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Researching and Building the All-Weather Portfolio
Gentry Wealth Management

Exclusive Conference Hosts Elite Gathering of Nation’s Pre-eminent Financial Advisors and Industry Decision Makers

PHOENIX (March 21, 2012)—Aaron Brodt Founder/Chief Investment Officer attended the fourth-annual Barron’s Winner’s Circle Top Independent Advisors Summit, hosted by Barron’s magazine to promote best practices in the industry and the value of advice to the investing public. The invitation-only conference was held at the JW Marriott Dessert Ridge, March 21-23 in Phoenix, AZ.

65 of the Top 100 Independent Financial Advisors in the U.S., as ranked and published in Barron’s August 29, 2011 issue, were in attendance. This annual ranking is the basis for the Top Independent Advisor’s Summit and the advisors are chosen based on the volume of assets overseen by the advisors and their teams and the quality of the advisors’ practices. The top 100 Independent Advisors are comprised of Registered Independent Advisors and Advisors from Independent Broker Dealers.

“The Barron’s conference allows advisor to share ideas, engage in best practices and listen to some of the top investors in the industry.”

This exclusive conference is designed to promote best practices and generate new ideas across the industry. Attendees conducted workshops led by the Top 100 Independent Financial Advisors that explored current issues from business development ideas, managing high-net-worth accounts and families to portfolio management and retirement planning.

“The work these independent advisors do and their influence will only increase as the nation’s Baby Boomers plan for retirement and all Americans nurture their portfolios and husband their businesses through difficult times, said Ed Finn, Editor and President of Barron’s. “This Summit brings together the industry’s leaders from across the country and provides a forum where they can address the key concerns of their clients and develop solutions to their financial-planning needs.”

Aaron Brodt was one of approximately 350 financial advisors who were either selected by Barron’s or their affiliated firm to participate in the event. Associated participating firms included: Advisor Group, Ameriprise Financial Services, Charles Schwab, Fidelity Investments, LPL Financial Services, Pershing, Raymond James, TD Ameritrade Institutional, and Wells Fargo Financial Network.

About Barron’s

Barron’s is America’s premier financial magazine, renowned for its market-moving stories. Published by Dow Jones & Company since 1921, it reaches an influential audience of senior corporate decision makers, institutional investors, individual investors and financial professionals. With new content available every week in print and every business day online, Barron’s provides readers with a comprehensive review of the market’s recent activity, coupled with in-depth, sophisticated reports on what’s likely to happen in the market in the days and weeks to come. As a result, Barron’s is the financial information source these powerful people rely on for market information, ideas and insights they can use to increase their professional success and enhance their personal, financial well-being.

The “Barron’s Top 100 Independent Financial Advisors” is a select group of individuals who are screened on a number of different criteria. Among factors the survey takes into consideration are the overall size and success of practices, the quality of service provided to clients, adherence to high standards of industry regulatory compliance, and leadership in “best practices” of wealth management. Portfolio performance is not a factor.

Attendees of the Barron’s Winner’s Circle Conference were comprised of the independent advisors listed in “Top 100 Independent Financial Advisors”, (August 29, 2011) as well as financial advisors who were chosen by Barron’s or their associated firms.

The FBI and FINRA recently issued alerts outlining this scam, which has so far resulted in actual victim
losses of $6 million. The fraudster uses a client’s legitimate e-mail account and poses as the rightful
account owner, the ring has been successful at getting large sums of money wired to bank accounts they
control. Account owners are often unaware they are being targeted, putting the onus on financial advisors
to identify suspicious transactions.

The scam starts with an e-mail, sent to a large number of individuals, requesting that they login to view an
offer or utilize a service. The scam may be set up to look like the e-mail is coming from an Internet service
provider, so unsuspecting consumers think they are logging into their own account. This practice is known
as phishing. Once the fraudsters obtain access to the e-mail account, they comb through the account for
financial information, account numbers, and the names of the e-mail holders’ financial institutions. Finally,
they use this information to communicate with the advisor and request unauthorized transactions,
normally wires.

To mask their efforts, cyber criminals sometimes modify the victim’s email settings so that any legitimate
emails from their financial institutions are sent to the victim’s spam folder, which provides additional time
for the money to be transferred out of the account before the victim can identify the transaction as being
fraudulent.

“Scams like these that target individual investors are very prevalent,” explains Marshall Abbott, Vice
President of Fidelity’s Institutional Fraud Response Team. Data breaches and hackers generate
headlines by compromising large numbers of customers, but scams that target individuals are often
equally effective in fraudulently obtaining funds.

Be On The Lookout for Signs of Fraud

Abbott says there are several signs that indicate you may be dealing with the recent e-mail compromise
fraud. The current scam almost always requests a wire transfer. Most often the transfer is to a foreign
country, with Australia and Malaysia being popular currently, but recent versions of the scam have
included domestic transfers as well. Spelling and grammar mistakes may also be a sign of fraud, as the
scam artists in this ring are not usually native English speakers.”

The scam may also include a “sympathy ploy,” claiming a hardship, accident, or death in the family. Often
it is accompanied by a request that the customer only be contacted through email and not through any
other channels.

“We all want to go above and beyond for our clients, which is why these scams are so effective,” Abbott
explains. “E-mail may very well be a common method of communication, but advisors really may not want
to rely on it for high risk transactions.

Advisors may be the first and best line of defense in protecting clients, as their personal relationship with
the client can help them detect fraud. If the details and behavior exhibited in an e-mail request don’t seem
to be right, then it may be fraud. “If you are concerned about a wire request you really should ask
yourself, ‘does this transaction seem right knowing what I know about this client?,’” Abbott says.
These scams are constantly changing and they won’t always contain the specific red flags identified here.
For that reason, Fidelity Institutional Wealth Services (Fidelity) recommends that you review your
verification procedures for high-risk transactions and make sure you can be confident that you are dealing
with an actual client.

To help keep advisory firms up-to-date on the latest scams and fraud methods, The Fidelity Institutional
Fraud Response Team issues periodic Flash Alerts. The team sends out these fraud warnings when it
detects a national trend, new scams, or significant loss potential. “We don’t send these out every day,”
Abbott said. “If we do send one, it means the scam is very prevalent and you are likely to see it.”

When Fraudsters Strike

If you receive a fraudulent wire transfer request or suspect fraud, contact your Fidelity client service
manager immediately. Fidelity can assist in assessing the risk and determining what steps need to be
taken. Clients may also need to alert their bank, set up a fraud alert with the credit reporting agencies, get
a new account number, or take a number of other steps, depending on the circumstances. “Every second counts,” Abbott says. “If we find out about it the same day, there is a chance that we can recover funds. By the second or third day, it becomes much less likely we can recover anything.”

Fidelity also works closely with law enforcement and peer groups to identify new trends and scams. The
more information Fidelity has, the better it can link fraud attempts together, ensuring they get the proper
attention from law enforcement.

Protect Yourself

There are several steps you can take to reduce the risk of fraudulent transactions, including:

 Separate sensitive information. If you need to communicate an ID and password, send the ID
by email and communicate the password by phone. Separately, the information is not useful and
the chances of both communications being intercepted are slim.

 Change your passwords. Fidelity requires you to change your password every 90 days, but
many other systems don’t. Some people use the same password for many different applications.
Fraudsters know that and it makes it easy for them to break into more secure systems.

 Update your systems. Make sure your anti-virus software has the most up-to-date definitions
and your operating system has all the latest updates. Remember that newer operating systems
are designed to be more secure, so consider upgrading. Don’t forget about updating plug-ins like
Adobe Acrobat and Flash.

 Use other security systems. Make sure you have an effective firewall in place and that the
configuration is as restrictive as possible.

 Be careful when traveling. Unprotected networks in airports, Internet cafes, kiosks, and Wi-Fi-
“hot spots” offer another opportunity for fraudsters to gain access to your information. Avoid them
whenever possible.

 Have a security policy and update it regularly. Someone in your firm should be responsible for
implementing, monitoring, and updating the firm’s security policy.

 Consider adding Fidelity’s IP Address restriction functionality. If your users only connect
from the office over a secure connection to the office, this could be a good enhancement to your
security.

Clients Can Also Protect Themselves

Because this and many other scams target individual clients, there are steps everyone should take to
reduce the risk of their personal information falling into the wrong hands.  Safeguard Account Information. Never send account information or personally identifiable information over any insecure channel (email, chat). Know what security is in use on the systems you use, and make sure your use is appropriate for the level of security available.

 Be suspicious of unsolicited information requests. Any email requesting personal information
should be suspect. Most businesses have no need to get your information that way. Fidelity will
never ask anyone to send personal information through e-mail. And never respond to an
information request by clicking a link in an email. Type the web site’s URL into the browser
yourself instead. That way you know you are going to the right web site.

 Protect your information on social networks. Be careful how much personal information you
post on social networking sites. You should never post your social security number (including
even just the last 4 digits), and you should consider keeping confidential your birth date, home
address and home phone number, especially if they’re different from your business address and
phone number.

 Review Financial Statements. You should review all your credit card and financial statements
as soon as they arrive. Call your financial institution if any transaction looks suspicious.

At Gentry, we use the same open architecture concept for 401(k)’s that we employ for our private asset management.  This allows us to be flexible and to provide a unique plan that is fully customized for the client and its employees.  We understand what the benefits market needs today and try to anticipate what will be needed tomorrow.  Having an open architecture platform helps manage fiduciary risks and encourage positive employee behavior for retirement readiness. If your company has not reviewed its current 401(k) plan in some time, it is highly advised in order to stay compliant.   Gentry will provide a detailed analysis of your current plan and make recommendations for any changes.

Gentry provides complimentary and holistic financial planning for employees as well as wealth management planning for executives.

This includes investment quality and choice to meet the needs of a diverse employee base with different levels of sophistication.

• We offer robust, yet easy-to-use tools for participants to increase adoption, streamline enrollment, and encourage account access, investing and monitoring.
• A priority for us is to offer attractive and highly transparent pricing that leaves as much money in the plan as possible and ensures fiduciary requirements are being met.
• We are an excellent customer service orientated and responsive business partner.
• We offer consultation on fiduciary issues and design of plan operations.
• Quarterly statements will be delivered directly to participants including a year-end summary.
• Gentry can provide participation at Trustee/Investment Committee meetings.

THE DEBATE

There are three issues which our elected officials are discussing: the debt ceiling, the need to cut
our deficit, and tax rates. Our elected officials will address each of these issues over time, but time
is of the essence and it is running out. August 2nd is the date set by the Treasury as to when the
debt ceiling needs to be raised or we will not be able to pay our bills.

THE RATING AGENCIES

The longer the opposing politicians drag this out, the risk of the rating agencies downgrading US
Treasury debt increases, as well as the subsequent downgrade of US Agency debt and US Agency
MBS issues. The rating agencies were criticized so strongly for their inability to warn of the 2007-
2008 credit crisis that a natural way to regain their credibility would be to downgrade the
obligations of the US.

Though not being one of the big three rating agencies (Moody’s, S&P, and Fitch), the Egan-Jones
rating firm has already reduced US Treasury debt to a AA level. Moody’s is seemingly indicating
if the debt ceiling is raised, with or without deficit reductions, it will remove the risk of a
downgrade. However, S&P is apparently saying that unless both an increase of the debt ceiling
and substantial deficit reduction steps take place, the risk of a downgrade will remain. The
downgrading of the credit rating will ultimately have a huge impact on our budget as our cost of
borrowing will rise as new Treasury issues are brought to market.

THE WORST CASE: 10% PROBABILITY

The political stalemate related to raising the debt ceiling and cutting the deficit has the potential to
cause the destabilization of the US financial system. We believe if a default were to occur, within
a one month period:
● The US stock market could fall by a minimum of 15%.
● The yield of the 10-year US Treasury, which is now at approximately 2.9%, could rise
to above 4%.
● The value of the US dollar could take a hit cushioned by the debt crisis in Europe,
which could result as a much greater global problem than the US deficit situation.
● Sources of business and personal credit could become difficult to obtain.
● The US economy could be thrown into a severe recession.
● US housing prices could drop by a minimum of 10%.
● The volume of foreign buying at US Treasury auctions could diminish, perhaps
severely.

BEST CASE: 10% PROBABILITY

What is the definition of the “resolution” we believe must take place to avoid all consequences?
To us at Greenrock, a resolution that would avoid all consequences would be the raising of the
debt ceiling and reductions to spending/increases to revenue of at least $2 trillion over the
upcoming ten-year period. The Gang of Six proposals appear at this point to be dealing with this
possibility.

MOST LIKELY CASE: 60% PROBABILITY

We are now less than two weeks away from the trigger date. Do we at Greenrock know there will
not be a resolution? No. We have no way of knowing whether a resolution will come about. Our
best guess at this point is that there is a) a 10% chance of no resolution and effectively a default of
US debt, b) a 60% chance for the McConnell/Reid resolution with a raising of the debt ceiling and
the President directed to make cuts equal to the size of the rise, and c) a 10% probability to some
version of the Gang of Six proposal with an increase in the debt ceiling and $4 trillion in the
combination of cuts and revenue increases. Default is of course the worst scenario and would
cause the results detailed above. The McConnell/Reid resolution could have many of the same
results but to a more muted level. A version of the Gang of Six proposal would not be a final
solution to our country’s deficit problems, but would probably result in a decent rally in the stock
market.

WHAT ABOUT THE OTHER 20%?

The other 20% is somewhere between the best case and the most likely case and somewhere
between the worst case and the most likely case. In addition, our putting an 80% probability on
anything at this point overstates our belief in our prediction abilities. Honestly, we would say the
same thing about 60%, but we think you deserve our guess.

WHAT SHOULD YOU DO?

We believe a contingency plan must be created as a hedge against the possibility of a complete
resolution, such as the Gang of Six proposal, not taking place. What do we think should be the
primary goal for a contingency plan? We believe the focus should be on protecting principal value
to as great an extent as possible, recognizing that such protection in this case cannot be absolute.
We first would recommend a major, though not complete reduction in the percentage allocated to
equities. If no resolution is reached or the rating agencies move on a downgrade, equities will take
the largest hit.

In fixed income, we would be recommending absolute return strategy managers with the ability to
dramatically reduce portfolio durations in the face of almost certain increases in interest rate
levels. The majority of the absolute return fixed income products we currently recommend have
already dramatically reduced their percentage allocations to US securities with heavy
concentrations in credit at both the corporate and mortgage levels, and global debt.

Though credit will likely suffer some losses, the losses will be much smaller than caused by the
downgrade to US debt. Further, credit will begin at much higher coupon levels than US
Government debt and will gain from a yield spread compression relative to US debt.

There is one major exception we believe should not be kept/employed as part of the contingency
plan from among the absolute return products we have being recommending since October 2010.
That is the Delaware Absolute Return MBS Fund. That Fund employs strictly Treasuries,
Agencies and Agency MBS. If the contingency plan is to be put in place, with this fund being
strictly US debt, direct and Agency securities, it should be excluded. A second reason for its
exclusion is if the Government is squeezed to raise cash, it might be forced to unload en mass the
$1.4 trillion in Agency MBS issues it owns which would crater the price level of this asset class.

We would be recommending the liquidation of: high yield debt, since high yield debt will decline
hand in hand with the decline of the stock market and the slowing of the economy, and all
commodities including oil (and probably also silver and gold). Relative to gold and silver, we do
not regard them as an automatic investment hedge. Gold will likely be the best performing asset
class if a default were to occur, but would suffer the largest losses if a resolution is reached.

WHAT RISKS EXIST IN IMPLEMENTING THE CONTINGENCY PLAN?

What do we believe might be the profit loss if the contingency plan is implemented and a true
resolution is reached? Relative to the bond market, it would be little if anything. Yields are already
at such low levels that capital gain returns would be virtually non-existent since how much lower
can they go? In the stock market, a resolution will almost certainly spark a rally, but to what
extent? 3% to 5% at most?

WHAT TIMING DO WE RECOMMEND FOR IMPLEMENTATION OF THE CONTINGENCY
PLAN?

With the deadline being less than two weeks away, what timing do we recommend before
implementing this contingency plan? We believe all actions can be deferred for about a week. But,
with only a week to go, if a resolution does not appear to be near, we believe the contingency plan
must be put into place.

The markets continue to believe a resolution will be reached. We are not saying the markets are
wrong. However, we believe all client portfolios should be hedged by next week if a resolution is
not well in the works. In all likelihood, such a step will cost clients some small level of profit, but
protecting against the risk that will exist will in our opinion be well worth that almost certainly
small level of give-up.

WHAT ABOUT GETTING BACK INTO THE MARKETS?

Toward making certain that give-up is indeed small, if a resolution is completed by August 2nd
with an increase in the debt ceiling and budget deficit reduction/revenue increase steps, the rating
agencies will almost certainly be out of the picture and the stock market may rally. Therefore, it
will be our recommendation that the equity component of client portfolios be reestablished. As to
the fixed income component, we would be strongly recommending a major segment be in absolute
return fixed income strategies recognizing the continuing likely of rising rates in the not distant
future.

If no resolution is completed by August 2nd, we recommend a delay in reestablishing all former
positions pending the evolving financial conditions.

If you would like to discuss these thoughts and you might implement some of these ideas, please
call us.