1 © SMA Hub 2016 | 20171

Secondary Market AnnuitiesAdvisor’s Guide

© SMA Hub 2017

4000 Kruse Way Place, Suite 1-230 Lake Oswego, OR 97035

971.245.3425 phone | 844.506.0512 fax | smahub.com

1 © SMA Hub 2016 | 2017

Thank you for considering Secondary Market Annuities for your financial

practice.

Secondary Market Annuities offer a higher yield than traditional fixed income

products, such as certificates of deposit, fixed annuities or period certain

annuities.

A Secondary Market Annuity (SMA) is an existing, period-certain payment

stream sold by the original annuitant at a discount. The underlying insurance

carriers making the payments are among the highest rated insurance

companies in the world. The SMA Hub transfer process ensures these payments

are transferred to your clients smoothly, efficiently and irrevocably.

SMAs are an ideal fixed income floor to individual accounts and can form

the baseline yield to smooth out pension funds, investment portfolios and

institutional capital pools.

SMA payments come in a variety of categories, including immediate and

deferred income streams, as well as short and long term lump sums. Each SMA

category offers different types of benefits to suit the specific needs of your

client.

While these discounted receivables are commonly known as annuities,

they are not just for older investors. For example, long term lump sums are

attractive to younger savers who would rather not expose their retirement

savings to volatility.

Our advisors use the safety, quality and certain yield in creative ways to

accomplish sophisticated financial outcomes for their clients.

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Who is SMA Hub?SMA Hub is the leading wholesale distributor of Secondary Market Annuities. Founded in 2013 by veterans of the industry, SMA Hub is the premier advisor resource for exclusive SMAs.

SMA Hub exists to serve advisors and their clients, processing cases in a manner that vigorously protects the end purchaser. We streamline the purchase process by offering SMAs that are ready for purchase today – SMAs that are in stock and off the shelf.

What are Secondary Market Annuities?Secondary Market Annuities are payment streams that are sold by the original annuitant in exchange for a lump sum payment today. The vast majority of SMAs available through SMA Hub were originally part of a structured settlement in a personal injury lawsuit. When the original annuitant sells his or her future payments for a lump sum, a

“Secondary Market Annuity” is created simply because the existing, in force payments are transferred on a secondary market basis.

SMAs offer fixed-term payment streams from top quality insurance carriers and also come with yields that are typically one to four percent

higher than comparable assets. SMAs offer all the benefits of a primary market, period-certain, guaranteed annuity, while

offering higher returns with the same low risk.

How is the Hub Different?Unlike other wholesaler distributors of SMAs, Hub Business Trust acts as the principal buyer and commits its capital exclusively to purchase each payment

stream prior to marketing. We have a deeply vested interest in ensuring that the purchased payment streams

are meticulously vetted before offering them for purchase.

SMA Hub’s unique process maintains the purchaser’s confidentiality and prevents the purchaser’s personal information from entering public

records. Payment servicing ensures accurate receipt of payments and services policies and accounts.

Advisors and their clients will receive a complete Closing Book that details every aspect of the transfer two days before the client is expected to fund the transaction, allowing ample time for review.

The SMA Hub Difference

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SMA Hub’s Unique ProcessHow are SMAs Transferred?A judge reviews the proposed contractual transfer of payments and only approves the sale if it is in the best interest of the seller (the existing annuitant), in accordance with state structured settlement protection acts and section 5891 of the Internal Revenue

Code. Once the judge determines that the sale is in the best interest of the seller, the judge issues a court order approving the contractual

transfer. The court order itself does not transfer title to the payments.

The court has no duty, and takes no action, to verify if the payments are in fact valid or if there are any claims to the

payments. Actual payment verification is done outside of court. SMA Hub’s unique process and in-house legal review ensures that

the end purchaser’s right to receive payments is conveyed by a clear chain of contracts connecting the seller and the end

purchaser.

Reservation Process To reserve a case through SMA Hub, either call your Hub Advisor or send a Purchase Order form via email or fax. We can hold an SMA for up to 48 hours while you confirm the reservation and titling with your client.

By reserving an SMA, you are indicating to SMA Hub that:

• You have a specific investor committed to purchase the SMA

• Your investor has sufficient liquid funds to purchase the SMA

• You have determined that the SMA is suitable for your investor, taking into account his or her overall portfolio and investment goals

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SMA Hub’s Unique Status CategoriesSMAs on our Inventory Page Have a Status - In Stock | Pre-Order | Reserved

In Stock

An SMA designated as In Stock is ready for immediate sale to your client. In Stock SMAs have been thoroughly vetted and the underlying court approval process has been completed. In Stock SMAs are ready for purchase off the shelf.

Pre-Order

An SMA designated as Pre-Order is still in the process of being acquired by SMA Hub.Because these cases are still undergoing our due diligence process, there is a possibility that they may not be approved for purchase.

You may reserve a Pre-Order SMA for your client, but it is important to understand that this process may take more time and the case is not guaranteed to close.

If you have reserved a Pre-Order SMA and the transfer falls out, you will be promptly notified and provided with an explanation for the fallout. A

Pre-Order SMA typically takes up to 60 days from the initial inventory listing on our website until the transaction closes.

Reserved

An SMA designated as Reserved has been placed with another party, but the transaction has not yet closed. As soon as you

reserve an SMA, its status will be updated on our inventory list.

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Legal Review

SMA Hub’s internal legal department reviews all of the supporting documentation to ensure the payment stream is conveyed to you absolutely and irrevocably. The review includes a thorough examination of the underlying court order and supporting court documents, verification that the cash flow is free from any liens and attachments and review of the transfer and assignment documents.

A thorough legal review checklist with case-specific findings is included in each Closing Book. The Closing Book is supplied to you, as the agent, and to your client two days before the client is expected to fund the transaction, allowing ample time for review.

Pricing and Closing

Pricing to Closing Date

Each SMA has a unique time line. The purchase price and closing date are estimated in our inventory and at the time you submit a Purchase Order on behalf of your client. When an SMA is ready to close, the exact payments, closing date and effective rate of return are used to calculate the final purchase price.

• If the actual closing date occurs before the estimated closing date, the actual purchaseprice will be lower than the estimated purchase price shown on the purchase order.

• If the actual closing date occurs after the estimated closing date, the actual purchaseprice will be greater than the estimated purchase price shown on the purchase order.

• In either case, the effective rate of return and the payment stream remain the same. Theonly change is the date of closing and final purchase price.

An amortization schedule of the exact payments and effective rate of return will be calculated using the actual closing date. The amortization schedule will reflect the final purchase price.

Wire Instructions

Within two business days after receipt of the Closing Book, the purchaser must wire funds to the Hub Business Trust Bank account.

Northwest Bank 4900 Meadows Road, Suite 410 Lake Oswego, OR 97035 (503) 906-3939

ABA #: 124103922 Account #: 100038128 Account Name: Hub Business Trust 4000 Kruse Way Place, Suite 1-230 Lake Oswego, OR 97035 (971) 245-3425

SMA Hub’s Unique Closing

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Closing BookAfter SMA Hub has completed its legal review of the case, a Closing Book will be prepared and sent electronically to you, as the advisor. Funding of the SMA transaction is required within two days of receipt of this Closing Book.

The Closing Book will generally contain all of the following items:

1. Summary Cover Page Wiring Instructions Final Purchase Price

2. Legal Review Checklist Legal Review Letter and Specific Case Findings

3. Amortization Schedule of Payment Stream Specific Transferred Payment Stream

4. Irrevocable Assignment between Hub Business Trust and Purchaser Between Hub Business Trust and Purchaser

5. Payment Servicing Agreement How Cash Flows are Handled

6. Acknowledgment Letter or Stipulation Agreement Carrier Confirms Transfer of Payments and Court Order

7. Court Order Approves Seller’s Transfer to Hub Business Trust Approves Seller’s Transfer to Hub Business Trust

8. Purchase and Assignment Agreement Between Factoring Company and Hub Business Trust

9. Assignment Agreement Between Original Payee and Factoring Company

10. Current Benefits Letter Confirming Currently Available Payments Carrier Confirms Currently Available Payments

SMA Hub’s Unique Documentation

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SMA Hub’s Process Overview

1. Injured party receives a settlement

2. Insurance carrier assigns payments to injured party

3. Injured party desires to sell future payments in exchange for a lump sum payment today

4. Injured party contacts a Factoring Company and begins to negotiate a sale

5. Factoring Company agrees to purchase the future payments

6. SMA Hub purchases the SMA into Hub Business Trust and lists the SMA on its inventory for agents

7. Factoring Company gets court approval of the transaction

1. SMA Hub’s legal counsel reviews all court documents and supporting materials to ensure a clear transfer of the SMA into Hub Business Trust

2. Hub Business Trust names GoldStar Trust Company as servicing agent

3. Purchaser’s agent finds an SMA in the inventory that meets the purchaser’s needs

4. Hub Business Trust irrevocably assigns payments to the purchaser

1. SMA Hub provides complete Closing Book for review

2. Purchaser signs Irrevocable Assignment and wires funds to Hub Business Trust account

3. SMA Hub pays agent commission for the sale

1. Insurance company sends reassigned payments to GoldStar Trust Company

2. GoldStar Trust Company forwards payment streams to the purchaser and handles all customer changes as circumstances require

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Creation of an SMA SMA Hub Process The Transaction The End Result

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Execution of Irrevocable AssignmentThe actual legal transfer of the SMA from Hub Business Trust to the purchaser is accomplished via an Irrevocable Assignment of Cash Flows. Upon mutual execution of the Irrevocable Assignment and our receipt of your client’s funds, full title is transferred and the transaction is complete.

Assignment & Confirmation

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Payment ServicingWhat Is It and Why Is It Better?Payment servicing is commonly used to facilitate payment transfers in banking, securities, mortgage servicing, property management, IRA administration and investment management. Many transactions in the financial industry involve a form of payment servicing.

The use of a servicing agent is required by some insurance carriers and is rapidly becoming the industry standard. When coupled with the Hub’s unique purchase process, payment servicing offers a host of benefits, including purchaser anonymity, ease of account servicing and increased transferability.

GoldStar Trust CompanySMA Hub has a strong relationship with GoldStar Trust Company (“GoldStar”) to perform payment servicing and account management for your clients. GoldStar’s service platform ensures there is always a real person to assist your clients. Whatever the need, GoldStar will handle it directly and personally with the carrier and the purchaser. The setup costs for this service are paid by Hub Business Trust, and the details of GoldStar’s servicing can be found in each Closing Book.

Who is GoldStar Trust?GoldStar Trust Company is one of the nation’s leading Self-Directed IRA custodians with over twenty-five years of experience and $2 billion in assets. GoldStar offers unique retirement solutions and investment options that allow investors to diversify their IRA portfolios with precious metals and other alternative investments. A trusted resource, GoldStar also serves as Paying Agent and Trustee for issuers of Church Bonds and Municipal Bonds in 38 states.

GoldStar Trust Company began as Colonial Trust Company, incorporated on August 19th, 1989, in Phoenix, Arizona. In 2004, Colonial Trust Company was acquired by Happy State Bank of Amarillo, Texas and emerged as GoldStar Trust Company. In 2006, GoldStar acquired American Church Trust Company in Houston, TX and later relocated all operations to Canyon, TX. Since then, GoldStar has enjoyed substantial growth due to strong executive leadership and keen financial foresight. GoldStar is backed by the financial strength and confidence of Happy State Bank, founded in 1908.

There are many benefits to payment servicing, including:

• Easy account administration for address and bank account changes

• Simplified estate administration for your heirs, successors and beneficiaries

• Easy transferability of payments

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Payment Servicing

GoldStar Payment Servicing Fee Schedule

PAYMENT SERVICING FEESAccount Set-Up | Document Review - Fee paid by SMA Hub $100

Distribution of Funds (deducted at distribution)

• ACH: $5 Per Payment

• GoldStar IRA $5 Per Payment

• Check $7 Per Payment

• Wire $25 Per Payment

• FedEx $25 Per Payment

Re-Assignment | Account Transfer $100

Stop Payment & Check Reissue

(deducted from funds when check is issued) $25

Address / bank information verification (optional) $25

Bank Account | Address Change No Charge

Additional Services Rendered $/Hr Rate $50

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How Safe are my Payments?Protection of PaymentsUnited States contract law protects your clients to the fullest. When your client and Hub Business Trust execute the Irrevocable Assignment of Cash Flows, all rights and title to the payment stream are passed from the Trust to your purchaser. As of that moment, Hub Business Trust has no ownership interest in the cash flows going forward. When payments commence, they are sent directly from the insurance carrier to GoldStar for servicing, with no involvement from Hub Business Trust.

Subsequent actions of Hub Business Trust or SMA Hub have no effect on the payment streams irrevocably assigned by us to your client. Once sold, they are legally no longer the property of Hub Business Trust and creditors and additional parties have no claim to the payments.

GoldStar Trust Company is a contracted payment agent. It will receive funds from insurance carriers but is subject to our Irrevocable Assignment of

Cash Flows and must account for all funds. While GoldStar Trust Company takes possession of each payment briefly to verify the

amount and payee, at no time does GoldStar Trust Company have legal ownership of the funds.

In the unlikely event that a creditor of GoldStar Trust Company attempted to foreclose on the assets of GoldStar,

your client’s payments remain safe.

In short, GoldStar Trust Company is a nationally recognized professional payment servicing platform used broadly by

companies and institutions to accurately receive payments and service policies and accounts.

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Agent Commission Agent CommissionAgent compensation is based on case term and size. In essence, you make more for those cases with longer terms and that are larger in size. Compensation varies simply because SMA Hub offers increased commission for every year of term.

The stated commission to you ranges from 2-7% depending on case size and term.

Additional Commission Details

• Commissions are payable in full at the point of closing and are not subject to claw-back.

• Added compensation incentives for case size and bonuses for sales volume are available.

• In addition to the baseline compensation outlined above, our agents have the flexibility to adjust client pricing to increase compensation.

• Agency overrides are available for producing agencies and FMOs with multiple agents.

HUB Commission Example:

As an illustration, SMA Hub has an In Stock, deferred SMA listed at a wholesale rate of 4.451% effective. This SMA pays $3,500.00 per month beginning in November of 2036 and paying for 240 months. The cost of this SMA at its listed wholesale rate is $235,113.78. The stated commission for this SMA is $13,107.59.

If the selling agent were to sell this SMA to their client at a rate of 4.25% (representing a 20.1 basis point reduction in rate), the SMA would cost the purchaser $248,409.59. The additional $13,295.81 would be added to the agent’s stated commission of $13,107.59 for a total commission to the agent of $26,403.40. In essence, this turns a 5.58% commission into a 10.63% commission to the agent.

Secondary Market Annuities are an excellent addition to your practice.

The addition of SMA Hub’s Secondary Market Annuities - with their safety, quality and certainty of yield - will help you accomplish sophisticated financial outcomes for your clients.

Be sure to access the Hub inventory regularly and be on the lookout for our inventory email communication so that you can reserve the cases that are right for your clients’ needs.

We encourage you to let other advisors know about the SMA Hub. They can receive member-only access to the Hub via email at info@smahub.com or they may call us at 971.245.3425.

We look forward to working with you and your referrals.

© SMA Hub 2017

4000 Kruse Way Place, Suite 1-230 Lake Oswego, OR 97035

971.245.3425 phone | 844.506.0512 fax | smahub.com