Structuring family wealth

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1 Structuring family wealth

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3 WELCOME Working with highly affluent families for many years, we have seen how financial success creates increasingly difficult wealth management challenges. Investment strategy becomes more sophisticated. Trust and estate structures grow more complex. New opportunities are constantly emerging, calling for higher levels of sophistication and global access on the part of your advisors. Our role is to bring balance to your financial life. Through thoughtful analysis and detailed planning, we help to deepen control of your financial affairs and shape more confident decisions. This confidence results in part from our approach to the relationship. Every day and with every client, we demonstrate uncompromising integrity, transparency, objectivity and confidentiality. Moreover, collectively we bring over 150 years of experience addressing particularly complex wealth management challenges issues that may involve unique assets, sophisticated financings and even multigenerational dynamics within your family. Many clients find that our ability to combine financial experience with an understanding of family wealth issues is a significant asset. Sincerely, Mark Seruya Managing Director Senior Portfolio Manager International Client Advisor Private Wealth Advisor Stephen Ackerman Executive Director Portfolio Manager Financial Advisor Barry Ganz Executive Director Portfolio Manager Financial Advisor Russell Ganz Managing Director Portfolio Manager Financial Advisor Family Wealth Director 3

4 OUR CLIENT We advise and serve a select clientele of highly accomplished entrepreneurs, executives and professionals, helping them address the complex, multigenerational challenges of managing significant wealth. The majority of our clients are still actively involved in their careers, and many spend significant amount of time focused on family and philanthropic endeavors. That leaves little time to focus on their personal wealth. Our role is to help them develop comprehensive strategies to help protect their assets and simplify their financial lives, leaving them free to enjoy the rewards of their success. SAGE WEALTH MANAGEMENT CAN HELP YOU: Manage investments with an unwavering focus on your financial strategy and personal goals Structure your wealth and customize solutions based on an objective view of your needs Simplify financial complexity to help you achieve clarity and control Align your strategy with the values that have shaped your life and constitute the core of your legacy 4

5 OUR TEAM Sage Wealth Management at Morgan Stanley Private Wealth Management is a group of financial professionals with diverse talents and a common mission: we strive to address your needs and to exceed your expectations. For over 35 years, we have worked to create a highly personalized experience for our clients, offering a concierge service model, disciplined investment process and experienced insight into financial markets. Our goal is to enable each of our clients to enjoy the opportunities their wealth provides. Left to right: Stephen Ackerman, Robin Russell, Carolyn Reynolds, Barry Ganz (back), Pamela Daher, Ryan Willsen (back), Mark Seruya, Russell Ganz, Paige Zebrowski, Brian Seruya 5

6 OUR TEAM Mark Seruya Managing Director Senior Portfolio Manager International Client Advisor Private Wealth Advisor Mark Seruya has spent more than 30 years in the financial services industry working with high net worth individuals and institutional clients both domestically and abroad. Mark focuses on all aspects of fixed income investing, concentrating on municipal, emerging market, corporate and U.S. government debt. He advises clients on equity and alternative investment products, both through individual recommendations and the selection of third-party managers. Mark also advises many of the team s clients on borrowing strategy, providing access to the firm s Private Bankers and Investment Bankers. Mark joined the partnership in 1988 at Bear Stearns, where he became one of the youngest employees in the firm s long history to hold the title of Senior Managing Director. Mark s holistic approach to wealth management enables him to work with a multitude of clients, ranging from tech entrepreneurs to real estate magnates. Mark was named to The Financial Times list of America s top 400 Financial Advisors in 2014 and He was also recognized as a top 100 Wirehouse Advisor by Registered REP. magazine in In his free time, Mark enjoys giving back to the community and mentoring children. He currently maintains dual residences in Brooklyn, New York, and Deal, New Jersey. Mark.Seruya@morganstanley.com NMLS# Stephen Ackerman Executive Director Portfolio Manager Financial Advisor Steve Ackerman s financial industry career began in 1958, when he began working on the New York Stock Exchange trading floor while attending college. Over the next 10 years, he transitioned from a registered representative to an investment adviser, concentrating on fixed income for high net worth individuals, institutions and foundations. In 1975, Steve co-founded a municipal bond firm, then in 1984 joined Bear Stearns, where he was instrumental in building a presence in municipals within the Private Client Services Group. During that time, Steve became a senior managing director and formed a partnership that became the foundation for Sage Wealth Management. Steve continues to concentrate on the fixed income market with a focus on high-grade municipals. Portfolios are actively managed to take advantage of discrepancies in the market, giving the opportunity to enhance total return. In constructing portfolios, Steve works closely with each client and makes recommendations based on their needs, circumstances and objectives. Steve is the Treasurer for the Parkinson s Disease Foundation, and dedicates much of his free time to volunteering for this important cause. Steve and his wife of 50 years, Marsha, reside in Armonk, New York, in order to be closer to his two married daughters and four grandchildren. When not spending time with his grandchildren, he enjoys playing golf. Steve also maintains a residence in Palm Beach Gardens, Florida. Stephen.Ackerman@morganstanley.com NMLS#

7 Barry Ganz Executive Director Portfolio Manager Financial Advisor Barry Ganz began his finance career in 1981 after successfully operating his own business for 20 years. Barry joined his current partner, Stephen Ackerman, at Emanuel & Company, where he specialized in municipal bonds. In 1984, he joined Bear Stearns, where he and his partners became the first at the firm to manage fixed income assets on a portfolio manager basis, managing portfolios for high net worth individuals, ERISA and Taft- Hartley accounts. Bear Stearns named him a senior managing director in 1991, and the partnership Barry and Steve formed grew into a group of four senior partners. Barry s experience in the fixed income markets and with structured products has been a tremendous asset to the group s high net worth clients. He also coordinates all equity and fixed income syndicates for the group, including IPO, secondary, preferred and municipal bond offerings. Barry resides in Forest Hills, New York, with his wife, Diane. Away from the office, he enjoys playing golf and spending time with his six grandchildren. Barry maintains a residence in Delray Beach, Florida. Barry.Ganz@morganstanley.com NMLS# Russell Ganz Managing Director Financial Advisor Family Wealth Director Drawing on nearly two decades of portfolio management and financial planning experience, Russell Ganz advises high net worth individuals, institutions and foundations on the management, preservation and transfer of their wealth. Russell focuses much of his efforts on fixed income portfolio management, particularly municipal bonds, and oversees the team s fixed income, equity and balanced portfolios. He and his group create and customize portfolios managed on a fully discretionary basis, with a strong focus on asset allocation and risk management. Russell is among the select few Financial Advisors who have earned the Morgan Stanley Family Wealth Director designation. This allows Sage Wealth Management access to an extended suite of resources to address complex needs such as financial planning, insurance and multigenerational wealth and estate planning. His goals are to provide comprehensive wealth management solutions that help clients achieve their immediate and long-term objectives. Russell joined the team in 1997 at Bear Stearns, where he held the title of Managing Director. Russell entered the industry in 1996 as a fixed income trader, specializing in municipal bonds. He began his career as an attorney, specializing in securities and antitrust litigation. Russell holds a B.A from the University of Michigan and a Juris Doctor from the University of Miami School of Law. Away from the office, Russell is an avid golfer and is active in several charitable organizations. Russell has two children and resides in Nassau County, New York. Russell.Ganz@morganstanley.com NMLS#

8 OUR TEAM Ryan Willsen, CFP Financial Advisor Ryan Willsen leverages his experience and training to provide financial and investment planning for individuals, families and foundations. Ryan works with clients to create a tailored financial plan centered on the individual s or group s risk tolerance, short-term needs and longer-term goals. Ryan serves as the point person for our clients CPAs, playing a vital role in facilitating productive collaboration between our team and our clients other trusted advisors. As a holder of the CERTIFIED FINANCIAL PLANNER designation, he has successfully completed the rigorous education, examination, experience and ethics requirements required by the Certified Financial Planner Board of Standards, an independent professional regulatory organization. Ryan has been in the financial services industry for nearly eight years, beginning his career at PriceWaterhouseCoopers LLP as a tax associate in the firm s Wealth Management Tax Services Group. After several years at PwC working with the trust, estate and private foundation clients of several of the country s largest wealth management firms, Ryan seized the opportunity to join Sage Wealth Management at Morgan Stanley in Ryan is a native New Yorker, currently residing in Long Island City. He earned a bachelor of science in finance from Siena College. Ryan.Willsen@morganstanley.com NMLS# Brian Seruya Financial Advisor Brian Seruya strives to foster longterm client relationships by utilizing a holistic financial planning approach. He concentrates on helping clients define, plan and analyze their goals and needs, and creates customized plans to help manage their financial lives. He received an undergraduate degree in business administration with an emphasis on information management at the University of Colorado at Boulder. In his free time, he enjoys playing soccer, tennis, hiking and living a healthy lifestyle. Brian.Seruya@morganstanley.com Robin Russell Senior Registered Client Service Associate Robin Russell is one of the team s Registered Senior Associates. She holds a bachelor of arts from New York University, with a concentration in economics. Robin has been with the team for 10 years and has over 18 years of experience working in the financial services industry. She holds FINRA Series 7 and Series 63 licenses. Robin is a longtime member of the New York Road Runners and enjoys participating in running events; she has completed six New York City marathons. Robin.Russell@morganstanley.com

9 Pamela Daher Senior Registered Client Service Associate Carolyn Reynolds Portfolio Management Associate Paige Zebrowski Client Service Associate Pamela Daher has been with the team since She holds a bachelor of arts with a major in economics from SUNY at Stony Brook and an MBA with a concentration in finance from St. John s University. In addition to holding FINRA Series 7 and 63 licenses, she also holds the Commodity Futures Series 3 license. Pam enjoys studying French, traveling, cooking and New York City. Pamela.Daher@morganstanley.com Carolyn Reynolds joined Morgan Stanley Private Wealth Management in 2005, working in Private Wealth Management until She then joined Sage Wealth Management in 2014, where she assists in managing discretionary portfolios and investment models. In addition to being the lead equity analyst, she also performs due diligence on third-party managers. Carolyn holds a bachelor of arts from the University of Pennsylvania. In her spare time, she enjoys traveling and all that New York has to offer. Carolyn.Reynolds@morganstanley.com Paige Zebrowski joined Sage Wealth Management in 2016 as a Client Service Associate, after interning for the firm during the summer of Paige attended Fairfield University in Connecticut, where she graduated with a double major in finance and marketing, with a concentration in integrated marketing communications. Following her graduation, Paige began her career in the financial services industry with a small firm in New York City before returning to Morgan Stanley. Paige is from Verona, New Jersey, where she currently resides. Paige.Zebrowski@morganstanley.com

10 CASE STUDIES 1 GOALS Case Study Acquiring Opportunity Our client, the Chairman and CEO of a family-owned global consumer products company, had identified a potential acquisition opportunity. The deal would expand product offering and increase market share. It would also represent a major departure from the company s organic growth model. APPROACH Our client recognized that he needed the knowledge and resources of a global investment bank, capabilities that were not available through his existing banking relationships. We introduced him to Morgan Stanley s Investment Banking Group, and provided ongoing support and advice as the team worked to: Assemble strategic advisors with the industry experience required to explore the potential risks and synergies of the proposed combined entity. Conduct a confidential due diligence review. Prepare his business and time the transaction for optimal results. Arrange the financing for the acquisition, facilitating future growth. OUTCOME Our client gained insight into the operations, financial condition and management team of the acquisition target and was able to make an informed decision about the prospective transaction. The investment bankers presented several deal structures and made introductions to potential capital sources, enabling our client to negotiate effectively, secure attractive financing and confidently complete the acquisition. The case studies provided are for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer s specific situation, goals, and results, may differ. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Please refer to the back cover of this brochure for additional important disclosures. 10

11 2 Case Study Diversification GOALS An affluent couple in their 60s was introduced to us when interest rates were at historic lows. The cash flow from their $10 million portfolio of short-term fixed income securities barely met their current needs, and they were concerned about sustaining their lifestyle over the longer term. APPROACH After reviewing their portfolio, we recommended a significant adjustment to their asset allocation. We suggested that a more diversified portfolio of bonds, equities and alternative investments created the potential for income returns and inflation protection: Drawing on Morgan Stanley s global asset allocation research and tools, we created a portfolio of high-yielding equities with prudent exposure to U.S. and international 2 stock markets. This portfolio may have lower volatility than the overall equity markets while generating a stream of income that can grow over time. We built a portfolio of hedge funds with low correlations to the other investments. 3 We incorporated sufficient liquidity and a low-risk fixed income allocation designed to help reduce the risk of a forced stock sale in a down market, one of the main risks of equity investing. OUTCOME The new portfolio increased the potential long-term growth prospects, offering better protection from inflation. Knowing that they put in place an investment strategy designed to help meet their investment objectives, the couple has begun to travel and more fully enjoy their retirement. The case studies provided are for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer s specific situation, goals, and results, may differ. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Please refer to the back cover of this brochure for additional important disclosures. 11

12 CASE STUDIES 3 Case Study Creating an Enduring Legacy GOALS Having reached the top of their professions, a couple had accumulated more than $30 million in investments. Realizing that their estate plan was inadequate and out of date, they sought help creating a new plan that reflected changing market conditions and evolving family circumstances. Their goals were to: Protect and consolidate wealth for their heirs. Create a philanthropic legacy. Help their children appreciate the responsibilities of wealth. APPROACH After an in-depth conversation to gain a detailed understanding of their objectives, we: Assembled a team of trust and estate planning professionals to review their plan and gain a better understanding of their goals. Conducted a detailed risk-return analysis, which indicated that the couple had adopted an overly conservative investment strategy. Reallocated the heavy weighting in fixed income securities into a higher proportion of equities, with some exposure to alternative investments. 4 Explored ways to transfer their wealth to the next generation while honoring their philanthropic goals. OUTCOME The new investment strategy carried the potential to generate higher returns while carefully managing risk through diversification. 1 This approach ultimately helped to create a more solid foundation for planning: The couple intensified their charitable focus by contributing more than half of their assets to a family foundation, where their children undertook grant-making responsibilities. A gifting program and individual trusts provided a vehicle for transferring personal wealth to their children and grandchildren while helping to manage estate taxes. 5 The case studies provided are for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer s specific situation, goals, and results, may differ. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Please refer to the back cover of this brochure for additional important disclosures. 12

13 4Case Study Optimizing for Income GOALS Our clients came to us with a substantial fixed income portfolio that was funded by the sale of their family-owned business. In a low interest rate environment, their portfolio was not generating the income they required, and they had concerns about the long-term risk of inflation. APPROACH We met with the family to gain a better understanding of their short- and long-term goals, and the requisite needs for income, principal and capital appreciation. We also discussed their tax status, and concerns regarding inflation, rising interest rates and potential changes in monetary policy. Drawing on a thorough understanding of bond indentures and credit support, we then analyzed the structure of their portfolio and its underlying credit quality and duration. We then worked closely with the family to restructure the portfolio to better address their needs: Shortened the average maturity of the portfolio to reduce overall sensitivity to potential inflation and rising interest rates. Offset the reduction in duration by identifying other investment-grade securities that had the potential to generate income without sacrificing credit quality. Identified price discrepancies and relative values, which provided the opportunity for capital appreciation. OUTCOME Upgraded the overall quality of the portfolio by reducing long-term credit risk and by creating more issuer and geographic diversification. Increased the confidence level that their lifestyle and legacy plan would be sustained. Continue to actively manage portfolio, using a total-return approach to keep pace with evolving needs. The case studies provided are for illustrative purposes only. Past performance is no guarantee of future results. The information has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each customer s specific situation, goals, and results, may differ. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Please refer to the back cover of this brochure for additional important disclosures. 13

14 COMPREHENSIVE CAPABILITIES Investment Management Risk Management Assistance with your Investment Policy Statement Asset Allocation Portfolio Construction and Management Open Architecture Platform Morgan Stanley Proprietary Investment Opportunities Exclusive Co-investment Opportunities Money Manager Due Diligence Analysis Alternative Investments Hedging Strategies Concentrated/Restricted Stock Advice Interest Rate Risk Management Currency Exposure Strategies Portfolio Protection Solutions Insurance Solutions Financial Planning Family Wealth Advisory Services Goals-Based Planning (Retirement, Education Funding, Philanthropic, Wealth Transfer) Cash Flow Planning Family Governance and Dynamics Philanthropy Management Lifestyle Advisory 1 Educational Programs 14

15 Access To Cash Management and Lending Products and Services Trust, Estate & Legacy Planning Securities-Based Lending Residential Mortgage Lending Tailored Lending Cash Management Services Referrals to External Providers Wth Preferred Programs: Aircraft and Yachts Wealth Transfer and Trust Strategies Current Will, Trust and Insurance Review 1 Foundation and Other Charitable Giving Strategies Coordination with Outside Legal and Tax Advisors Offers a Robust Donor-Advised Fund ( Morgan Stanley GIFT ) Corporate Equity Solutions Online & Mobile app capabilities Directed Shares, Stock Plans, 10b5-(1) Programs Cash Management Services Retirement and Pension Plans Manage Accounts Online Trade Securities, Transfer Funds, and Pay Bills Online OneView edelivery Mobile App available for iphone, ipad and Android 15

16 A CUSTOMIZED APPROACH Your family s dynamics, goals and risk tolerance are unique. We will tailor our process to meet your personal and financial needs and objectives. 1 DISCOVERY PROCESS Being that every client situation is unique, we begin by learning about you, your family and your financial complexities. What we learn helps us to formulate specific strategies and, of equal importance, it helps us to clearly define and customize your investment considerations and objectives. 2FORMULATION OF TAX, TRUST 5 AND ESTATE STRATEGY After reviewing your balance sheet and existing estate plan, we help analyze your income and estate tax circumstances to identify planning techniques that may be effectively tailored to your personal and financial objectives. 3CREATION OF A CUSTOMIZED STRATEGIC ASSET ALLOCATION Managing significant wealth often involves developing a customized asset allocation mix that reflects risk, opportunities and taxation across multiple entities, while integrating your investing and estate plans. This asset allocation 8,9 becomes the basis for a long term strategy formalized in your investment policy. 16

17 6 4 INTEGRATION OF TACTICAL ASSET ALLOCATION These short-term adjustments in asset allocations seek to take advantage of opportunities created by temporary market distortions. Before adjustments are made, we can analyze the potential impact of any taxes or trading costs on potential returns. 8,9 5IMPLEMENTATION OF A CUSTOMIZED INVESTMENT STRATEGY After comprehensive due diligence and extensive analysis of expected results across a range of market scenarios, investment strategies from our global investment platform are combined to create your portfolio. Portfolios are actively managed to take advantage of discrepancies in the market, giving the opportunity to enhance total return. Our platform includes proven proprietary strategies developed using Morgan Stanley s worldwide resources and expertise as well as open architecture solutions by many of the world s most respected managers. ONGOING ASSESSMENT OF WEALTH MANAGEMENT NEEDS Coordinating with you and your other advisors, we can conduct ongoing reviews and comprehensive reporting to ensure that your strategy adapts to changing financial and family needs. 17

18 INSIGHT What if your financial preferences and your personal objectives received equal attention? D rawing on the world-class talent and global presence of Morgan Stanley, we shape financial strategies that combine the highest levels of analysis and sophistication. As your Private Wealth Advisor, we enhance the value of Morgan Stanley s insight with an objective understanding of your goals, your tax sensitivity, the complexities of your situation and your family dynamics. Successfully structuring family wealth requires an understanding of the global financial marketplace and insight into your financial needs and situation. The financial world changes continually and families redefine themselves over generations. As your Private Wealth Advisor working in conjunction with your legal and tax advisors we can help realign your financial strategy as needed. This approach consisting of a discovery process; formulation of a tax, trust and estate strategy; creation of a customized strategic asset allocation; integration of a tactical asset allocation; implementation of a customized investment strategy; and an ongoing assessment of wealth management needs is customized based on your needs and objectives. While providing a sound foundation for a long-term relationship, our approach helps to ensure that your personal and financial objectives are not overlooked and incorporates the full range of financial disciplines necessary for the success of your plan. COMBINING PERSONAL AND INVESTMENT INSIGHT Sage Wealth Management will apply discipline to the management of your family s goals and assets, helping to ensure that your strategy leverages our global market expertise and our understanding of you and your goals. Our goal is to help you: Clearly and concisely define your investment considerations and objectives Ensure that all of your investment needs are fully and appropriately reflected in your strategy Define a formal investment strategy to guide asset allocation and portfolio management decisions Provide a foundation upon which to build and implement a customized wealth plan 18

19 RISK MANAGEMENT Interest Rates Interest rate hedging Cross-currency hedging Yield enhancement Commodity Hedging and investment solutions Bespoke basket exposure Alternative Assets Volatility exposure Real estate risk management Custom hedge fund exposure Currencies Hedging solutions Tactical investment execution Access Equity Portfolio hedging Single stock hedging and monetization Yield enhancement Alternative sale strategies Equity swaps Structural alpha Credit Credit default swaps and options Credit-linked notes Risk management Strategies and / or investments listed may not be suitable for all investors, please discuss with your Private Wealth Advisor. 19

20 CLOSING THOUGHTS Significant wealth tends to create complex challenges. Affluent families come under unique stresses and even the most well-meaning people can develop serious differences of opinion over matters of wealth transfer and the like. Investment strategies grow more sophisticated. Tax and estate issues become more complicated. It can even become difficult to manage expenses and keep proper records. Our goal is to take on as many of these challenges as possible, so our clients are free to focus on the people, activities and interests that bring meaning to their lives. We are a tightly knit team of experienced professionals who serve a relatively small group of affluent families. The services we can provide will help you develop the strategies to preserve your wealth, pass it along and perhaps even enjoy it just a little bit more. We welcome the opportunity to show you how we can work together. CONTACT INFORMATION Sage Wealth Management at Morgan Stanley Private Wealth Management 55 East 52nd Street 29th Floor New York, NY / MAIN / TOLL-FREE / FAX

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22 Smith Barney LLC, American Express or other third parties. Restrictions and other limitations apply. See the terms and conditions for the Cards for details. Clients are urged to review fully before applying. The Morgan Stanley Debit Card is currently issued by UMB Bank, N.A., pursuant to a license from MasterCard International Incorporated. Master- Card and Maestro are registered trademarks of MasterCard International Incorporated. The third-party trademarks and service marks contained herein are the property of their respective owners. Interest-only loans enable borrowers to make monthly payments of only the accrued monthly interest on the loan during the introductory interest-only period. Once that period ends, borrowers must make monthly payments of principal and interest for the remaining loan term, and payments will be substantially higher than the interest-only payments. During the interest-only period, the total interest that the borrower will be obligated to pay will vary based on the amount of principal paid down, if any. If a borrower makes just an interest-only payment, and no payment of principal, the total interest payable by the borrower during the interest-only period will be greater than the total interest that a borrower would be obligated to pay on a traditional loan of the same interest rate having principal-and-interest payments. In making comparisons between an interest-only loan and a traditional loan, borrowers should carefully review the terms and conditions of the various loan products available and weigh the relative merits of each type of loan product appropriately. The Active Assets Account is a brokerage account offered through Morgan Stanley Smith Barney LLC. The Morgan Stanley Credit Card from American Express or the Platinum Card from American Express exclusively for Morgan Stanley is only available for clients who have an eligible Morgan Stanley Smith Barney LLC brokerage account ( eligible account ). Eligible account means a Morgan Stanley Smith Barney LLC brokerage account held in your name or in the name of a revocable trust where the client is the grantor and trustee, except for the following accounts: Charitable Remainder Annuity Trusts, Charitable Remainder Unitrusts, irrevocable trusts and employersponsored accounts. Eligibility is subject to change. American Express may cancel your Card Account and participation in this program, if you do not maintain an eligible account. Morgan Stanley Smith Barney LLC may compensate your Financial Advisor and other employees in connection with your acquisition or use of either the Morgan Stanley Credit Card from American Express or the Platinum Card from American Express exclusively for Morgan Stanley. The Morgan Stanley Cards from American Express are issued by American Express Bank, FSB, not Morgan Stanley Smith Barney LLC. Services and rewards for the Cards are provided by Morgan Stanley Smith Barney LLC, American Express or other third parties. Restrictions and other limitations apply. See the terms and conditions for the Cards for details. Clients are urged to review fully before applying. The Morgan Stanley Debit Card is currently issued by UMB Bank, N.A., pursuant to a license from MasterCard International Incorporated. Master- Card and Maestro are registered trademarks of MasterCard International Incorporated. The third-party trademarks and service marks contained herein are the property of their respective owners. Interest-only loans enable borrowers to make monthly payments of only the accrued monthly interest on the loan during the introductory interest-only period. Once that period ends, borrowers must make monthly payments of principal and interest for the remaining loan term, and payments will be substantially higher than the interest-only payments. During the interest-only period, the total interest that the borrower will be obligated to pay will vary based on the amount of principal paid down, if any. If a borrower makes just an interest-only payment, and no payment of principal, the total interest payable by the borrower during the interest-only period will be greater than the total interest that a borrower would be obligated to pay on a traditional loan of the same interest rate having principal-and-interest payments. In making comparisons between an interest-only loan and a traditional loan, borrowers should carefully review the terms and conditions of the various loan products available and weigh the relative merits of each type of loan product appropriately. Tax laws are complex and subject to change. This information is based on current law s in effect at the time this was written. Morgan Stanley Smith Barney LLC, its affiliates, employees and Private Wealth Advisors are not in the business of providing tax or legal advice, and these Individuals should consult their personal tax advisor for matters involving taxation and tax planning and their attorney for matters involving personal trusts and estate planning. Morgan Stanley Smith Barney LLC is a registered broker-dealer, member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services. Investment, insurance and annuity products offered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED NOT A BANK DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY Investment and services offered through Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC. Member SIPC. Apple, the Apple logo, iphone, ipad, and ipad Air are trademarks of Apple Inc., registered in the US and other countries. Apple Pay and ipad mintm are trademarks of Apple Inc. App Store is a service mark of Apple Inc. Android and Google Play are trademarks of Google Inc. Asset allocation and diversification do not assure a profit or protect against loss in declining financial markets. Insurance products are offered in conjunction with Morgan Stanley Smith Barney LLC s licensed insurance agency affiliates. Morgan Stanley Smith Barney LLC does not accept appointments nor will it act as a trustee but it will provide access to trust services through an appropriate third party corporate trustee. Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates and their employees including Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning, charitable giving, philanthropic planning and other legal matters. Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not fiduciaries (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in a written agreement with Morgan Stanley. Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account. Lifestyle Advisory Services: Morgan Stanley Smith Barney LLC (the Firm ) and its affiliates do not currently offer the services provided by this Service Provider(s). The Service Provider(s) is not an affiliate of the Firm. Any review of the Service Provider(s) performed by the Firm was based on information from sources that we believe are reliable but we cannot guarantee its accuracy or completeness. This referral should in no way be considered to be a solicitation by the Firm for business on behalf of the Service Provider(s). The Firm makes no representations regarding the suitability or otherwise of the products or services provided by the Service Provider(s). There may be additional service providers for comparative purposes. If you choose to contact the Service Provider(s), do thorough due diligence, and make your own independent decision. The Firm will not receive a referral fee for referring you to the Service Provider(s). The Firm is a diversified financial services company with millions of individual clients and corporations, institutions and governmental clients in several countries around the world. The Firm routinely enters into a variety of business relationships for which either the Firm receives compensation or pays for services, and such business relationships may include the named Service Provider(s), its employees or agents, or companies affiliated with the Service Provider. The Morgan Stanley Global Impact Funding Trust, Inc. ( MS GIFT, Inc. ) is an organization described in Section 501(c) (3) of the Internal Revenue Code of 1986, as amended. MS Global Impact Funding Trust ( MS GIFT ) is a donor-advised fund. Morgan Stanley Smith Barney LLC provides investment management and administrative services to MS GIFT. While we believe that MS GIFT provides a valuable philanthropic opportunity, contributions to MS GIFT are not appropriate for everyone. Other forms of charitable giving may be more appropriate depending on a donor s specific situation. Of critical importance to any person considering making a donation to MS GIFT is the fact that any such donation is an irrevocable contribution. Although donors will have certain rights to make recommendations to MS GIFT as described in the Donor Circular & Disclosure Statement, contributions become the legal property of MS GIFT when donated. The Donor Circular & Disclosure Statement describes the risks, fees and expenses associated with establishing and maintaining an MS GIFT account. Read it carefully before contributing. Source: The Financial Times Top 400 Financial Advisors is an independent listing produced by the Financial Times (March, 2016). The FT 400 is based in large part on data gathered from and verified by broker-dealer home offices, and, as identified by the FT, reflected each advisor s performance in six primary areas, including assets under management, asset growth, compliance record, experience, credentials and accessibility. The rating may not be representative of any one client s experience and is not indicative of the Financial Advisor s future performance. Neither Morgan Stanley Smith Barney LLC nor its Financial Advisors or Private Wealth Advisors pays a fee to The Financial Times in exchange for the rating. Source: REP Representative s Top 100 Wirehouse Advisors Selected Financial Advisors are ranked exclusively by assets under management custodied at their firm. Only Financial Advisors for whom 60 percent or more of assets correspond to retail clients were eligible for the list. The rating is not indicative of the Financial Advisor s future performance. Neither the Financial Advisor nor Morgan Stanley Smith Barney LLC pay a fee to REP. magazine in exchange for the ranking. 22 CRC (09/16) CS /16

23 REFERENCES 1 Source: As of 12/31/ As of 1/1/ Tier 1 Capital 4 Source: Overview: Morgan Stanley Wealth Management, Morgan Stanley, Winter Internal. 5 Source: Overview: Morgan Stanley Wealth Management, Morgan Stanley, Winter Internal. 6 Includes overseas affiliates 7 Products and services are provided by third parties, not Morgan Stanley Smith Barney LLC or its affiliates. 8 Morgan Stanley Smith Barney LLC and its affiliates and employees do not provide tax or legal advice. 9 Asset allocation does not ensure a profit or protect against loss. DISCLOSURES The Morgan Stanley Smith Barney Global Impact Funding Trust, Inc. ( MSSB GIFT, Inc. ) is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended and exempt from federal income tax pursuant to Section 501(a) of the Code. The Morgan Stanley Smith Barney Global Impact Funding Trust ( MSSB GIFT ) is a donor-advised fund. Morgan Stanley Smith Barney LLC provides investment management and administrative services to MSSB GIFT. Investments and services offered through Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC, member SIPC. Morgan Stanley Smith Barney LLC ( Morgan Stanley Wealth Management ) offers a wide array of brokerage and advisory services to its clients, each of which may create a different type of relationship with different obligations to you. Please consult with your Private Wealth Advisor to understand these differences. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with licensed banks and other third parties to assist in offering such banking-related services. Life insurance, disability income insurance and long-term care insurance are offered through Morgan Stanley Smith Barney LLC s licensed insurance agency affiliates. Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates, Financial Advisors and Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and / or investments discussed in this material may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor s individual circumstances and objectives. Diversification does not guarantee a profit or protect against a loss. An investment in alternative investments can be highly illiquid, is speculative and not suitable for all investors. Investing in alternative investments is only intended for experienced and sophisticated investors who are willing to bear the high economic risks associated with such an investment. Investors should carefully review and consider potential risks before investing. Some of these risks may include: Loss of all or a substantial portion of the investment due to Restrictions on transferring interests Complex tax structures and delays in tax reporting leveraging, shortselling, or other speculative practices Potential lack of diversification and resulting higher risk due Less regulation and higher fees than mutual funds Lack of liquidity in that there may be no secondary market to concentration of trading authority when a single advisor for the fund and none is expected to develop is utilized Manager risk Volatility of returns Absence of information regarding valuations and pricing Unless otherwise noted, information contained in this document is dated as of July 1, Individual funds will have specific risks related to their investment programs that will vary from fund to fund. Actual results may vary and past performance is no guarantee of future results Morgan Stanley Private Wealth Management, a division of Morgan Stanley Smith Barney LLC. CRC (09/14)

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