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Janney Proposal 12.20 FINAL DRAFT Flipbook PDF
Janney Proposal 12.20 FINAL DRAFT
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ACE Business Development [email protected]
Advisor Credit Exchange Janney Credit Platform Proposal
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
TABLE OF CONTENTS I EXECUTIVE SUMMARY................................................................................................................................................ 2 II OVERVIEW ...................................................................................................................................................................... 3 The ACE Breakthrough ............................................................................................................................................. 3 Financial Opportunity ............................................................................................................................................... 4 III PROPOSED SOLUTION – THE JANNEY CREDIT PLATFORM ....................................................................... 5 Ease of Use .................................................................................................................................................................... 6 Home Page ................................................................................................................................................................... 6 Personalized Lending Opportunities ................................................................................................................... 7 Streamlined Workflow .............................................................................................................................................. 7 Ease of Installation/Implementation ................................................................................................................... 7 Data Security/Privacy ................................................................................................................................................ 8 Classification of PII ..................................................................................................................................................... 9 Regulation ..................................................................................................................................................................... 9 Product Roadmap ................................................................................................................................................... 10 Marketing, Adoption and Sales.......................................................................................................................... 10 Advisor Communications, Training and Sales Support ............................................................................. 10 Support........................................................................................................................................................................ 11 Business Development .......................................................................................................................................... 11 Recruiting and Advisor in Transition Services............................................................................................... 11 Product & Service Specialists .............................................................................................................................. 11 Home Office Specialists ........................................................................................................................................ 11 Process Transparency (Advisor and Home Office Dashboards)............................................................. 11 IV ECONOMICS ............................................................................................................................................................. 12 V HIGH-LEVEL CONTRACT TERMS ........................................................................................................................ 13 VI APPENDICES ............................................................................................................................................................. 14 Pro Forma (all “Mid Case”) ................................................................................................................................... 14 Executive Biographies ............................................................................................................................................ 17 Lending Solutions .................................................................................................................................................... 20 Quick Start Guide .................................................................................................................................................... 22 VII NEXT STEPS .............................................................................................................................................................. 25
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
I EXECUTIVE SUMMARY We believe that it is extremely important for Janney to provide comprehensive lending solutions as part of its wealth management service offering. Creating a platform that brings additional SBL options, residential real estate mortgage choices, other consumer, business and commercial lending options from a curated group of national lenders, will set Janney apart from the competition. Why Credit Matters: • •
• •
•
Deliver Total Balance Sheet Management – Managing both assets and liabilities builds the net worth that meets lifetime goals and achieves financial wellness. Preempt Competitors – Capture clients earlier in the lifecycle when credit needs are greater and peak investing years are yet to come. And protect those relationships from competitors that now offer financing. Retain Highly Profitable Relationships – Enterprises that offer credit solutions report financing clients have significantly higher levels of production, assets and retention. Attract Top Producers – Advisors looking to join a new firm are increasingly looking to enterprises that offer solutions for their clients’ total financial needs, including credit. Create Incremental Revenue – Credit offers can include significant direct compensation for Janney advisors; that’s not counting the revenue from attracting and retaining highly profitable client relationships.
In the pages that follow, we highlight the mission of our company and how we think Janney can utilize the technology we have to expand your service offering to include the market’s most robust lending offering available to your wealth management advisors. Our platform is architected in a way that offers advisors choices. Our lenders are all specialists in their space. We manage the lender relationships, so you don’t have to. Advisors will receive multiple, pre-qualified lending offers from different lenders. Importantly, with Reg BI and the Fiduciary Rule providing the guard rails for wealth management practices, having multiple offers with clearly stated pricing eliminates concern with conflict and fulfills expectations around pricing transparency. Service Summary: • • • 2
Single sign-on integration with Janney Advisor Desktop Installation and Configuration support ACE administers, hosts and provides managed services for the platform ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
• • • • •
On-going training, case support and advisor education by a national network of lending specialists Recruiting and Advisor-in-Transition Services Dedicated Account Manager/On-site, at your option Marketing Services Practice Management Services
We look forward to continuing the conversation
II OVERVIEW Delivering a full suite of Banking Services has become table stakes for competing in the wealth management marketplace. Banking services -- lending and cash/deposit solutions -- are imperative to attracting and retaining top-tier advisors, and in turn, enabling them to meet one of their high-end clients’ largest financial needs. Along the continuum of the banking services mentioned above, the Advisor Credit Exchange (ACE) enables Janney to deliver lending solutions on a level that will make you ‘better than a bank’. We will deliver your advisors a range of lending solutions to create a comprehensive product set. Each lending solution presents the advisor with choice. For each lending opportunity, the advisor and the client will have a manageable number of lending options to choose from with pricing clearly stated. The experience of identifying pre-qualified opportunities is completely digital, ensuring a quality advisor experience. Finally, the platform will give Janney the opportunity to significantly expand its current lending programs and dramatically increase their growth and profitability. ACE will drive far higher levels of advisor adoption and client acceptance, with an experience that commands the pricing power for increasing profit margins. Beyond delivering a compelling financial contribution, ACE will help position Janney to capture and defend the strategic high ground in the wealth management marketplace and become the partner of choice for sought-after advisors and practices. In the end, it is net worth that meets client need -- buying a home, sending kids to college, retiring comfortably and leaving something for the generations to come. By integrating liability management with asset management, ACE creates new opportunities for Janney advisors to help clients manage both sides of their balance sheet to build the net worth that meets their financial goals and achieves financial wellness. THE ACE BREAKTHROUGH ACE’s key innovation is that Janney advisors will know – in advance of speaking with their clients – what pre-qualified loan options are available for presentation, along with clearly proposed pricing and terms. This breakthrough, quite literally, takes the mystery out of lending for 3
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
advisors and their clients. Until now, virtually all financially advised clients have managed credit on their own – away from their financial advisor and their wealth management plan. Janney advisors will be able to help clients fund needs including cash flow, real estate financing, business investment, large tax obligations and large-ticket purchases with credit solutions based on unsecured, real estate-based, securities-based and commercially secured credit facilities.
FINANCIAL OPPORTUNITY The Credit Platform offers a compelling value proposition for Janney. Your financial opportunity is enormous. We believe our game-changing technology will enable you to realize the growth opportunity in front of you. Today, we understand that you have roughly $97B in AUM/A on the Janney Platform. Conservatively speaking, if half of those assets are taxable (as such, eligible collateral for securities-based lending), based on market metrics your SBL portfolio should be closer to $100mm in outstanding balances. We know we can get you to realize that opportunity, without disintermediating your margin portfolio. In a “mid-case” scenario, we believe deploying the ACE technology into the Janney ecosystem, in just two asset classes, (Margin and SBL), will improve the growth rates in those product areas by an average of 9% per year – above their historic growth levels. This additional growth over baseline will deliver $274MM in additional outstanding loan balance growth and $22.4MM in revenue growth on those balances, for Janney. The up-front and on-going ACE technology costs to deploy and maintain the technology over a 5-year period would be $1.25MM. The integration of your client and account level data from the BETA platform, will be done by ACE, requiring little to no development work by Janney resources. The work done to drive adoption by the advisors on the Janney platform will be funded and supported by ACE. (Please refer to Appendix for the detailed pro forma) Finally, as you deploy additional lending solutions (beyond Margin and SBL) the financial benefit simply grows, without any additional direct expense for technology. You will receive revenue share on additional loan product from ACE’s curated lineup of lenders. Like with other wealth management platforms, we believe the reason you are not capturing more of the opportunity is that most advisors are uncomfortable, uninformed or underequipped to be a liability advisor to their clients. Most advisors use credit as a ‘defensive’ solution for their clients; meaning, clients usually come to the advisor when they have a liquidity need (typically unplanned) and need to liquidate part of their portfolio to meet that need. ACE’s technology enables Janney to deliver a service that dramatically changes that dynamic. 4
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
Faster growth of credit-related revenue ACE’s technology enables Janney- advisors to find more credit opportunities in their book. Proactively, The Credit Platform brings pre-qualified offers for margin and SBL to the attention of the advisor on the Janney Advisor Desktop. Using the ACE technology will extend the value of the service they deliver as well as increase the Janney’s lending-related revenue. Expanded lending solution set The ACE technology brings a far more comprehensive set of lending products to Janney. Consumer solutions like unsecured lines of credit, residential real estate lending, home equity lines of credit, student loans and luxury asset lending are all solutions available today from our curated group of Lenders. In 2021, we will expand offerings to include business and commercial lending, including funding for advisor practices. Empowering advisors to confidently address liabilities Finally, through a partnership with the ACE, Janney wealth advisors will have access to intelligent, digital, data-enabled tools that deepen and broaden the relationship they have with their clients. This will bring additional value to current enterprise relationships and be attractive to potential enterprise relationships. Our service is delivered in a way that, from a client experience standpoint, enables the advisor to attract, cross sell and retain clients.
III PROPOSED SOLUTION – THE JANNEY CREDIT PLATFORM Key highlights of the solution include: • • • • • • • •
Single sign-on integration with Janney Advisor Desktop Installation and Configuration support ACE administers, hosts and provides managed services for the platform On-going training, case support and advisor education by a national network of lending specialists Recruiting and Advisor-in-Transition Services Dedicated Account Manager/On-site, at your option Marketing Services Practice Management Services
Our data-driven technology will deliver pre-qualified loan offers, for current credit products, to Janney advisors via SSO to the Platform from the Janney Advisor Desktop. It can be the powerful starting point of a digital lending experience at Janney and will accelerate the growth of existing lending solutions. Moreover, and at your option, those advisors will have access to a curated group of specialty lenders so they will have a credit solution for virtually every client
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
situation. We believe that our technology will vastly improve the Janney- advisors’ ability to deliver actionable credit advice to their clients while improving revenue and profits for Janney. The Janney Credit Platform will compare borrower profiles against lender requirements to generate automated, pre-qualified credit proposals. Advisors will explore available options to help identify solutions based on client circumstances, preferences and financial goals. Loan alternatives are generated real time, together with proposal sheets detailing terms, pricing and a direct link to the lender for loan origination. With lender guidelines already in place, the risk of credit decline and concern about competitive pricing are greatly minimized.
EASE OF USE Advisors constantly seek opportunities to be efficient, reduce mundane tasks and maximize the return on their time invested to focus most on productive relationship-building, revenuegenerating opportunities. ACE’s founding members recognized that the identification and implementation of strategic credit management simply did not exist in the marketplace. Hence, they developed a platform that enables financial advisors to research lenders and solutions > identify data-driven client opportunities > communicate the strategy with the client > refer and implement the ’best-fit” credit strategy with the selected lender(s). HOME PAGE In the same way advisors identify investment or insurance opportunities in their day-to-day client reviews, the platform’s home page design provides them with a single source to review available lending solutions and lenders, by category. In addition, the advisor can explore lender minimums and maximums, highlights of the program and fact sheets.
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
Use Case: The advisor’s client contacts him/her to seek advice on the possibility of re-financing their current mortgage. Once it’s determined that it may be in the client’s best interest to refinance in today’s current low interest rate environment, the advisor can screen the different lending opportunities available to the client within a single tab – prior to any tailored documentation being generated for the client. PERSONALIZED LENDING OPPORTUNITIES The platform is designed to provide advisors and staff with scalable insights and visibility into client lending opportunities across their entire practice – prior to client-identified need. Advisors can select a specific client and, within seconds, prepare custom documents which illustrate loan details and terms. The details may include pre-qualified lending amount, associated rates, expected monthly payment, and more. Use Case: An advisor team is preparing for four upcoming quarterly reviews with their clients the following week. In addition to the providing updates and recommendations on investment strategies and financial plans, the team gathers multiple, pre-qualified loan opportunities that may provide the clients with liquidity in the future – potentially keeping the client’s investment strategy intact and on track to achieve long-term goals. The team can share loan opportunity sheets with each client via a preferred portal, share them on the screen in a virtual meeting, or hand deliver in a face-to-face review. STREAMLINED WORKFLOW Once a client has acknowledged the need for a lending solution, a key element of the platform is the ability to directly refer the lending request to the selected lender. Use Case: A client’s WealthVision financial plan identifies the desire to eliminate an oppressive, high interest rate debt in order to maximize future savings. Once a lower rate loan type has been proposed to the client and accepted, the advisor can click a single loan referral button within the technology which passes the details of the loan directly to the lender’s initial review and application process. EASE OF INSTALLATION/IMPLEMENTATION Our on-boarding approach begins with assignment of an ACE Program Manager (ACE PM) to work with Janney in building the On-Boarding Strategy and Project Plans. In addition to the planning and tracking of execution, the ACE PM also acts as a point of contact for key players throughout the process. Our approach is to establish teams with leads from ACE and Janney. These teams will focus on the following areas: • • • •
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Advisor Experience and SSO Data Availability and Mapping Feed Transmission and SLA’s Data Testing and Validation
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
• • • •
Service & Operations Model Marketing and Training Programs Pilot and Rollout Approach Analytics and Reporting
Working together we can ensure a successful integration of the Platform to the Janney environment, thus providing Advisors the insight and tools to take the mystery out of lending. DATA SECURITY/PRIVACY ACE uses The U.S. Department of Commerce guidelines on identifying and treatment of Personal Identifiable Information (PII) which define PII as any information about an individual that can be used to distinguish or trace an individual's identity, such as name, social security number, date and place of birth, mother's maiden name, or biometric records; and any other information that is linked or linkable to an individual, such as medical, educational, financial and employment information. Our automated process for ingesting Janney client account information and Date Privacy standards will ensure PII is protected. This includes: • • • • • • • • •
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Transmission of all data from Janney to ACE is via FTP mailboxes Data in Transit is encrypted using 256 PGP keys Data at Rest remains encrypted Database Storage is encrypted PII data fields use two levels of encryption – field level and database storage Stored documents containing PII are encrypted Single Sign On (SSO) Advisor experience Janney Advisor Desktop Janney platform access is restricted to Senior Service and Operations Leads AES encryption keys are maintained in secure AZURE vault
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
CLASSIFICATION OF PII The following advisor and client personal information are classified as PII, as per the U.S Department of Commerce definition: • • • • • • • • • • • •
First and Last Name Social Security Number Date of Birth Credit card numbers Bank account numbers Place of birth Mother’s maiden name Full address Phone numbers Email address Social Media accounts Gender
REGULATION Regulation Best Interest and The Fiduciary Rule compel Advisors associated with a Broker Dealer and Registered Investment Advisors to put the client’s interests ahead of their own. The “care of client” standards and expectations have been raised on both advice ecosystems and those expectations are evolving to include liability products/advice. Moreover, there is increasing regulatory pressure to provide pricing transparency on pricing of ALL services, including lending solutions. It is incumbent upon practitioners, and platforms serving the practitioners, to equip wealth managers with the tools to better serve needs on both sides of the client balance sheet. We believe our platform technology includes features that enable advisors to meet the requirements of the new regulatory environment, in ways heretofore unavailable when it comes to credit. The platform equips the advisor with the tools to help the client evaluate multiple lending offers (pricing included) and perform “what if” ‘lend or liquidate’ scenarios to support informed decisions. To ensure you meet your compliance requirements, we provide you the ability to place your customer disclosure language in all system-generated, client-facing communications.
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
PRODUCT ROADMAP ACE has lending partners across multiple products which can quickly be active for Janney. ACE’s primary consumer loan product set includes Securities Backed Lines of Credit, Personal Lines of Credit, Residential Real Estate Lending, Luxury Asset Lending and Insurance Backed Lines of Credit. ACE’s Commercial / Business loan product set, to be added in 2021, will include a full suite of loan types. MARKETING, ADOPTION AND SALES The overarching strategic goal for Sales is advisor-client engagement, at a high and continuous level. Liability management will be core to each advisor’s value proposition – essential to answering the clients’ and prospects’ question, “Why should you be my financial advisor?” Marketing, Sales and Training programs are singularly focused on the advised-client experience, whereby: • •
Clients will be aware of, interested in and expecting their advisor to address their liability management needs Advisors will be trained, supported and inspired to identify credit needs and deliver “best-fit” financing solutions
ACE will partner with its Janney sales, marketing and training counterparts to foster this advisorclient engagement and make it foundational to the Janney client experience. ADVISOR COMMUNICATIONS, TRAINING AND SALES SUPPORT ACE’s experience, built from decades of success in driving advisor credit adoption, has demonstrated the following programs to be effective in moving advisors from awareness to active engagement: • Internal email Announcements • Early Adopter “Peer-to-Peer” Promotion Awareness • In-house Sales Meetings, Webinars • Credit Champion Recognition Programs • Janney Credit Platform Brochure • Follow-up emails Interest • Janney Intranet Website • Program 1-pager • Launch/Follow-up Field Sales Calls • Train-the-Trainer Training • Platform and Practice Management Training (including Core Intent Liability Management) -- Available on site or by Webinar • On-demand Practice Management and Platform Training Videos • ” How to Engage Your Administrative Assistant”
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SUPPORT A tremendous amount of work went into designing a simple and intuitive technology; however, we have also made a concerted investment to complement the technology with human capital – focused on driving awareness, education, adoption and on-going utilization of the technology and solutions. BUSINESS DEVELOPMENT Our Business Development team members, known as Regional Lending Managers (RLMs), engage directly with field leadership, recruiters, the advisors, support staff and any other team members who would potentially use the platform. This group serves as an extension of the Janney Credit team and is a subject matter expert as it relates to technology navigation and best practices. In addition, the key role of the RLM is to work directly with the advisor to provide necessary training on the solutions, identify data-driven lending opportunities, and refer them to the lender. Lastly, the RLMs can work with the advisor to coordinate the loan with the lender once it has been submitted. RECRUITING AND ADVISOR IN TRANSITION SERVICES Diverse lending capabilities and integrated technology empower Janney to retain the strategic high ground in the wealth management marketplace and continue to be the firm of choice for quality advisors and teams. The ACE team can support the recruiting and transition efforts of Janney as it relates to educating advisor candidate on Janney’s full lending capabilities, as well as mapping and transitioning loans to the select lenders on behalf of Janney. PRODUCT & SERVICE SPECIALISTS In the event an advisor or team member needs immediate assistance, we staff a full-service Product & Service Desk available via screen-to-screen, phone and e-mail. Whether the advisor or home office staff needs help with the technology, or simply needs assistance finding a document, this team fully supports them. HOME OFFICE SPECIALISTS In addition to the ACE support, Janney’s Home Office will be in a strong position to offer support to advisors. The ACE team provides full home office-focused training on the technology and lending solutions. PROCESS TRANSPARENCY (ADVISOR AND HOME OFFICE DASHBOARDS) The Credit Platform has tools for enabling reporting for the advisor/management/home office to view summary and detail level information on loan referral activity. To be clear, our platform is a pre-origination tool. Our reporting shows how many loans each advisor has created by units or dollar value for current period, YTD, QTD, Past Year. We can produce reports that enable Advisor and Home Office to see Loans by Type, Loan Opportunity Sheets (LOS) Created,
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Loans Referred, LOS Expired, Application Expired with no action and Loans closed/funded. All reports are available at a summary or detail level. In addition, Home Office/Supervisory level reports can see this same information across all advisors within their jurisdiction.
IV ECONOMICS
Fee
Service
$250,000 • Setup to provide the standard configuration for Janney Credit Platform and support integration into your existing wealth management ecosystem. Installation and Configuration:
• Discover and define the integration requirements. Janney represents a single custody feed from BETA.
•
Monthly System Administration Fee:
Monthly Processing and Support Fee*
•
Initiate any custom design and/or integration work that is requested and required. There may be an additional cost in the one- time implementation fee for custom work (e.g., additional integration work for multiple custodial feeds). $18,000 / Month Service includes system administration, platform hosting and providing managed services for the Platform. Also includes platform development and maintenance and ensures that Janney is entitled to ongoing releases of ACx code as additional features/functions are developed.
Product
Fee
Terms
Margin
15% of Net Spread
Payable on growth above historical levels (prior 3-year weighted average)
*Based on average monthly outstanding balances on loans originated via the platform
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Pro Forma: Highlights of Pro Forma Base
Assumptions: 9% Historical YoY Growth on Margin Book 9% Historical YoY Growth on SBL Book
$ $
400,000,000 20,000,000
4.5% Avg. Spread on Margin 4.5% Avg. Spread on SBL
Best Case
Mid Case
Worst Case
Balance Growth
$535,027,939
$313,595,539
$126,686,614
REVENUE Margin Spread Revenue Revenue Share to Janney from SBL Lenders
$44,197,737 $475,125
$25,520,453 $412,459
$8,822,879 $357,099
EXPENSE Revenue Share on Margin ACE Technology Expense One Time Technology Expense Recurring Technology Expense
$66,297 $1,150,000 $250,000 $900,000
$36,518 $1,150,000 $250,000 $900,000
$13,234 $1,150,000 $250,000 $900,000
734% 3670%
409% 2044%
118% 592%
20/20/25/25/25
15/15/20/20/20
10/10/15/15/15
Annualized ROI on Direct Expense 5-Year ROI on Direct Expense Percent Growth Years 1-5
Other Notes: Currently, TriState Capital is not a lender on ACx V HIGH-LEVEL CONTRACT TERMS • • • • • • • •
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5-Year contract term (target) One-Time and Recurring Fees as in section above Revenue share arrangements Varies by loan type Roles and Responsibilities Cross-Indemnification Confidentiality Limitations of Use
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
VI APPENDICES PRO FORMA (ALL “MID-CASE”) Consolidated ACx - Janney 1. Consolidated Year 1
Year 2
Year 3
Year 4
Year 5
Total
Variable Fees Asset Rollforward - Baseline Beginning Balance Net Flows Ending Balance Growth
$420,000,000
$457,800,000
$499,002,000
$543,912,180
$592,864,276
37,800,000
41,202,000
44,910,180
48,952,096
53,357,785
$420,000,000 226,222,061
$457,800,000
$499,002,000
$543,912,180
$592,864,276
$646,222,061
$646,222,061
9.0%
9.0%
9.0%
9.0%
9.0%
$420,000,000
$483,000,000
$555,450,000
$666,540,000
$799,848,000
63,000,000
72,450,000
111,090,000
133,308,000
159,969,600
539,817,600
$483,000,000
$555,450,000
$666,540,000
$799,848,000
$959,817,600
$959,817,600
Asset Rollforward - ACx Projected Beginning Balance Net Flows Ending Balance Growth
15.0%
Growth over Baseline ($) Growth over Baseline (%) Janney Gross Fees on Growth ACx Fees
15.0%
20.0%
20.0%
$420,000,000
20.0%
$25,200,000
$56,448,000
$122,627,820
$206,983,724
$313,595,539
6.0%
12.3%
24.6%
38.1%
52.9%
$313,595,539
$591,000
$1,832,220
$4,018,547
$7,396,640
$11,682,047
$25,520,453
$887
$2,748
$6,028
$11,095
$17,523
$38,281
$19,698,250
$21,471,093
$23,403,491
$25,509,805
$27,805,687
$117,888,326
$20,263,750
$23,303,313 $66,125 (2,748) (180,000) $23,186,689 $1,715,597 8.0%
$27,422,038 $79,350 (6,028) (180,000) $27,315,360 $3,911,869 16.7%
$32,906,445 $95,220 (11,095) (180,000) $32,810,570 $7,300,765 28.6%
$39,487,734 $114,264 (17,523) (180,000) $39,404,475 $11,598,787 41.7%
$143,383,279 $412,459 (38,281) ($1,150,000) $142,607,457 $24,661,632 20.9%
Janney Economics Baseline Spread Fees With ACx Spread Fees SBL Revenue Share Less: ACx Revenue Share Less: ACx Fixed Costs Net Fees F/(U) Baseline ($) F/(U) Baseline (%)
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0.25%
, (887) (430,000) $19,832,864 $134,614 0.7%
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
SBL ACx - Janney Pricing Analysis 2. SBL Year 1
Year 2
Year 3
Year 4
Year 5
Total
Variable Fees Asset Rollforward - Baseline Beginning Balance Net Flows Ending Balance Growth
$20,000,000 1,800,000 $21,800,000 9.0%
$21,800,000 1,962,000 $23,762,000 9.0%
$23,762,000 2,138,580 $25,900,580 9.0%
$25,900,580 2,331,052 $28,231,632 9.0%
$28,231,632 2,540,847 $30,772,479 9.0%
$20,000,000 10,772,479 $30,772,479
Asset Rollforward - ACx Projected Beginning Balance Net Flows Ending Balance Growth
$20,000,000 3,000,000 $23,000,000 15.0%
$23,000,000 3,450,000 $26,450,000 15.0%
$26,450,000 5,290,000 $31,740,000 20.0%
$31,740,000 6,348,000 $38,088,000 20.0%
$38,088,000 7,617,600 $45,705,600 20.0%
$20,000,000 25,705,600 $45,705,600
$2,688,000 12.3% $82,620 $124
$5,839,420 24.6% $181,208 $272
$9,856,368 38.1% $333,535 $500
$14,933,121 52.9% $526,777 $790
$14,933,121
$968,193
$1,055,330
$1,150,310
$1,253,837
$5,315,919
$1,236,538 $79,350 (272) $1,315,616 $260,286 24.7%
$1,483,845 $95,220 (500) $1,578,565 $428,255 37.2%
$1,780,614 $114,264 (790) $1,894,088 $640,250 51.1%
$6,465,559 $412,459 (1,763) $6,876,255 $1,560,336 29.4%
Growth over Baseline ($) Growth over Baseline (%) Janney Spread Fees on Growth ACx Fees
4.25% 0.15%
$1,200,000 6.0% $51,000 $77
Janney Economics Baseline Spread Fees
4.25%
$888,250
4.25% 0.25%
$913,750 $57,500 (77) $971,174 $82,924 9.3%
With ACx Spread Fees SBL Revenue Share Less: ACx Revenue Share Less: ACx Fixed Costs Net Fees F/(U) Baseline ($) F/(U) Baseline (%)
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$1,050,813 $66,125 (124) $1,116,814 $148,621 15.4%
$1,175,140 $1,763
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
Margin ACx - Janney Pricing Analysis 3. Margin Year 1
Year 2
Variable Fees Asset Rollforward - Baseline Beginning Balance Net Flows Ending Balance Growth
Year 3
Year 4
Year 5
Total
$400,000,000 36,000,000 $436,000,000 9.0%
$436,000,000 39,240,000 $475,240,000 9.0%
$475,240,000 42,771,600 $518,011,600 9.0%
$518,011,600 46,621,044 $564,632,644 9.0%
$564,632,644 50,816,938 $615,449,582 9.0%
$400,000,000 215,449,582 $615,449,582
Asset Rollforward - ACx Projected Beginning Balance Net Flows Ending Balance Growth
$400,000,000 60,000,000 $460,000,000 15.0%
$460,000,000 69,000,000 $529,000,000 15.0%
$529,000,000 105,800,000 $634,800,000 20.0%
$634,800,000 126,960,000 $761,760,000 20.0%
$761,760,000 152,352,000 $914,112,000 20.0%
$400,000,000 514,112,000 $914,112,000
$53,760,000 12.3% $1,749,600 $2,624
$116,788,400 24.6% $3,837,339 $5,756
$197,127,356 38.1% $7,063,105 $10,595
$298,662,418 52.9% $11,155,270 $16,733
$298,662,418
Growth over Baseline ($) Growth over Baseline (%) Janney Spread Fees on Growth ACx Fees
4.50% 0.15%
$24,000,000 6.0% $540,000 $810
Janney Economics Baseline Spread Fees
4.50%
$18,810,000
$20,502,900
$22,348,161
$24,359,495
$26,551,850
$112,572,407
4.50%
$19,350,000 (810)
$22,252,500 (2,624)
$26,185,500 (5,756)
$31,422,600 (10,595)
$37,707,120 (16,733)
$19,349,190 $539,190 2.9%
$22,249,876 $1,746,976 8.5%
$26,179,744 $3,831,583 17.1%
$31,412,005 $7,052,510 29.0%
$37,690,387 $11,138,537 42.0%
$136,917,720 (36,518) $136,881,202 $24,308,795 21.6%
With ACx Spread Fees Less: ACx Revenue Share Less: ACx Fixed Costs Net Fees F/(U) Baseline ($) F/(U) Baseline (%)
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$24,345,313 $36,518
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
EXECUTIVE BIOGRAPHIES Peter Stanton, Chief Executive Officer With over thirty years leading banking services and wealth management innovation, Peter is Chief Executive Officer for the Advisor Credit Exchange, LLC (ACE). Prior to launching ACE in 2017, he served as Chief Executive Officer for the Stanton Executive Group, LLC, a leading strategy consulting firm for the financial services industry. Peter is well-regarded for his expertise in helping top-tier wealth management firms deliver highly profitable growth with banking and lending programs based on fully integrated wealth management strategies. In 2015, Peter co-founded Investor Lending Solutions (ILS), a Fintech company linking broker dealers and asset managers with lending institutions. Later that year, he sold ILS to Goldman Sachs. Then, as a Goldman Managing Director from 2015-2017, he led the extension of Goldman’s Private Bank’s lending capability into the third-party marketplace. A Yale University graduate, he served as Senior Vice President and Director of Banking Strategy for UBS Financial Services, Inc. He had full accountability for the banking services for all retail client accounts, comprising approximately two million clients with $350 billion+ in assets. He also led the firm’s expansion into U.S. commercial lending. Peter began his career at Merrill Lynch as a commercial banking analyst and loan officer. Over the next sixteen years with Merrill Lynch he was Executive Vice President and Senior Director of Merrill Lynch Business Financial Services and SVP and Senior Director for Merrill Lynch Credit Corporation. During this time, he successfully completed an advanced securities industry program at Wharton and was accredited with multiple industry licenses. Peter spent three years in Europe as President and CEO of AdvisorTech Corporation, a VC funded investment services and technology firm, and has served as a consultant, advisor and board member for firms both within and outside the financial services industry. Paul Donovan, Chief Technology Officer Paul is Chief Technology Officer for the Advisor Credit Exchange, LLC (ACE). He is a senior executive with more than thirty years of experience in Information Technology, customer service, professional services and corporate strategy. Paul has a highly successful track record as a change agent and leader in business improvement through information technology. His responsibilities have ranged from managing a 4,000+ person Information Technology organization, to being responsible for the international technology organization for a large financial services company. Most recently, Paul was Vice President and product manager of Goldman Sachs’ non-purpose loan business. Before Goldman, he was the architect of Muniaxis’ Municipal Bond Auction 17
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
Platform and President of Chairman's View, a private business advisory firm. Earlier, he was a partner at Tatum LLC, an executive services firm. Before that, he served as Executive Vice President and Chief Information Officer (CIO) for ING Americas. Paul held several CIO/Executive positions at Fidelity Investments, American Transtech, Arthur D. Little and EDS. Paul led a consulting practice at Coopers and Lybrand and was a founder and principal for a software and service company, Advanced Information Management, Inc. Paul earned a Bachelor of Business Administration from The University of Massachusetts, Amherst, and was an officer in the US Army. He has been recognized many times by CIO Forum as one of the top Financial Services IT Executives. Bill Cassidy, Managing Director, Strategic Accounts Armed with a career spent inside some of the most notable U.S. financial services organizations, Bill is uniquely positioned to serve as the Head of Sales for Advisor Credit Exchange. Prior to joining ACE, Bill built and led the team that rapidly expanded the Institutional Banking (IB) division on at The Bancorp. As the line of business head, he was responsible for growing top line revenue, creating and executing IB’s strategic agenda. He managed a team of sales, credit, product, operations and customer service professionals. After taking responsibility for the business in 2014 Bill and his team grew lending, revenue and operating income by triple-digit figures. Moreover, under his leadership the IB division of the Bank re-engineered all their business processes and then launched an industry-leading automated lending platform. Prior to his Bancorp experience, Bill worked with SEI Investments in several senior leadership roles in the U.S. and Asia. In those roles he led and managed teams responsible for current client management and prospective client development in most areas of SEI's business areas, including Investment Processing, Global Fund Services, Transaction Services, and Investment Distribution programs. Bill’s career with SEI also included a focus on large U.S. bank clients, and he headed up SEI’s San Francisco operation. Outside of his career at SEI, Bill worked extensively with both the "buy-side" and "sell-side" in automating and improving trading practices through the use of technology. Bill has also served in technical sales and sales management roles at Bank of America, Thomson Reuters, and Mantara. Bill earned his B.A. Degree from Penn State and has held several industry licenses both in the U.S. and Asian financial services markets. Ted Kopczynski, Head of Lending Relationships With over thirty years’ experience in Consumer and Commercial Business Banking, Ted is Head of Lending Relationships for the Advisor Credit Exchange, LLC (ACE). Ted is well-regarded for his
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
expertise in helping top-tier wealth management firms deliver highly profitable growth with their banking and lending programs. Prior to joining ACE, Ted served as a Regional Lending Officer at Goldman Sachs for its Midwest Region after his role as Director, Commercial Business at Citibank. Ted began his career at Merrill Lynch in 1986 as a Senior Credit Officer in Merrill’s Business Financial Services Group with advancements to Group Manager, Small Business Credit and National Administrative Manager. Since Merrill, Ted held positions at UBS as Head of its Large and Structured Transaction Group, Citigroup as a Commercial Banking Director for Smith Barney Commercial, Amcore Bank as Chief Credit Officer, The Stanton Group as Senior Vice President/ Consultant and MB Financial Bank as its Director of Field Credit Management. A Chicago State University graduate with both an BA and MBA degree, Ted honed his financial services skillset by completing Merrill Lynch’s Advance Management program, UBS’ Global Leadership Program and earning his Series 7 license. Sarah Mackie, Chief of Staff Sarah Mackie is Advisor Credit Exchange, LLC’s Chief of Staff. She has over 25 years of experience in finance, accounting, and business and product management. Sarah spent most of her career in wealth management with UBS in Zurich and NY. There, she served as a business manager for products and services in the private bank as well as the broker dealer. She also spent time in executive compensation. Sarah’s career began as an auditor in public accounting at Deloitte & Touche LLP which was followed by time at Capital One in accounting policy and strategic projects. She graduated from Dartmouth College with a BA in Economics and a Certificate in Environmental Studies. She is also a CPA.
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
LENDING SOLUTIONS
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QUICK START GUIDE
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ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL
VII NEXT STEPS To initiate the Envestnet Credit Exchange solution, please sign below to indicate your acceptance of this pricing proposal. We will proceed with the formal agreement and integration process. We look forward to be a part of your financial wellness platform. Sincerely,
John Yackel Executive Managing Director Envestnet [email protected] (484) 328-5359
(Acknowledged By)
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Peter Stanton Chief Executive Officer Advisor Credit Exchange [email protected] (267) 797-6184
(Title)
(Date)
ADVISOR CREDIT EXCHANGE, LLC - CONFIDENTIAL