Investment Plan North River Road Bloomfield Hills, MI

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1 Investment Plan Portfolio Optimization, Design & Analysis Example David & Deborah Smith 1111 North River Road Bloomfield Hills, MI A Wealth Building Plan, Investment Plan and Retirement Plan are written long-term plans to guide you to meet your retirement goals and maintain income in retirement. A plan provides peace of mind to your family and increases one s confidence and effectiveness in managing income, spending, saving, debt and investing. The investment process is complicated and requires strict discipline without emotion. Without professional guidance, you will likely produce mediocre returns, and not meet your retirement goals. You should always seek professional advice unless you receive the proper training, invest in the proper tools, and are willing to put the time into managing your portfolio. Most people find investing complicated, difficult to find good advice and are worried about losing money. Prepared By Philip Michalek July 2015 PDM Investment Services, LLC A Registered Investment Advisor 5131 Standish Drive, Troy, Michigan * * info@fginvestor.com See our website or brochure for our Disclosure, Fee Schedule and Privacy Policy The content of this report is the property of PDM Investment Services and subject to copyright, trademark and intellectual property rights. You may not reproduce, retransmit, redistribute, upload or post any part of this report in any form or by any means, other than those strictly related to your own personal, noncommercial use. Any other use of our content is strictly prohibited unless prior written permission has been obtained from PDM Investment Services.

2 Financial Advisor Value Proposition We put our clients interest first, investing our client s money in the same investments we invest our personal money. Performance is monitored and verified by an independent party. If you answer NO to any of the following questions, it is likely a good financial advisor can add value to reaching your financial goals, producing better portfolio returns and providing peace of mind to you and your family. Do you feel you have the proper investment training? (Asset allocation, security selection, portfolio implementation and portfolio management) Do you have the proper investment tools? (Market forecast, fundamental, technical, valuation, psychology and cycles & seasonality) Do you have the time to keep up with the complex and changing investment environment? (Barron s, Morningstar and newsletters on the market forecast, stocks and mutual funds) Are you putting in enough time to design, manage and monitor your portfolios? Are you measuring your portfolios performance each year and are your portfolios outperforming their benchmarks and the average investor? The average investor lagged the S&P 500 s 11.1% return by 7.4% per year from 1993 to 2013 according to DALBAR research due to poor timing decisions particularly during down markets. An advisor can help you stick to your strategy through bear and bull markets. Do you panic and sell near market bottoms and tend to invest more near market tops? If an advisor can improve your portfolio performance annually over time by at least the management fee than the portfolio is performing now, the advisor adds value. Advisors add additional value from wealth plans, guidance, investor education and a newsletter. Wealth Plan Design and Support with Measured Goals A Wealth Plan is a written long-term investment plan to guide you to meet your retirement goals and provide peace of mind to your family. Having a Wealth Building Plan, Investment Plan and Retirement Plan, increases one s confidence and effectiveness in managing, borrowing, saving and investing. Investor Education Focused Growth Investor newsletter An educated investor increases one s confidence and effectiveness in investing. Guide you through the transition into retirement, retirement income and complex IRA rules. Investment Research Keep your strategy current with the complex and changing investment environment. Enhanced tactical investment strategies to help control risk. Professional Portfolio Design and Management Uncover the few active mutual funds that consistently outperform their benchmarks. Efficient portfolio implementation with disciplined and timely execution of trades. Active portfolio management, asset allocation and rebalancing. Behavior Coach Behavior coach for disciplined emotional support through, bull markets, bear markets and bubbles. Portfolio Performance Analysis with Quarterly Performance Reports Investments, asset allocation, cash flow, management fees and year-to-date performance.

3 Stock Market Expected Returns Annual return predictions should be calculated for a period of at least ten years. Expected returns are much higher after a bear market when PE s are low, than in a mature bull market when PE s are high. Stock appreciation is based on fundamental return (earnings growth and dividend yield) and speculative return (PE expansion). Fundamental return is much easier to predict than speculative return. Future earnings growth should be lower at around 3.5%. GDP will be lower in the developed countries of United States, Europe and Japan. Emerging market growth will be higher, but slowing. Productivity growth was strong over the past 20 years and is starting to slow to more normal levels. Dividend yields in the past 100 years were around 4.0%, fell to 1.0% in 2000 and should settle in around 3.0% and cash-rich companies increase dividends. The PE ratio at the end of 2014 was 19 past/17 forward. The PE ratio is close to the average PE of 18, leaving 0% return for long-term expansion. If you add earnings growth, dividends and PE expansion, you get a 6.5% annual return for the next ten years. Based on the earnings yield predictor, the stock market could return 7.0% going forward. This is based on a current PE of 20 and a 2% dividend yield. (1/20 PE = 5.0% + 2.0% dividend yield) These returns are close to Charles Schwab Investment Advisory Annual Return Forecast. Expected Returns are based on past performance, a secular bull market and future expectations from various sources over long periods of time. Returns in the table reflect average annual returns going forward, but are not guaranteed. Earning Dividends PE Total Growth Yield Expansion Return Past Stock Market 4.0% 4.0% 1.0% 9.0% Future Stock Market 3.5% 3.0% 0.0% 6.5% Future Bond Mix 4.0% Money Market/CD 2.0% Portfolio Manager Expected Returns A good portfolio manager aims to outperform the benchmark that it tracks based on a clients risk level. The Morningstar Conservative, Moderate and Aggressive Risk benchmarks are a good place to start for portfolio managers. Unless you are in an aggressive risk portfolio 100% invested in stocks, you should not judge the portfolio against the large cap S&P 500 or NASDAQ index. A portfolio manager and strategy should be judged over a 10-year period, not one year s performance. If a manager can outperform its benchmark 3 out of 4 years with the appropriate risk, they are doing a good job relative to most fund and portfolio managers. Annual performance over a ten-year period should be at or better than the benchmark for the appropriate risk level. Market conditions change during the economic cycle. No strategy can be designed to outperform in every market condition and year of the market cycle. Find a sound strategy and stick with it thru varying market conditions. Also take into account portfolio management fees. If you are outperforming the benchmark by 2% per year over the long-term and paying a 1% annual portfolio management fee, you can justify the cost. Also consider the other services you are getting from the portfolio manager as part of the 1% fee. Your are paying the management fee for some or all of the following services: Asset allocation, equity selection, portfolio management, tactical market allocation to control risk, a wealth building plan, ongoing investment research, investor education, investment newsletter, behavior coach and portfolio performance reviews. The advantage of a professional portfolio design is proper diversification, strategic asset allocation, enhanced security selection and discipline. Your portfolio is designed to meet your long-term retirement goals based on your risk tolerance and time horizon. Most investors find it difficult to implement and maintain an asset allocation strategy, reducing the likelihood of investment success on their own. The World Stock Market is the largest contributor to a portfolio s return. Our long-term timing model tries to avoid some of a bear market and participate in most of the bull market. Asset Allocation is the second largest contributor to a portfolio s return. Our asset class rating system helps us select a strategic allocation for each year s economic and market conditions. Equity Selection is the third largest contributor to a portfolio s return. Mutual funds are selected based on our enhanced security selection system employing fundamental, technical and valuation analysis.

4 Client Information David Smith (40), Deborah Smith (40), Michael (12), Michelle (10) in Investment Advisor Philip Michalek, PDM Investment Services. Investment Goals Page 1 Goals, Time Horizon, Risk Tolerance Retire in 15 years at 55 years old. Employ a GROWTH strategy with a MODERATE risk. (Base Allocation: 75% Stocks / 25% Bonds & Cash) How much will you need to save for retirement to maintain your standard of living? The Wealth-to-Income Ratio says you should have saved 10 times your working average annual income by the time you retire. If your average annual income is $130,000 over the next 15 years, you can retire comfortably with $1,300,000 or $4,333 per month with 5% return and after 20% taxes. 55: Investment Income of $6,000 per month after tax. (5% return and 20% tax bracket) Current Plan: Investment Income of $6,135 per month after tax. (5% return and 20% tax bracket) Current Total Portfolio = $500,000 Riskalyze survey April 2015 was 70. Acceptable six-month risk is +24% (+$120,000) to -15% (-$75,000). Your total portfolio six-month risk is 70: +24% (+$120,000) to -15% (-75,000). Risk tolerance is the amount of price volatility and investment loss you are willing to withstand before changing your behavior. Risk comes in the form of market risk, security risk, financial risk, valuation risk, economic risk, currency risk, political risk, interest rate risk, inflation risk and liquidity risk. Most investors are not trained to tell an advisor their risk tolerance. At market tops, most people will say their risk tolerance is high. At market bottoms they will say they have no tolerance for risk. The longer your time horizon, the higher the risk you can take. Volatility is only a problem if you sell. There is long-term risk in not owning equities. If you have a large pension, you may be able to take on more investment risk. If your job earned income is very stable into your sixties, you may be able to take on more risk. If the investment will be passed on to heirs, you may be able to take on their level of risk. If you have no debt, you may be able to take on more risk. The more you understand the markets, the more likely you will be comfortable with more risk. Select a portfolio type based on your goals, risk tolerance and time horizon from the table below. INCOME INCOME CONSERVATIVE CONSERVATIVE MODERATE MODERATE AGGRESSIVE AGGRESSIVE ALLOCATION 40% Stocks 60% Bonds & Cash 50% Stocks 50% Bonds & Cash 60% Stocks 40% Bonds & Cash 75% Stocks 25% Bonds & Cash 80% Stocks 20% Bonds & Cash 90% Stocks 10% Bonds & Cash Risk and Volatility Low Low to Medium Low to Medium Medium to High Medium to High High Time Horizon 1 to 4 years 1 to 4 years 5 to 9 years 10 to14 years 10 to14 years > 15 years Expected Average Annual Return 4.0% 5.0% 6.0% 7.0% 7.5% 8.0% Morningstar S&P % TR 15% 17% 20% 25% 27% 30% Riskalyze S&P % TR 16% 20% 22% 27% 29% 31% Morningstar S&P % TR -10% -12% -15% -25% -30% -35% Riskalyze S&P % TR -18% -23% -26% -32% -34% -38% Based on our allocation model with Riskalyze and Morningstar models. Expected Returns are based on past performance and future expectations from various sources over long periods of time. Returns in the table reflect average annual returns going forward, but are not guaranteed.

5 Fidelity, 401 (k), David PDM Investment Services design and client managed Moderate risk (Base Allocation: 75% stocks / 25% bonds & cash) $200,000 (December 2014) Merrill Lynch, 401 (k), Deborah PDM Investment Services design and client managed Moderate risk (Base Allocation: 75% stocks / 25% bonds & cash) $100,000 (December 2014) Investment Plan Page : Your portfolio performance saw a 5.7% return. (See statement for your performance) The Morningstar Moderate Target Risk Benchmark saw a 4.9% return. 2013: Your portfolio performance saw a 23.5% return. (See year-end statement for your performance) The Morningstar Moderate Target Risk Benchmark saw a 14.3% return. Scottrade, IRA, David PDM Investment Services design and managed Moderate risk (Base Allocation: 75% stocks / 25% bonds & cash) $50,000 (December 2014) Scottrade, IRA, Deborah PDM Investment Services design and managed Moderate risk (Base Allocation: 75% stocks / 25% bonds & cash) $50,000 (December 2014) Scottrade, Taxable, Joint PDM Investment Services design and managed Moderate risk (Base Allocation: 75% stocks / 25% bonds & cash) $80,000 (December 2014) Bank of America, Taxable, Joint Client design and managed Conservative risk (Base Allocation: 0% stocks/100% cash) $30,000 (December 2014) UBS, Jabil Stock Purchase Plan & Stock Options, Taxable, David PDM Investment Services design and client managed Aggressive risk (Base Allocation: 100% stocks/0% bonds & cash) Shares are held short-term and applied to income. $22,000 (December 2014) 2015 Q1 - Q2: Your portfolio performance saw a x.x% return. The SPDR Technology ETF (XLK) Benchmark saw a x.x% return. 2014: Your portfolio performance saw a 27.0% return. The SPDR Technology ETF (XLK) Benchmark saw a 17.9% return. 2013: Your portfolio performance saw a -7.3% return. The SPDR Technology ETF (XLK) Benchmark saw a 26.3% return.

6 Investment Plan Page 3 See the table below for your expected wealth creation adjusted for a 2.5% inflation rate. Numbers and calculations are estimates and should be updated annually. Capital gains tax should be paid with extra money. Retirement points in the table below are listed at 55, 60 and 68 years old. Once you retire at one of these dates a retirement plan will be created Q4 Worth Age Q4 Worth Age Worth Age Worth Age Worth Age 68 Custodian Account Type Name Risk Level Estimated Return Annual Contribution Fidelity 401 (k) David Moderate 7% $12,600 $180,000 $200,000 $648,936 $877,623 $1,366,256 Merrill Lynch 401 (k) Deborah Moderate 7% $12,600 $85,000 $100,000 $455,407 $636,451 $1,023,286 Scottrade IRA David Moderate 7% $3,000 $46,000 $50,000 $159,116 $214,700 $333,465 Scottrade IRA Deborah Moderate 7% $3,000 $46,000 $50,000 $159,116 $214,700 $333,465 Scottrade Taxable David Moderate 7% $5,000 $70,000 $80,000 $258,743 $349,794 $544,343 0% $0 $0 $0 $0 $0 $0 Bank Taxable Joint Conservative 1% $10,000 $30,000 $30,000 $159,144 $196,083 $249,676 $0 $0 $0 $0 $0 $0 $0 $0 $0 Totals $46,200 $457,000 $510,000 $1,840,462 $2,489,351 $3,850,490 Based on David's Age 11.6% Inflation Rate 2.5% Years to Retirement % Return, 20% Taxes Annual Income $73,618 $99,574 $154,020 Monthly Income $6,135 $8,298 $12,835 At age 55 you would have $1,840,462, of investment worth. This could generate $73,618 per year or $6,135 per month based on a 5% annual return and 20% tax bracket. Draw from taxable accounts. At age 60 you would have $2,489,351 of investment worth. This could generate $99,574 per year or $8,298 per month based on a 5% annual return and 20% tax bracket. Can draw from tax-deferred accounts now. After 67 years old you can start drawing from social security. Riskalyze Probability you will not run out of money by 90 years old is 95%+ Retirement Income Spend in Retirement $7000 per month Income in Retirement David 55 Years Old in 2029: Pension David (Taxable) Investment Portfolio Draw (Mix) David 67 Years Old in 2041: Pension David (Taxable) Investment Portfolio Draw (Mix) Social Security David (Taxable) Social Security Deborah (Taxable) $1,600 per month ($2,000 x 0.8 taxes) $5,400 per month ($6,750 x 0.8 taxes) $1,600 per month ($2,000 x 0.8 taxes) $2,400 per month ($3,000 x 0.8 taxes) $2,000 per month ($2,500 x 0.8 taxes) $1,000 per month ($1,250 x 0.8 taxes) Retirement income under $6,500 per month is taxed at 15% Federal plus state taxes. SS Max:

7 Retirement Projection Page 4 Tax rate 20%

8 Total Portfolio Summary Page 5 Proposed Allocation Total Allocation Taxable/Tax Deferred Bonds 19% Cash 6% Tax Deferred 47% Taxable 53% Equities 75% Asset Allocation Cash 6% Asia 3% Natural Resources 2% Healthcare 6% Financial 4% Bonds 19% Large Cap 15% Mid Cap 11% Small Cap 17% Technology 7% International 10% Risk Allocation Financial Advisor PDM / Client 10% Moderate 100% PDM Investment Services 90%

9 Proposed Action List Page 6 Smith - December 2014 Fidelity, 401 (k), David Allocate mutual funds to the recommended allocation for the contribution and the balance. Setup your contribution rate to save $12,600 per year. The maximum contribution for 2015 is $18,000 under 50 years old and $24,000 over 50 years old. The company match and profit sharing is in addition to the contribution limits. Merrill Lynch, 401 (k), Deborah Allocate mutual funds to the recommended allocation for the contribution and the balance. Setup your contribution rate to save $12,600 per year. The maximum contribution for 2015 is $18,000 under 50 years old and $24,000 over 50 years old. The company match and profit sharing is in addition to the contribution limits. Scottrade, IRA, David Contribute $3000 per year. The maximum contribution for 2015 is $5500 for under 50 years old and $6500 for over 50 years old. Scottrade, IRA, Deborah Contribute $3000 per year. The maximum contribution for 2015 is $5500 for under 50 years old and $6500 for over 50 years old. Scottrade, Taxable, Joint Setup an auto-investment plan to transfer $416 per month automatically from your primary bank checking account to your Scottrade Joint Taxable account. UBS, Jabil Stock Purchase & Stock Option Plan, Taxable, David Sell shares as the economic cycle matures. We six years into the economic cycle shares $22,000 Cash $0 Total $22,000 Current Price $22.00/share (12/31/2014) Risk High Fundamental Neutral, Hold Rating Valuation Positive, Target = $24/share Technical Range $16.5 to $24.0/share Resistance $22/share and $24/share

10 Fidelity 401 (k) David Page 7 Portfolio Allocation & Analysis Proposed Portfolio - December 2014 Goal: Retirement Risk Tolerance: Moderate (Base Allocation: 75% stocks / 25% bonds & cash) Time Horizon: 20 years Amount: $200,000 Contribution: 6% + 1% (Vesting 20% per year after the first year) Plan Fees Not disclosed Self Directed Option Schwab ($100 setup + $150 per year) The portfolio is designed to meet your goals, risk tolerance and time horizon. Grades are derived from technical charts, fundamentals and other rating services. Funds listed below may be like funds and not exactly the ones in the plan. Change the allocation of the Contribution Elections and the Current Balance to the new allocation below. TICKER ASSET ALLOCATION GRADE SYMBOL CLASS Fidelity Contrafund FCNTX LCG 15% B Columbia Diversified Equity Income ADECX LCV 10% C Artisan Mid Cap Value ARTQX MCV 15% A Neuberger Berman Genesis NBGIX MCG/SCG 10% B Fidelity Low Priced Stock FLPSX MCG/SCV 15% A Fidelity Diversified International FDIVX INT 15% B PIMCO Total Return PTTAX ITB 15% A Fidelity Cash Reserves MM 5% X Analysis The portfolio is moderate risk, diversified and has a fund quality of a B average grade. No new funds were added and no new funds were removed. Client implementation grade= A. 25.0%% 23.5%% 20.0%% 15.0%% 16.6%% 12.1%% 14.3%% Fidelity%401%(k)% 10.0%% 5.0%% 5.7%% 4.9%% 3.0%% 3.0%% Morningstar%Moderate%Risk% 0.0%% 2012% 2013% 2014% 2015%Q1% Asset Class Key LCG-Large Cap Growth, LCV-Large Cap Value, MCG-Mid Cap Growth, MCV-Mid Cap Value, SCG-Small Cap Growth, SCV-Small Cap Value, INT-International, INT EM MKT-International Emerging Market, INT BOND-International Bond, HY BOND-High Yield Bond, IT BOND-Intermediate Term Bond, ST BOND-Short Term Bond, MM-Money Market.

11 Merrill Lynch 401 (k) Deborah Page 8 Portfolio Allocation & Analysis Proposed Portfolio - December 2014 Goal: Retirement Risk Tolerance: Moderate (Base Allocation: 75% stocks / 25% bonds & cash) Time Horizon: 20 years Amount: $100,000 Contribution: 6% + 2? (Vesting 20% per year after the first year) Plan Fees Not disclosed Self Directed Option Schwab ($100 setup + $150 per year) The portfolio is designed to meet your goals, risk tolerance and time horizon. Grades are derived from technical charts, fundamentals and other rating services. Funds listed below may be like funds and not exactly the ones in the plan. Change the allocation of the Contribution Elections and the Current Balance to the new allocation below. TICKER ASSET ALLOCATION GRADE SYMBOL CLASS JPMorgan Large Cap Growth JLGMX LCG 15% B Vanguard Equity Income Admiral VEIRX LCV 10% A JPMorgan Mid Cap Value FLMVX MCV 20% A PRIMECAP Odyssey Aggressive Growth POAGX SCG 10% B T. Rowe Price Small Cap Value PRSVX SCV 10% A American Funds Euro Pacific Growth R4 RERGX INT LCG 10% A Invesco Developing Markets GTDIX INT EM MKT 5% A PIMCO Total Return Portfolio Institutional Class PTTRX ITB 5% B Invesco High Yield Bond AHIYX HYB 10% B Vanguard Prime Money Market Fund VMRXX MONEY MKT 5% B Analysis The portfolio is moderate risk, diversified and has a fund quality of a B average grade. Implementation costs, underperforming active managed funds and a divergent market hurt performance. No new funds were added and no new funds were removed. Client implementation grade= A. 25.0%% 23.5%% 20.0%% 15.0%% 16.6%% 12.1%% 14.3%% Merrill%Lynch%401%(k)% 10.0%% 5.0%% 5.7%% 4.9%% 3.0%% 3.0%% Morningstar%Moderate%Risk% 0.0%% 2012% 2013% 2014% 2015%Q1% Asset Class Key LCG-Large Cap Growth, LCV-Large Cap Value, MCG-Mid Cap Growth, MCV-Mid Cap Value, SCG-Small Cap Growth, SCV-Small Cap Value, INT-International, INT EM MKT-International Emerging Market, INT BOND-International Bond, HY BOND-High Yield Bond, IT BOND-Intermediate Term Bond, ST BOND-Short Term Bond, MM-Money Market.

12 Scottrade IRA David & Deborah Page 9 Portfolio Allocation & Analysis December 2014 Goal: Retirement Risk Tolerance: Moderate (Base Allocation: 75% stocks / 25% bonds & cash) Time Horizon: 20 years Amount: $50,000 + $50,000 The portfolio is designed to meet your goals, risk tolerance and time horizon. Grades are derived from technical charts, fundamentals and other rating services. Your exact portfolio may vary from the allocation and funds below due to availability and fund minimums. TICKER ASSET ALLOCATION GRADE SYMBOL CLASS Mairs & Power Growth MPGFX LCG 9% A Vanguard Growth ETF VUG LCG 9% B Price Value TRVLX LCV 5% B Vanguard Value ETF VTV LCV 5% B Akre Focus AKREX MCG 8% A Fidelity Low Priced Stock FLPSX MCV 8% A Broadview Opportunity BVAOX SCG 4% B Vanguard Small Cap Growth ETF VBK SCG 4% B Stratten Small Cap Opportunities STSCX SCV 5% A ishares Morningstar Small Cap Value ETF JKL SCV 5% B Harbor International HIINX INT LCG 4% B Artisan International ARTIX INT LCG 4% B ishares MSCI EAFE Small Cap ETF SCZ INT MCB SCB 0% B Price New Asia PRASX ASIA 5% A Loomis Sayles Global Bond LSGLX INT BOND 2% B Fidelity New Markets Income FNMIX INT BOND EM 2% B PIMCO High Yield Bond PHYDX HY BOND 3% B Thompson Bond THOPX STB HY 3% A PowerShares Senior Loan Portfolio ETF BKLN BANK LOAN 3% B Merger Fund MERFX Merger Arbitrage 3% B Vanguard Short Term Corporate Bond ETF VCSH ST BOND 4% B Money Market MM 5% NA Analysis The portfolio is moderate risk, diversified and has a fund quality of a B+ average grade. 2014: Implementation costs, underperforming active managed funds and a divergent market hurt performance. 2015: Outperforming active managed funds and strong small cap and international helped performance. 25.0%& 22.8%& 20.0%& 15.0%& 14.5%& 12.1%& 14.3%& PDM&Moderate&Mutual&Fund&&&Sector& 10.0%& 5.0%& 5.3%& 4.9%& 3.0%& 3.0%& Morningstar&Moderate&Risk& 0.0%& 2012& 2013& 2014& 2015&Q1& The cash came into the portfolio December 2011 and the portfolio was implemented in January Portfolio management fee for the portfolio was $500 in 2014.

13 Proposed Scottrade Portfolio Page 10 Portfolio Performance & Analysis Diversified Mutual Fund & Sector Portfolio Moderate, the portfolio your portfolio will be tracking. The portfolio produced a 5.2% return in 2014, 0.3% better than the 4.9% return of the Morningstar Moderate Allocation Benchmark. The portfolio produced a 13.9% annual return over the past 3 years, 10.8% over the past 5 years, 8.6% over the past 10 years and 10.8% over the past 12 years. The portfolio outperformed the Morningstar Moderate Target Risk Benchmark by 3.5% over the past 3 years, 2.1% over the past 5 years, 2.0% over the past 10 years and 2.6% over the past 12 years. 83% of the 12 years the portfolio outperformed its benchmark. The worst performing year of the portfolio saw a 30% drop compared to a 22% drop for its benchmark. The performance calculation includes capital gains, dividends and custodial transaction fees (0.2%) The performance calculation excludes portfolio management fees and taxes $400,000% $350,000% $300,000% $250,000% Diversified%Mutual% Fund%&%Sector% PorBolio%C% Moderate% T.%Rowe%Price%Equity% Index%500% $200,000% $150,000% Morningstar% Moderate%Target% Risk% $100,000% 2003% 2004% 2005% 2006% 2007% 2008% 2009% 2010% 2011% 2012% 2013% 2014% PORTFOLIO PERFORMANCE 2014 Annual Return 3 Year Annual Return 5 Year Annual Return 10 Year Annual Return 12 Year Annual Return Diversified Mutual Fund & Sector Portfolio - Moderate 5.2% 13.9% 10.8% 8.6% 10.8% Morningstar Moderate Target Risk Benchmark 4.9% 10.3% 8.7% 6.6% 8.2% Focused Sector Stock & Mutual Fund Portfolio - Aggressive 5.6% 12.7% 10.4%* 7.9%* 9.5%* Morningstar Category (AL) Aggressive Allocation Benchmark 5.7% 13.5% 10.1% 5.8% 7.7% T. Rowe Price Equity Index 500 Benchmark (PREIX) 13.4% 20.1% 15.1% 7.4% 9.3% Performance calculations are updated annually and are verified by Alpha Performance Verification Services. The performance graph is updated monthly and verified annually. Performance is calculated before portfolio management fees. Brokerage transaction fees and dividends are included in performance calculations. Past performance is no guarantee of future results. Market and economic conditions have the largest impact on a portfolio's performance. Strategies can go in and out of favor in different market environments. Some periods will see losses. Investment strategies evolved over the past and will continue to evolve in the future. Client investment results may vary from the model due to the timing of implementation, implementation transaction fees, portfolio size, risk profile and actual investments. For a copy of the Independent Verifier Reports, visit our website and click on the link on the home page. For details on calculations, see our disclosure page. * Returns not verified.

14 Scottrade Taxable Account Joint Page 11 Portfolio Allocation & Analysis December 2014 Goal: Retirement Risk Tolerance: Moderate (Base Allocation: 75% stocks / 25% bonds & cash) Time Horizon: 15 years Amount: $80,000 The portfolio is designed to meet your goals, risk tolerance and time horizon. Grades are derived from technical charts, fundamentals and other rating services. Your exact portfolio may vary from the allocation and funds below due to availability and fund minimums. TICKER ASSET ALLOCATION GRADE SYMBOL CLASS Mairs & Power Growth MPGFX LCG 3% A Oakmark Fund OAKMX LCG 2% A PRIMCAP Odyssey Growth POGRX LCG 2% A Vanguard Growth ETF VUG LCG 2% B Price Value TRVLX LCV 2% B Vanguard Value ETF VTV LCV 2% B Dodge & Cox Stock DODGX LCV 2% B Akre Focus AKREX MCG 3% A Vanguard Mid Cap Growth ETF VOT MCG 2% B Fidelity Low Priced Stock FLPSX MCV 3% A Vanguard Mid Cap Value ETF VOE MCV 2% B Broadview Opportunity BVAOX SCG 2% B Mairs & Power Small Cap MSCFX SCG 3% A Vanguard Small Cap Growth ETF VBK SCG 0% B Stratten Small Cap Opportunities STSCX SCV 3% A Homestead Small Company Stock HSCSX SCV 3% A ishares Morningstar Small Cap Value ETF JKL SCV 3% B Harbor International HIINX INT LCG 3% B Artisan International ARTIX INT LCG 3% B ishares MSCI EAFE Small Cap ETF SCZ INT MCB SCB 3% B Price New Asia PRASX ASIA 6% A Price Global Technology PRGTX TECH 6% B Technology Select Sector SPDR ETF XLK TECH 1% B Price Financial PRISX FIN 4% B Price Healthcare PRHSX HC 4% A Fidelity Select Health Care FSPHX HC 3% A Fidelity Select Chemicals FSCHX NR CHEM 1% B UBS E-TRACS Alerian MLP Infrastructure ETN MLPI NR MLP 2% A Loomis Sayles Global Bond LSGLX INT BOND 2% B Fidelity New Markets Income FNMIX INT BOND EM 2% B PIMCO High Yield Bond PHYDX HY BOND 3% B Thompson Bond THOPX STB HY 3% A PowerShares Senior Loan Portfolio ETF BKLN BANK LOAN 3% B Merger Fund MERFX Merger Arbitrage 3% B Vanguard Short Term Corporate Bond ETF VCSH ST BOND 4% B Money Market MM 5% NA Analysis The portfolio is moderate risk, diversified and has a fund quality of a B+ average grade. 2014: Implementation costs, underperforming active managed funds and a divergent market hurt performance. 2015: Outperforming active managed funds and strong small cap and international helped performance.

15 Strategy Price Small Cap Stock (OTCFX) Mutual Fund Research Example The Price Small Cap Stock Fund is in the Small Cap Growth asset class. Gregory McCrickard has been manager since 1992 and has over $250,000 of his own money in the fund. He has an MBA degree and is a CFA. McCrickard divides his portfolio into two sections. The first half is composed of value issues, for which he uses discounted cash-flow analysis to help identify cheap stocks. The other half of the portfolio is concentrated on out-of-favor growth stocks. McCrickard is a buy-and-hold manager. He is very conscious of the portfolio's average market cap, keeping it in line with that of the Russell 2000 Index. They look for superior earnings, undervalued, consistent, growth and value, strong balance sheet and strong cash flow. T. Rowe Price has a strong small cap research team. The turnover rate is low at 22%. The fund has a low expense ratio of 0.9%. The fund size is moderate at $10 billion in assets under management. Performance The fund outperformed the S&P 500 and its category by 1% annually in the past 3 years, outperformed by 2% in the past 3 years, outperformed by 2% in the past 10 years and outperformed by 5% in the past 15 years. Source: Performance Consistency The fund has outperformed the S&P 500 and its category in 75% of the years between 2004 and Risk & Reward The fund volatility is higher than the volatility of its category and the variation is slightly less than its category. The risk-adjusted return is 23% higher than its category risk-adjusted return. The maximum downdraft was 33% in 2008, better than the S&P 500 loss of 37%. The up/down capture ratio is positive at 1.1. Valuation The fund valuation is less than its category. Summary This fund is strong in most areas with an A overall rating, making it a good fund in its category. The fund is CLOSED to new investors with a $2500 minimum for taxable accounts and $1000 for IRAs. The fund is no-load but carries a transaction fee through Scottrade and Schwab.

16 401 (k) to IRA Rollovers Advantages of Rolling Your 401 (k) into a Professionally Managed Traditional IRA Access to all asset classes and sectors. Access to more active and passive mutual funds. Access to better rated mutual funds. Account consolidation. Professional portfolio design and management. Professional active asset class management. Behavior coach for disciplined emotional support through, bull markets, bear markets and bubbles. Easy to read quarterly performance reports. Opportunity for stronger performance if a professionally managed portfolio can outperform a clientmanaged 401 (k) by at least the 1% management fee, the client is ahead. Simplify and consolidate tax-deferred accounts to make it easier to manage and track performance. Professional management saves you the time of researching funds and implementing allocation changes annually and every time your company changes plans. Gives you more control over your investments. Estate planning advantages. Beneficiaries can keep money in an IRA. Beneficiary does not have to be a spouse. Easier to make penalty-free early withdrawals for a first house, medical hardship and college. Outside annual contributions allowed for employees that left the company. Lower custodian administrative costs with discount broker like Scottrade and Schwab. Typical 401 (k) custodian administrative fees range from 0.5% to 2.0% depending on the size and custodian. Rolling your 401 (k) into a non-professionally managed IRA may underperform due the increased difficulty and discipline of managing your own non-401(k) account. Disadvantages of Rolling Your 401 (k) into a Professionally Managed Traditional IRA The purchase of some of the new funds in the IRA may carry a transaction fee of $17 with Scottrade. If employment is terminated at 55 years old you can take an early partial distribution without a 10% penalty from a 401(k). A 401 (k) may have better protection from creditors in bankruptcy. If the 401 (k) contains a sizable stake in company stock, you may be better off keeping the 401 (k) and taking distributions from the 401 (k) to enable you to pay ordinary income tax on the cost basis of the shares and long-term capital gains tax on the appreciation in the shares over and above the cost basis. In an IRA the investor would owe income tax on the whole amount of the distribution. If you do not currently have a financial advisor for your 401 (k) and you now use an advisor for your new IRA, you will be paying a portfolio management fee of around 1% annually. The extra cost could be lower than some hidden 401 (k) administrative fees. The performance of the professionally managed IRA should be at least 1% better than the client-managed 401 (k). IRA Rollover Rules A person can only do one IRA-to-IRA rollover (60-day rollover) in a 365-day period from all of a person s IRA accounts (check was made out to the person). A rollover means a distribution from an IRA that is payable to the IRA owner who can then roll those funds over to the same or another IRA within 60 days. This is different than a direct trustee-to-trustee transfer, which is not a rollover. A direct trustee-to-trustee transfer goes from custodian to custodian or the check is made out to the new custodian name (Scottrade/FBO your name). There are no limitations to the number of direct transfers. The rule does not apply to Roth IRA conversions.

17 Investment Advisor Process Finding Meeting General information about goals, risk tolerance, time horizon, expected returns, income, spending, savings, investing and debt. Your experience with investing, asset management and investment advisors. Your concerns, needs, wants and fears about investing. Review current investments and brokerage statements. (Custodian, advisor, amount, type, investment strategy and performance) Review our services, strategy and portfolio types. Wealth Plan & Proposal Review Meeting Review investment plan, accounts and action plans. Review strategy and proposed portfolio asset allocations and holdings. Custodian Account Setup Fill out Scottrade Brokerage Account Applications for each new account. Fill out Scottrade Trade Authorization Form if you have a Scottrade Retail account. Fill out Scottrade Account Transfer Forms and gather latest brokerage statement. For cash deposits make check out to Scottrade FBO/Your Name. We will take forms, brokerage statements and check to Scottrade to open your accounts and process transfers. Clients can go to the local branch to deposit checks once account is open. For 401 (k) Rollovers: Call the Custodian Retirement Team and liquidate 401(k) for a direct rollover and have them make the check payable to Scottrade FBO/your name. Deposit check at Scottrade. Sign Investment Advisory Agreement Sign Investment Advisory Agreement and send to PDM Investment Services. On-Line Account Setup In about a week you will receive a letter from Scottrade with directions to create your login to view your account. The temporary password will expire, so you may have to call Scottrade at to walk you through the process. If you want to view the account sooner, call Scottrade at and they will guide you through the process with a starter login and password. For retail and 401(k) accounts, communicate login and password to PDM Investment Services. Portfolio Design & Implementation PDM Investment Services will design and implement your portfolio per your investment plan. Purchases will be made all at once or over a period of time, depending on market conditions. Billing Process At the end of each quarter you will receive an invoice for the portfolio management fee. Review the fee calculation. You have 7 days to dispute the fee calculation before the fee is transferred out of your account and into our fee holding account. Portfolio Monitor & Reports Your portfolio will be monitored for asset allocation and holdings. (Monthly) Brokerage statements will be sent to you by the custodian. (At least quarterly, monthly if activity) For paperless, login to your account and select paperless. You will receive notifications. Portfolio Report with holdings, inflows/outflows, asset allocation, fees and performance. (Quarterly) Wealth Plan update and Review Meeting in person or conference call. (Annually) Capital Gains Tax Summary for taxable accounts. (Annually) Portfolio Management Free Services Focused Growth Investor Newsletter - Stock & Mutual Fund Letter. (Monthly) Wealth plans with 401 (k) designs and stock option management Special Reports - Investor Education and access to other special reports on our web site. Stock and Mutual Fund Reports. (See website for latest reports)

18 Client Information Below is a list of information needed to complete an Investment Plan. Name and age of each family member House address, address and phone numbers Occupation and place of work for adult family members Target age for retirement Your risk tolerance level Pension Year start withdrawal Estimated monthly payout Brokerage Account #1 Account type (401k, IRA, Roth, Taxable) Name on account Last statement Annual contribution Portfolio designer Portfolio manager Brokerage Account #2 Account type (401k, IRA, Roth, Taxable) Name on account Last statement Annual contribution Portfolio designer Portfolio manager Brokerage Account #3 Account type (401k, IRA, Roth, Taxable) Name on account Last statement Annual contribution Portfolio designer Portfolio manager Bank Account Cash Amount Other Investments Real Estate other then home you live in