Financial Services: Financial Services: New Propositions and New Propositions and

ImperativesImperativesJessica BibliowiczJessica Bibliowicz

Chairman and CEO, Chairman and CEO, National Financial PartnersNational Financial Partners

OverviewOverview

About NFPAbout NFP• VisionVision• Business Highlights Business Highlights • NFP NetworkNFP Network

Management LessonsManagement Lessons• OpportunitiesOpportunities• What Makes It WorkWhat Makes It Work• Fostering Growth/Protecting ShareholdersFostering Growth/Protecting Shareholders

Questions/DiscussionQuestions/Discussion

NFP’s VisionNFP’s Vision

Be the preeminent distributor of financial Be the preeminent distributor of financial services to the high net worth and growing services to the high net worth and growing corporate marketscorporate markets• Create opportunities from inefficienciesCreate opportunities from inefficiencies

Enable network of financial specialists to Enable network of financial specialists to maintain entrepreneurialism while maintain entrepreneurialism while leveraging scaleleveraging scale

Align interests of shareholders, NFP firm Align interests of shareholders, NFP firm principals, employees and clientsprincipals, employees and clients

NFP HighlightsNFP Highlights

Leading pure-play high-end financial Leading pure-play high-end financial services distribution company services distribution company

Growth from a zero base of revenue in Growth from a zero base of revenue in 1999 to more than $500 million during last 1999 to more than $500 million during last 12 months12 months

Strong performance since 9/03 IPO Strong performance since 9/03 IPO allowed NFP to complete a secondary allowed NFP to complete a secondary offering less than seven months lateroffering less than seven months later

The NFP NetworkThe NFP Network

Scale and reach of 136 owned and more Scale and reach of 136 owned and more than 180 affiliated firmsthan 180 affiliated firms

Acquired and affiliated firms in more than Acquired and affiliated firms in more than 40 states and Puerto Rico40 states and Puerto Rico

NFP firms provide products and services in NFP firms provide products and services in three primary areas: three primary areas: • Life insurance and wealth transfer Life insurance and wealth transfer • Corporate and executive benefits Corporate and executive benefits • Fee-based planning and investment advisory Fee-based planning and investment advisory

services services

Keys to Expanding DistributionKeys to Expanding Distribution DemographicsDemographics

• Growing marketsGrowing markets• FragmentedFragmented

Acquisition programAcquisition program• Selection and due diligence processSelection and due diligence process• Economic alignmentEconomic alignment• PermanencePermanence

Ongoing strategic partner fostering growthOngoing strategic partner fostering growth• Provide access and benefits of scaleProvide access and benefits of scale• Ability to diversifyAbility to diversify• Best practicesBest practices

The NFP BridgeThe NFP Bridge

Benefits to Product ProvidersBenefits to Product Providers

• Increased access to Increased access to attractive marketsattractive markets

• Enhanced distribution Enhanced distribution efficiencyefficiency

• Access to specialists and Access to specialists and market expertisemarket expertise

• Opportunity for co-Opportunity for co-development of productsdevelopment of products

• Expanded lineup of Expanded lineup of productsproducts

• Superior marketing Superior marketing and technical supportand technical support

• Branding and Branding and marketingmarketing

• Benefits of scaleBenefits of scale• Synergies across firmsSynergies across firms

Benefits to NFP FirmsBenefits to NFP Firms

NFP Platform Creates Value for Manufacturers and DistributorsNFP Platform Creates Value for Manufacturers and Distributors

Product Product ProvidersProviders

DistributorsDistributors(NFP Firms)(NFP Firms)

Management OpportunitiesManagement Opportunities

Focusing on growth while remaining Focusing on growth while remaining disciplined with corporate overhead disciplined with corporate overhead • AcquisitionsAcquisitions• ““Same store” revenue growthSame store” revenue growth• Leveraging corporate resources across growing Leveraging corporate resources across growing

revenue base revenue base Educating investment community about Educating investment community about

NFP NFP • Unique storyUnique story• No clear comparable companiesNo clear comparable companies

What Makes It WorkWhat Makes It Work

Building the right organizationBuilding the right organization• No regional management layersNo regional management layers• Team approach to coverage Team approach to coverage • Good alignment Good alignment • Limited conflictsLimited conflicts

Good transition from financial Good transition from financial transaction to strategic benefit of transaction to strategic benefit of becoming an NFP firmbecoming an NFP firm

Early wins Early wins

What Makes It WorkWhat Makes It Work

NFP is a strategic partner not a NFP is a strategic partner not a “holding company”“holding company”

Unique acquisition structureUnique acquisition structure• Motivates producers with long-term Motivates producers with long-term

incentives that create shareholder valueincentives that create shareholder value• Allows firms to retain product Allows firms to retain product

independenceindependence• Aligns interests of owners and producersAligns interests of owners and producers• Succession opportunitiesSuccession opportunities

Unique Acquisition ModelUnique Acquisition Model

Current Operating Company

BecomesSubsidiary

of NFP

Management Contract Provides for:

Earns Management Fees Acquires 100%

Principal(s)Are

IndependentContractor(s)

• Principals’ ability to manage business of NFP’s operating company

• Share financially in growth of business

• Access to Best Practices and resources of the NFP system

• Non-Compete / Non-Solicit Covenants

Transferable Asset with

Value

Fostering Growth…Fostering Growth…Protecting ShareholdersProtecting Shareholders

GROWTH:GROWTH:

Compelling financial Compelling financial

incentivesincentives

Access to strategic Access to strategic

advantagesadvantages Enhanced economics Enhanced economics

derived through scalederived through scale

Product enhancementsProduct enhancements

Joint business Joint business

opportunitiesopportunities

PROTECTION:PROTECTION:

Revenue diversificationRevenue diversification

Firm diversificationFirm diversification

Cumulative preferred Cumulative preferred

earnings structureearnings structure

Economic alignmentEconomic alignment

Non-compete / non-Non-compete / non-

solicit agreementssolicit agreements

Questions/DiscussionQuestions/Discussion

How do you help people understand a new How do you help people understand a new business model?business model?

How do you develop the right How do you develop the right management team?management team?

How do you encourage relationships How do you encourage relationships among a network of highly independent among a network of highly independent group of entrepreneurs? group of entrepreneurs?

What’s the key to maintaining an What’s the key to maintaining an entrepreneurial atmosphere while entrepreneurial atmosphere while managing growth?managing growth?