Wealth Management Overview

Financial Services Industry Training

Introduction to
Wealth Management

Saunders Learning Group, LLC
Saunders Learning Group, LLC, Andover, KS

Training from Saunders Learning Group

Saunders Learning Group provides a variety
of training programs, workshops and
seminars targeted to the financial services
industry.

Programs are available in a wide range of
topics, and we are specialists in developing
custom programs that are targeted to your
needs.

Contact the founder, Floyd Saunders at
316-680-6482 or at
floyd@floydsaunders.com for more
information.

1

Topics

1. Six Dimensions of Wealth Management
2. Wealth Management Products
3. Investment Management
4. Private Client Investments
5. Personal Trust
6. Private Banking
7. Planning and Advisory Services

Saunders Learning Group, LLC, Andover, KS Slide 2

Six Dimensions of
Wealth Management


Six Dimensions of Wealth Management

Wealth Management

 Family Continuity

 Strategic Philanthropy

 Risk Management

 Integrated Planning

 Investment Diversification

 Lifestyle Enhancement

Saunders Learning Group, LLC, Andover, KS 4

Comprehensive Wealth Planning

Discovery
 Family, key issues
 Goals, retirement timing, special needs
 Values
Discovery  Comprehensive view of current financial
picture
Identifying your values & goals  Risk tolerance, time horizon, attitude
toward volatility
Analysis, Recommendations
 Analyze personal, financial information
 Income goals, probability analysis
 Analyze liabilities
 Analysis of risks and threats
 Coordination with outside advisors
Monitoring Analysis & Reccomendations  Action plan:
Client growth, preservation, transfer of wealth
Building an Action Plan Implementation
Ongoing evaluation & reporting
 Retirement and education plans
 Estate plan, trust, philanthropic plans
 Borrowing plan
 Risk plan including
diversification, hedging, insurance, tax
minimization
 Family mission and bylaws
Implementation  Asset management
Monitoring
 Track progress toward goals
Choosing services & providers
 Set/follow guidelines for liquidity, asset
allocation
 Notification when portfolio strays
outside guidelines
 Performance reporting
 Online access


Wealth Management Services

Comprehensive Wealth Planning
Integrated analysis and planning for family issues, wealth transfer, asset location
and protection
Family Advisory
Maintain family unity across generations focusing on family missions, goals and
governance
Philanthropic Services
Invest in Others is more than our motto, it is our passion
Investment Management
Tax sensitive, asset allocation, hedge funds and private equity, concentrated
positions, diversification, control and restricted security management, hedging
and monetization strategies
Reporting, Monitoring, Aggregation, Access
Comprehensive view of assets and portfolio


Wealth Management
Products


Typical Wealth Management Products


 Discretionary
Asset A Discretionary approach means that, having agreed the strategy, you delegate
Management the day-to-day investment decisions relating to your portfolio to an investment
 Asset manager. This is ideal if you don’t have the time or resources to commit to researching and monitoring
the global financial markets yourself.
Allocation and
Investment
Strategies
 Alternative Asset Allocation - A portfolio strategy that involves periodically rebalancing the
investments portfolio in order to maintain a long-term goal for asset allocation, where
investments are held in a mix of stocks, bonds, cash, commodities or
alternative investment.

Alternative investments include hedge funds, managed futures, real estate,
commodities and derivatives contracts. Most alternative investment assets are
held by institutional investors or accredited, high-net-worth individuals because
of their complex nature, limited regulations and relative lack of liquidity.
Link to 70 minute presentation on investment management @ Yale:
http://openmedia.yale.edu/projects/media_viewer/video_viewer2.php?window_size=medium&type=flv&title=ECON%20252%
20-%20Lecture%209%20-
%20Prof.%20Robert%20Shiller&path=%2Fcourses%2Fspring08%2Fecon252%2Fflash%2Fecon252_09_021308


Asset Allocation

Asset Allocation – Review, analysis and management
Strategic Allocations Tactical Adjustments

tactical
underweight

strategic
overweight

Build portfolios based on
Further adjustments are made
strategic risk and return
assumptions and models. based on short-term insights.

Asset allocation does not ensure profit or protect against loss.

When an asset class is overweighted, other asset classes are underweighted by a compensating percentage so that the total
allocation remains 100%..

11

Alternative Investments Strategies

MARKET ANALYSIS SPONSOR ANALYSIS PRODUCT ANALYSIS

 Investment Team

 Investment Process
 Current Market Dynamics  Financial Health of Sponsor  Risk Disclosure

 Regulatory Environment  Experience, Track Record  Legal, Compliance Issues  Track Record

 Market Participants  Organizational Alignment
 Return Potential

 Risk Profile

Private Equity Hedge Fund Strategies Real Estate Structure Products

Global Buyout Event Driven Trend Core Principal Protected

Distressed Real Equity Long Managed
Opportunistic Return Enhanced
Estate Short Futures

Mezzanine Absolute Return Multi-Strategy Value-Added Bull/Bear


Alternative Investment Research

Focused on fund of funds, hedge funds, real estate, private equity, structured products and other
non-traditional assets.

Identification Diligence and Implementation
Monitoring

 Broad Access to Innovative  Market Analysis  Concepts for combining
Products Alternative with Traditional
 Sponsor Analysis – assets
 High Quality - Well Operational Processes
Researched Products and Stability
 Risk and Global based
implementation strategies
 Focus on Low Leverage –  Product Analysis – Legal/
fundamental research Disclosure
oriented products

 Cross wealth products  Product Analysis – Risk/
Return
(Mutual funds to 3C-7)

Investing in alternative investments may not be suitable for all investors and involves special risks such as risk associated with leveraging the investment,
potential adverse market forces, regulatory changes, and potential illiquidity. There is no assurance that the investment objective will be obtained.

13

Structured Investments
Structured products are investments that offer some protection from downside risk in exchange for the investor foregoing some upside
potential to achieve that protection. Structured products typically have two components: a note and a derivative, and have a fixed
maturity. If the option (derivative) turns out to be valuable, investors can gain exposure to the upside of the asset class.

Structured investments with tailored terms and Structured product strategies:
risk/reward profile are designed to help clients: - Customized notes, linked to a single stock, bond, or
- Optimize returns, diversify portfolio holdings currency, basket of stocks, bonds, currencies, or
indices; or baskets of asset classes
- Provide leverage
- Principal protected structures
- Derive tax efficiencies
- Leverage/deleverage notes
- Minimize volatility, provide downside protection
- Total return swaps, trigger swaps
- Hedge fund derivatives
- Fixed or floating rate payment instruments
Investing in customized notes is not equivalent to investing in an index and the return of the notes is linked to the performance of
the index which is subject to market risk.
• Principal protected notes are used to gain exposure to an asset class while providing protection at maturity.
• Principal protection varies from partial to 100%. Investing in PPN is not equivalent to investing directly in the underlying index
and involves significant risk, such as risks associated with derivatives.
• Such note does not guarantee any return of principal and the investment is fully exposed to any decline in the underlying
investments.
• Structured notes are intended as “buy and hold” investments. Investment value prior to the maturity will be influenced by many
economic and market forces that may either offset of magnify each other.
• These can include interest rates, implied volatility and time remaining to maturity.
• No assurance can be given that the strategy will be successful.
Investing in alternative investments may not be suitable for all investors and involves special risks such as risk associated with leveraging the investment, potential adverse market forces,
regulatory changes, and potential illiquidity. There is no assurance that the investment objective will be obtained.


“Economic Seasons”

Capital Structure
Special Situations
Arbitrage Fundamentally
Undervalued
Securities

Distressed
Securities
Economic Activity

Merger Arbitrage

Macro Relative Value
Long/Short Equity

A generic business cycle is presented above, for informational purposes only. Investing in alternative investments may not be suitable for all investors and involves special
risks such as risk associated with leveraging the investment, potential adverse market forces, regulatory changes, and potential illiquidity. There is no assurance that the
investment objective will be obtained.


Investment Manager Research

Evaluation Framework: The Key Areas
Investment
Process People
Philosophy

Personnel

Quantitative &
Implementation
Qualitative Criteria

Quality of
Composite
Performance Process

Dispersion

Business
Evaluation

Quality of
Research

The Research Team maintains a strictly-derived “short list” of strategists that have been reviewed and believed to be of enhanced quality. This is done by
monitoring managers’ performance, adherence to philosophical guidelines, low personnel turnover, consistency of assets under management, etc.


Investment Research and Strategy

The Six “I”s of Research:
 Integrity Investment Research provides macro and quantitative
analysis of markets and sector trends. The core focus of
 Independence the group is to help investing clients make informed
decisions by providing value-added, independent,
 Insight insightful analysis.

 Innovation Financial analysis, advice and reports are designed to
deliver independent opinions empowering advisors to
 Illustration work in the interest of clients.

 Illumination


Financial Investment Process

Investment Strategy Committee Research Process

STEP 1: Gathering the STEP 2: Tweaking the Mix STEP 3: Finalizing the STEP 4: Solutions
Inputs to Set the Strategic for Tactical Benefit Model Portfolios
Allocations

Strategic Discretionary
Tactical
Allocations Solutions
Outlook and Model
and
Portfolio Portfolios
Economic Advisory
Positioning
Base Case Solutions

The Research Analytics Strategy The Investment Strategy Group It’s not always practical or cost-
Group gathers market data, key formulates an economic outlook effective to make a change to The model portfolio is used in
economic variables as well as and suggests tactical positions on model portfolios every time there’s two ways:
other fundamental information to equity, credit, currency and a change to the short-term view. For discretionary relationships,
build 10-year projections of risk alternative asset classes based But periodically, changes in the the authority to make buy and
and returns for a variety of asset on key market indicators gathered outlook prompt it to alter its sell decisions on your behalf
classes. by the Economics Research team recommendations. to inform clients on guidance in
The Investment Strategy Group and top third-party analysis. The Portfolio Strategy Group an advisory capacity.
then produces a series of transforms the tactical positions to
strategic portfolios for a wide specific portfolio weightings using
spectrum of risk levels. the strategic portfolios as a
baseline.


Private Client
Investments


Portfolio Construction - Investment Spectrum

Investment Spectrum
Liquidity, Income, Growth of Capital

Exchange Structured
Fixed Funds/ Products/ Real Hedge Private
Cash Equities
Income Managed Derivatives Estate Funds Equity
Futures/
Commodities

Money Managed High Quality Fund of Unique Funds Fund of Leveraged
Market Portfolios Managed Funds Structured Funds Buyouts
Joint
Funds Portfolios Products
Individual ETFs Ventures Macro Mezzanine
Other Cash Issues Mutual Funds Unique Financing
Futures Operating Long/
Instruments Derivative
Annuities Funds Companies Short Distressed
Strategies
Debt
UITs Event
Driven Special
Innovative
Situations
equity-linked Market
products Neutral


Equity and Fixed Income Strategies

Whether your goals include opportunistic investments, yield-enhancement instruments, or risk-averse
strategies, Wealth Management specialists are responsive to the complex wealth challenges of affluent
individuals and sophisticated investors.

Wealth Management research specialists are experienced problem-solvers, helping clients realize financial
opportunities and manage the burdens of potential risk despite volatility in pursuit of achieving beneficial
outcomes for your significant personal, trust, business, and philanthropic assets.

 Identifying Opportunity:  Strategies with tailored terms and risk/reward profile are
- Economic perspective designed to help clients:
- Strategic and tactical asset - Diversify risk
allocation - Reduce volatility, provide downside protection
- Preserve and enhance expected returns
- Domestic and Global
- Laddered or “Barbell” income portfolios
- Growth, Value, Core
- Access liquidity from stocks
- Capitalization biases - Provide leverage
- Credit Analysis
- Managed Portfolios
- Mutual Funds
- Annuities
- UITs


Hedging and Monetization Strategies

Hedging Monetization Diversification

Option Strategies Hedging + Margin Loan
Private Exchange Fund
Pre-Paid Forward Sale Single or Multi-Investor
Sale of a Call Option
Contingent Forward Sale

Securities
Law

Regulatory Tax
Issues Implications

Client

Equity Deal
Derivatives Structuring

Equity
Trading


Concentrated Stock Management

Liquidity & Risk Considerations for Restricted, Control, & Concentrated
Stock Positions

Preservation
of Capital
 Margin Loan
 Rule 144/145 sale
 Option Strategies
Liquidity
Strategies  Pre-Paid Forward Sale
 Exchange Fund
 Reinvestment of prepaid forward sale
Hedging
Strategies  Reinvestment of margin loan proceeds
 Exchange Funds
 Loan to finance diversification strategy
Diversification  10b5-1 Trading Plans


Cash Management

Strategic Options

FORMULATE
INVESTMENT DEVISE A STRATEGY EXECUTE MONITOR
POLICY

Client Interest Rate Yield Curve Sector Security Benchmarking
Objectives Management Management Allocation Selection & Reporting
Understand Needs for Establish Investment Determine Positioning Identify Relative Value Identify and Capture Select Appropriate
Return, Liquidity and Policy Parameters on Yield Curve Between Sectors Value Between Index / Benchmark
Preservation of Alternative
Adjust Portfolio Conduct Periodic
Capital Investments
Maturity Profile Based Forward Break-Even Performance
Yield vs. Stability
Define Investment on Interest Rate Analysis Monitoring
Goals, Acceptable Outlook Taxable vs. Tax-
Security Analysis Provide Full
Investments, Portfolio Horizon Roll-Down Exempt
Compliance Reporting
Limitations, Analysis Execution
Responsible Parties Provide Monthly
and Authorized Broker Spread Analysis Reports Conforming to
/ Dealer / Bank Month End
Identify and Schedule
Anticipated Cash
Outlays

24

Personal Trust


Personal Trust Services
 Trust & Estate Planning
 Trust and A trust is a relationship where one party ("the grantor") gives fiduciary control
Estate of property to another party (a person or an institution, "the trustee") for the
benefit of another ("the beneficiary").
Planning The trustee (Bank trust department) administers and controls the assets of the
 Custody trust according to instructions found within the trust document.
 A personal trust can be used to: reduce estate taxes, as a tool for protecting the
 IRA assets of your estate, to ensure the proper distributions of assets to
Administration beneficiaries, to provide support for your spouse and children.
 Some of the services offered by a Trust Company include:
 Will  Living Trusts – A document that directs an trustee to managed investments for the trustor while
appointments the trustor is still alive. This allows you to avoid probate and allow for the distribution of assets
quickly after death.
 Foundations  Revocable Trust - A trust that may be altered or terminated during the grantor's lifetime. Since
the trust can be altered, it is part of the estate and subject to taxation.
and Charitable  Special Needs Trust - A specialized legal document designed to benefit an individual who has a
Trust disability and allows for the payment of benefits from government programs.
 Testamentary Trust - A trust created by the terms of a will, with the executor as trustee, for the
benefit of someone else (spouse, child etc.)
 Dynasty Trust – A trust in which assets are controlled through several generations and makes
use of generation-skipping tax exemption.
 Life Insurance Trusts - An irrevocable trust set up with a life insurance policy as the asset,
allowing the grantor of the policy to exempt asset away from his or her taxable estate.


Personal Trust Services

 Custody  Custody - A service in which a brokerage or bank holds securities on behalf of the
customer. In addition to the safekeeping of assets the bank as custodian can sell the asset as
directed by the customer.

 IRA Plan Administration - A group of services providing complete administrative,
 IRA operational, and compliance support for individual retirement accounts
 Tax Reporting – Produces and mails tax information to IRA owners and the IRS
Administration
 Periodic Payment Notification and Calculation – Notifies you of IRA owners nearing
critical ages to elect payment options
 Death Benefit Claims Processing – Informs you and beneficiaries of payment options,
and notifies you of how and when to disburse assets.

 Will  Will Appointments – Arrangements were a trust department is appointed as the
administrator for a person’s will. The trustee will act to distribute assets according to the
Appointments provisions of a will, pay final expenses and file tax returns. Will appointments often include
arrangements for the creation of a trust to continue to manage assets for the benefit of
beneficiaries.

 Foundations – A legal categorization of a nonprofit organization set up to support specific
causes or charitable purposes. This type of non-profit organization differs from a private
 Foundations and foundation, typically set up to provide for a family or individual.

Charitable Trust  Charitable Trusts - Trust created for advancement of a specific cause and can be funded to
exist pass the lifetime of the person creating it or funding. Generally exempt from taxes.


Private Banking


Private Banking

 Also referred to as Wealth Management services
 Personalized financial and banking services that are traditionally offered to a bank's
rich, high net worth individuals (HNWIs).
 For wealth management purposes, HNWIs have accrued far more wealth than the average
person, and therefore have the means to access a larger variety of conventional and
alternative investments.
 Private banks aim to match such individuals with the most appropriate options.
 Private banking offers an array of deposit and cash management services, along with
residential mortgages, specialty lending and other custom financing solutions to help you:
 Manage your assets and liabilities
 Provide the liquidity you need for important investments
 Liquidate a concentrated stock position tax-efficiently
 Fund short-term cash flow needs
 Obtain financing for major purchases such as private aircraft and yachts


Planning and
Advisory Services


Corporate Consulting

Type of Fund Key Services
 Asset / Liability Studies
 Asset Allocation Advice
Defined Benefit Plans
 Traditional and Alternative Investment Manager Search
Capabilities
 Performance Measurement Reports
 Trust and Custody Services

 Bundled Platform Services
Defined
 Investment Consulting for Fund Lineup
Contribution Plans  Lifestyle Funds and Automatic Enrollment
 Personalized Asset Allocation Advice for Plan Participants

Foundations and  Investment and Spending Policy Statements
Endowments  Traditional and Alternative Investments
 Board Member Communications

Family Offices and  Specialized services for high net worth families including all
Private Individuals of the above and art advisory, private banking, aircraft
leasing and other capabilities


Philanthropic Planning

Seek unique products and opportunities
Interested in what money can’t buy
Philanthropic mind-set

Financial The Private Client
Advisers Trust Company

 Endowment Funds  Charitable Bequests
 Large Direct Capital Gifts  Charitable Lead Trusts
 Pooled Income Funds  Charitable Remainder Trusts
 Private Family Foundations  Donor Advised Funds


Family Advisory and Education

 A Wealth Manager can
 Client Education & Mentoring helps clients manage the
family dynamics of inter-
 Family Philanthropy
generational wealth transfer.
 Business Succession Plans  Wealth consists not just of
a family’s financial
 Advice on family offices or capital, but of their human
alternative structures and social capital as well.
 Family Governance Help clients maximize the
structures/documents value of all their family capital
through the transfer and
 Family Mission Statements preservation of the family’s
shared values and the
 Wealth Structuring, jurisdiction creation of an enduring family
analysis legacy.

 Education Savings Programs
Financial Team & Client
 529 College Savings Program
 Custodial Accounts
 Trusts
 Education Tax Credits/Deductions
 Investment Strategies
 On-going Education


Insurance Planning

Life Insurance may provide:

Explore the possibilities of leverage premiums  A substantial benefit in exchange for a relatively
low amount of premium dollars
 An income tax-free death benefit to your named
beneficiaries

Life Insurance strategies integrated with:  Estate tax-free proceeds with proper planning
 Liquidity when estate taxes are due
Financial Planning  An opportunity to accumulate assets on a tax-
advantaged basis
Trust Services
 A source of tax-free funds to satisfy a variety of
Retirement Programs objectives, including education funding and
retirement planning

Can Provide Income and Estate Tax benefits for:
Personal Needs Business Needs

Legacy planning Succession planning/key person

Estate tax liquidity Deferred compensation

Philanthropic aspirations Buy/Sell funding

Income replacement COLI


Investment Advisory Consulting

Flexible Choices
Open Architecture
 Strategic Asset Management Potential Benefits
- comprehensive advisory platform offers clients broad customization from
5,900 investment options, including mutual funds, stocks, bonds, UITs, conservative options, fund of
hedge funds, managed futures and no-load variable annuities

 Manager Select - separate account platform offering over 120 institutional managers and over 330
strategies, with research-recommended short list and the flexibility to customize portfolios to client needs

Centrally Managed
 Optimum Market Portfolios - mutual fund asset allocation platform with both strategic and dynamic
models, ongoing due diligence and automatic rebalancing; a turnkey small-account solution

 Personal Wealth Portfolios - unified managed account for high net worth clients, offering a sophisticated
and efficient “one account, fee and contract” solution; invest in separate accounts or combine separate
accounts with mutual funds; features automatic rebalancing and the customization benefits of overlay
portfolio management

 Model Wealth Portfolios - discretionary research-driven platform helps clients construct portfolios,
features overlay portfolio management, superior mutual fund managers, automatic allocation of deposits
and withdrawals


Questions


Post Workshop Action Plan

 Complete the Post Workshop Action Plan

37

Thank You !


About the Author/Presenter
 Floyd Saunders has worked on Wall Street
with both Bank of America and JPMorgan,
where is was a vice president in global
financial systems. He has worked across the
industry in retail, commercial, and
investment banking.
 He has taught courses in Money and Banking
and extensively for the American Institute of
Banking and various colleges.
 As a consultant, he developed and taught a
wide range of banking and investing courses.
 He authored three programs for the
American Bankers Association: Banking on
Mutual Funds and Annuities, Introduction to
Securities Markets and Investing in Securities.
 He is the author of “Figuring Out Wall Street”
and his next book is “Family Financial
Freedom” a book on personal money
management.


Reference Material

Figuring Out Wall Street Consumer’s Guide To
Financial Markets
By Floyd Saunders
Publisher: Saunders Learning Group

ISBN: 978-0-9824019-0-3

Available from Amazon:
http://www.amazon.com/Figuring-Out-Wall-Street-
Consumers/dp/0982401906
and many other online book stores.
Book summary: Figuring Out Wall Street, is the
concise guide to help everyone understand how what to do
now to restore our financial systems. Written in an easy to
understand manner, even the most complex financial
concepts are easy to digest. This book provides help to
monitor investments with a review of investment products,
financial regulators and economic indicators. Learn how the
stock market exchanges work and the world of investment
banking, hedge funds, venture capital and private equity.
Every chapter includes action plans for investing.


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