Financial Services: Maximizing Our Opportunity

1. Financial Services:Maximizing Our Opportunity

2. Industry Update In the groundbreaking report from the Mortgage Bankers Association's Council to Shape Change, several important trends were uncovered: • Consolidation – Strong get stronger • Regulation – More (always) • Convergence

3. Industry Update • “The holy grail of the large integrated financial services companies will be the capability to cross-sell a variety of financial products… • The largest mortgage bankers will not operate as stand-alone organizations but will more likely operate as part of a larger integrated financial services firm…” MBA Staff MapQuesting the industry October 3, 2006

4. We’re Living in Changing Times

5. We’re Living in Changing Times

6. We’re Living in Changing Times 3 Reasons: Consumer demand Creates loan demand Attract, retain, and reward associates

7. Consumers Need Help • Have little or no financial education • Understand little about debt management • Understand even less about asset accumulation and creating wealth • Have no real plans to achieve financial security

8. Consumers Need Help • Consumer Debt is more than $2 trillion • College cost doubled from 1990 to 2005 • Shift in workplace from pensions to 401Ks • Social Security isn’t so secure MASSIVE DEBT

9. Consumers Need Help • 1980s = 10 % • 1990s = 5% • 2000s = 1% WEAK SAVINGS HABITS Savings as a share of disposable income:

10. The Financial Services Industry is the only industry in a position to solve these challenges!

11. Creates New Loan DemandConsumers Need Help!

12. Equity Management Workshops Client Workshops designed to educate and inspire Debt Management Equity Management Asset Accumulation

13. Household Expenses Mortgage $2,000 Food/Bills $1,000 Car + Insurance $ 500 Credit Cards $ 500 Misc. $ 500 TOTAL BILLS $4,500 INCOME $4,500 DISCRETIONARY INCOME :-0- The Problem

14. Solution Household Expenses Mortgage $2,000 Food/Bills $1,000 Car $ 0 Credit Cards $ 0 Misc. $ 500 TOTAL BILLS $3,500 INCOME $4,500 New Cash Flow + $1,000 Without Cutting Back Lifestyle

15. What is it REALLY worth? • Save $500 per month for Emergency Fund • $6,000 saved for emergency use after 1 year • Invest $500 per month for 25 years • Could our clients use an extra Half Million Dollars at Retirement? Growth @ 6% $346,000 Growth @ 8.5% $516,000

16. Asset Accumulation • What interest rate do you earn on equity? • Is Equity liquid? • Is Equity Safe from market Risk? • If we could earn a rate of return on Equity for our clients, would you want the extra money?

17. Federal Reserve Bank Article

18. Federal Reserve Bank Article • By accelerating mortgage payments instead of stashing the money in savings, 1 in 3 Americans are “giving up potentially important arbitrage gains.” • Report calls it a “Misallocation” of funds, costing Americans up to $1.5 Billion per year. • Savings provide “a good hedge against a combination of housing price risks and liquidity risk.”

19. Solution #1 Loan Amount $300k $300k $2,000 Level Interest OnlyMortgage $1,500 The difference is $500 If we invest $500 per monthover 30 years @ 8.5% =$825,000 Then pay off loan -($300,000) The client has $525,000 Or…

20. Solution #2 Loan Amount $300k $300k $2,000 Level Interest OnlyMortgage $1,500 However, not everyone lives in their home for 30 years. Assuming we live in our home for 7 years. We invest $500 per month over 7 years @ 8.5% : $ 57,122 After 7 years, the home may appreciate to $400,000 The client owes: - ($300,000) Profit on sale of home is: $100,000 Client nets: $157,122

21. Equity is GREAT

22. Cash Is KING!

23. Marketing Workshops • LO invite existing clients • Flyers available for clients • Speakers educate and inspire clients to take action • Financial Services rep and LO jointly bring client forward

24. “Combining the offerings of mortgage and insurance products is common sense when you consider that as a Loan Officer we collect all the financial data upfront, giving us a clear picture of clients’ insurance/investment needs.” Mike Radi Branch ManagerCharter Funding, San Diego

25. “Our first client investment seminar resulted in 5 new loans…‘three for one client!’ I can definitely see how Charter Insurance is going to be a key to our long-term growth in a changing market.” Mike Radi Branch ManagerCharter Funding, San Diego

26. “As a result of the seminar, I have generated 3 new loans for a total of $931,500. Thanks for introducing me to these amazing concepts!” Nick Dawson Loan OfficerCharter Funding, San Diego

27. The Charter, Great Southwest Career Opportunity OPPORTUNITY Mortgage Service Refinance Purchase ELOC Primary Residence Investment Property Insurance Services Term-ROP Term Universal Life Equity Indexed Life Wealth Accumulation Products P and C Homeowners Insurance Umbrella Policies Future products

28. Charter’s Partners • Solid companies • Proven track record • Household names

29. Financial Rewards

30. Compensation • Participate in workshops and additional income through increased organization • You can BE the advisor • You can TRAIN with an advisor • You can REFER to an advisor

31. Income SplitsBased on a Level Of Involvement Referring Agent25% Producing Agent75% Participating Agent50% Producing Agent50% Producing Agent70% Plus applicable management overrides Based as a percent of filed payout

32. Compensation: Field Payouts 70% Producing Agent 9% District Agent/Branch 4% Regional Agent

33. Compensation: Agency Building Agents(20% O/R)14% 2nd Generation(20% O/R) 2.8%

34. Refinance $400,000 Loan Amount x 2% (points) $8,000 x 60% Commission $4,800: x 3 Clients Equity Indexed Life $ 500 per month x12 $ 6,000 x70% $4,200: x 3 Clients Compensation $14,400 Mortgage Income $12,600 Financial Services Income $27,000 Monthly Income $324,000 / Year potential

35. Referring Agent Compensation $ 500 per month x12 $ 6,000 x70% $4,200: x 3 Clients 25/75 Split with advisor Initiate and introduce Advisor manages the relationship/process $1050 per client (example) $14,400 Mortgage Income $4200 Financial Services Income $18,600 Monthly Income $223,000 / Year potential

36. The Agent Website • Login = Charter1 • Password = Riskmanagement1

38. Take the Next Step • A tremendous need in marketplace exists for solid financial advice • Excellent earning potential as an Advisor or Manager. • Opportunity to help others while helping yourself and your family • Creates more loan originations Four major reasons to expand into Financial Services…

40. $ 500 per month X12 $ 6,000 x70% $4,200: x 3 Clients Producing/Sr. Agent Compensation $14,400 Mortgage Income $12,600 Financial Services Income $27,000 Monthly Income $324,000 / Year potential

41. Compensation • We are looking for Leaders/Agency Builders • As a Managing Advisor you supervise 10 Advisors $15,000 Business x 10 Advisors $150,000 Total x Management Override $21,000 Monthly Income Potential $252,000 annual potential • Plus renewal commissions • Plus IRA/401k Rollover and annuities business

42. Additional path to grow profession • Additional service to provide more complete package • Rise above the crowd

43. Consumers Need Help Most of America is under-insured! Average death benefit in 2000 per LIMRA report was less than $12,000 UNEXPECTED LOSS

44. The Problem • If we could show you a way to free up $700 to $1,000 from your family expenses, without changing your Lifestyle… • Would you save for your future?