Welcome! Integrity Financial regional meeting April 4th, 2006

1. Welcome!Integrity Financial regional meetingApril 4th, 2006

2. Annual Growth Rates

3. Annual Growth Rates

4. Annual Growth Rates

5. What has been causing this growth? We have seen the greatest percentages of Asset and Revenue growth in: • Investment Advisory • Direct Investments

6. Direct Investments ProEquities In the top 5 B/Ds with other Industry Leaders. • Inland • CNL • Atlas • Behringer Harvard • Etc. - $136 Million invested last year ● How are we and ProEquities helping? Due Diligence Education Support

7. Investment Advisory Options & Flexibility > Fee Based Planning > You decide Comp Structure • Wrap Fee Accounts –CAM • With Retail Mutual Fund’s Stocks, Bonds, Options • Institutionally Managed Accts • Separately Managed Accts • Private Equity Funds BD Results > 1.2 Billion AUM (+36.6%) > Producing IARs (+20%) Training via • IA Workshop & Fee-Based Academy

8. What Has Integrity Financial Done To Help Get You There? ProEquities Support Marketing/Branch Development • BDU • Coaching Program • Product Road Show • Forefield • Setup Classes to help reps get licensed • Business evaluation with reps • One on One coaching and business development Supervision Operations • Internal systems to improve efficiencies to move business faster • Supervisory Program • Rewrite • Began STP Initiative • Software and Hardware evaluation and implementation • VPN integration with network • And Much Much More

9. What Else Can We Do To help You Grow? Financial Planning Business and Marketing Development NEW Technology Directions • Continuous regional meetings • Evaluate business needs and • opportunities of growth • Continue systemizing business • One on One meetings • Work with reps to bring on • new reps • Help reps Recruit and train JR reps • Continue bringing new strategies and ideas to grow your business • Evaluating financial planning software • Integrity Financial web-site • Server to access your business • Assist reps with technology needs • Please: Ask for Assistance

10. The Ugly part of our business….Compliance Statistics • Customer Complaints • 20 in 2005; 17 in 2004; 32 in 2003; 52 in 2002 • Regulatory Inquiries • 6 in 2005; 18 in 2004; 29 in 2003; 34 in 2002 • Internal Disciplinary Actions (2005) • 6 Letters of Caution • 2 Fines Totaling $2,750 • 2005 Settlements • $281,000 in total settlement dollars

11. 529 Plans Update • NASD Began a Sweep in 2005 • Fined Ameriprise $500,000 for Inadequate Supervision of Sales by its Brokers; plus Ordered Restitution of $750,000 • Major Points of Regulator Contention • Tax Advantages of In-State vs. Out of State • Effectively Evaluate Suitability, Considering Costs, Plan Fees, Share Classes

12. Mutual Fund Share Classes Update • Still Seeing Regulatory Actions • Latest Action – Merrill, Wells Fargo, and LPL hit on B and C Shares (Dec 2005) • Collective Fine of $19.4 Million – ML $14; Wells $3; LPL $2.4 • 140,000 Clients Offered Remediation • Regulators Still Emphasizing the Lower Cost with A Shares as Being More Advantageous to the Client

13. Variable Annuities • Remains on Radar Screen of NASD • Exchanges; USL Use with Proper Documentation is Critical • Suitability Issues - Elderly Sales, Large Percentages of Net Worth, Large Transactions – Supervise Closely • NTM 04-45 Has Been “Watered Down”, but Eventually it will become Effective

14. Equity Indexed Annuities Overview • Uncertainty Whether a Security or Not • Private Security Transaction or OBA? • Marketing of EIAs as an Investment • Do Agents (Reps) Selling EIAs Understand the Features of the Product? • Supervision – Calling for Firms to Adopt Special Procedures under Rule 3030 (OBA) • Other Suggestions – Run Through Firm; Approved List of EIAs

15. ProEquities Equity Indexed Annuities Review and Action Plan Action PlanStatus • Survey Reps & OSJ’s Ongoing • Obtain Producer Information Ongoing • Create Due Diligence Checklist 80% Complete • Review Product Information March/April • Make OBA vs. Security Decision April • Implement OBA or Security Strategy April/May

16. Equity Index Annuities Currently Many Questions • Is it a Security or Not? • Sales Supervision • Marketing and Advertising Concerns • ProEquities EIA Policy

17. To be, or not to be…a security To prevent complication, please note that EIAs may not be marketed primarily as an investment. It is an insurance product and should be represented as such. • If an EIA is deemed to be a security under the securities laws (even if it has not been registered by the issuing insurance company), a sale of the EIA must run through the Firm or there will be a violation of NASD Conduct Rule 3040 (Private Securities Transactions).

18. Sales Supervision • If an associated person sells a registered EIA outside of their regular scope of employment with the firm, Rule 3040 requires the sale be treated as a private securities transaction. • The firm must supervise the sale in accordance with the provisions of rule 3040 • Rep must notify firm of sale prior to participating • Firm must supply written approval to the rep • If the EIA is not registered, it is to be treated as an Outside Business Activity and also disclosed in writing as such.

19. EIA Marketing & Advertising Concerns NASD is concerned about the manner in which associated persons are marketing and selling unregistered EIA’s Sales materials that don’t fully describe features and risks can be problematic. Some statements can be misleading: • “Growth potential without market risk.” • “You lose nothing if the market goes down.” • “A Win/Win investment Vehicle!” • “If you’re looking for upside potential and not market downside look no further than [name of EIA]. This fixed annuity …enables you to make the most of the S&P 500 Index Gains.” • “How your retirement funds can have: security of principal, higher than CD rates of interest, opportunity for growth (no losses).”

20. EIA Marketing and Advertising Sales materials should reference: • Possible surrender charges • Combination of caps and participation rates If sales pieces are deemed to be broker-dealer communications with the public, they would be subject to the NASD advertising rules, therefore they have to provide a more balanced description of features and risks of the product.

21. Under all circumstances, NASD suitability rules apply to any recommendation that a customer liquidate or surrender a registered security for the purpose of purchasing an unregistered EIA. ProEquities’ EIA Policy

22. ProEquities’ EIA Policy • Proper disclosure forms should be signed by the client and submitted to ProEquities any time you recommend or transact an exchange from variable to fixed, or from a fixed to a variable product including: • Universal Switch Letter • Proper Acknowledgement Form • Failure to comply could result in disciplinary action or mandatory requirement for all EIA’s to come through the firm to protect against unauthorized exchanges.

23. Please note… As we continue to assess our position on EIAs, our policy may change or require amendments. The firm will notify you via Advisor Portal and email alerts well in advance of any policy or procedural changes.

24. Univesal Switch Letter Issues • 1035s/Replacements • Extra caution and information for switches with high concentration of net worth and or Age • Be sure switch letters are completed Pay attention to details • No blanks, especially on existing policy information such as, Investment Date, Investment Amount, Surrender Charges and Death Benefits • No liquid paper • Be sure changes are initialed

25. Merrill Rule • Under ProEquities’ policy, reps must register as IAR if any of the following: • Rep is CFP, ChFC • Uses the term financial planning or otherwise holds themselves out as a financial planner or offering planning services • Rep provides financial plans to customers • If providing a Financial Plan, rep must obtain a signed Financial Planning Services Agreement and fee for planning ($100 minimum)

26. Merrill Rule • The SEC has issued very little guidance on this Rule. ProEquities has issued the following guidance on what constitutes planning: • Delivering a document with the title, “Financial Plan” • A comprehensive analysis of a client’s financial situation, as compared to an analysis that is limited in scope • Contact the compliance department with specific questions

27. Merrill Rule • Risk of conducting planning activities by a Non-IAR: • The rep will likely be deemed by the SEC to be conducting advisory business as an unregistered advisor, which will lead to disciplinary action against both the rep and ProEquities

28. Mark Your Calendars Our next meeting dates are: Tuesday May 2cd & Tuesday June 6th.