Session 2 Team Workbook

SESSION TWO WORKBOOK Cook,Inc Decisions and Notes for Modules 1 – 5 Cook, Inc.

BSMARTer Business Simulation Management and Relationship Training

Introduction It’s been a fantastic year for Cook, Inc., yet there is always room to improve to take the firm to the next level. We wanted to address some pain points identified and felt this was a good time to align our compensation plan and organizational structure to ensure we meet our goals. All details are outlined in the following pages, but we wanted to provide a high level summary of the key changes. In terms of the organizational structure (next page) we are alleviating the pressure on Natalie and functionally organizing ourselves into lines of business. We successfully transitioned the majority of clients from Natalie to lead advisors and created a new associate advisor role which develops a career path for our talented younger advisors. In addition, we have aligned our client service associate team to report to our COO (hired last year), although they will always work with the same lead and junior advisor to ensure a deep understanding of our client’s unique needs. We feel we have developed a strong “bench” and career path for our employees to move along as they progress in their careers. Natalie maintains 10 clients, to keep in touch with their needs. However, given her responsibilities as CEO the client load is much lighter. The partners were feeling strained having to write a check to the bank as we complete the transition to an independent firm. Therefore, for the duration of the buyback period (two more years) we will be distributing profits quarterly to the owners based on their pro-rata shares. This should help alleviate some financial burdens they are feeling. It is clear this distribution plan is only for the next two years, and we will evaluate the plan moving forward and greater business reinvestments after that time. We also have instituted a culture of growth, and have pushed our partners and other firm members to increase their understanding of the brand. While this will take some time, it is no longer just Natalie who is the PR machine of the firm. Investments were made to do PR training with the partners, and also to leverage the resources of Fidelity to ensure our story is consistent, differentiated and repeatable. Many other changes outlined in the following pages, we look forward to watching these decisions and their outcomes as the business continues to be a leader in the industry.

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Cook, Inc.’s New Organization Structure CEO Natalie Cook

CIO

Lead Advisor

Lead Advisor

COO

Dylan Sanders

Alex Munday

John Bosley

Kelly Garrett

Associate Advisor

Associate Advisor

Jerrod Bustos

Madison Lee

Ike Horak Client Service Associate Maria Haggard

Client Service Associate Jenn Cyr Administrative Assistant

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MODULE 1 Organizational Structure and Compensation

Service Team Structure

Draw a picture of your service team structure.

Client (50 clients)

Lead Advisor John Bosley

Clients (47 clients)

Lead Advisor Alex Munday

Clients (10 legacy)

CEO Natalie Cook

Associate Advisor Madison Lee

Associate Advisor Jerrod Bustos

Maria Haggard Client Service Associate

Ike Horak Client Service Associate

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Shared resource brought in as needed

Service Team Structure

Provide an explanation of your service team structure. We are moving to a team based approach for client service in an effort to take the pressure off of Natalie, improve client experience, provide career paths for employees, and to effectively align resources to meet our mission and vision statement. Natalie has transitioned all but 10 of Cook’s Legacy clients to John and Alex who are now lead advisors. Those clients are also serviced by Jerrod and Ike (see more information below). Madison (currently enrolled in CFP program) will be acting as associate advisor and will be working with John. Jerrod (currently enrolled in CFP program) has been promoted to associate advisor and is supporting Alex. Both will eventually be given smaller less complicated clients to start taking the lead on, and these clients will be the beginnings of their books of business when they transition to lead advisors. Dylan will be pulled into client meetings as a shared resource in her capacity of CIO as needed. Based on the new org structure realignment, we determined that two admins were not necessary. Maria was promoted to a client service associate after a review of her skills to backfill Jerrod’s promotion. Ike remains as the second client service associate. Maria supports John and Madison while Ike supports Alex and Jerrod. Clients are now supported in their comprehensive wealth management plan by a team of specialists, who have the same sets of clients and deep expertise in their complex situations. 1

Compensation Benchmarking Determine base compensation for three employees in your briefing book. Complete the task using the next two pages.

Position

COO

Salary

Bonus 40% of salary. Bonus pool is funded based on revenue goals. CEO determines allocation after funding amount is determined.

$175,000

Eligible for Referral Bonus (Up to $10 million $2,500/over $5,000)

Total

Maximum $245,000 Minimum $175,000

Benchmark Median

$148, 320

$32,630

$216,000

Benchmark Third Quartile

$200,104

$52,500

$300,000

See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study

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Compensation Benchmarking Determine base compensation for three employees in your briefing book. Complete the task using the next two pages.

Position

Associate Advisor

Benchmark Median

Salary

Bonus

Range: $65,000 $85,000

Eligible for new business and retention bonus pool. New Business: Year 1 - 19% Revenue Year 2 – 9% of Revenue Year 3 – 4% of Revenue Servicing: 2% of Revenue ongoing

$65,000

$9,720

Benchmark Third $84,000 $15,000 Quartile See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study

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Total

Maximum Variable

Minimum $65,000

$81,832

$100,813

Compensation Benchmarking Determine base compensation for three employees in your briefing book. Complete the task using the next two pages.

Position

Client Service Associate

Salary

Bonus

Range $50,000 $65,000

20% of salary. Bonus pool is funded based on revenue goals. COO determines allocation after funding amount is determined. Eligible for Referral Bonus (Up to $10 million $2,500/over $5,000)

Total

Maximum $78,000 Minimum $50,000

Benchmark Median

$53,000

$5,000

$62,500

Benchmark Third Quartile

$61,000

$7,000

$72,600

See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study

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Compensation Benchmarking Determine base compensation for three employees in your briefing book. Complete the task using the next two pages.

Position

Administrative Assistant

Salary

Bonus

Range $40,000 $55,000

20% of salary. Bonus pool is funded based on revenue goals. COO determines allocation after funding amount is determined. Eligible for Referral Bonus (Up to $10 million $2,500/over $5,000)

Total

Maximum $66,000 Minimum $40,000

Benchmark Median

$37,000

$2,500

$40,000

Benchmark Third Quartile

$41,750

$4,000

$47,500

See Appendix A for position compensation information Source: 2013 InvestmentNews/Moss Adams Comp Study

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Compensation Benchmarking What changes, if any, will you make to compensation? Salary consists of 4 components: - Base salary - Incentive comp/referral bonus - Equity (for Partners) - Bonus Pool Sharing - Pool is available to all employees who do not have primary or secondary client ownership - This includes all Ops and Admin employees, CIO (Dylan) and COO (Kelly) - The bonus pool is funded based on revenues assuming that firm metrics are hit. The target funding is based on target bonus percentages for each employee * their base salary. If the firm exceeds the metrics, it is possible to fund the pool at >100% and if the firm does not hit the metrics, the pool will be funded at