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									   A Year of Change, a
    Return to APIC’s
             Annual Membership Meeting
Association of Professional Investment Consultants
                    June 9, 2005
                            Association of Professional Investment Consultants (APIC)
                                                                          Organizational Chart 2005-2006

                                                                                              APIC Membership
                                                                                                                                                                                                             June 9,2005
                                                                                              Committees and Chairperson (s)

             Endowment/               Corporate           Professional          Membership             Private Wealth           Legal and             Website/        Technology            Conference              Research
             Foundation                Services           Development                                                           Regulatory             Street                                Oversight
                                                                                 Jim Gill               Management                                    Smarts          Jon Webster                                  & Evaluation
                                     Brian Penzel         Janet Bolton                                                             John                                                    Elaina Spilove
                                                                                                                                  Collier            Tom Davis                                                      Kent Cox

 Endowment/                                                             Oracle
  Foundation         Endowment/                                                               < $5 Million              > $5 Million
                      Foundation                                      Bill Teeple                                                                                                   Logistics          Agenda Planning
 >$25 Million                                                                                 Susan Yelen              Steve Thacker                                             Planning 2006               2006
                     < $25 Million                                  Barbara Griffin
Lori Van Dusen                                                                                                          Scott Wilson                                             Elaina Spilove         Gregg Paulson
                     Doug Berger
 Scott Thayer                                                                                                                                                                                            Jeff Wigbells

           Lori Van Dusen            Mark Curtis          Janet Bolton         Skip Sussman              Susan Yelen            Mike Engel            Al Eaton        Brian Hein            Elaina Spilove         George Dunn
            Scott Thayer                                                                                 Brian Kelly
            Doug Berger                                                                                  Bob Scherer

                                                                                                       Board Liaisons

                                                                                                       APIC Board of                   Governance
                                                                                                         Directors                 Paul Compton

                                               Secretary/Treas               Pres. Elect/VP              Executive                   President/
                                                                                                         Committee                                                             Past President
                                               Douglas Berger                 Tim Kneen                                            Spokesperson
                                                                                                                                                                                Jim Pupillo
                                                                                                                                    Chris Aitken

                                                   Finance Comm.         Nominating             Best Practices                                                    Steering                Advisory Group
                                                   Douglas Berger        Tim Kneen               Tim Kneen                                                       Committee                  Jim Pupillo
                                                                                                 Phil Shaffer                      Exec Director
                                                                                                                                                                 Jim Pupillo               Chris Aitken
                                                                                                                                    Eric Scharf
     President George Bush once
     said “Great Leaders are                                                                                                           Association
     defined by those people
     around them..”
Welcome Newly Elected Board Members
             Three-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
Honoring our Charter Members
   Chris Aitken            Steve Jackson
   Bill Ankeny             Brian Kelly, Sr.
   Dan Biederman           Ted Lucien
   Ed Clissold             Chris Poch
   Rusty Cooer             Dan Rolan
   Mark Curtis             Mike Sasser
   George Dunn             Robert Scherer
   Larry Eckstrom          John Scott
   Barry Giller            Sandee Smith
   Rich Gleason            Gene Trudeen
   Austin Heberger         Jeff Wigbels
   Kathleen Hegenbart      Howard Zumsteg
   Mary Lynne Hickey
   Laree Hulsoff
              A Year in Review
   Rewrote APIC’s Mission Statement and five-year
    Strategic Plan including new membership
   Made structural changes to the conference
   Dramatically reduced APIC’s expenses
   Created new committees
   Partnered with the Firm on new initiatives
   Developed Professional Standards Guide
  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
 Produced a new APIC budget for the recently adopted policy that
  avoids potential conflicts of interest
   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 < $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
  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
 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.
   Accomplishments in 2004 - 2005
Foundation/Endowment < $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.
  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
 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
New Mission and Five-Year Plan

   “A Community of Colleagues
    Fostering Professionalism
 Through a Culture of Consulting”
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
    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 FC’s exchanging ideas and

    APIC members will be the beneficiaries of
    “Returning to Our Roots” and to spending
    more time sharing ideas with our friends
            and fellow practitioners
              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
    New Committees = New Problem Solving
   Best Practices Committee is generating great ideas that are
    shared with the entire membership
     • George Dunn’s ideas on allocating to commodities
     • Scott Thayer’s finals presentations, etc.

   Professional Development Committee
    • Committed to raising the knowledge level and differentiating our
    • 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
     • Chris Aitken, President
     • Tim Kneen, President-Elect, June 2006
     • Jim Pupillo, Past President 2004
     • Doug Berger, Secretary and Treasurer
     • Elaina Spilove, Conference Oversight
       Partnering with The Firm

   FundFire cost savings
   Board meetings held at CG and
    other firm events to create cost
   Top priorities list
   Conference planning
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
    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
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
              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”
     Association of
Professional Investment
  A community of colleagues
  fostering professionalism
     through a culture of
   Professional Association
    • Bylaws, Policy and Governance, Procedures
   Professional Expectations of members
    • Qualifications – Skill-set
   Committees of members – principal
    • Standing Committees
    • Functional Committees
   Annual Educational Conference
   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
   Our passion for perfection enhances the financial
    consultant’s effectiveness and the quality of the client’s
   APIC is the communication link between unified financial
    consultants and Smith Barney’s senior management.
   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
    • communicates to support free interchange
      of our best practices, ideas and information,
      and to build the collective wisdom of our
      members and our association.
                   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
    • a unified voice representing the business needs of the
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
        • FC’s prepared to qualify
      Professional Development Committee
      Electronic Communication
   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
   Unified communication strategy
    • Oracle upgrade / APIC Journal
    • Website upgrade path
    • Media relations
   APIC archives – publish history
    • Annually itemize accomplishments

   Drive change by teaching
     • Ongoing member
     • Conference content
     • Industry Advisory Council
         Member Expectations
 Share the Vision
 Professional Standards

 Ethical Practices

 Leadership

 Committee Service
    • Challenge
    • Natural talent + willing to learn
     Association of
Professional Investment
  A community of colleagues
   fostering professionalism
      through a culture of
             Jim Pupillo
          Immediate Past President
         Chair, Steering Committee
       Chair, Industry Advisory Council

Guided APIC’s Initiatives in Two Key
      Professional Standards
    Maximizing APIC’s Industry
Focus on Standards and Innovation

   Creating resources for building a
    culture that values high professional

   Tapping into the best of the
    investment management consultant
    industry to create innovation and new
    directions for the practitioner
    Professional Standards Project
   Initiated by former President Jim Stoker
    with the guidance of the Steering

   Assisted by the resources of Don Trone
    and the Foundation for Fiduciary Studies
 Partnership with the Foundation
      for Fiduciary Studies
Distribution partners
 with the Foundation
 of their publication
APIC members
 receive a special
 discounted price.
      APIC Code of Ethics
In 2004 the Board of Directors
  approved an APIC member Code of
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
                   APIC Code of Ethics
I 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
             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
   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.
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
                   Working with Smith Barney’s
                     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.
 Eight Standards for
Professional Practice
Sample Standard
       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
         How to Obtain the Guide
   APIC is placing a .pdf copy of the Guide on the
    members only section of the website – your’s
    free to download as a member benefit.
   Attractive color copies will also be available to
    •   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.
     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
    • Industry Think Tank – Function as an
      exploratory investment consulting research
      and developmental think-tank.
          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.
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
    In Closing – Two Thank You’s
   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
   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!
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.
     • 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
     • 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.
   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.
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!
   A Community of Colleagues
Fostering Professionalism Through
      a Culture of Consulting

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