to achieve “financial independence?” B) Toss them a questionnaire and say, “Here…fill this out?” C) Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? D) Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more?

4. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 4 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? A) Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they would like to achieve “financial independence?” B) Toss them a questionnaire and say, “Here…fill this out?” C) Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? D) Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more?

5. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 5 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? A) Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they would like to achieve “financial independence?” B) Toss them a questionnaire and say, “Here…fill this out?” C) Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? D) Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more?

6. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 6 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they like to achieve financial independence? Toss them a questionnaire and say “Here…fill this out” Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? D) Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more? If your answer was “D”, then give yourself a high five…

7. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 7 QUIZ: Which of the following would be MOST EFFECTIVE to determine the goals a client VALUES? A) Bury both you and the client in mountains of statements, tax returns, insurance policies, etc… and while you dig yourselves out…ask them at what age they like to achieve financial independence? B) Toss them a questionnaire and say “Here…fill this out” C) Ask them questions from a questionnaire to make sure you get a realistic answer for each #!%&@ data point? Have a profoundly personal discussion that encourages them to dream about aspirations, identify acceptable compromises and the prices they are willing to pay in one goal to achieve another they value more? If you normally do “A”, “B” or “C” Then I’m glad you’re on the call!!

8. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 8 The Wealthcare Value Proposition: Help your clients live the one life they have, the best way they can The Premises of Wealthcare Advising: » Confidence in achieving goals each client values » Without UNDUE sacrifice to their lifestyle » Avoid UNNECESSARY investment risk Link to Value Proposition: http://www.financeware.com/ruminations/wealthcare.value.proposition.ppthttp://www.financeware.com/ruminations/wealthcare.value.proposition.ppt

9. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 9 The Wealthcare Value Proposition: Help your clients live the one life they have, the best way they can The Premises of Wealthcare Advising: » Confidence in achieving goals each client values » Without UNDUE sacrifice to their lifestyle » Avoid UNNECESSARY investment risk Link to Value Proposition: http://www.financeware.com/ruminations/wealthcare.value.proposition.ppthttp://www.financeware.com/ruminations/wealthcare.value.proposition.ppt

10. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 10 “DOs” and “DON’Ts” of Wealthcare Profiling DO NOT GET BURIED IN MEANINGLESS DETAILS, TOSS THEM THE QUESTIONNAIRE, OR TREAT THEIR DREAMS AS DATA POINTS… DO start a general discussion about their life goals DO write down the words they use to describe them DO LISTEN - CAREFULLY DO use their words (i.e. if they use “Estate” do not call it “Legacy”) DO assume they would like to spend more, save less, take less risk, retire earlier, leave more behind, and that there is something else they would like to discuss but may think it’s to unrealistic DO understand what is also acceptable for each goal DO watch their emotions & body language DO understand their priorities among goals DO review the questionnaire AFTER you think you have all of their information to remind you of anything you may have missed.

11. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 11 “DOs” and “DON’Ts” of Wealthcare Profiling DO NOT GET BURIED IN MEANINGLESS DETAILS, TOSS THEM THE QUESTIONNAIRE, OR TREAT THEIR DREAMS AS DATA POINTS… DO start a general discussion about their life goals DO write down the words they use to describe them DO LISTEN - CAREFULLY DO use their words (i.e. if they use “Estate” do not call it “Legacy”) DO assume they would like to spend more, save less, take less risk, retire earlier, leave more behind, and that there is something else they would like to discuss but may think it’s too unrealistic DO understand what is also acceptable for each goal DO watch their emotions & body language DO understand their priorities among goals DO review the questionnaire AFTER you think you have all of their information to remind you of anything you may have missed.

12. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 12 Meeting With Arvin and Alice Client Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk What do you need to know about this stuff?

13. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 13 Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk What do you need to know about this stuff? What would they be doing in a Comfortable Retirement? How much could they spend? Ideally? Acceptably? When would they like it to happen? Ideally? Acceptably? Meeting With Arvin and Alice Client

14. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 14 Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk How much education… Under? post? PhD? Ideally? Acceptably? What type of school? Public? Private? Specific? Meeting With Arvin and Alice Client

15. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 15 Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk How much could they spend? Ideally? Acceptably? What would they do with vacations? Ideally? Acceptably? Meeting With Arvin and Alice Client How soon would they start? Ideally? Acceptably?

16. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 16 Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk How late in life might they travel? Where would they travel to? Ideally? Acceptably? Spend? Meeting With Arvin and Alice Client

17. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 17 Goals: “Comfortable” Retirement Educate Arvin Jr. Take more vacations Travel in Retirement Avoid investment risk Meeting With Arvin and Alice Client Do they want to avoid all risks??? i.e. T-bills? How much risk is acceptable? And at what point is the risk so small they’d be indifferent?

18. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 18 How should we discuss investment risk with clients? Investment Risk = Currency What does taking risk buy you in terms of your goals? If there is nothing else accepting additional risk buys you that you value, why take the risk? Because you like all the pain and volatility of the market? Investment risk is about BAD, “unpleasant” performance… The EXTENT (how bad it gets) and FREQUENCY (how often it occurs) Here’s how to communicate the reality…

19. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 19 Risk Tolerance Don’t Focus on this:

20. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 20 Risk Tolerance Focus on this: How Often? frequency How Bad? 1.3% chance How Bad? 3% chance

21. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 21 Risk Tolerance Focus on this: How Often? frequency How Bad? 1.3% chance How Bad? 3% chance Former “best practices” assumed client risk tolerance was “THE”main thing to connect to the client… Do you think clients REALLY “connect” to the difference between a 1.3% & 3% chance?

22. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 22 Meeting With Arvin and Alice Client Avoid Investment Risk: Took a “beating” in bear market – Lost 50%! Don’t EVER want to go through that again Understand some downside is reality Expect $200,000 downside on $2 million portfolio (10%)but even less would be better Can tolerate 25-35% downside, but really do NOT want to if they can avoid it

23. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 23 Meeting With Arvin and Alice Client Priorities: To Reduce Risk: Retire later, reduce estate To Reduce Savings (by $10,000 a year for 2 weeks in Jamaica pre- retirement): Retire later, reduce estate To Retire Earlier: Reduce Estate To Maximize Estate: Retire later, but not if Estate is >$500,000 they inherited To Maximize Ret. Inc. & Travel Budget: Retire later, reduce estate, and even take more than acceptable risk To Educate Jr.: Retire later, reduce estate, save up to $10,000 more per year, take more risk

24. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 24 “Big Picture” Goals & Some Needed Details

25. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 25

26. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 26

27. ©Copyright Financeware, Inc., d/b/a Wealthcare Capital Management 2004-2008 All rights reserved P r o v i d i n g W E A L T H C A R E PAGE 27 After you’ve reviewed the Wealthcare Questionnaire to make sure you have the information you need, CONFIRM YOU UNDERSTOOD: Their RANGE of Ideal & Acceptable Goals AND ONLY THEN is it time to design recommendations…Lesson 4 Questions?