A Year of Change, a Return to APIC

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• A Year of Change, a Return to APICs Roots!
• Annual Membership Meeting
• Association of Professional Investment
  Consultants
• June 9, 2005

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Association of Professional Investment
Consultants (APIC) Organizational Chart 2005-2006
APIC Membership
Updated June 9,2005
Committees and Chairperson (s)
Professional Development Janet Bolton
Private Wealth Management
Research Evaluation Kent Cox
Conference Oversight Elaina Spilove
Technology Jon Webster
Legal and Regulatory John Collier
Membership Jim Gill
Corporate Services Brian Penzel
Website/ Street Smarts Tom Davis
Endowment/ Foundation
Oracle Bill Teeple Barbara Griffin
Endowment/ Foundation gt25 Million Lori Van
Dusen Scott Thayer
gt 5 Million Steve Thacker Scott Wilson
Endowment/ Foundation lt 25 Million Doug Berger
lt 5 Million Susan Yelen
Agenda Planning 2006 Gregg Paulson Jeff Wigbells
Logistics Planning 2006 Elaina Spilove
Susan Yelen Brian Kelly Bob Scherer
Lori Van Dusen Scott Thayer Doug Berger
Janet Bolton
George Dunn
Elaina Spilove
Brian Hein
Skip Sussman
Mark Curtis
Al Eaton
Mike Engel
Committee Board Liaisons
Governance Paul Compton
APIC Board of Directors
Secretary/Treas Douglas Berger
President/ Spokesperson Chris Aitken
Executive Committee
Pres. Elect/VP Tim Kneen
Past President Jim Pupillo
Nominating Tim Kneen
Finance Comm. Douglas Berger
Best Practices Tim Kneen Phil Shaffer
Advisory Group Jim Pupillo Chris Aitken
Steering Committee Jim Pupillo
Exec Director Eric Scharf
President George Bush once said Great Leaders
are defined by those people around them..
Association Staff
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Welcome Newly Elected Board MembersThree-year
terms
Janet Bolton, Chicago, IL Steve Thacker,
Baltimore, MD Mike Engel, Washington, D.C. Phil
Shaffer, Columbus, OH
Appointed one-year term Skip Sussman, San
Rafael, CA
Special Thanks to Outgoing Board Members
Sandee Smith, Kansas City, MO Mike Melko,
Chicago, IL
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Honoring our Charter Members

• Chris Aitken
• Bill Ankeny
• Dan Biederman
• Ed Clissold
• Rusty Cooer
• Mark Curtis
• George Dunn
• Larry Eckstrom
• Barry Giller
• Rich Gleason
• Austin Heberger
• Kathleen Hegenbart
• Mary Lynne Hickey
• Laree Hulsoff

• Steve Jackson
• Brian Kelly, Sr.
• Ted Lucien
• Chris Poch
• Dan Rolan
• Mike Sasser
• Robert Scherer
• John Scott
• Sandee Smith
• Gene Trudeen
• Jeff Wigbels
• Howard Zumsteg

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A Year in Review

• Rewrote APICs Mission Statement and five-year
  Strategic Plan including new membership criteria
• Made structural changes to the conference
• Dramatically reduced APICs expenses
• Created new committees
• Partnered with the Firm on new initiatives
• Developed Professional Standards Guide

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Accomplishments in 2004 - 2005

• Governance Committee
• Facilitated the 5 year strategic planning effort
  including new membership standards.
• Developed Board Orientation Program
• Continued improvements to the Board Operating
  Manual
• Finance Committee
• Established a Finance/Audit Committee  Doug
  Berger, Bob Scherer, Paul Compton George Dunn
• Developing a records retention and emergency back
  up/recovery procedure.
• Produced a new APIC budget for the recently
  adopted policy that avoids potential conflicts of
  interest

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Accomplishments in 2004 - 2005

• Conference Oversight Committee
• Planned the 2005 Annual Educational Conference in
  Naples, FL on June 9 10, 2005 with an
  attendance of more than 230 members present. .
• Reoriented the conference away from an event
  supported by and involving the providers of money
  management services to a self-supporting program
  paid for directly by the membership
• Initiated planning for the 2006 conference,
• Legal/Regulatory Committee
• FC Team Agreement
• Franchise Protection Plan (FPP)
• Staff Compensation
• Outside software programs
• Personal Computers NNPC (Non-Networked Personal
  Computers)
• PWM lt 5 Million Committee
• Integrated Wealth Management. 33 Done, 3 out of
  9 items completed
• Inconsistencies in Tax Reporting Done, 9 out of
  12 items completed
• Friction List from 2004. 28 Done, 21out of 75
  items completed

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Accomplishments in 2004 - 2005

• Steering Committee
• Worked with the Governance Committee to complete
  the development of the Strategic Plan
• Continued development of the Industry
  Professional Standards project which has
  included
• a. Fine tuning and dissemination of the Code of
  Ethics
• b. Finalization of the Professional Standards
  Guide which will be ready for release at the
  Annual Conference.
• Oversaw the development of the Industry Advisory
  Council (IAC)
• Research/Evaluation Committee
• 50 additional managers covered in CES year to
  date along with several level commitments.
  
• An improved salary and bonus structure was put in
  place which has improved morale and reduced
  turnover in the research department.
• Consideration is being given to a second tier of
  investment managers who will work for a fee level
  between FS and their current fee with lower
  minimums. This would improve our access to high
  quality managers.

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Accomplishments in 2004 - 2005

• Foundation/Endowment lt 25 Million Committee
• Developed Initial Committee Responses,
• Developed Priorities for this committee to pursue
  
• a.  Support CG in developing marketing materials 
  for this market
• b.  Support development of better RFP Response
  Capabilities  ( Will assist CG in populating it's
  new software "The RFP Machine")
• c.  Support development of Finals Presentation
  Resources  
• d.  Focus on Marketing Opportunities -
  Philanthropic Services - Rockefeller
  Philanthropic Advisors     
• Industry Advisory Council
• Building a Culture that embraces Ethics and
  Professional Standards
• Portfolio Construction
• Behavioral Finance Research
• Member Internet Services Committee
• Worked with StreetSmarts technology provider,
  Involve Technology, to enhance its member
  communication tool with improved features and
  usability. These include
• Reworked the categories in the Website Members
  Exchange to conform with StreetSmarts and then
  placed all of the current items into the
  categories with descriptive information.
• Reworked the committee report module to make it
  easier to post reports.

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Accomplishments in 2004 - 2005

• Membership Committee
• Performed and reported major study of membership
  composition
• Researched and recommended new Qualifications for
  Membership
• Created presentation/assisted with Board
  Membership campaign
• Since July 2004, responded to 123 applications of
  which 91 were recommended for approval by the
  Board. APIC began the year with 372 Voting
  members and 168 Non-Voting members as of May 30,
  2005 there were 223 Voting members and 108
  Non-Voting members.
• Worked with the Internet Members Services
  Committee to implement further upgrades to Online
  Application Process and continued the process of
  improving and simplifying the Online Application
  Process

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New Mission and Five-Year Plan
A Community of Colleagues Fostering
Professionalism Through a Culture of Consulting
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APIC Membership Requirements Effective January 1,
2005

• In order to qualify for voting membership, a
  member must have one of the following
  credentials
• Senior Institutional Consultant (SIC)
• Chartered Financial Analyst (CFA) 06/2005
• Certified Investment Management Analyst (CIMA)
• Private Wealth Management Advisor (PWMA)
• Corporate Client Group Director (CCG Dir.)
• Senior Investment Management Consultant (SIMC)
• Individuals who were voting members prior to
  January 1, 2005, and do not possess any of these
  credentials will have two years from 1/1/05 to
  obtain one of the listed credentials OR, members
  will be grandfathered if they have been members
  in good standing for at least five years as of
  1/1/05.

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Structural Changes to the Conference

• Avoid all perception of conflicts of interest
• APIC no longer accepts investment advisor
  sponsorships for any functions
• Return APIC to its roots, when the conference was
  educationally focused featuring FCs exchanging
  ideas and networking
• APIC members will be the beneficiaries of
  Returning to Our Roots and to spending more
  time sharing ideas with our friends and fellow
  practitioners

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Budgetary Changes

• Conference last year netted a surplus for APIC.
  With that reserve we were able to make needed
  changes
• We cut over 150k from the budget including over
  75k from conference planning, over 10k from
  meetings, 21k from printing, 15,000 by having
  the firm absorb the cost of FundFire and 8k from
  credit card fees
• Today we are a leaner organization, completely
  focused on providing value to our colleagues You
  the APIC member

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New Committees New Problem Solving

• Best Practices Committee is generating great
  ideas that are shared with the entire membership
• George Dunns ideas on allocating to commodities
• Scott Thayers finals presentations, etc.
• Professional Development Committee
• Committed to raising the knowledge level and
  differentiating our practices
• The Mitch Anthony Program that was conducted
  today
• New management structure at APIC Exec team will
  stay for another year to provide continuity
  during this current transition period
• Chris Aitken, President
• Tim Kneen, President-Elect, June 2006
• Jim Pupillo, Past President 2004
• Doug Berger, Secretary and Treasurer
• Elaina Spilove, Conference Oversight

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Partnering with The Firm

• FundFire cost savings
• Board meetings held at CG and other firm events
  to create cost sharing
• Top priorities list
• Conference planning

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2005 - 2006 Top Priorities of APIC

• Create and/or buy Performance Reporting that is
  accurate and the standard of the industry.
• Research
• Change structure and expand research capabilities
  
• Focus on adding managers that add Alpha
• Collaborate with 18 manager analysts in Private
  Bank
• Expand asset classes to include more alternatives
  
• Umbrella Pricing
• Expand Advisor to include all products and
  asset classes
• Friction Items
• Tax Recordkeeping and Reporting
• Questionnaires
• Qualitative and Quantitative Client Discovery
  Process
• Improved Risk Questionnaires integrating
  behavioral finance
• Comprehensive Fee Calculator with transparency
  including all discretionary and non discretionary
  fee based solutions
• Industry Custodial Reporting
• Deliver a workable strategy

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Looking Forward Our Challenges

• APIC is only as good as how involved its members
  are.
• We need to find ways to engage each of you!
• Your Board of Directors has Committed to
• Run a financially tight ship with the elimination
  of investment advisor sponsorships
• Better communicate to the membership more of what
  each committee is doing and what APIC is
  accomplishing
• Encourage a free flow of idea sharing using
  cutting edge technology that addresses the
  usability issues with the old Chalkboard list
  serve and current StreetSmarts system.
• Continue to attract the best practitioners to APIC

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Looking Forward Our Challenges

• Continue to push the firm to provide us with the
  latest in technology at the branch and for the
  mobile consultant
• Continue to push the firm on our highest
  priorities and items that enhance best practices
  like team training
• Continue to push the firm to be leaders in the
  investment management consulting industry and not
  be satisfied with past success
• Insist that the Firm execute on what they promise
  us they will do

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• Paul Compton
• Chair, APIC Governance Committee
• Board Liaison, Membership Committee
• Led the APIC Board of Directors through the
  Strategic Planning Process and implementation of
  its key elements
• that will bring APIC
• Back to the Future

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Association of Professional Investment Consultants

• A community of colleagues
• fostering professionalism
• through a culture of consulting

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Structure

• Professional Association
• Bylaws, Policy and Governance, Procedures
• Professional Expectations of members
• Qualifications Skill-set
• Committees of members principal activity
• Standing Committees
• Functional Committees
• Annual Educational Conference

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Vision

• In a dynamic world, our clients, our firm and our
  industry need professional financial consultants
  who respond to their needs with customized
  comprehensive solutions.
• Our association supports an atmosphere of
  intellectual accomplishment and encourages
  reciprocal exchange of ideas.
• Our passion for perfection enhances the financial
  consultants effectiveness and the quality of the
  clients experience.
• APIC is the communication link between unified
  financial consultants and Smith Barneys senior
  management.

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Mission

• APIC
• advocates for our standards and for our members
  needs
• innovates to provide creative solutions to client
  problems
• educates to raise the skill of its members and
• communicates to support free interchange of our
  best practices, ideas and information, and to
  build the collective wisdom of our members and
  our association.

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Core Values

• Client-Centered business practices
• Highest ethical standards
• Collaborative, professional colleagues
• academically inquisitive thinkers who share our
  intellectual capital
• State-of-the-art solutions
• for our clients and our consulting practices
• Advocate
• dedicated to being a positive influence within
  our firm
• a unified voice representing the business needs
  of the membership

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Education Professional Development

• Best Content Systems for Development
• Best Practices Committee
• Innovative Educational Content
• Educational Conferences
• Members Practices
• Outside Industry Leaders
• Align Educational Content with CG Track
• FCs prepared to qualify
• Professional Development Committee
• Electronic Communication

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Advocacy

• Stakeholders
• Inform the Firm
• Profitable use of Firm capital
• A willing, qualified membership
• Support Program-oriented Committees
• Industry Advisory Council
• Behavioral Finance
• Portfolio Construction
• Professional Standards Guide

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Communication

• Unified communication strategy
• Oracle upgrade / APIC Journal
• Website upgrade path
• Media relations
• APIC archives publish history
• Annually itemize accomplishments

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Innovation

• Drive change by teaching innovations
• Ongoing member prospecting
• Conference content
• Industry Advisory Council

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Member Expectations

• Share the Vision
• Professional Standards
• Ethical Practices
• Leadership
• Committee Service
• Challenge
• Natural talent willing to learn

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Association of Professional Investment Consultants

• A community of colleagues
• fostering professionalism
• through a culture of consulting

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• Jim Pupillo
• Immediate Past President
• Chair, Steering Committee
• Chair, Industry Advisory Council
• Guided APICs Initiatives in Two Key Programs
• Professional Standards
• Maximizing APICs Industry Relationships

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Focus on Standards and Innovation

• Creating resources for building a culture that
  values high professional standards
• Tapping into the best of the investment
  management consultant industry to create
  innovation and new directions for the
  practitioner

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Professional Standards Project

• Initiated by former President Jim Stoker with the
  guidance of the Steering Committee
• Assisted by the resources of Don Trone and the
  Foundation for Fiduciary Studies

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Partnership with the Foundation for Fiduciary
Studies

• Distribution partners with the Foundation of
  their publication Prudent Investment Practices
  Handbook
• APIC members receive a special discounted price.

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APIC Code of Ethics

• In 2004 the Board of Directors approved an APIC
  member Code of Ethics
• Designed as a membership guideline, it provides
  you with a resource to demonstrate to clients how
  you operate your practice in a highly ethical
  fashion

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APIC Code of EthicsI recognize that this Code of
Ethics, its principles, and obligations are in
addition to those set forth by any other code
which governs my professional and ethical conduct.

• To my consulting clients, I will
• Act with honesty and integrity, and seek to avoid
  conflicts of interest, real or perceived.
• Ensure the timely and understandable disclosure
  of relevant information that is accurate,
  complete, and objective including any actual or
  potential conflicts of interest.
• Be responsible when determining the value of my
  services and my form of compensation, taking into
  consideration the time, skill, experience, and
  special circumstances involved in the performance
  of my services.
• Know the limits of my expertise, and refer to
  colleagues and/or other professionals on issues
  beyond my knowledge and skill.
• Respect the confidentiality of information
  acquired in the course of my work. I will not
  disclose such information, except when authorized
  or otherwise legally obligated to do so. I will
  not use confidential information acquired in the
  course of my work for my personal advantage.

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APIC Code of Ethics

• To APIC, I will
• Proactively promote and be an example of ethical
  behavior as a responsible partner among peers, in
  the work environment, and the community.
• Ensure that my fee structures and the overall
  promotion of my practice are implemented in the
  best interests of the profession.
• Seek, accept, and offer honest criticism of
  technical work acknowledge and correct errors
  and properly credit the contributions of others.
• Use corporate assets and resources employed or
  entrusted to me in a responsible manner.
• Continue to improve my knowledge and skills,
  share ideas and information with my colleagues,
  and assist them in their professional
  development.
• Approved by the APIC Board of Directors as a
  membership guideline on March 1, 2004.

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Promoting Professional Standards
The Professional Standards Guide for Investment
Management Consultants is a new tool to use in
growing your practice. The standards were
developed in conjunction with Prudent Investment
Practices and provide a common set of operating
standards that should be used by all professional
investment management consultants. Working with
Smith Barneys legal compliance team, APIC has
created a guide that you can use internally and
as a valuable marketing tool to demonstrate how
you operate your practice.
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Eight Standards for Professional Practice
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Sample Standard
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How to Use the Professional Standards Guide in
Your Practice

• Benchmark how you operate your practice.
• Training of new staff and colleagues to practice
  the APIC way.
• Demonstrate to clients that you work at a high
  level of professional standards

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How to Obtain the Guide

• APIC is placing a .pdf copy of the Guide on the
  members only section of the website yours free
  to download as a member benefit.
• Attractive color copies will also be available to
  purchase.
• First 25 copies 7.00 each
• Next 25 copies 6.00 each
• Next 50 copies 5.00 each
• Over 100 or more copies 4.00 each
• We are offering a 25 pre-publication discount
  for 1,000 copies ordered.

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Creating innovation and new directions for the
practitioner

• Mission of the Industry Advisory Council is
  two-fold
• Industry Communication Bridge Function as a
  communication link with key industry leaders to
  stay abreast of cutting edge technological
  innovations and other developments.
• Industry Think Tank Function as an exploratory
  investment consulting research and developmental
  think-tank.

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Industry Leadership

• The IAC consists of such key leaders as
• Frank Sortino
• Bob Seaberg
• Donald Trone
• Bob Padgette
• Ron Surz
• APIC leadership is actively involved in leading
  this effort.

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Projects that the IAC is Focused On

• Building a Culture that embraces Ethics and
  Standards
• Implementing a Code of Ethics for APIC Members
• Developed the APIC Standards of Practice
• Collaborating with the Foundation for Fiduciary
  Studies to foster a culture that values ethical
  behavior within a standard set of practices
• Portfolio Construction
• Blending Active/Passive Investment Strategies
• Alpha Through Enhanced Asset Allocation
• Research of Minimum Acceptable Returns (MAR)
• Behavioral Finance Research
• Obtain Better Understanding of Behavioral
  Finance
• Provide Informational Resources for Financial
  Consultants

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In Closing Two Thank Yous

• First To the conference committee
• No committee has ever faced bigger challenges!
  Please give them constructive ideas and more
  importantly, Thank them Elaina Spilove, Steve
  Thacker and Mike Engel
• Second The APIC Board and Committee Chairs
• If you would all stand - Thank YOU
• You do the day-to-day work of APIC!
• Finally, in closing, I would like to read you an
  email exchange between my Vice President and one
  of our members. It speaks to who we have always
  been!

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• First, thanks for your comments. We can only
  serve better by listening. Second, I couldn't
  agree with you more about getting Value. If APIC
  is not providing value to you and your practice
  then you should leave and find it elsewhere.
  However, let me share a few thoughts about how
  APIC is providing value in my life and practice
  and see what you think in the end
• 1) When I first joined APIC I was a pretty good
  producer (1st quintile type) and I did OK
  bringing in new clients and I did pretty good
  managing my clients assets. I attended my first
  conference and was struck with the awesome
  reality that what I thought was pretty good was
  in fact pretty average. The best practitioners
  were using cutting edge ideas that I had not even
  thought of. The best practitioners were thinking
  about asset allocation problems that were coming,
  not here yet, but just around the corner. The
  best were not simply satisfied with being pretty
  good at manager selection they demanded and had a
  plan to b better. Let me give you some examples
• The best practitioners were thinking about
  alternative asset classes 10 years ago, sourcing
  out hedge funds and other opportunities so that
  when the difficult markets came their clients
  were prepared. They were there teaching me what
  these asset classes could do to risk and return
  so I would have my clients prepared.

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• The best practitioners were thinking 10 years ago
  about the brick wall that most FC's hit where
  there are just not enough hours in the day to do
  any more bizz and taught me how to leverage my
  time through the building of a high performance
  team.
• The best practitioners were there years ago when
  they saw that our reporting systems were not
  adequate to serve our market and lead the way in
  helping design Orion and other reporting
  tools..yes that was an APIC project.
• The best practitioners were there years ago when
  research was causing us lots of problems in
  firing managers that we had just hired. They led
  the way in creating the new warning system that
  is in place....yes that was an APIC project too
• I could keep going on but the point is who was
  going to be my advocate with the firm, who was
  going to teach me all of these things if the best
  practitioners who are the members of APIC and
  constantly share with us were not there. I can
  honestly say I would not have gotten to where I
  am with out this organization!
• 2) So what has APIC done for me lately? Look
  on the APIC website and you will see a list of
  great closing presentations recently posted by
  Scott Thayer, you will see a great study on
  commodities and how they can affect asset
  allocation posted by several FC's including Bill
  Hendrix and George Dunn, you will see a new
  Morningstar report that Mary Deathridge has found
  to give a snap shot look at MPT stats on a series
  of SMA portfolio's, you will see an idea by
  George Cook to use SMA's inside of 401k's there
  by reducing participant cost, you will see
  competition updates, etc. I use all of these and
  you will see a lot more.

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• What you wont see is what you will get most any
  other place...people who are not willing to share
  because they view you as their competition. I
  don't know of anywhere else where you will go and
  the best practitioners in the world will openly
  share their very best ideas for you to use. Why
  will they do that? Because, like me, they have
  gotten so much from this place we call APIC it is
  a honor to give back.
• 3) APIC is my place to be part of the solution
  rather than part of the problem! We have real
  problems at this firm like all other firms. Like
  all firms this one has limited resources to
  address those problems. APIC provides a forum
  with Sr Mng to understand what our top concerns
  are, prioritize them and fund them. Someday we
  should list out in one document the hundreds of
  things that have been accomplished at this firm
  that started on an APIC priority list. You would
  be amazed at how much it has affected your daily
  working life. I want this to continue, in fact I
  need this to continue if my practice is going to
  continue to grow.

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• APIC is my place to be part of the solution
  rather than part of the problem! We have real
  problems at this firm like all other firms. Like
  all firms this one has limited resources to
  address those problems. APIC provides a forum
  with Sr Mng to understand what our top concerns
  are, prioritize them and fund them. Someday we
  should list out in one document the hundreds of
  things that have been accomplished at this firm
  that started on an APIC priority list. You would
  be amazed at how much it has affected your daily
  working life. I want this to continue, in fact I
  need this to continue if my practice is going to
  continue to grow.
• Finally, I will leave you with this thought.
  Some of my closest friends in the world have
  come from my time at APIC. In these
  relationships I find the things that make me a
  better practitioner and a better person. My hope
  is that you will get more involved in APIC. If
  you wait for all of these things to come to you,
  you are probably correct in leaving. However, if
  you embrace wanting to be cutting edge then allow
  us to help you find one of our committee's that
  most closely aligns with your business I think
  you will get from APIC everything that I have.
  It was the best decision I ever made and one I
  hope you will make as well.
• Thanks for listening and allowing me to share my
  experiences with you.
• Timothy B. Kneen, APIC Vice President
• The good news to this letter is that the member
  has now
• renewed their 2005 membership!

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A Community of Colleagues Fostering
Professionalism Through a Culture of Consulting