Dan Harty, MBA, CLU, ChFC Business Owner & Exec Solutions The Principal Financial Group Business Owner Perspectives & Sales Ideas ASA 2016 Kickoff Symposium

Agenda Business Owner Market & Priorities Support, Tools, & Resources Sales Ideas Q & A

General Business Market Facts Market Sizing: Over 28 million business owners in the U.S. 1 25% are affluent of which 12% are super affluent 2 Business Facts: Family-controlled companies account for 78% of the nation’s job creation, 60% of its employment, and over 50% of its gross domestic product. By 2030, $4.8 trillion of net worth will be transferred and $10.4 trillion by U.S. Census Bureau, 2007 Survey of Business Owners 2 LIMRA Small Business Owner: 2009 study 3 Family Firm Institute, 2009

#3 priority is health and wellness solutions, yet 45% don’t offer medical insurance. #4 priority is qualified retirement plans, yet 58% don’t offer any. #1 priority is business protection, yet 70% still need it. Thought Leadership Priorities Don’t Align with Action #2 priority is income protection, yet 74% still need it (up from 68% in 2012). But – 1 in 3 would recommend it. #5 priority is group benefits, yet 63% don’t offer any. Of those that offer coverage – disability, dental and life are the most popular. Take away? They need help taking action.

Business Facts – Pop Quiz Exit Planning What percentage of businesses have never had their business valued? A.10% B.40% C.62% D.82% Source: Harris Interactive Business Owner Survey (2012)

Business Facts – Pop Quiz Exit Planning What percentage of family businesses survive to a second generation? A third? A.100%, 50% B.50%, 100% C.25%, 10% D.36%, 19% Source: PwC Family Business Survey

Business Facts – Pop Quiz Business Protection Out of 100 businesses what number have NOT made provisions for dealing with a shareholder or key employee who becomes seriously ill or dies? A.22 B.32 C.52 D.62 Source: PwC Family Business Survey

Thought Capital Business Planning … Not Top of Mind

Thought Leadership What stops business owners from planning? 82% cite a reason that generates from human behavior of inaction. The other 18%? Think they can’t afford it.

The Principal Difference BOES platform offers a complete package to give you an edge: Value Added Tools Technical Expertise Customized Proposals with Recommendations Business Focused Products Underwriting Advanced Sales Expertise Administrative Services Everything you need in one place.

Prospecting Business Owners Referrals Chambers of Commerce Professional Associations Business Owners You Already Know

Business Valuation & BSR The Process Collect Documents  Review the Customized Report Discuss and Review Highlights and Recommendations with: The Business Owner Tax and Legal Advisors Collect from the Business Owner and send to The ASA Group: Completed Fact-finder Most recent 3 years of Financials 7 – 10 business day Turnaround Existing Agreement Existing Insurance 3-4 Week Turnaround

Business Planning Fact-Finder

When the Owner UNDER-values the Business?  Short Change Family  Underfunded Plan?  Why Additional Valuation?  Hold Business Value

When the Owner OVER-values the Business:  Business Owner Retirement Plan  Increase Business Value  Creating a Market

Sales Study Profile Transportation Company Two owners Details Broker requested an informal valuation and a buy-sell review Discovered buy-sell was at book value Other Buy/Sell Errors Each owner had $1,500,000 of term insurance that they owned on themselves

Reports and Proposals

Do you have insuranc e on your buyer? Will this hold if your key person leaves? What does your Buy/Sell say the value is? Do you have a buyer? Will you be taxed on this or this?

Identify Priorities

NQ Supplemental Retirement Decisions

NQ Deferred Comp: S Owner Plus How the Plan Works:

Financing the Plan NQ Retirement Income: S Owner Plus VUL Business High Early Cash Values 100+ Investment Options Net Zero Cost Loans after PY 10 Automated Income Automated Over-loan Protection* Accelerated Underwriting Complimentary S Owner Plus Administration *Certain conditions apply to trigger the over-loan protection rider (LPUR)

NQ Retirement Income: S Owner Plus

Simplifying the Plan NQ Retirement Income: S Owner Plus Accelerated Underwriting

Simplifying the Plan NQ Retirement Income: S Owner Plus Policy Admin: Automated Income

Concierge Business Case Administration

Thank you Survey conducted by Harris Poll and included over 500 online interviews conducted in January Interviews were conducted using the Harris Poll Small Business Panel. Results were weighted for company sized based on number of employees, entity type and annual sales. Potential respondents for this survey were selected from among those who have agreed to patriciate in Harris Poll surveys. Because the sample is based on those who agreed to be invited to participate, no estimates of theoretical sampling error can be calculated. For producer use only. Not intended for use in sales situations or with the general public. To see the full results of the survey, please click here.here DI9428  09/2015  ©2015 Principal Financial Services, Inc.