Principle-Based Investing

1. Principle-Based Investing The Model Wealth Program

2. Who we are Securities offered through LPL Financial, Member FINRA/SIPC 13358 Manchester Road, Suite 200 Des Peres, Mo 63131 314-394-1670 * As reported in Financial Planning magazine June 1996-2019, based on total revenues Cornerstone Wealth Management is one of the fastest growing Registered Investment Advisor firms in the US. We offer wealth management services. We do not have investment banking, trading, proprietary products or sales quotas. Cornerstone is supported by LPL Financial, the nation’s largest independent broker/dealer* providing an integrated platform of technology, brokerage, and investment advisor services to more than 16,000 financial advisors.

3. The Investment Industry is changing • The primary focus of many financial advisors today is making investment recommendations • But today, three long-term trends are changing the financial industry: • Regulatory changes: Legal/compliance requirements are rising (investment fiduciary) • Technology: Technology is making available more services at a lower cost • Clients: Want their investments managed, not just invested • Clients want a complete approach to their financial needs which includes comprehensive financial planning as well as guidance on issues such as estate planning, tax planning and insurance

4. The Model Wealth Program At Cornerstone, clients have the opportunity to benefit from more guidance and advice, as well as a full-time investment management team who is constantly evaluating, monitoring and managing the investment portfolio. Our investment team is led by Alan F. Skrainka, CFA, the firm’s Chief Investment Officer Our managed portfolio program is The Model Wealth Program

5. Common Investor Challenges • The Challenges: • Short-term focus, which often leads to emotional decision-making • Poor risk management, which often leads to unrecoverable losses • Poor investment selection, which often leads to performance issues • Inattention to costs, which can hurt returns over the long-term • Conflicts of interest, which can lead to a lack of objectivity • The Model Wealth Program is uniquely designed to address the five of the most common investor challenges

6. The Challenges The Principles • Short-term focus • Poor risk management • Poor investment selection • Inattention to costs • Conflicts of interest Our Principles: Model Wealth Program We maintain a long-term perspective Our portfolios are broadly diversified and rebalanced when necessary We conduct rigorous due diligence We are intensely focused on costs We have no financial arrangements with the managers we invest with* *Please see firm’s ADV Part 2A for potential conflicts of interest information

7. Long-term perspective

8. Percent of time stocks have provided positive returns (1926-2017) The Importance of Patience Source: Crestmont Research, Morningstar Total return. The S&P 500 is an unmanaged index and cannot be invested in directly. Past performance does not assure future results. For periods ended December 31, 2017

9. It is not possible to determine the top or the bottom of the market. Investing in the market involves risk, including fluctuating prices and the uncertainty of return. Euphoria Thrill Still Happy Excitement A Little Worried Optimism Relief Anxiety Skepticism Fear Optimism Pessimism Desperation Capitulation The Cycle of Emotions Depression Panic Investors often find it is challenging to know when to buy and sell investments A professionally-managed portfolio offers the potential to significantly reduce emotional decision-making

10. Invest with a long-term perspective History has shown there are always reasons not to invest. But history has also shown that the “reasons not to invest” are often reasons to invest more!

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12. The stock market can seem very volatile in the short-term Source: Ned Davis Research. The S&P 500 is an unmanaged index and cannot be invested in directly. Past performance may not be a reliable indicator of future results.

13. The stock market’s returns have been much more dependable over the long-term Source: Ned Davis Research. The S&P 500 is an unmanaged index and cannot be invested in directly. Past performance may not be a reliable indicator of future results. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

14. Invest with a long-term perspective Source of data: Ned Davis Research. Dow Jones Industrial Average. Past performance may not be a reliable indicator of future results. Market declines are normal, frequent, and not a reason to sell quality investments Market declines begin and end without warning Market declines provide an opportunity to buy quality investments at a lower price

15. Invest with a long-term perspective Total return includes dividends. These calculations do not include any commissions or transaction fees that an investor may have incurred. If these fees were included, it would have a negative impact on the return. Source: Ned Davis Research, JP Morgan The S&P 500 is an unmanaged index and cannot be invested in directly. Past performance does not assure future results. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

16. Risk mitigation Professional investment management has two goals: Earning a competitive return, and managing risk

17. Risk Mitigation • We provide a professionally-managed, broadly diversified portfolio of investments • We monitor those investments and make changes when necessary • We also rebalance the portfolio to maintain a level of risk consistent with your goals and objectives

18. Risk mitigation through diversification Broad diversification by security: Our typical portfolio will include exposure to thousands of different stocks and bonds, reducing the risk that an adverse development with one company will significantly impact the value of the portfolio Broad diversification by type of investment: Our typical portfolio will include a variety of different asset classes (stock, bond, etc), styles (value, growth, blend), geographies (domestic, international, emerging market) and market cap (small, mid, large) Broad diversification by manager: When navigating in an uncertain world, we believe diversity of opinion is critical to investment success

19. Diversification offers the potential to dampen volatility • A blend of stocks and bonds has not suffered a negative return over any five-year rolling period in the past 65 years. Reducing Risk through Diversification Source: Barclays, Bloomberg, FactSet, Federal Reserve, Robert Shiller, Strategas/Ibbotson, J.P. Morgan Asset Management. Returns shown are based on calendar year returns from 1950 to 2018. Stocks represent the S&P 500 Shiller Composite and Bonds represent Strategas/Ibbotson for periods from 1950 to 2010 and Bloomberg Barclays Aggregate thereafter. Growth of $100,000 is based on annual average total returns from 1950 to 2018. Guide to the Markets – U.S. Data are as of July 17, 2019.

20. Managing risk Past performance may not be an indication of future results. Assumes stock annual return 8%, bonds 4.0%. This is a hypothetical example based on the assumptions provided and is not representative of any specific investment. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

21. Managing risk Assumes stocks drop 25%, bonds remain unchanged. Does not include dividends or interest. Not meant to represent any particular investment. Past performance may not be an indication of future results. This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.

22. No Rebalancing 1999 Too much Risk No Rebalancing 2000-2002 Lost Recovery Potential Rebalancing: An alternative to predicting the market Source: S&P , Ibbotson, stocks returns S&P 500 assume reinvestment of dividends, S&P is an unmanaged index, doesn’t include expenses. Bonds: Barclays Aggregated Bond Index. Past performance may not be an indication of future results. Rebalancing does not ensure a profit or protect against a loss and may result in taxable consequences.

23. Rigorous due diligence Poor investment selection lies at the heart of most investor’s performance issues

24. The Model Wealth Program Seeks to Offer…. Consistently strong investment performance • We believe identifying truly skilled managers is a highly labor intensive process which requires a great deal of skill, experience, and judgment • Our goal is to identify a small number of quality managers who offer the potential to outperform their peers and their respective benchmarks over a long period of time

25. The Process There is no assurance that selection of any investment manager will yield positive outcomes

26. Investment Culture Consistent Results Team-Based Approach Disciplined Risk Management Due Diligence Broad and Deep Resources Historical Track Record Collaborative Judgment Low Expenses Long-term Perspective Minimal Conflicts of Interest Bottom-up Research Repeatable Process Potential Our Due Diligence Process

27. Inattention to costs It’s not what you make, it’s what you keep that matters

28. Managing costs: Low fees • Our fee structure is very competitive. The cost of investment management is negotiated with your advisor. • We also attempt to keep costs low by maintaining a long-term perspective • Excessive trading can lead to higher transaction costs (fees and taxes)

29. Conflicts of interest A managed-portfolio program has the potential to more carefully align the interests of the investor and the advisor

30. Objectivity • A managed portfolio program has the potential to more carefully align the interests of the investor and the advisor, because the investor pays an annual fee for investment management instead of commissions per transaction • Under this arrangement, there is no incentive to engage in transactions. Instead, the advisor’s compensation is based on the value of the portfolio • Unlike many other advisory programs, we have no financial arrangements, such as revenue sharing, with the firms that are represented in your portfolio. This aligns our interests with the investor and gives us access to quality investment managers, not just those willing to pay to be on a buy list.

31. The Model Wealth Program Seeks to Offer…. • Consistently strong investment performance • By maintaining a long-term perspective • Risk mitigation • By providing a professionally-managed, broadly diversified portfolio of investments that is monitored, managed and rebalancing when necessary • Professional investment selection • After rigorous due diligence • Low fees • The cost of our investment management is very competitive • Objectivity • Because we have no financial arrangements with the firms that are represented in your portfolio

33. Index Disclosures: • The NAREIT EQUITY REIT Index is designed to provide the most comprehensive assessment of overall industry performance, and includes all tax-qualified real estate investment trusts (REITs) that are listed on the NYSE, the American Stock Exchange or the NASDAQ National Market List. • The West Texas Intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of New York Mercantile Exchange's oil futures contracts. • The Bloomberg Barclays US Aggregate Bond Index, which until August 24th 2016 was called the Barclays Capital Aggregate Bond Index, and which until November 3rd 2008 was called the "Lehman Aggregate Bond Index," is a broad base index, maintained by Bloomberg L.P. since August 24th 2016, and prior to then by Barclays which took over the index business of the now defunct Lehman Brothers, and is often used to represent investment grade bonds being traded in United States. Index funds and exchange-traded funds are available that track this bond index. • The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. • The MSCI World USA All Cap Index captures large, mid, small and micro cap representation across 22 of 23 Developed Markets (DM) countries* (excluding the United States). With 8,178 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in each country. • The MSCI Emerging Markets Index captures large and mid cap representation across 23 Emerging Markets (EM) countries.  With 829 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. • The MSCI EAFE Index is an equity index which captures large and mid cap representation across Developed Markets countries around the world, excluding the U.S. and Canada.  With 929 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country. • The MSCI Europe ex-U.K. Index captures large and mid cap representation across 14 Developed Markets (DM) countries in Europe.  With 337 constituents, the index covers approximately 85% of the free float-adjusted market capitalization across European Developed Markets excluding the U.K. • The MSCI United Kingdom Index is designed to measure the performance of the large and mid cap segments of the U.K. market.  With 109 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in the U.K. • The MSCI USA Index is designed to measure the performance of the large and mid cap segments of the U.S. market.  With 625 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in the U.S.

34. Investment Risk Disclosures: • Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. • Investing involves risk including the potential loss of principal. No strategy can assure success or protection against loss. Past performance is no guarantee of future results. • Please note that rebalancing investments may cause investors to incur transaction costs and, when rebalancing a non-retirement account, taxable events will be created that may increase your tax liability. • There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. • Advisory fees are in addition to the internal expenses charged by an investment company, and it you hold such a security, these should be included when evaluating the costs for a fee based account. Clients should periodically re-evaluate whether a lee based account continues to be appropriate for their needs compared to other alternatives. • Stock investing involves risk including loss of principal. The prices of small and mid-cap stocks are generally more volatile than large-cap stocks. • Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time. • Growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company’s growth of earnings potential. • Bond values will decline as interest rates rise and bonds are subject to availability and change in price. • International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. • To find out more, stop by the office or call your financial advisor.