JWCA Welcome Aboard 06.14

WELCOME ABOARD! The Advisory Team would like to welcome you to J.W. Cole Advisors (“JWCA”). During the recruiting and onboarding process, we recognize that you’ve been provided a tremendous amount of information regarding the various aspects of J.W. Cole. Our team is responsible for all aspects of advisory business; Adviser Managed Accounts, 3rd Party Money Managers and Planning/Consulting services. The various options within these categories are vast, almost overwhelming. Understanding these complexities, the information that we’re providing you with is designed to provide you a quick, but informative, overview of the resources available to you and the services we deliver.

STAFF OVERVIEW – Short synopsis of the Advisory Department team's areas of focus along with our contact information.

NEW BUSINESS PROCESSING AND COMMON PITFALLS – Provides a description of the documents needed to process all forms of advisory business including a short listing of the most common paperwork problems advisers experience.

BLACK DIAMOND FAQ – Black Diamond is the backbone to our Adviser Managed accounts providing JWCA with billing capabilities and advisers with sophisticated performance reporting capabilities. This document addresses the most commonly asked questions.

ADVISOR DRIVEN PORTFOLIOS – Contains basic details of the four primary Adviser Managed choices for managing advisory assets; excludes the use of 3rd Parties.

3RD PARTY MANAGERS – We maintain an extensive list of top rated money managers. This list is constantly updated. Refer to JWCONNECT™, under Approved Products, for the most up to date list.

GLOSSARY OF TERMS - This document contains terminology commonly used within the advisory business; both industry and firm specific.

As you are becoming familiar with J.W. Cole, please don’t hesitate to contact us with any questions you may have. Congratulations on your decision to join one of the premier Advisory Firms in the country! We look forward to partnering with you.

Sincerely, The Advisory Team

JWCA Team Overview 04.15

INVESTMENT ADVISORY TEAM OVERVIEW

TODD PACK Todd has been a member of J.W. Cole since the acquisition of Financial Advisers of America (FAA). Todd started in the industry in 1996 where he managed and sold a highly successful planning practice. While at FAA, Mr. Pack was the President, CCO and COO but spent much of his time developing the IA business. Prior to FAA, he was involved in the acquisition of $10B in advisory assets through an acquisition Firm he founded. Todd now manages JWCA where he is responsible for:

Oversight of all operational aspects of the business Compliance testing and risk mitigation Enterprise growth through development of unique advisory services and partnering

with advisers to fulfill their business needs

LINDA CHRISTINA Linda has been a member of J.W. Cole since June of 2011. Linda started in the industry in 1999 when she joined the Haddon Financial Group in Cherry Hill, NJ. In 2004, Linda was recruited by Smart Financial Advisors, headquartered in Devon, PA, with offices in multiple cities. In 2008, Linda was then recruited by Beneficial Advisors, LLC –the Wealth Management Unit of Beneficial Bank in Philadelphia, PA, one of the oldest banks in the U.S., where she served as OSJ for Advisors servicing 65 branches. Mrs. Christina brings a tremendous amount of knowledge and capability to JWCA and is “currently” the firm’s only MENSA certified member. Linda is an Advisory Operations Principal and is responsible for:

Advisory business approval Compliance testing and oversight Servicing adviser requests, handling technical operational inquiries and supporting

our partners in the implementation of advisory related business

JACLYN MEADOR Since joining J.W. Cole in February 2013, Jaclyn's role has expanded greatly. Prior to joining the Advisory Team, she was a Sales Support Specialist where she worked with our advisers and Relationship Managers. Jaclyn's strong background in Sales Training and Management has contributed to her tremendous growth in the Firm. Jaclyn is responsible for:

Maintaining and running all billing related activities for JWCA Continued integration and maintenance of Black Diamond and supporting adviser

implementation Servicing adviser requests and providing unique business driven reports to advisers

monthly and quarterly

JWCA New Business Processing 06.14

NEW BUSINESS PROCESSING

REQUIRED FORMS FOR ADVISORY BUSINESS

TRADITIONAL ADVISORY ACCOUNTS NFS Account Application JWCA Consolidated AUM Agreement

Enter client fee under Adjusted Fee column and ignore Program Fee and Total Fee

ASSET-BASED ADVISORY ACCOUNTS NFS New Account Application JWCA Consolidated AUM Agreement

Enter client fee under Adjusted Fee column and add Program Fee to equal Total Fee (Client Fee plus Program fee = Total Fee)

JWCA Wrap Fee Brochure

MANAGED ACCOUNT SOLUTIONS (MAS) ADVISOR MANAGED PORTFOLIOS NFS Account Application JWCA Consolidated AUM Agreement Completed Statement of Investment Selection (SIS) with “Detailed Fee Schedule”

MANAGED ACCOUNT SOLUTIONS (MAS) THIRD PARTY MANAGED NFS Account Application JWCA TPIA AUM Completed Statement of Investment Selection (SIS) with “Detailed Fee Schedule”

THIRD PARTY MONEY MANAGER - DIRECT BUSINESS JWCA New Account Application JWCA TPIA AUM Copy of product application

ANNUITY ADVISORY JWCA New Account Application JWCA Annuity Advisory AUM (Note: If annuity is to be managed by a 3rd party manager,

there is a field to specify for that on the last page)

FINANCIAL PLANNING & CONSULTING JWCA New Account Application Consulting services worksheet JWCA Financial Planning & Consulting Agreement Delivery Receipt within 6 months of agreement date

Note: For all NEW advisory customers, advisor must also deliver to customer JWCA ADV Part 2a (includes JWCA Privacy Policy) and Advisor’s ADV Part 2B.

Note: Payment Authorization Form may be required. See specific agreement for specific requirements for that form.

JWCA New Business Processing 06.14

COMMON PAPERWORK PITFALLS As a Firm, we recognize that one of the most frustrating issues for advisers involves delays in the home office processing business. We've taken a moment to highlight the most common pitfalls in completing paperwork and clarified some common terminology.

Missing date on advisory AUM agreement - Page 1 Writing in IAR name instead of client name - Page 1 Not identifying advance or arrears billing option - Page 2 Blank fee schedule signed by client - Page 5 Missing client initials next to fee schedule - Page 5 Incomplete Fee Schedule Page 5 Missing payment method (Direct bill, From account, etc.) - Page 5 Using a 3rd Party Advisory Agreement with annuities to be managed by a TPIA.

Use the Annuity Advisory Agreement, which has a field in which to enter the Third Party Manager, if applicable, or rep as manager.

NEW BUSINESS PROCESSING

4301 Anchor Plaza Parkway, Suite #450, Tampa, FL 33634 Phone (813) 935-6776 │ Fax (813) 935-6775

Black Diamond FAQ 06.14

BLACK DIAMOND FAQ

Black Diamond is our cloud based fee billing and customized reporting tool. Through Black Diamond, our partners can access pertinent information regarding their fee based accounts, generate customizable performance reports and provide web based client access. QUESTION: I'd like to provide a comprehensive family asset statement. Can Black Diamond

pull data from insurance companies, non-advisory accounts (NFS, mutual fund families, 3rd party money managers, Trust company of America, TD Ameritrade, etc.?

ANSWER: Only advisory account data feeds will be brought over to Black Diamond.

QUESTION: Because Black Diamond is for advisory accounts only, does their reporting include advisory assets not held at NFS?

ANSWER: It depends on the custodian. Black Diamond has a very large list of financial institutions that they are able to pull data from. We can check the authorization for any financial institution on your behalf. Assets reporting through DST (mutual funds, annuities, etc.), NFS, Schwab and IWS are currently reflected in our reporting.

QUESTION: Can Black Diamond process trades or is it for reporting only? ANSWER: Black Diamond does not provide trading capabilities. The system is used by

JWCA for billing, suitability reviews and reporting. Advisers and their clients utilize Black Diamond for reporting only.

QUESTION: Does Black Diamond charge extra for reconciliation? ANSWER: Black Diamond is responsible for reconciliation and there is no additional cost.

QUESTION: When we generate a report, can we save and/or print that report as a PDF? ANSWER: Yes, you can save and print reports as PDFs. Additionally, you can post the report

to your clients’ web portal.

QUESTION: Are we able to customize reports with our own logos? ANSWER: Yes, Black Diamond can load different advisor logos for reports. Reports are

personalized with the adviser’s specific information.

QUESTION: If moving to Black Diamond from another reporting software, will the history of the accounts follow or does history start when we move to Black Diamond?

ANSWER: The first day an account starts in Black Diamond is the start date for reporting. However, Black Diamond can load historical values on a monthly basis going back as far as the client would like. The majority of performance reporting software companies can produce exports of monthly data. Black Diamond also has an Excel spreadsheet that can be completed by an adviser and uploaded.

Black Diamond FAQ 06.14

BLACK DIAMOND FAQ

QUESTION: For billing purposes, can Black Diamond exclude certain positions from billing? ANSWER: Yes, we are able to exclude certain assets from billing even if they are reported on

via Black Diamond. An example may be a legacy asset that an adviser is not actively managing.

QUESTION: Can we exclude specific positions from the summaries shown? ANSWER: Yes, there is way to tag certain assets as unsupervised. For report purposes, you can

select the performance report for supervised positions only.

QUESTION: When a new advisory account is opened in Streetscape (NFS) does Black Diamond pick it up automatically or does the adviser have to manually add it?

ANSWER: Accounts are generally linked to Black Diamond automatically. In some cases, the advisory team at JWCA may need to manually establish a feed (DST reported assets). Assets are reported on a daily basis. It is not the responsibility of the adviser to add any accounts to Black Diamond.

QUESTION: Do Black Diamond reports provide the ability to drill down into individual securities - stocks, mutual funds, ETFs?

ANSWER: The performance reports do provide drill down capability to the asset level. However, the system does not provide research capabilities on individual securities.

QUESTION: How were security classifications determined and can the adviser view these

classifications? ANSWER: The classification and segmentation schema was created by JW Cole. Black

Diamond automatically and manually classifies assets as they fit the firm’s schema. In some cases, classes and/or segments may be unknown and reflected as unclassified. As these are identified, classes and segments can be added.

QUESTION: How is performance determined? ANSWER: Black Diamond calculates performance using the Time Weighted Rate of Return

methodology. Black Diamond calculates daily returns based on the value at the beginning and ending of the day, any external flows that are going in or out of the account, and what the gain/loss is for that day. When looking at a certain time period (MTD, QTD, YTD, etc.) Black Diamond links the daily returns together to get a true time period return. Also, the daily returns used for linkage are out to 17 decimal places to ensure for accuracy.

QUESTION: Under the Setup tab I'm able to view the Classification Schema; how does the system identify the positions that come onto the site?

Black Diamond FAQ 06.14

BLACK DIAMOND FAQ

ANSWER: Securities are classified with Black Diamond’s auto-classification tool, this occurs during daily reconciliation. The system classifies the securities based on the characteristics that come over from Black Diamond’s 3rd party data provider, IDC. Those characteristics are matched to the characteristics for each segment. For example, if there is a security that comes in with an allocation of Equity and a location of Emerging, that asset will be filtered to Equities—> Emerging Markets.

QUESTION: Within the Classification Schema, what are unclassified and to be classified assets? ANSWER: Assets that are tagged as ‘To Be Classified’ are assets that the system is unable to

classify. This could be due to several reasons most commonly it is because the security does not exist on IDC and therefore no characteristics were sent over. This most frequently happens on either newly issued securities, options, or securities that were named incorrectly by the custodian. Black Diamond runs their auto classification tool daily for “To Be Classified” securities, so that when they do finally get the characteristics from IDC, they can classify them as appropriate.

“Unclassified” is a bucket that Black Diamond puts “to be classified assets” in if they are unable to determine how the asset should be classified. On a quarterly basis, Black Diamond attempts to manually classify all of the TBC assets. If they are unable to determine how the asset should be classified, then they will put them into the “Unclassified” class and segment. If you should see “Unclassified” (or even “To Be Classified”) please let the Home Office know and the account number and asset and the Home Office will work with you to classify the asset.

QUESTION: Can we show the adviser name on the cover page of reports? ANSWER: Black Diamond can show the adviser name on the cover page on reports.

Unfortunately, Black Diamond is not able to add this to the report builder. If you would like contact information added to a custom report that you created in report builder please let the Home Office know and they will work with Black Diamond to have them create that report as a template so that contact information can be added to the front page.

4301 Anchor Plaza Parkway, Suite #450, Tampa, FL 33634 Phone (813) 935-6776 │ Fax (813) 935-6775

ADVISOR DRIVEN PORTFOLIOS SPONSOR J.W. COLE ADVISORS, INC. ENVESTNET JWCA Program Traditional Advisory Asset Based Portfolios

Managed Accounts Solutions (MAS) Asset-Based Pricing

Managed Accounts Solutions (MAS) Transaction-Based Pricing

Program Overview

Traditional Advisory accounts provide the simplicity and functionality of an NFS brokerage account allowing investment management flexibility while providing

the advisor the ability to overlay a variety of practice management tools.

Asset Based Portfolios give the advisor distinct investment management control while providing trading benefits and cost

effectiveness for frequently traded accounts

Managed Accounts Solution (MAS) provides effective and seamless model management while bundling proposal,

trading, and performance reporting practice management tools and capabilities

Managed Accounts Solution (MAS) provides effective and seamless model management while bundling proposal,

trading, and performance reporting practice management tools and capabilities

Custodian National Financial Services/Held Away National Financial Services/Held Away National Financial Services/Held Away National Financial Services/Held Away

Eligible Investments All commission/load waived brokerage

eligible securities All commission/load waived brokerage

eligible securities Stocks, Mutual Funds, and ETFs Stocks, Mutual Funds, and ETFs

Discretionary Available upon IAR approval Available upon IAR approval Available upon IAR approval Available upon IAR approval

Minimum Account Size $25,000 $100,000 $25,000 $25,000

Program Fee Non Applicable

First $250,000 $250,000—$500,000 $500,000—$1,000,000 $1,000,000—$2,000,000 Above $2,000,000

First $250,000 $250,000—$500,000 $500,000—$1,000,000 $1,000,000—$2,000,000 Above $2,000,000

0.17%

Advisor Management Fee Determined by advisor on a client by

client basis Determined by advisor and added to the Program Fee on a client by client basis

Determined by advisor and added to the Program Fee on a client by client basis

Determined by advisor and added to the Program Fee on a client by client basis

Additional Fee Information

First $250,000 $250,000—$500,000 $500,000—$1,000,000 $1,000,000—$2,000,000 Above $2,000,000

Minimums apply

First $250,000 $250,000—$500,000 $500,000—$1,000,000 $1,000,000—$2,000,000 Above $2,000,000

Minimums apply

Minimum $100 annual Custodian Fee Minimum $130 annual Program Fee

(calculated as 10 bps of AUM)

Minimum $100 annual Custodian Fee Minimum $130 annual Program Fee

(calculated as 10 bps of AUM)

Transaction Costs (Ticket Charges)

Yes See “NFS Clearing Schedule” for details Applicable ticket charges can be charged

to client or picked up by advisor on a trade by trade basis

No Included in program fee

No Included in program fee

Yes See “NFS Clearing Schedule” for details

Trading Platform Streetscape® or “Fee-Based Tools” Streetscape® or “Fee-Based Tools” Managed Account Solutions

(Streetscape® integrated) Managed Account Solutions

(Streetscape® integrated)

Modeling and Rebalancing Available with “Fee-Based Tools” add on Yes Yes Yes

NFS “Fee-Based Tools” Entitlement Import/Export Package Trading Package Full Access Package

“Full Access Package” included Not Applicable Not Applicable

.30%

.26%

.25%

.24%

.23%

.30%

.26%

.25%

.24%

.23%

$ 50/month $100/month $150/month

15 bps 13 bps 11 bps 9 bps 7 bps

15 bps 13 bps 11 bps 9 bps 7 bps

JWCA 3rd Party MM 06.14

THIRD PARTY MANAGERS

ASSETMARK (GENWORTH) BRINKER CAPITAL

BTS ASSET MANAGEMENT HANLON INVESTMENT

HOWARD CAPITAL MANAGEMENT PACIFIC FINANCIAL GROUP, INC.

SEI SOWELL MANAGEMENT SERVICES

SYMMETRY PARTNERS

4301 Anchor Plaza Parkway, Suite #450, Tampa, FL 33634 Phone (813) 935-6776 │ Fax (813) 935-6775

Below is a partial list of the money managers available through J.W. Cole. The complete list can be found on our website.

IA-Glossary of Terms 06.14

GLOSSARY OF TERMS

INVESTMENT ADVISORY BUSINESS

J.W. COLE FINANCIAL (JWC) – Broker Dealer, member FINRA/SIPC.

J.W. COLE ADVISORS (JWCA) – Investment Adviser, SEC Registered.

NATIONAL FINANCIAL SERVICES (NFS) – Subsidiary of Fidelity Investments. Provides clearing and custody services to J.W. Cole.

INVESTMENT ADVISER REPRESENTATIVE - Often referred to as the "IAR." Individual providing advice on investment related items. Must be registered with an Investment Adviser to conduct business.

AGGREGATED FEE DEBIT - This allows for fees for multiple advisory accounts to be debited from a single account. Example - Accounts A, B and C may have all fees debited from account A. Complete Custodial Withdrawal Authorization Form

PRO-RATED ADVISORY FEES - Processed monthly and refers to fee billing of new or terminated advisory accounts during the quarter.

INFLOW/OUTFLOW - Processed quarterly and refers to fee credits and debits for inflows and/or outflows of funds in existing fee based accounts. Transactions involving excludable assets are adjusted monthly.

EXCLUDABLE ASSETS - Assets deemed by the Firm or IAR that are to be excluded from fee billing for various reasons (C shares, Alternatives, CDs...)

TRADITIONAL ADVISORY ACCOUNT - Typical fee based platform that allows the adviser to trade a variety of investment options. Each trade involves a ticket charge, often paid by the client, but an adviser may elect to cover the ticket charge. Minimum account size is $25,000.

ASSET BASED ADVISORY ACCOUNT - Typically referred to as a wrap program where an adviser can trade the account often resulting in no cost on a trade by trade basis. Client pays a Program Fee. This option is best suited for advisers with significant trading activity. Minimum account size is $100,000.

MANAGED ACCOUNT SOLUTIONS - Solution that is in partnership with Envestnet. Provides both a 3rd party platform and an adviser directed platform. Adviser must use a model to determine risk tolerance and portfolio design that results in a Statement of Investment Selection (SIS). Client pays a program fee.

ADMIN FEE - The admin fee is assessed to the adviser (not the client) and is based on account value. The JW Cole admin fee is 15 bps but tiered down based on account size. This fee is for various items but generally for ongoing compliance requirements (cash balance, ongoing suitability and appropriateness reviews, inactivity...), billing system and the running of billing, account processing, ADV updates, Part 2B updates, annual mailers, privacy policy, etc.

IA-Glossary of Terms 06.14

PROGRAM FEE - Client fee that covers platform access and trading cost for Asset-Based accounts. Typically starts at 30bps and declines based on the account size. True concept of asset based pricing. Adviser can trade numerous times without causing an increase in the clients overall cost.

DIRECT BUSINESS – Any advisory business that is not held at NFS. This includes third party managed accounts, Financial Planning & Consulting, and advisor-managed annuities.

INACTIVITY REVIEWS – Accounts are reviewed on a 6, 9, 12 & 18 month basis for transaction activity (Buys and Sells). Lack of activity may result in account being removed from advisory program due to perceived reverse churning. Reverse Churning - Lack of client account activity while adviser continues receiving an advisory

fee

CASH BALANCE REVIEWS – Accounts are reviewed monthly to identify accounts maintaining 50% or greater in cash for 6 consecutive months or longer.

ADVANCE BILLING – Accounts are billed based on the billable asset value at quarter-end for the upcoming quarter. Should the account close, any unused advance fees may be refunded to the client and debited to the advisor.

ARREARS BILLING – Accounts are billed based on the billable asset value at quarter-end for the previous quarter. Should an account close, any fees due may not be recoverable.

BLACK DIAMOND – Performance reporting system, also used for fee-billing, for fee based accounts only.

ALBRIDGE – Performance reporting and data aggregation system for fee based and non-fee based accounts

GLOSSARY OF TERMS

INVESTMENT ADVISORY BUSINESS

4301 Anchor Plaza Parkway, Suite #450, Tampa, FL 33634 Phone (813) 935-6776 │ Fax (813) 935-6775