Rob Jones, managing director of Peloton Partners, shares emerging pricing trends in the industry based on data from 70 advised firms across Australia, and strategies for advice practices to extract latent value out of their business.

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7. The Value Within Your Business
Peloton Partners Pty Ltd
Prepared by Peloton Partners Pty Ltd 2019

8. Introduction – Royal Commission and the Business Environment
The Royal Commission findings were of no real surprise given the interim report – and none of it
matters until enacted into law – which will happen soon enough.
The Peloton view is simple – where there is a service, there is value…where there is value, it can
be articulated, packaged, priced (including profit) and communicated effectively to clients and
they will be happy to pay for it!
Nothing changes this – except there will be a requirement to effectively “re-sign” clients up to the
service they are “entitled to receive” each year and detail the total fees they will be charged.
It implies that a business that charges clients via a % of Funds Under Management model may
find it a challenge to advise clients in advance, what they will pay in total, given the number of
variables that may infringe that ability.
In any event, this presentation was never focused on the Royal Commission, but is focused on
what we believe is the optimal model to be profitable and valuable now and in the future – its
therefore an opinion piece, but one that is based on facts and evidence only. You will get to see
what your peers are doing and how they are approaching some of the challenges you will all face,
are facing or have faced.
In advance of this I would like to thank all those firms who have entrusted us with your business –
hope you are enjoying the rewards of hard work and honesty – you are well positioned.

9. What to Expect from this Session
Strategies and case studies to make good businesses better
• Understanding your business (the good / the bad / the ugly)
• Client Value Proposition (many firms struggle with this – but shouldn’t)
• Pricing models that correctly price (all components of your service)
• Profit is not a dirty word and no 2 clients are the same (neither should the price)
• Industry trends around pricing models (past/present/future) – future is now
We will present only the facts
• Real data on 70 firms we have advised across Australia (metro/country/large/small)
• The issues, challenges & opportunities that define these firms
• How they extracted the latent value clearly visible in their business and the
financial and valuation impact it delivered

10. The Opportunity is Clear
Average 49% Profit Uplift
Ranged from 17% - 150%
How much latent Value is there to Unlock in Your Firm?
Delivered within 12 months

11. Where Do You Start – at the beginning of course
Numbers Tell The Story
• What do the financials tell us about
the business? – a lot!
• How does the business compare to
the best, not the average?
• How risky is the revenue?
• Are owners happy with the return?
• What is the business worth now?
• What could it be worth tomorrow?
1
Service Scope / Depth
• How “elastic” is the service
offering?
• How deep does the service go?
• Does the business specialise?
• Does the business attract a wide
variety of client types?
• Does the business co-ordinate
other specialists and act as their
clients personal “CFO”?
2
Your Team / Your Fees
• Does the team posses the right mix
of qualifications?
• Are there opportunities for them?
• Are they paid too much-too little?
• Does the fee model price in the value
delivered by the team?
• Does the fee paid by clients reflect
their individual complexity and needs
and are they profitable to the
business?
3
The first question to be asked - is there a need to change what
you are doing? – we don’t know till we know (iFOCUS)

12. Data collated on
over 70 firms
advised
How Firms Presented to Us

13. All
Shapes
& Sizes
…located in regional areas & capital cities across Australia
…If we isolated a single trait these firms embody, it is that they
deliver value we could measure, describe and price accurately -
meaning their clients now pay what they should, no more / no less.
# of Active clients
50-2000
Profit
-$0.7m-$3.2m
# of FTE Staff
2-45
FUM
$15Mil-$1.2Bil
Time in Business
2–30years
Total Revenue
$0.2mil-$12.1mil

14. Revenue Splits of Firms Advised
Risk fees
20%
Wealth
Management fees
69%
Other fees
11%
Revenue Breakdown by Service Type
Risk Wealth Management Other
Upfront
28%
Ongoing
72%
Risk Fees
Upfront
9%
Ongoing
91%
Wealth Management
Fees
This has been
trending down
since LIF reform
and will reduce
further
This is at an
historical low. 3
years ago it was
~13% of total
revenue. Advisers
have consciously
charged less.
Combination of
broking fees,
volume rebates,
passive income,
product
commissions.
*Accounting fees /
legal fees stripped out

15. What are the Main Issues Confronting the
Business Environment of Today?
Interpreting the Data

16. What the Data Tells Us – 3 Main Themes
• 3% compound 2015-2018
• 6% compound 2011 -2014
• Changes to upfront risk insurance
fees are part to blame
• Financial planning upfront fees
have come back for no obvious
reason other than advisers were
unsure what to charge and went
down the path of least resistance
• Average business costs had
increased by 15% over the past 3
years
• Primarily through a combination of
wage inflation and CPI increases
• A big contributor was additional
costs directly attributable to
complying with increased regulatory
requirements
• Slow new business growth plus
increased business costs has
resulted in owners income flatlining
• Very few ongoing fee models were
able to price in additional costs
• We must modernise ongoing fee
structures to avoid these issues as
they will put some firms under
immense pressure
New Business
Growth Has Slowed
Rising Business Costs Flatlining profit levels

17. Profit is coming under pressure and may
intensify
22.6%
25.3%
27.7% 26.6%
25.0%
0%
10%
20%
30%
40%
50%
2013 2014 2015 2016 2017
Australian Financial Planning Industry
Profit Margins % Over Time
25.4% 24.6%
38.0%
Australian Financial
Planning Industry
US Financial Planning
Industry
Peloton Top 20%
Benchmark
Operating Profit Margins %
(5yr Average)
FY2018 average
industry profit is
showing a downward
trend of up to 4%
lower than FY2017

18. Firms Rely Too Much On Low Quality Revenue
Low Quality Revenue = Upfront Revenue, One-
off Revenue, Product Commissions, passive
client revenue, rebates of any kind, volume
bonus, loyalty bonus, “marketing support” etc.
Low Quality Revenue is under regulatory
pressure &/or is labor intensive to replenish year
on year. In some market conditions, it is difficult
to bring on new business.
If Low Quality Revenue was to dry-up or reduce
significantly in any way, the average firm in this
industry may experience a 50% drop in profit!.
Peloton Avg. Peloton Top 20%
Average Operating Profit $483,000 $904,000
Average Low Quality Revenue received $238,000 $242,000
% Profit reliant on Low Quality Revenue 49% 26%
$483,000
$904,000
$226,000
$283,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
Peloton Avg Peloton Top 20% Average
Normalised Operating Profit (Blue)
V Low Quality Revenue (Red)
We design ongoing
pricing models to
deliver a healthy
“profit buffer" so the
business is not solely
reliant on low quality
revenue of any kind

19. Unprofitable Clients
They are everywhere, but which ones?
We must develop a more sophisticated approach to address individual client
profitability

20. The Challenge of Change
We want to… We need to… Don’t have time… It’s too hard!
Fintech development is delivering greater efficiencies – but will that translate
to increased business growth?

21. Blind Inertia
We hope things will get better next year.
Hope is not a strategy

22. Fee Models
% Based Models Hybrid Models Fixed $ Models
Peloton Average 40% 28% 32%
Peloton Top 20% 15% 12% 73%
Many different fee models remain in operation still
However the trend is clear – the move to fixed fee models that can flex with the
changing circumstances of clients is well underway
The best financial performance is achieved when firms price the services and value
they deliver not how much money they manage

23. Evolving Fee Models – past, present and future…..
The progression of our industry toward a profession maybe viewed
through the lens of an evolving pricing model being actively pursued now.
This is a natural progression toward an authentic fixed fee model and its
moving quickly.
Being able to price a service fully to clients (including profit) can only
occur when the pricing model is flexible enough to allow this.
In addition having a pricing model that can flex (up or down) as client
circumstances dictate maintains a perfect alignment between adviser and
client.
The philosophy is simple - no 2 clients are identical in their needs and
complexity and neither should the fee they pay.
Flat % of
FUM
Tiered %
of FUM
Combo: Tiered
% of FUM +
Fixed $
Fixed $ Segments
(Gold, Silver..)
Fixed $
Individual
Pricing
that flex

24. Describing Your Fees and Value to Your Clients
A simple, but clear set of statements is always preferable – here is only one example;
1. Value – Our fee is directly linked to the value we deliver by a highly qualified team whose mission is to
understand what is important to you. We commit to delivering all the services to you – not just some.
2. Simplicity - Our ongoing fee structure is clear, transparent, easy to understand and calculate.
3. Personalised – Our fee will relate directly to services you need, how complex your circumstances are and how
you wish to engage with us. Therefore you will pay a fixed fee that may change as your circumstances change.
4. Fair – As our fees are tailored for each client, they are fair to each client and they include a profit so that we
can continue to serve you in a manner appropriate to your circumstances.
5. Goal – Our goal is to ensure our services are valuable to you and valued by you. If at anytime they are not, we
will assist you to go elsewhere.

25. What do Clients Value the Most?
Source: Beddoes Institute's Client Experience Survey, 2013
And the Survey Says…..
Interpersonal Skills and
trust (intangible value)
82%
Professional Reputation 19%
Quality Advice / Product 17%
Service – (tangible value) 15%
Knowledge/Competence 11%
Cost / Other 7%
Technical Skills 4%

26. Understanding Your Value – if you don’t clients won’t
Intangible
Value
Tangible
Tangible
Tangible
Tangible
➢ Your clients do not have to be advised – they make
an informed decision to elect to be advised.
➢ Most often this decision stems from an
overwhelming need to feel safe financially – peace
of mind always features in the decision making
process of clients.
➢ As advisers we hold up one of the 3 most important
pillars in the lives of clients – first pillar is personal
health, then family and friends - the final pillar is
wealth.
➢ Too many advisers underplay their value to clients
and when they do that, so do their clients.
➢ Regularly reconnect your clients to the reason they
sort advice in the first place – this is so important
for a 2-way “valued” and “valuable” relationship to
exist.
The core of any
advice offering

27. Expressing Intangible Value
✓ “We are committed to understanding your needs and to give you the peace of mind that your financial affairs will be in
order to enable you to live the life you choose”.
✓ “We are here to help you identify and clarify your unmet aspirations and goals”.
✓ “We are here to take stewardship over your financial goals and aspirations with you”.
✓ “We are here when you need us the most - at a time of a loved one passing or suffering a serious illness or disability”.
✓ “We are here on an ongoing basis to help you make informed decisions regarding your financial affairs throughout the
course of planned or unplanned changes in your situation”.
✓ “We are here at the end of the phone when you need us”.
✓ “We stay up to date with legislative and economic changes and trends in the wealth management industry to benefit
the advice we provide you”.

28. The Peloton Curve
Peloton Curve – A proprietary model we developed to determine the ongoing fee
mix to target a minimum 30% margin that high performing firms achieve.
Top 20% Peloton Benchmark Firms typically have at least 50% of their
client base priced at or above this curve charged via a fixed fee only.
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
2.4%
2.8%
3.2%
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
Feeas%ofFUM/fixedfeeequivalent
FUM
The Peloton Curve – Fixed Fees or %
Well Below Curve
Just Below Curve
At or Above Curve
Peloton
Benchmark
20%
30%
50%
Positioning on the Peloton Curve
Well Below Curve Just Below Curve At or Above Curve
Variance
above/below
the curve
reflects
customised
pricing per client

29. The Peloton Curve – Actual Case Study
Example of actual firm’s clients mapped against The Peloton Curve…this particular firm had priced clients
under a % of fee model / a fixed fee model / hybrid fee model – confusion and inconsistency
The Peloton Curve vs
Example Firm’s Actual Clients
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Feeas%ofFUM/fixedfeeequivalent
FUM
Clients Above/Below Curve
Well Below Curve
Just Below Curve
At or Above Curve
Example Firm Peloton
Benchmark
65%
20%
20%
30%
15%
50%
Well Below Curve Just Below Curve At or Above Curve
This firm was
delivering a consistent
profit margin under
20%

30. What Happened Next?
We measured and calculated the following; the value of the firm via a review of the service
offer, service depth, the team, each client’s individual service needs and complexity and the
target profit the business wanted. Solution - a revised service offer paired to a fixed (but flexible)
ongoing fee model and shifted all existing clients (actually this firm is still implementing):
Peloton Curve vs. Actual firm’s Clients
Clients Above / Below Curve – New
Fixed $ Pricing
0.4%
0.8%
1.2%
1.6%
2.0%
2.4%
2.8%
3.2%
3.6%
4.0%
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
Feeas%ofFUM/fixedfeeequivalent
FUM
Well Below Curve
Just Below Curve
At or Above Curve
Example Firm Peloton
Benchmark
7%
20%
38%
30%
55%
50%
Well Below Curve Just Below Curve At or Above Curve
Still in the
implementation
phase but will
deliver a 32%
stable margin
within 12 months

31. A Fixed Fee Segment Approach to Building Your Fee
(Amend to Preferred
Naming Convention) Gold Silver Bronze
FUM (Guide Only) >$600K to (uncapped) $300K to $600K $150K to $300K
SMSF Use Yes No No
Account Structures Multiple Single or Multiple Single or Multiple
"CFO" Relationship Yes No No
Portfolio Management Bespoke Model Portfolio Model Portfolio
Intergenerational
Requirements
Yes No No
Service Expectation High Moderate Moderate
Service Needs High Moderate Moderate
- where increased service or complexity
add upwards of $200 pm to BASE
- where increased service or complexity
add upwards of $100-200 pm to BASE
- where increased service or complexity
add upwards of $100 pm to BASE
Upfront Fee Guide Min $4,000 ex GST Min $2,500 ex GST Min $1,200 ex GST
Ongoing Fee ex-GST
(Fixed Retainer +Variable Fee)
Min $12,000 p.a. ($1,000 pm)
+ variable (uncapped)
Min $6,000 p.a. ($500 pm)
+ variable to $12,000
Min $3,600 p.a. ($300 pm)
+ variable to $6,000

32. Cont’d
(Amend to Preferred
Naming Convention) Gold Silver Bronze Existing Clients Only
Wealth Management Review
Half Yearly
Comprehensive Face-to-Face
Annual
Comprehensive Face-to-Face
Annual
Comprehensive Face-to-Face
Annual
Review (Face-to-Face / Phone)
Video Update (optional)
Annual
(alternate to face-to-face)
n/a n/a n/a
Phone Call / General Update /
“No Reason” Contact (min.)
Half Yearly
"Check-In"
Annual
"Check-In"
n/a n/a
Out of Scope Strategic Advice
Generally inclusive - adviser
discretion based on complexity of
Advice required.
Standard Charges may apply -
adviser discretion based on
complexity of Advice required.
Standard Charges apply - adviser
discretion based on complexity of
Advice required.
Standard Charges apply - adviser
discretion based on complexity of
Advice required.
SMSF Service^ Within Scope of Services Standard Charges May Apply n/a n/a
Adhoc reactive client meeting Within Scope of Services Within Scope of Services Within Scope of Services n/a
File maintenance & Monitoring Monthly Monthly Monthly Monthly
Newsletter & Legislative
Announcements
Yes Yes Yes Yes
Invitation to Exclusive Functions Yes Consider - if a key relationship Consider - if a key relationship No
Invitation to Client Briefings Yes Yes Consider - if a key relationship Consider - if a key relationship
Admin. & Query
Turnaround Times
Priority - 1 business day 2 business days 3 business days 4 business days
Market Commentary from
Investment Committee
Quarterly Half-Yearly Annually n/a
Xplan Client Online Access Yes Yes
Consider - if it is a key
relationship
No
CFO relationship management^^ Yes Standard Charges Apply n/a n/a
Home/Workplace Visits^^^ Yes Yes n/a n/a

33. A Layered Approach to Building Your Fee
An alternative to a fixed fee per segment approach, some firms will elect a layered fee approach for each client within the business and
they will deliver it as a layered fee approach. For example;
Base Fee
Intangible Value (how we make
clients feel)
For example,
• A trusted adviser who understands me
(“my concerns, my challenges and my
needs”).
• A Trusted Adviser who will pro-
actively contact you (“Peace of
Mind”).
• On demand availability (“my adviser
will be there for me in a personal or
financial crisis be it planned or
unplanned”).
• My short and long terms goals are
always in focus (“its about me”).
• Getting my affairs in order.
Service Package Fee
Tangible Services (the minimum
things we must do)
For example,
• Semi-Annual goal and strategy Meetings
• Comprehensive Annual Portfolio Review
• Ongoing Records of Advice (ROA’s)
where applicable.
• Ongoing Management (oversight) of
Insurances, Estate Planning, Taxation.
• Responding via Phone Calls, Emails,
Letters, specific requests
• Quarterly Newsletter / update
• Functions and/or specific topics of
interest
Non-Standard Adjustments
Individual client Complexity and
service needs (cannot ignore)
For example,
• Out-of-office Meetings (at home or clients
office)
• Client Complexity (multiple and complex
tax structures)
• Out of Scope Services either being
demanded or evolved
• Additional/Reduced Service Needs as
lifestyle changes impact
• Non-Standard Portfolio Requirements
(requiring tailored investment strategies)
• Intergenerational support / third party
advisers (CFO) / philanthropic and
charitable interests
Fixed
Standard
Fee $
linked to
CPI
Truly
Bespoke
Fee $
linked to
CPI

34. A Service “Menu” Approach to Building Your Fee
Service Menu
Price
(ex-GST)
MONTHLY
Price
(ex-GST)
ANNUAL
INTANGIBLE VALUE – What Really Matters
We are always available to respond to planned or unplanned charges in your circumstances to give
you Peace of Mind that your affairs will always be in order enabling you to live a life you chose -
Retainer fee for continuous coverage of your affairs
$300 - $500 $3,600 - $6,000
TANGIBLE SERVICES – What Needs to Happen
Planning Review meeting – including preparation of Advice documentation and reports $100 - $200 $1,200 - $2,400
Estate Planning Coordination and Review $100 - $200 $1,200 - $2,400
Insurance Advice and Review $100 - $200 $1,200 - $2,400
Lending Strategy & Management $100 - $200 $1,200 - $2,400
Group Structure Complexity – SMSF, Trusts, Company $200 - $300 $2,400 - $3,600
Bespoke or Direct Share Portfolio Management $200 - $300 $2,400 - $3,600
Tax Management and Assistance $100 - $200 $1,200 - $2,400
Overseas Taxation Management and Structuring $200 - $300 $2,400 - $3,600
Internal ‘CFO’ and third party coordinator $100 - $200 $1,200 - $2,400
Centrelink administration and support $100 $1,200
Administration – file maintenance, implementation of advice, co-ordination with investment
managers, quarterly/monthly portfolio reports
$100 - $200 $1,200 - $2,400
We have
individually priced
each core service
for transparency
and it is calculated
based on:
1) Time Cost,
2) Value delivered,
3) Additional
services offered
4) Special needs or
circumstances
(e.g. external
meetings with
other
professional
advisers – legal
etc.) and,
5) Profit,
6) Reviewed
against Industry
benchmarks

35. …Cont’d Service Menu Approach
Your Service and Fee Schedule Price
(ex-GST)
ANNUAL
Services
Provided to you
ANNUAL
Client Fee
(ex-GST)
INTANGIBLE VALUE – What Really Matters
Retainer fee for client engagement $3,600 - $6,000 ✓ $4,800
TANGIBLE SERVICES – What Needs to Happen
Planning Review meeting – including preparation of Advice documentation and reports $1,200 - $2,400 ✓ $2,400
Estate Planning Coordination and Review $1,200 - $2,400
Insurance Advice and Review $1,200 - $2,400
Lending Strategy & Management $1,200 - $2,400
Group Structure Complexity – SMSF, Trusts, Company $2,400 - $3,600 ✓ $3,600
Bespoke or Direct Share Portfolio Management $2,400 - $3,600 ✓ $3,600
Tax Management and Assistance $1,200 - $2,400 ✓ $1,200
Overseas Taxation Management and Structuring $2,400 - $3,600
Internal ‘CFO’ and third party coordinator $1,200 - $2,400 ✓ $1,200
Centrelink administration and support $1,200
Administration – file maintenance, implementation of advice, co-ordination with investment managers,
quarterly/monthly portfolio reports
$1,200 - $2,400 ✓ $2,400
Total (incl-GST, p.a.) $19,200

36. Implementing Transformational Change
We looked at the reasons for change (iFOCUS) – now change must happen (iDELIVER)
DEVELOP THE PLAN
• Develop a clear Client Value
Proposition and communication
narrative for the business
• Amplify Intangible & Tangible Value
and build the pricing model
• Identify mis-priced clients who are
either under-priced or over-priced and
those offered a discounted fee
1
COMMUNICATE THE PLAN
• Agree the Communication and
implementation steps
• Review every client with their adviser
to understand total value delivered and
new fee impact
• Conduct objections handling and
scenario training with advisers
• Conduct “value proposition” training
2
IMPLEMENT THE PLAN
• Start date – End date
• Individual adviser & group monitoring
• Weekly reporting to all the team
• Celebrate individual & group milestones
along the way
• Mission complete!
3

37. Case Studies of Firms That Wanted Change
Revenue: $850K
EBIT: $230K
EBIT Margin: 27%
Revenue: $700k ↑27%
EBIT: $290k ↑105%
EBIT Margin: 41%
$150k uplift
Revenue: $1.6mil
EBIT: $320K
EBIT Margin: 20%
Revenue: $550k
EBIT: $140k
EBIT Margin: 25%
Revenue: $970K ↑14%
EBIT: $350K ↑52%
EBIT Margin: 36%
$120k uplift
Revenue: $1.81mil ↑9%
EBIT: $530K ↑60%
EBIT Margin: 29%
Target $250k uplift*
Firm 1
iDELIVER Completed
5 staff (1.5 advisers)
Firm 2
*Still implementing iDELIVER
10 staff (3 advisers)
Firm 3
iDELIVER Completed
3 staff (1 adviser)

38. Benefits of Evolving Your Fee Strategy?
Firms who have evolved their pricing model, have evolved their conviction and offering along with it – and this
happens;
Client Value Proposition – becomes clear when the capability of the firm is “unpacked”, analysed
and clearly restated leading to conviction around what you offer.
Clarity – the service model and team structures required to deliver the service become clearer and
focused on value not volume.
Transparency – is unrivaled with clients knowing exactly what they are paying for and why.
Fairness – clients are paying their fair share for the service, no more or no less than they should
with no client “funding” another client.
Improved Cashflow, Profit and Business Valuation – evolving your fee will deliver certainty in
these key metrics

39. Conclusion
There is little room for complacency as rapid, revolutionary industry change is occurring and will embed greater
consumer protection mechanisms.
The evidence is clear that there is significant latent value residing in the average firm across our industry due to
the inability of pricing models to price ALL the relevant factors that must be considered.
Re-connecting clients to the reason financial advice is so relevant for them and why your particular service is so
important to them, has never been more urgent. But you might need convincing first.
When you are open, honest and fully convicted about what you do and what you need to charge, your clients
will pay a higher (correct) fee when the facts are presented to them & the value you deliver is clear to them.
While uncertainty abounds in our industry, nothing can impact the value of your business if the relationship with
your clients is established, then maintained on a framework of transparency, authenticity and 2-way honesty.
You want your service to be valuable to your clients, but also valued by them and when that happens you have
created a valuable, sustainable and transferable business that is highly valued. You just have to hit start……..

40. Disclaimer
The contents of this presentation are private and confidential. This presentation is being
provided to the Recipient on the condition that it is not reproduced, communicated, disclosed
or discussed with any third party without the prior written consent of Peloton Partners.
There are a number of factors, including market fluctuations, business type, service type and
size that may produce a different outcome to that which is presented in this presentation.
The information contained in this presentation should be considered general in nature and
caution should be applied if attempting to benchmark business results.
This presentation is not advice, nor is it intended to influence the Recipient in any way which
may be considered advice.
Peloton Partners, its agents and officers take no responsibility for errors or omissions that
relate to ‘published’ external information sources that may have been used in this
presentation.

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