an introduction to maendel wealth management

Contents

1

2

3

4

5

Firm and Mission

LPL Financial: The Organization

Investment Principles

Client Discovery

Ongoing Consulting and Communication

Investment PresentationPrepared exclusively for

AN INTRODUCTION TO MAENDEL WEALTH MANAGEMENT

November 26, 2011

Prepared by:

James D. Maendel

MAENDEL WEALTH MANAGEMENT

31700 Middlebelt Road, Ste 145

Farmington Hills, MI 48334

Phone: (248) 626 2000 X234

http://maendelwealthmanagement.com

Securities, advisory services & insurance product offered through LPL Financial and its affiliates, Member FINRA/SIPC.

Not FDIC/NCUA Insured Not Bank/Credit Union Guaranteed May Lose Value Not Guaranteed by any Government Agency Not a Bank/Credit Union Deposit Tracking # 429093

Firm and Mission

FIrm & mIssIOn

Building an investment portfolio designed to address your unique long-term goals and financial dreams is a complex process that requires knowledge, skill, dedication and expertise. For investors in today’s ever-changing financial markets, a professional financial advisor can provide expert advice to help you pursue your financial goals.

The importance of financial guidance

n Analysis of needs and goals

n Asset allocation strategies

n Manager selection

n Retirement income

n Investment strategies

n Ongoing monitoring and maintenance of investments

n Ongoing education

n Tax management

n Long-term capital appreciation

n Wealth structuring

n Trust services

n Education savings programs

n Wealth transfers

n Socially responsible issues

FIRM & MISSION

needs and goals

portfolio construction

tax management

retirement income

The importance of financial guidance

FIrm & mIssIOn

As your investment partner, we are committed to helping you accomplish your unique financial goals and objectives. After developing a thorough understanding of your risk tolerance and short- and long-term goals, we will work together to create a customized investment portfolio designed for you. In order to accomplish this, we will take you through the investment consulting process, which is designed to help us determine how to best address your financial goals and dreams.

The investment consulting process

Discovern What are your hopes and dreams?

n Do you have a high or low tolerance for risk?

n Do you have any specific tax considerations?

n What is your investment objective?

n What is your time horizon?

Recommendn Investment portfolio recommendations

n Customized asset allocation strategies

n Wealth management services

n Diversification

Designed For You

4

Rev

iew 1 Discover

3 Implement

2 Recommen

d

Reviewn Quarterly performance reports

n Ongoing due diligence of investment managers

n Periodic reviews

n Investment newsletters

n Tax harvesting

n Portfolio rebalancing

Implementn Account opening paperwork

n Funding

FIRM & MISSION

The investment consulting process

YOU, YOUR FAMILY, YOUR DREAMS

THAT'S WHAT MATTERS & THAT IS OUR SOLE FOCUS AT MAENDEL WEALTH MANAGEMENT.OUR GOAL IS TO BE YOUR MOST TRUSTED ADVISOR THROUGH OUR PROFESSIONAL KNOWLEDGE, OUR INTEGRITY AND OUR

PERSONALIZED SERVICE.

WE HAVE ALWAYS BELIEVED that in an increasingly complex world of investments, pursuing your financial goals depends on solid, unbiased

advice; meaningful timely information and research; and access to the investments and services that best fit your specific circumstances. Being

independent means we are free to recommend only those financial strategies that fit our clients' unique needs & goals, allowing us to provide truly

independent and objective investment advice.

NOT ALL FINANCIAL ADVISORS CHARGE COMMISSIONS. The advisors at Maendel Wealth Management offer you an alternative choice to

commission-based investing: a fee-based relationship enhancing communication for both the client & the advisor. A fee-based relationship can

help to foster your financial success by inspiring real teamwork & providing the kind of freedom & flexibility you've always wanted when investing forthe future.

WE WELCOME YOU TO STOP BY OUR NEW OFFICE, call us anytime with questions, or, if you're not quite ready to say "Hello" visit our website at www.maendelwealthmanagement.com. At Maendel Wealth Management, there are no "products", only strategies. Each client has unique financial circumstances and challenges, and we tailor our recommendations & process to meet your precise requirements.

At Maendel Wealth Management, we know that the stresses and challenges facing you today are unique, and may have made your financial goals

seem unobtainable. We believe those goals -a financial future without worries, a future where your loved ones are secure, a level of financial

security that will give you the freedom to live, travel, work and play on your own terms, are still achievable.

We have a passion for the markets, and for helping people understand them and benefit from them, and we believe we can help you not only to

survive, but to thrive in this ongoing global economic storm.

THE MWM TEAM IS HERE TO WORRY ABOUT THE MARKETS AND YOUR ASSETS SO THAT YOU DON'T HAVE TO. It is an honor for us to serve you and your family.

Define, Advance & Protect

http://www.maendelwealthmanagement.com/

Define, Advance & Protect

James D. Maendel, Wealth Advisor at Maendel Wealth Management

Maendel Wealth Management provides professional asset management and comprehensive financial, retirement and

estate planning to select families and business owners.

We're located in Farmington Hills, Michigan but we serve families and businesses throughout the U.S. using state of the art

client contact and secure interface technologies. Our mission is to combine the personalized service and "small town" feel

of a family office model with the global scope, regulatory oversight, capabilities and execution platform of the nation's

largest independent broker/dealer, LPL Financial.

James D. Maendel is co-owner and Chief Investment Strategist at Maendel Wealth Management. An alumnus of the State

University of NY at New Paltz and Cortland University, Jim obtained a BA in childhood education, with minors in psychology

and Russian language. He holds Series 7, 63 and 65 securities licenses, as well as accident, health, life and long-term

care insurance licenses & has earned the Accredited Asset Management Specialist designation in addition to the

Accredited Wealth Management Advisor (AWMA) professional designation.

A native of Hastings, England, Jim has lived in the United States, Europe and the Middle East and brings an inquisitive,

globally informed approach to wealth management and investing. Jim made Michigan his home in 1995 and lives in the Lakes Area of Oakland County with his wife Nicole, & three children.

Who We Are:

FIRM & MISS ION

Your total wealth management solution

FIRM & MISSION

*Please consult a qualified tax or legal advisor.

Your total wealth management solution

LPL Financial: The Organization

lPl FInancIal: the OrganIzatIOn

Providing you with advice for life

About LPL Financial

LPL Financial registers and supports more than 12,000 independent financial advisors in over 7,000 offices nationwide. LPL Financial was built on the premise that achieving your financial goals depends on unbiased financial advice, timely research and easy access to the investments and services that best fit your specific needs.

With over 40 years of industry leadership and innovation, LPL Financial serves the growing needs of independent financial advisors and their clients. LPL Financial was formed in 1989 through the merger of two brokerage firms—Linsco (established in 1968) and Private Ledger (founded in 1973).

Today the firm is a leading diversified financial services company and the nation’s largest independent broker/dealer* with headquarters in Boston, Charlotte and San Diego.

n Largest independent broker/dealer in the country*

n More than $280 billion in assets under management and 2.7 million client accounts

n 20 years of consecutive earnings growth, in both up and down markets

n No capital markets, trading, investment bank or proprietary products

* As reported in Financial Planning magazine 1996 - 2009, based on total revenue.

LPL FINANCIAL: THE ORGANIZATION

Providing you with advice for life


Account Protection and Oversight

Account protectionsn Securities Investor Protection Corporation (SIPC) Insurance applies in the

event that an SIPC member firm fails financially and is unable to meet obligations to securities clients, but it does not protect against losses from the rise and fall in the market value of investments. LPL Financial’s SIPC membership provides account protection up to a maximum of $500,000 per customer, of which $100,000 may be in cash. For an explanatory brochure, visit www.sipc.org.

n Additionally, through Lloyds of London, LPL Financial accounts have securities protection to cover the net equity of customer accounts up to an overall aggregate firm limit of $750 million, subject to conditions and limitations.

n Balances invested in the Insured Cash Account are protected by Federal Deposit Insurance Corporation (FDIC) up to a maximum of $1 million for a single account holder, $2 million for a joint account.

Oversightn The Private Trust Company, NA an affiliate of LPL Financial is a nondepository

national banking association, which is regulated and reviewed by the Office of the Controller of the Currency (OCC).


Account protection and oversight


Advisory Consulting Services

Financial Planning Group

Wealth Management Services

LPL Financial Research

The Private Trust Company

LPL Insurance Associates

Alternative Investments

Structured Investments

Lending Capabilities

Advisor

LPL Financial services

Client


LPL Financial Services




Keeping up with increasingly complex financial markets demands a high level of expertise and extensive resources.

Experienced team of professionals■n Members average more than a decade in the investment industry

■n Assists with designing asset allocation strategies and implementing the ongoing consulting process

■n Provides tools and resources to enhance the client investing experience

Innovative investment platforms — Building and maintaining investment strategies to address your goals:■n Strategic Asset Management

■n Optimum Market Portfolios*

■n Model Wealth Portfolios

■n Personal Wealth Portfolios

■n Manager Select

Partners with LPL Financial Research — Design and assistance with:■n Asset allocation strategies

■n Portfolio construction and manager selection

■n Analysis on the markets

■n Tax management services

* The Optimum Market Portfolios advisory accounts utilize the Optimum Funds, a sub-advised family of funds from Delaware Management Holdings, Inc. ands its subsidiaries. Delaware Management Company, a series of Delaware Management Business Trust, is the manager and Delaware Distributors, LPL Financial is the distributor of the Optimum Funds.



LPL Financial Planning Group

We have access to the LPL Financial Planning Group, a dedicated team devoted to helping us structure your investments, answer financial planning questions and implement tax-efficient strategies. The LPL Financial Planning Group has the expertise, tools and resources to help us suc-ceed, including access to a powerful financial planning software called WealthVision. The team routinely designs cases and devises unique planning solutions based on your specific situation.

About WealthVision

WealthVision is a powerful, Web-based wealth-planning tool that offers account aggregation, modular and comprehensive financial goal planning, and an online document storage facility that helps you store and keep track of your valuable files, all accessible through your own personalized website.


LPL Financial Planning Group


LPL Financial Wealth Management Services

LPL Financial offers a wide range of products and services that are specifically designed to address the goals and needs of affluent clients.

Legacy and philanthropic planning— Design and assistance with:

■ Donor advised funds■ Endowment funds■ Pooled income funds■ Family foundations■ Fiduciary custody services■ Charitable remainder trusts

Insurance planning—

Design and case analysis for sophisticated

strategies from a combination of internal

resources and industry experts. Lending— Margin lending and collateralized

loan capabilities.

Financial and estate planning— Effective and long-term wealth management, preservation/enhancement and asset transfer:

■ Wealth protection ■ Tax reduction and potential deferral ■ Customized estate and inheritance planning ■ Legacy and business succession planning

Management of concentrated stock positions— Offering options for liquidity, diversification, preservation of capital:

■ Hedging, option strategies■ Monetization■ Diversification, exchange funds


LPL Financial Wealth Management Services



About LPL Financial Research

LPL Financial Research works continuously to help your financial advisor interpret and adjust to the latest developments in the world’s capital markets.

As the industry’s leading independent brokerage firm*, LPL Financial has no proprietary products to sell, no investment banking relationships to promote, nor any other business conflicts to get in the way of providing unbiased recommendations. The breadth of LPL Financial research coverage—mutual funds, separate accounts, fixed income, exchange traded funds, alternative investments, variable annuity sub-accounts and more—reflects a focus on helping meet the needs of clients, rather than “pushing product” or moving inventories of securities.

The LPL Financial Research team

The LPL Financial Research team consists of seasoned and accomplished industry veterans, comprising one of the largest and most experienced research groups among independent brokerage firms.

The goal of LPL Financial Research is to be your advisor’s trusted partner. In order to be successful, it is critical that all LPL Financial advisors have access superior unbiased investing ideas, timely market perspective, and ongoing support. The delivery of timely, in-depth, unbiased research on varying investment products, asset allocation strategies, and the financial markets is designed to provide your financial advisor with a powerful tool that is a distinct advantage in helping them achieve your financial objectives.


Research Organization

Portfolio Strategy

Portfolio Strategy expertise truly sets LPL Financial Research apart from its competitors. LPL Financial Research Analysts determine the asset allocation models based on investment objectives and the strong relationship between risk and return in the portfolios and then select the models and combinations of managers for each portfolio based on a variety of characteristics and corresponding performance in over 300 different market conditions using their proprietary statistical SAT tool.

Investment Manager Recommendations

Investment manager selection and due diligence efforts for mutual funds, money managers, and alternative investment strategies is based on a strong and thorough investment discipline. LPL Financial Research's recommendations are unbiased. As an independent firm, you and your advisor can be confident LPL Financial Research is making decisions based solely on recommending the best investment option for a specific purpose. The research process combines quantitative and qualitative screening factors and analysis that do not include or consider in any way any financial arrangements or business relationships that may or may not exist between LPL Financial and the manager.

Quantitative AnalysisThe function of the Research Analytic Group is to perform quantitative analysis, performance measurement, attribution, and appraisal of LPL Financial Research’s recommendations and platforms, while managing the underlying data and application usage of products and services within the team.

Investment and Market Communications

The Investment Strategy Group is focused on delivering timely, efficient, and accurate communication of the team's investment advice to help you and your advisor stay informed. The ASK Research service desk, a dedicated team of research professionals, is ready to address your financial advisor’s market and investment advice questions.


* As reported in Financial Planning magazine, June 1996 - 2009, based on total revenue.



LPL Financial Research team

n Provides strategic guidance for the LPL Financial Research group, directs team of analysts and investment professionals providing in-depth research on the global economy and markets, portfolio optimization and construction, mutual funds, separate accounts, fixed income, alternative investments and exchange traded funds

n Served as the Chairman of the Manager Strategy Group Investment Committee at Wachovia

n Responsible for all due diligence of third-party investment managers and mutual funds, including more than 1,200 company meetings and on-site reviews

Burt White, Managing Director and Chief Investment Officer

Jeffrey Kleintop, CFA, Chief Market Strategist

Areas of expertise: n Asset allocation

n Asset class and sector research

n Capital markets analysis

n Economic analysis

n Investment manager evaluation, recommendations

n Overlay services

n Portfolio construction

n Mutual funds

n Separate accounts

n Fixed income

n Alternative investments

n Exchange traded funds

n Variable annuity subaccounts


n Leads the development and articulation of LPL Financial Research’s market and investment strategies, leveraging his expertise in the analysis of global financial markets and asset allocation strategy

n Former chief investment strategist at PNC Wealth Management

n Recognized economic strategist

n One of “Wall Street’s Best and Brightest”—Wall Street Journal

LPL Financial Research team



The Private Trust Company N.A. (PTC) is an affiliate of LPL Financial. PTC manages trusts and family assets for high net worth clients and is licensed in all 50 states under its 1995 national banking charter to administer the trusts and implement the estate plans of affluent families. The bank does not engage in lending or deposit taking; it specializes solely in providing fiduciary solutions.

As its primary mission, PTC provides trust services to clients of LPL Financial advisors as well as to local clients in Cleveland, Ohio, where it is headquartered. PTC is also the custodian of all of the LPL Financial IRA accounts.

Key trust facts

A trust is a legal entity that holds assets, such as securities or mutual funds, for the benefit of a person, family, or organization.

When establishing a trust, you designate one or more trustees. A trustee can be an individual, often including yourself, or a bank with a trust charter. By law, your trustee is responsible for:

n Managing and protecting the trust’s assets and seeing they are diversified appropriately

n Assuring your wishes are followed and all of your beneficiaries are treated fairly

n Ensuring accurate records and accounting for all transactions

n Complying with tax reporting regulations

n Good planning will prompt the designation of a successor trustee—one who assumes responsibilities for an individual trustee who becomes disabled or dies.

n Unlike a relative, friend or business associate, a professional trustee fields a team of experts that operates your trust with care and objectivity for as long as you desire.

For more information, visit www.theprivatetrustcompany.com





The full suite of life insurance solutions includes:

n Term life

n Whole life

n Universal life

n Variable universal life

Irrevocable Life Insurance Trusts (ILITs)

Using insurance inside a trust can have a powerful impact on your estate planning strategy. Common client goals achieved by using an ILIT include:

n Helping to avoid forced liquidation to pay estate taxes on an asset a family wants to retain, such as a family business or real estate

n Helping to provide a safety net for potential long-term care needs in later years

n Helping to minimizing estate tax liability at the time assets transfer to heirs

n Helping to offer an opportunity to enhance charitable contributions, in addition to providing for heirs

n Helping to ensuring an equitable distribution of assets to heirs

n Helping to provide for greater control of assets

LPL Insurance and The Private Trust Company work together to help us implement this powerful planning tool for you.

LPL Financial offers full-service insurance solutions and dedicated support through its life insurance agency, LPL Insurance Associates, Inc. It is able to offer our firm the carriers and products to fulfill all of your fixed and variable life insurance needs with more than 24 quality, name brand companies on its platform.




Alternative investments

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

Alternative investments n Managed futures

n Fund of hedge funds

n Private equity

n Real estate (REITS, limited partnerships)

n 1031 exchange programs

n Concentrated equity solutions (Exchange funds, Collars, Pre-paid forwards)

n Oil and gas partnerships

n Equipment leasing

n Structured products

Complex tax and regulatory requirements can make sorting through and selecting the right investments difficult. We are committed to helping you navigate the world of alternative investments.

LPL Financial provides information and educational materials from key resources, including a dedicated team of consultants, the LPL Financial Research department and product sponsors, to help us determine which alternative investments are the most appropriate options for you.

As investors’ needs become increasingly complex and sophisticated, a growing number of alternative investment products have been introduced. LPL Financial has responded to this need with a range of innovative products designed for formulating, supporting or supplementing specific strategies.


Alternative investments

FIxed IncOme tradIng

Fixed Income Trading

FIXED INCOME TRADING 1

The LPL Financial Fixed Income Trading Team is compromised of professional traders who Build �xed income investment strategies speci�c to your goals O�er unique solutions Conduct buy and sell orders on a best e�orts basis

Products and Services

Government Agencies

U.S. Treasuries

Mortgage Backed Securities and CMOs Municipals Corporates Structured Products

Customized reports include

Strategies to achieve income goals

Portfolio diversi�cation

Bond maturity and income schedule proposals

Best E�orts Execution

Before a bond is bought or sold a team of more than 40�xed income professionals works to make sure best executionstandards are met. We work hard to provide the best pricesavailable whether a client is buying or selling bonds.

Fixed Income Trading’s online execution system showsthe combined inventories of dozens of �rst tier brokerdealers, wire houses, middle market and boutique bondshops ensuring that a competitive market place ismaintained.

Fixed Income Trading


Structured investments

An investment in structured products involves significant risks. Investing in structured notes is not equivalent to investing directly in the underlying indices. No assurance can be given that the investment strategy used to construct any return enhanced structured note will be successful or that the structured notes will outperform any alternative basket that might be constructed from the constituent sub indices. Investment value prior to maturity will be influenced by many economic and market factors that may either offset or magnify each other, including interest rates, the level of the underlying, implied volatility and the time remaining to maturity. Investors should carefully review the risks in the offering documents. Structured products are intended as “buy and hold” investments and may not be liquid instruments prior to maturity.

Structured investments with tailored terms and a risk/reward profile are designed to help clients:

n Optimize returns and diversify portfolio holdings

n Provide leverage

n Derive tax efficiencies

n Minimize volatility and provide downside protection

JPMorgan, DWS Scudder, HSBC, and Credit Suisse provide new monthly offerings, which may include principal protection, equity indexed notes and more.

Structured investment products are complicated investments that help provide investment exposure that cannot be accessed through traditional assets, and some protection from downside risk in exchange for the investor’s forgoing some upside potential to achieve that protection. Structured products typically have two components, a note and derivative and have a fixed maturity. Structured products combine traditional investments, such as bonds, stocks and commodities, with financial instruments, including options and swap agreements.

The most common structured products are used to gain exposure to an asset class while providing protection at maturity. Principal protection may vary from partial to 100%. If the option (derivative) turns out to be valuable, investors can gain exposure to the upside of the asset class.


Structured investments


Lending capabilities

*Lines above $5 million will be considered and priced individually.

LPL Financial Collateralized Lending Program LPL Financial has partnered with Nationwide Bank to offer Collateralized Lines of Credit to retail clients. Revolving line of credit Line amounts from $100,000 to $5 million* 30 day London Interbank Offered Rate (LIBOR) based pricing

starting at LIBOR plus 2.50%.

Line amount based on 60% of the value of the marketable securities

Line of credit checks for easy access

LPL Financial credit card program LPL Financial offers clients an exclusive credit card program, which includes a choice from the following card options with low or no annual fees: LPL Financial Rewards American Express Card and Platinum Plus©

MasterCard© with WorldPointsSM Rewards for consumers

LPL Financial Business MasterCard© with WorldPointsSM Rewards

®

for business owners

Through LPL Financial, we can offer you access to banking and lending products, including credit cardsmargin lending and collateralized loans.


Redeem points for WorldPointsSM Rewards, including cash back into yourLPL Account with as little as 2,500 points, travel with no blackout dates,brand-name merchandise, and more

Lending capabilities

Investment Principles

Investment PrIncIPles

Cycle of Investor Emotions

*Source: Ken Kivenko, 7/29/05, The Fund Library.

Investor Emotion Chart. Source: Index Funds: The 12-Step Program, M.T. Hebner, 2004.

Graph courtesy of Goldman Sachs.

“Behavioral finance scientists have studied investor behavior and concluded investors go through a multi-phase internal process before they decide to react to bad news.”*

INVESTMENT PRINCIPLES

Optimism

Optimism

Thrill

Fear

Denial

Anxiety

Euphoria

Desperation

Panic

Capitulation

Despondency

Relief

Hope

Depression

Excitement

PricesHigh

PricesLow

Cycle of investor emotions


Common investor challenges

Not having a clearly defined investment objective

Whether building a new house or an investment portfolio, you first need to establish a solid foundation. Gaining an in-depth understanding of your unique financial goals is key to this process. Your personal portfolio investment objective will take into account your risk tolerance and time horizon. Specific strategies can be created to address a single objective or a combination of objectives simultaneously.

Improperly judging risk

In general, the longer the time horizon of your investments, the more risk you can take on. Many investors, fearing even a little amount of risk, focus only on investments that address short-term volatility even though their time horizon may be 20 years or more. The result is a poorly performing portfolio in relation to their investing goals and time horizon.

Being overconfident in a single stock or sector

Relying solely on your intuition or creating attachments to specific stocks or sectors without reading impartial analyses and reports can lead to poor investing decisions. For example, employees of a firm will often make excessively large allocations to their employer’s stock, believing they can better predict the stock price because of their intimate knowledge of their firm. This is not always true, as demonstrated by cases such as Enron.

Not investing globally

A well-diversified portfolio should include assets with low correlation to each other. Some American investors may tend to lean toward domestic securities and avoid global investing opportunities altogether. By investing only in U.S. stocks, you could miss out when foreign stocks perform well.

Being led by your emotions

Every day you hear new theories or speculation about the direction of the stock market from the media, friends, family and coworkers. It can be challenging to sort through differing opinions, filter out the noise and stay focused on your long-term investing goals. Many investors find themselves preoccupied with the fear of investment losses and mistakenly make costly investment decisions.

Paying too much in taxes

Structuring your investments properly by mitigating the effect of taxes on your portfolio can help preserve and ultimately grow more of your investments over time. Not using tax-efficient money managers or strategies where appropriate may cause you to pay taxes unnecessarily.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. There is no guarantee that a diversifiedportfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.


Common investor challenges


Why does the average investor underperform?

Sources: Dalbar 2010 Quantitative Analysis of Investor Behavior Study, S&P 500, Consumer Price Index, Citigroup BIG Treasury Bill (3M). Average stock investor, average bond investor and average asset allocation investor performance results are calculated using data supplied by the Investment Company Institute. Investor returns are represented by the change in total mutual fund assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs. After calculating investor returns in dollar terms, two percentages are calculated for the period examined: total investor return rate and annualized investor return rate. Total return rate is determined by calculating the investor return dollars as a percentage of the net of the sales, redemptions and exchanges for the period. Indices are unmanaged and cannot be invested into directly. Past performance is not a guarantee of future results.

Markets have performed well Individual investors have underperformed

– Wrong decisions, wrong time

0%

2%

4%

6%

8%

10%9.14%

1.01%

2.57%

3.83%

Annualized total returns for 20 years

S&P 500

3-Month Treasury bills

Inflation

Average equity fund investor


Why does the average investor underperform?


Underperformance is a result of investors who buy high/sell low

Source: Investment Company Institute and Morgan Stanley Capital International 2010.1 The return on equities is measured as the year-over-year change in the MSCI All Country World Index.

2 Net new cash flow to equity funds is plotted as a six-month moving average. Past performance is no guarantee of future results.

3 MSCI World Index is an unmanaged index which cannot be invested into directly. Past performance is no guarantee of future results.

n Investors chase returns – Wrong decisions, wrong time

-60

-40

-20

0

20

40

60

80

-40

-30

-20

-10

0

10

20

30

40

50

Equi

ty M

utua

l Fun

d Fl

ow ($

bill

ions

MSC

I Wor

ld In

dex

(%)

MSCI World Index (%)Equity Mutual Fund Flows ($ billions)

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10


Underperfomance is a result of investors who buy high/sell low


investment principles

Your losses hurt more than your gains

n Constructing a portfolio that helps minimize losses can significantly affect your portfolio value over time.

n To bring a portfolio back to its initial value after a loss takes a return greater than the loss.n For example—a 15% loss would take an appreciation of over a year of 17.6% to break even.

Assuming an 8% annual return, the break even would take 2 years and 1 month.

% Appreciation to break even

17.6%

33.3%

53.8%

81.8%

% Loss

15%

25%

35%

45%

Years to break even at 8% annual return

2 years, 1 month

3 years, 9 months

5 years, 7 months

7 years, 9 months

past performance is no guarantee of future results. this is a hypothetical example. Your results will vary. the assumed 8% annual return used does not reflect the deduction of the fees and charges inherent to investing in securities.

Your losses hurt more than your gains


Investment prIncIples

The Emotional Rollercoaster

source: Zephyr, lpl Financial research

past performance is no guarantee of future results.

the Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. the Dow Jones is an unmanaged index which cannot be invested into directly.

stock investing involves risk including loss of principal.

Headline buzz words detail the emotional rollercoaster that is a market downturn and upswing

7850

7650

7450

7250

7050

6850

6650

6450

6250

Optimistic Emotion Says to Buy Here

Emotion Tells Investors to Sell Here

“Excitement”

“Euphoria”

“Anxiety”

“Fear”

“Panic”

3/12/97

4/11/97

6/20/97

Leve

l of

the

Dow

Jon

es In

dust

rial A

vera

ge(3

/12/

97 -

6/20

/97)

The emotional rollercoaster

INVESTMENT PR INCIPLES

To invest or not to invest?

Source: Factset as of 12/31/10

Note: This is a hypothetical example and is not representative of any specific situation. Your results will vary. The S&P 500 Composite Index is an unmanaged index and cannot be invested into directly. Investing in stocks involves risk including loss of principal.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500 is an unmanaged index which cannot be invested into directly.

Stock investing involves risk including loss of principal. Past performance is no guarantee of future results.

1953 Russia Detonates H-Bomb

1954 Dow Drops 300, Mkt Too High

1955 Eisenhower Heart Attack

1956 Suez Canal Crisis

1957 Russia Launches Sputnik

1958 Recession

1959 Castro Seizes Power in Cuba

1960 Russia Down U-2 Plane

1961 Berlin Wall Erected

1962 Cuban Missile Crisis

1963 Kennedy Assassination

1964 Gulf of Tonkin

1965 Civil Right Marches

1966 Vietnam War Escalates

1967 Newark Race Riots

1968 USS Pueblo Seized

1969 Money Tightens, Mkts Fall

1970 U.S. Bombs Cambodia

1971 Wage and Price Freeze

1972 Largest U.S. Trade Deficit Ever

1973 Energy Crisis

1974 Steepest Mkt Drop in four decades

1975 Clouded Economic Prospects

1976 Russia Launches Sputnik

1977 Market Slumps

1978 Interest Rates Rise

1979 Oil Prices Skyrocket

1980 Interest Rates at All Time High

1981 Steep Recession Begins

1982 Worst Recession in 40 Years

1983 Market Hits New Highs

1984 Record Federal Deficits

1985 Economic Growth Slows

1986 Dow Nears 2000, Mkt Too High

1987 October “Mini-Crash”

1988 Economic Growth Slows

1989 Invasion of Kuwait

1990 Gulf War


Even through many market conditions, $10,000 invested in the S&P 500 Index in December 1933 would have been worth $1,272,910 by December 2008.

Every year has a reason to say "no."

1992 Global Recession

1993 Health Care Reform

1994 Fed Raises Interest Rates Six Times

1995 Dow Tops 5000

1996 Dow Tops 6400

1997 Dow Drops 554 Points in One Day

1998 Russia Long-Term Capital

1999 Y2K

2000 Tech Bubble Bursts

2001 Weak Corporate EarningsTerrorist Attacks

2002 Corporate Accounting Scandals

2003 War in Iraq

2004 Fed Begins to Raise Rates

2005 High Commodities Prices

2006 Dow Hits Highest Level at 11,727

2007 Subprime Mortgage Meltdown

2008 Lehman Brothers Collapses

2009 National unemployment rate exceeds 10%

To invest or not to invest?

1991 Communism Tumbles withBerlin Wall 2010 The Bail out of Greece


Why patience is a virtue

Source: Fact Set, LPL Financial Research

Note: Based on S&P 500 Monthly Total Return. Average Annual Rolling period returns 1978 - 2010. Past performance is no guarantee of future results. The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The S&P 500 is an unmanaged index which cannot be invested into directly. Stock investing involves risk including loss of principal.


Percent of time stocks have provided positive returns (1977 – 2010)

Negative Returns Positive Returns

78%Over a one-year

time period

83%Over a three-year

time period

86%Over a �ve-year

time period

91%Over a ten-year

time period

Why patience is a virtue


Investment prIncIples

The Worse We Feel, the Better the Gains

source: Bloomberg, lpl Financial

past performance is no guarantee of future results. note: In interpreting the consumer sentiment survey, the lower the number, the worse consumer sentiment is.

the standard & poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. the s&p 500 is an unmanaged index which cannot be invested into directly.

stock investing involves risk including loss of principal.

Consumers feel the worst prior to large gains in the markets

Consumer Sentiment S&P 500 Price Gain Over Next Twelve Months

Less than 60 +23.1%

Less than 70 +18.5%

Less than 80 +13.1%

87 (average) +10.8%

Greater than 90 +10.8%

Greater than 100 +8.1%

Greater than 110 -1.2%

The worse we feel, the better the gains


Market comebacks

Source: JPMorgan Asset Management, Standard & Poor’s. The market returns are represented by the S&P 500 Index return (price only). Returns reflect calendar year returns and not peak to trough. The example is for illustrative purposes only. Past performance is not a guarantee of future returns. Updated as of 12/31/10. S&P 500 is an unmanaged index which cannot be invested into directly. Past performance is no guarantee of future results.

Often when times are bleak, years that follow show significant total market returns.


2003-02 / 2003-07Internet bubble/War on terrorism

1973-74 / 1975-76Oil crisis

1940-41 / 1942-45World War II

1929-32 / 1933-36The Great

Depression

2008 / 2009-10The Great Recession

148%

-78%

-17%

100%

-42%

57%

-40%

67%

-38%

39%

-100%

-50%

0%

50%

150%

100%

200%

Market comebacks


Benefits of patience

Source: Zephyr, LPL Financial Research

Note: Past performance is no guarantee of future results

The hypothetical portfolio is assumed to be invested in the S&P 500 and does not reflect the deduction of the fees and charges inherent to investing in securities. The S&P 500 index is an unmanaged index and cannot be invested into directly. Your results will vary.

Stock investing involves risk including loss of principal.


Despite starting at the “worst times,” markets reward investors

Portfolio Begins with $100,000 on:

Portfolio Gets as Low as:

Portfolio Value as of April 2010:

Dec 1972 $58,173 (Sept 1974) $3,316,940

Nov 1980 $83,479 (July 1982) $1,911,915

Sept 1987 $70,419 (Nov 1987) $603,270

Feb 1990 $92,129 (Oct 1990) $555,762

Oct 2008 $58,827 (March 2009) $105,674


Benefits of patience


Good news about bear markets

Source: Zephyr, LPL Financial Research

Past performance is no guarantee of future results.



The median bear market price decline of 21% has been followed by a 33% price gain within the next 12 months

Peak TroughDuration (Months)

S&P Price Decline

Price Gain 12 Months Later

05/29/1946 05/19/1947 12 -28% 19%

02/02/1953 09/14/1953 7 -14% 38%

07/15/1957 10/22/1957 3 -21% 31%

12/12/1961 06/26/1962 6 -28% 33%

02/09/1966 10/07/1966 8 -22% 33%

11/29/1968 05/26/1970 18 -36% 44%

01/11/1973 10/03/1974 21 -48% 38%

06/30/1975 09/16/1975 3 -14% 28%

12/31/1976 03/06/1978 14 -19% 13%

09/11/1978 11/14/1978 2 -14% 12%

02/13/1980 03/27/1980 1 -17% 37%

11/28/1980 08/12/1982 21 -27% 47%

10/10/1983 07/24/1984 9 -14% 30%

08/25/1987 12/04/1987 4 -34% 26%

07/16/1990 10/11/1990 3 -20% 34%

07/17/1998 08/31/1998 3 -19% 40%

03/24/2000 10/09/2002 30 -47% 36%

Median 7 -21% 33%

10/09/2007 03/10/2008 5 -19%

Post War Period


Good news about bear markets


Market resilience

Source: Bloomberg, LPL Financial Research

Note: Past performance is no guarantee of future results



When markets rebound following a bear market, gains are captured quickly. Not being invested when these rebounds begin can lead to not recouping all possible gains.

0 10 20 30 40 50 60 70 80 90

40%

35%

45%

30%

25%

20%

15%

10%

5%

0%

Trading Days From End of Bear Market

03/09/200903/11/200310/08/199810/11/1998

S&

P 5

00 p

erce

ntag

e ga

in


Market resilience


Missing the best days of the market can significantly reduce your returns

$10,000 invested in the Dow Jones Industrial Average (9/30/87–9/30/07)

For example: By staying fully invested over the past 20 years, you would have earned almost twice as much as someone who missed only 10 of the market’s best days.


Source: Putnam Investments. Data is historical. The example is for illustrative purposes only. Past performance is not a guarantee of future results.There can be no assurance with respect to predicting market lows. Dow Jones Industrial Average is an unmanaged index which cannot be invested into directly.

Missing the best days of the market can significantly reduce your returns


Bes

tW

orst

SmallGrowth51.2%

Small Value41.7%

LargeGrowth41.2%

HFRI40.1%

S&P500

30.5%

LargeValue24.6%

Bonds16.0%

Inter-national12.5%

Small Value29.1%

HFRI21.3%

LargeValue13.8%

SmallGrowth

7.8%

S&P5007.6%

Bonds7.4%

LargeGrowth

5.0%

Inter-national-11.8%

Inter-national33.0%

HFRI27.9%

SmallValue23.9%

LargeValue18.1%

SmallGrowth13.4%

S&P500

10.1%

Bonds9.8%

LargeGrowth

2.9%

Inter-national

8.1%

LargeGrowth

2.7%

HFRI2.6%

S&P5001.3%

SmallValue-1.5%

LargeValue-2.0%

SmallGrowth-2.4%

Bonds-2.9%

LargeValue38.3%

S&P500

37.6%

LargeGrowth37.2%

SmallGrowth31.0%

HFRI31.0%

SmallValue25.8%

Bonds18.5%

Inter-national

11.6%

LargeGrowth23.1%

S&P500

22.9%

HFRI21.7%

LargeValue21.6%

SmallValue21.4%

SmallGrowth11.3%

Inter-national

6.4%

Bonds3.6%

LargeValue35.2%

S&P500

33.4%

SmallValue31.8%

LargeGrowth30.5%

HFRI23.4%

SmallGrowth13.0%

Bonds9.7%

Inter-national

2.1%

LargeGrowth38.7%

S&P500

28.8%

Inter-national20.3%

HFRI16.0%

LargeValue15.6%

Bonds8.7%

SmallGrowth

1.2%

SmallValue-6.4%

HFRI44.2%

SmallGrowth43.1%

LargeGrowth33.1%

Inter-national

27.3%

S&P500

21.0%

LargeValue7.3%

Bonds-0.8%

SmallValue-1.5%

SmallValue22.8%

Bonds11.6%

HFRI9.1%

LargeValue7.0%

S&P500

-9.1%


SmallGrowth-22.4%

LargeGrowth-22.4%

SmallValue14.0%

Bonds8.4%

HFRI0.4%

LargeValue-5.6%

SmallGrowth-9.2%

S&P500

-11.9%

LargeGrowth-20.4%


Bonds10.3%

HFRI-4.7%

SmallValue-11.4%

LargeValue

-15.5%


S&P500

-22.1%

LargeGrowth-27.9%

SmallGrowth-30.4%

SmallGrowth48.5%

SmallValue46.0%

Inter-naitonal39.2%

LargeValue30.0%

LargeGrowth29.8%

S&P500

28.7%

HFRI20.9%

Bonds4.1%

SmallValue22.3%

Inter-national20.7%

LargeValue16.5%

SmallGrowth14.3%

S&P500

10.9%

LargeGrowth

6.3%

Bonds4.3%

HFRI2.2%

Inter-national14.0%

HFRI10.6%

LargeValue7.1%

LargeGrowth

5.3%

S&P500

4.9%

SmallValue4.7%

SmallGrowth

4.2%

Bonds2.4%

Inter-national26.9%

SmallValue23.5%

LargeValue22.3%

S&P500

15.8%

SmallGrowth13.4%

HFRI11.7%

LargeGrowth

9.1%

Bonds4.3%

LargeGrowth11.8%

Inter-national

11.6%

HFRI10.7%

SmallGrowth

7.1%

Bonds7.0%

S&P500

5.5%

LargeValue-0.2%

SmallValue-9.8%

Bonds5.2%

HFRI-27.7%

SmallValue -28.9%

LargeValue

-36.9%

S&P 500-37.0%

LargeGrowth-38.4%

SmallGrowth-38.5%


2008

LargeGrowth37.2%

SmallGrowth34.5%

Inter-national32.5%

S&P500

26.5%

HFRI24.5%

SmallValue20.6%

LargeValue19.7%

Bonds5.9%

2009

LargeGrowth37.21%

The case for style diversification

Sources■ Bonds: Barclays Aggregate Bond Index

■ Large Growth: Russell 1000 Growth Index

■ Large Value: Russell 1000 Value Index

■ Small Growth: Russell 2000 Growth Index

■ Small Value: Russell 2000 Value Index

■ International: MSCI EAFE Index

■ HFRI: HFRI Equity Hedge Index

■ S&P 500: Standard and Poor's 500 Stock Index

The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged index generally representative of the U.S. Stock Market, without regard to company size.The Russell 2000 Growth Index is an unmanaged index comprised of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000 Value Index measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.The Morgan Stanley Capital International (“MSCI”) Europe, Australasia, Far East Index (“EAFE”) is an unmanaged index of over 900 companies, and is a generally accepted benchmark for major overseas markets. Index weightings represent the relative capitalizations of the major overseas makers included in the index on a U.S. dollar adjusted basis. The index is calculated separately; without dividends, with gross dividends reinvested and estimated tax withheld, and with gross dividends reinvested, in both U.S. Dollars and local currency.

The Barclays Aggregate Bond Index is composed of securities from BarclaysGovernment/Credit Bond Index, Mortgage-Backed Securities Index and Asset-Backed Securities Index.The Russell 1000 Growth Index is an unmanaged index comprised of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.Small-cap stocks may be subject to higher degree of risk than more established companies’ securities. The illiquidity of the small-cap market may adversely affect the value of these investments.International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

■ Some investors fall into the trap of chasing what is hot.■ Returns fluctuate in the various asset classes from year to year.■ By diversifying and rebalancing regularly, you will be managing your risk and return, without sacrificing potential return.


20072006200520042003200220012000199919981997199619951994199319921991 2010

SmallGrowth29.1%

SmallValue24.5%

LargeGrowth16.7%

LargeValue15.5%

S&P500

15.1%

HFRI10.5%

Inter-national

8.2%

Bonds6.5%

The case for style diversification


Importance of rebalancing

As a result of the market fluctuations of one asset class versus another over a given period, all portfolios drift over time from their original asset allocation. Rebalancing is an essential component of any comprehensive investment strategy and will help you avoid undue shifts in your portfolio due to financial market trends resulting in risk outside of your desired investment objective.

This example is intended to demonstrate the effects of rebalancing and is not intended to project performance. No strategy assures success or protects against loss.Such strategy may involve tax consequences.Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and are subject to availability and change in price.Stock investing involves risk including loss of principle.


Importance of rebalancing

Investment strategy and proposal

Fund of hedge fundsFund of Hedge funds

What is a fund of hedge funds?

A fund of hedge funds invests in a portfolio of different hedge funds to provide broad exposure to the hedge fund industry and to diversify the risks associated with a single investment fund. Funds of hedge funds managers select hedge funds and construct portfolios based upon their selections.

They are actively managed portfolios of investments that uses advanced investment strategies, such as leveraged, long, short and derivative positions, in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).

Potential benefits include:

■ Accessibility to professional hedge fund managers whose funds are hard to access

■ Reduced correlation to stocks/bonds

■ Attractive risk-adjusted returns

■ Diversification

■ Multiple investment styles

Potential risks include:

■ Lack of transparency

■ Additional layer of fees (above hedge fund manager fees)

■ Fund of hedge funds can be illiquid

■ May employ leverage

■ May employ aggressive tax strategies that may pose tax risks for investors and require filing extensions

Investment strategy and ProPosal

alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. the strategies employed in the management of alternative investments may accelerate the velocity of potential losses. long positions may decline as short positions rise, thereby accelerating potential losses to the investor. derivatives/options are not suitable for all investors and certain options strategies may expose investors to significant potential losses such as losing entire amount paid for the option.


Fund of hedge fundsFund of Hedge funds

The value of fund of hedge funds

Fund of hedge funds show low correlation to traditional investments and may offer the potential for capital preservation in down markets, thereby improving the portfolio’s risk/return profile and reducing its overall volatility.

Fund of hedge funds strategy

If you are a long-term investor with no immediate need for liquidity, investing a portion of your portfolio in a fund of hedge funds may be a suitable investment choice for you. With a fund of hedge funds, you will have access to quality hedge fund managers and you can benefit from an investment that has low correlation to the equity and fixed income market, with the potential for capital appreciation.

You might consider a fund of hedge funds if you are:

■ Not concerned with liquidity of investment

■ Seeking diversification, rebalancing or reduction of volatility in their portfolios

■ Looking for professional money management


alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. the strategies employed in the management of alternative investments may accelerate the velocity of potential losses. long positions may decline as short positions rise, thereby accelerating potential losses to the investor. derivatives/options are not suitable for all investors and certain options strategies may expose investors to significant potential losses such as losing entire amount paid for the option.


Managed futures funds

What is a managed futures fund?

A managed futures fund is a pool of money from various investors. Professional managers, known as commodity trading advisors, specialize in trading futures and forward contracts, and invest the money pool using a proprietary trading system, or a discretionary method, that may involve going long or short in futures contracts in areas such as metals (gold, silver), grains (soybeans, corn, wheat), equity indexes (S&P futures, Dow futures, NASDAQ 100 futures), soft commodities (cotton, cocoa, coffee, sugar), foreign currency and U.S government bond futures.

Potential benefits include:

■ Professional management

■ Lack of historical correlation with almost all other investment classes

■ Potential to profit in advancing markets and declining markets, since they can hold both long and short positions

■ A way to increase portfolio diversification beyond what other common stocks and fixed income securities can offer by themselves

■ Exposure to broad, global markets

Potential risks include:

■ Futures and forward trading is speculative and leveraged, and can be volatile

■ Trading occurs on foreign exchanges which could mean higher risk

■ Futures and forward markets can be illiquid or disrupted

■ Diversification does not assure a profit or guarantee against loss in a declining market

■ Limited ability to liquidate investment units (monthly)

INVESTMENT STRATEGY AND PROPOSAL

Alternative investments may not be suitable for all investors and should be con-sidered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.

Managed futures funds


Managed futures fundsManaged futures funds

The value of managed futures funds

Managed futures funds show negative correlation to other asset classes, meaning that its investment performance is independent of other investments.

Managed futures strategy

Investing a portion of your portfolio in a managed futures fund may be a suitable investment for you if you are a long-term investor with little need for liquidity. Managed futures funds are an investment that has low-correlation to the equity and fixed income market, with potential for capital appreciation and exposure to broad, global markets.

You might consider a managed futures fund if you are:

■ Not concerned with liquidity of investment

■ Seeking diversification, rebalancing or reduction of volatility in their portfolios

■ Looking for exposure to a wide range of global markets


Alternative investments may not be suitable for all investors and should be con-sidered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.


What is a non-traded REIT?

A Real Estate Investment Trust (REIT) is an alternative to direct ownership of real estate. An investment in a REIT allows small investors to share in the many benefits associated with real estate while reducing the overall risks that accompany property ownership.

What is a non-traded REIT?

Potential benefits include: ■ Professional management

■ Dividend yields typically higher than other equities

■ Long-term capital appreciation

■ Diversification from common stocks and fixed income

■ Flexible tax treatment by claiming depreciation


Investing in real estate/reIts involves special risks such as potential illiquidity and may not be suitable for all investors. there is no assurance that the investment objectives of this program will be attained.


The value of non-traded REITs

LPL Financial offers access to a broad non-traded REIT platform that includes some of the highest quality sponsors in the market.

You might consider a non-traded REIT if you are: ■ Long-term investor (investment horizon of 10-15 years or more)

■ Not concerned with the liquidity of an investment

■ Seeking income and/or capital appreciation

■ Seeking diversification, rebalancing, or reduction of volatility in your portfolio

Benefits of diversification* (low correlation)Non-traded REITs show a low or negative correlation to other asset classes over long periods, meaning that the investment performance is independent of other investments. This low correlation means that when other investments are down, non-traded REITs may continue to perform. Simply put, low correlation can help contribute to less volatility in an investment portfolio.


Investing in real estate/reIts involves special risks such as potential illiquidity and may not be suitable for all investors. there is no assurance that the investment objectives of this program will be attained.

* there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. diversification does not ensure against market risk.

The value of non-traded REITs


Risks with non-traded REITs

■n Shares in a non-traded REIT are generally considered illiquid until the REIT’s exit strategy either returns investors’ principle or lists on a public exchange. No public market exists for shares of common stock of a non-traded REIT. Even if investors can sell their shares through a secondary market, it is likely that they will have to sell them at a significant discount from the public offering price.

■n The REIT may not achieve its desired diversification or investment objectives, or be able to pay dividends.

■n The shares may be worth more or less than the offering price.

■n If the value of the assets in which the fund invests declines, investors’ shares may lose value.

■n The REIT could be vulnerable to economic and geopolitical conditions. For example, a REIT that invests in the office sector may be negatively affected by an economic downturn that leads to tenant defaults or vacancies.


Risks with non-traded REITs

Client Discovery

clIent dIscOvery

Defining your needs and goals

The first and most important step in the investment consulting process is Discovery. We will help you clearly identify your short- and long-term investing goals, tolerance for risk and wealth management needs. Perhaps you have always wanted to purchase a second home, start a new business or establish a charitable foundation. Whatever your needs may be, we can help you get there by defining your investment objectives and then customizing a portfolio designed to address your unique situation.

CLIENT DISCOVERY

Discovery About You

What are your hopes and dreams?

Are there investments you’d like to avoid as a matter of principle?

What are your income needs?

Do you have any specific tax considerations?

What sort of risk and return characteristics are you looking for?

Do you have any short-term cash needs?

What other investments do you have?

What has your experience been with other financial advisors?

Designed For You

4

Rev

iew 1 Discover

3 Implement

2 Recommen

d

Defining your needs and goals

clIent dIscOvery

Aggressive Growth

Your investment objective

Return

Risk

Your investment objective is based on many factors, including your financial situation, income needs, time horizon and tolerance for risk. Common investment objectives are Aggressive Growth, Growth, Growth with Income, Income with Moderate Growth and Income with Capital Preservation.

Growth

Growth with Income

Income with Moderate Growth Income with

Capital Preservation

n Need for capital preservation and current income

n Need for current income n Equal focus on growth and current income

n No need for current income

n No focus on growth n Moderate focus on growth n Moderate tolerance for risk n Focus on aggressive growth

n Lowest tolerance for risk n Low tolerance for risk n Intermediate investment horizon

n Highest tolerance for risk

n Shortest investment horizon

n Short/intermediate investment horizon

n Long investment horizon

CLIENT DISCOVERY

Your investment objective

Investor Profile Questionnaire

Name

Address

Day phone

Evening phone

Email

Financial advisor

www.lpl.com

Investor Profile Questionnaire

Building Your Financial FoundationThe Investor Profile Questionnaire is designed to help you gain an in-depth understanding of your investment objective, which serves as the foundation of your portfolio and guides us in making investment recommendations. Your investment objective is based on many factors, including your time horizon, financial goals and risk tolerance. To build your portfolio, you must clearly define your financial goals. Short-term goals may include buying a house or financing a dream vacation. Long-term goals may include saving for your child’s education or planning for your retirement.

Your time horizon defines when you want to achieve a goal. It could be 1-5 years, 5-10 years, 15 years, 30 years or more.

Risk is an unavoidable part of investing. Historically, investments with higher returns have required a higher tolerance for risk. Therefore, by clearly defining your risk tolerance, we will be better prepared to choose the most appropriate investments for your portfolio.

Over time, your goals and financial situation may change. It’s important for us to discuss any changes, as your original investment objective may need to be reevaluated.

Determining Your Investment ObjectiveThis self-scoring questionnaire will help us determine your investment objective. Answer each question by writing the corresponding number in the box to the right of each question. Then total the numbers for each section. Fill in the scorecard on the last page to determine your investment objective.

Your score

QUESTION 1What is your age?

56 and over ...................................................................................................................................................................146-55.............................................................................................................................................................................236-45.............................................................................................................................................................................320-35.............................................................................................................................................................................4

QUESTION 2What is your primary financial goal?

Wealth preservation .....................................................................................................................................................1Retirement planning .....................................................................................................................................................2Wealth accumulation ....................................................................................................................................................3

QUESTION 3What is the time frame for you to achieve your financial goals?

0-5 years .......................................................................................................................................................................15-10 years .....................................................................................................................................................................210 years or longer .........................................................................................................................................................3

Time Horizon Total

QUESTION 4Which of the following best describes your financial goals?

Preserving principal and earning a moderate amount of current income .....................................................................1Generating a high amount of current income ...............................................................................................................2Generating some current income and growing assets over an extended time frame .................................................3Growing assets substantially over an extended time frame .........................................................................................4

QUESTION 5How do you expect your standard of living five years from now to compare to your standard of living today?

Less than it is today ......................................................................................................................................................1The same as it is today .................................................................................................................................................2Somewhat higher than it is today .................................................................................................................................3Substantially greater than it is today .............................................................................................................................4

QUESTION 6Five years from today, you expect your portfolio value to be:

Portfolio value is not my primary concern; I am more concerned with current income ...............................................1The same as or slightly more than it is today ...............................................................................................................2Greater than it is today .................................................................................................................................................3Substantially greater than it is today .............................................................................................................................4

QUESTION 7Generating current income from your portfolio is:

A primary concern (only if you are about to retire) .......................................................................................................1Not important ...............................................................................................................................................................2

QUESTION 8With the income generated from your portfolio, you plan to:

Use it for living expenses .............................................................................................................................................1Use some and reinvest some .......................................................................................................................................2Reinvest all income .......................................................................................................................................................3

Financial Goals Total

Financial Goals

Time Horizon

Your score

Your score

QUESTION 9You have just received a large amount of money. How would you invest it?

I would invest in something that offered moderate current income and was very conservative .................................1I would invest in something that offered high current income with a moderate amount of risk ..................................2I would invest in something that offered high total return (current income plus capital appreciation) with a moderately high amount of risk ................................................................................................3I would invest in something that offered substantial capital appreciation even though it has a high amount of risk ................................................................................................................................................4

QUESTION 10Which of the following statements would best describe your reaction if the value of your portfolio were to suddenly decline by 15%?

I would be very concerned because I cannot accept fluctuations in the value of my portfolio ....................................1If the amount of income I receive was unaffected, it would not bother me.................................................................2I invest for long-term growth, so I would be concerned about even a temporary decline ...........................................3Because I invest for long-term growth, I would accept temporary fluctuations due to market influences ..................4

QUESTION 11Which of the following investments would you feel most comfortable owning?

Certificates of deposit ..................................................................................................................................................1U.S. Government securities ..........................................................................................................................................2Blue-chip stocks ............................................................................................................................................................3Stocks of new growth companies ................................................................................................................................4

QUESTION 12Which of the following investments would you least like to own?

Stocks of new growth companies ................................................................................................................................1Blue-chip stocks ............................................................................................................................................................2U.S. Government securities ..........................................................................................................................................3Certificates of deposit ..................................................................................................................................................4

QUESTION 13Which of the following investments do you feel are the most ideal for your portfolio?

Certificates of deposit ..................................................................................................................................................1U.S. Government securities ..........................................................................................................................................2Blue-chip stocks ............................................................................................................................................................3Stocks of new growth companies ................................................................................................................................4

QUESTION 14How optimistic are you about the long-term prospects for the economy?

Very pessimistic ...........................................................................................................................................................1Unsure ..........................................................................................................................................................................2Somewhat optimistic ....................................................................................................................................................3Very optimistic ..............................................................................................................................................................4

QUESTION 15Which of the following best describes your attitude about investments outside the U.S.?

Unsure ..........................................................................................................................................................................1I believe the U.S. economy and foreign markets are interdependent...........................................................................2I believe overseas markets provide attractive investment opportunities ......................................................................3

Risk Tolerance Total

Risk Tolerance

Adjusted Total Range Investment Objective

34-57 Income with Capital Preservation

58-83 Income with Moderate Growth

84-99 Growth with Income

100-114 Growth

115-125 Aggressive Growth

Match your total score with one of the investment objectives listed below. If your score is near the top or bottom of an Adjusted Total Range, you may want to examine the next or previous objective to determine which represents your needs more accurately.

Time Horizon Total ............................................................................... x 1 =

Financial Goals Total ............................................................................ x 2 =

Risk Tolerance Total ............................................................................. x 3 =

TOTAL SCOREThe total for each section is multiplied by a number that represents the overall importance of that section when determining your investment objectives.

Investor Scorecard

The investment objectives shown are for illustrative purposes only. Your investment objective is based on many factors including your financial situation, tolerance for risk, time horizon and other financial needs. Consult your financial advisor if you have any questions.

Income with Capital Preservation

Income with Moderate Growth Growth with Income Growth Aggressive Growth

Need for capital ��

preservation and current income

No focus on growth��

Lowest tolerance ��

for risk

Shortest investment ��

horizon

Need for current ��

income

Moderate focus ��

on growth

Low toler ance ��

for risk

Short/intermediate ��

investment horizon

Equal focus on growth ��

and current income

Moderate tolerance ��

for risk

Intermediate ��

investment horizon

Little need for ��

current income

Focus on growth��

High tolerance ��

for risk

Intermediate/long ��

invest ment horizon

No need for ��

current income

Focus on aggressive ��

growth

Highest tolerance ��

for risk

Long investment ��

horizon

INCREASING RISk, VOLATILITY ANd RETURN ExPECTATIONS

Your score

www.lpl.comMember FINRA/SIPC

The LPL Financial family of affiliated companies includes LPL Financial, UVEST Financial Services Group, Inc., IFMG Securities, Inc., Mutual Service Corporation, Waterstone Financial Group, Inc., and Associated Securities Corp., each of which is a member of FINRA/SIPC.

Not FDIC or NCUA Insured | No Bank/Credit Union Guarantee | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit

A Registered Investment AdvisorACS-02889-0508

Tracking # 415997 (Exp. 5/10)

Ongoing Consulting and Communication

OngOIng cOnsultIng and cOmmunIcatIOn

Ongoing consulting and commitment

ONGOING CONSULTING AND COMMUNICATION

Personalized client service■ Investment education

■ In-person reviews/meetings

■ Your fi nancial partner

Ongoing communication■ Periodic performance reporting

■ Quarterly performance reports

■ Monthly statement of holdings

Monitoring, reviewing, rebalancing■ Ongoing monitoring of accounts

■ Review for tax-harvesting opportunties

■ Rebalancing/reallocation considerations

■ Ongoing tax management

Personalized client service

Monitoring, reviewing, rebalancing

Ongoing communication

Designed for you

Ongoing consulting and commitment

OngOIng cOnsultIng and cOmmunIcatIOn

Ongoing consulting and communication

Once your assets are invested, the process of monitoring and managing your portfolio begins. We will continue to review and evaluate your investment strategy to ensure it remains aligned with your goals. We will provide investment education, guidance and expertise through regular meetings and discussions. As your needs change, we will reevaluate your investment strategy and discuss alternatives.

Reviews■ Evaluate your current situation and alignment of goals with investment strategy

■ Discuss your needs/concerns

■ Provide market update/outlook

■ Educate about investment needs

■ Update on performance

■ Discuss tax harvesting opportunities

■ Other relevant topics

Ongoing communication■ Quarterly performance reports

■ Monthly statement of holdings

■ Online account access

■ Newsletters

■ Investment/educational seminars

ONGOING CONSULTING AND COMMUNICATION

Ongoing consulting and communication

an introduction to maendel wealth management

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