The following discussion should be read in conjunction with the consolidated financial statements of National Financial Partners Corp. ("NFP") and its subsidiaries (together with NFP, the "Company") and the related notes included elsewhere in this report. In addition to historical information, this discussion includes forward-looking information that involves risks and assumptions, which could cause actual results to differ materially from management's expectations. See "Forward-Looking Statements" included elsewhere in this report.

NFP's principal and executive offices are located at 340 Madison Avenue, 20th Floor, New York, New York, 10173 and the telephone number is (212) 301-4000. On NFP's Web site, www.nfp.com, NFP posts the following filings as soon as reasonably practicable after they are electronically filed or furnished with the Securities and Exchange Commission (the "SEC"): NFP's annual reports on Form 10-K, NFP's quarterly reports on Form 10-Q, NFP's current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All such filings on NFP's Web site are available free of charge. Information on NFP's Web site does not constitute part of this report.

Executive Overview

NFP and its benefits, insurance and wealth management businesses provide a full range of advisory and brokerage services to the Company's clients. NFP serves corporate and high net worth individual clients throughout the United States and in Canada, with a focus on the middle market and entrepreneurs. As of September 30, 2011, the Company operated over 140 businesses.

Founded in 1998, the Company has grown organically and through acquisitions, operating in the independent distribution channel. This distribution channel offers independent advisors the flexibility to sell products and services from multiple non-affiliated providers to deliver objective and comprehensive solutions. The number of products and services available to independent advisors is large and can lead to a fragmented marketplace. NFP facilitates the efficient sale of products and services in this marketplace by using its scale and market position to contract with leading product providers. These relationships foster access to a broad array of insurance and financial products and services as well as better underwriting support and operational services. In addition, the Company is able to operate effectively in this distribution channel by leveraging financial and intellectual capital, technology solutions, cross-selling, and regulatory compliance support across the Company. The Company's marketing and wholesale organizations also provide an independent distribution channel for benefits, insurance and investment products and services, serving both third-party affiliates as well as member NFP-owned businesses.

NFP has organized its businesses into three reportable segments: the Corporate Client Group (the "CCG"), the Individual Client Group (the "ICG") and the Advisor Services Group (the "ASG"). The CCG is one of the leading corporate benefits advisors in the middle market, offering independent solutions for health and welfare, retirement planning, executive benefits, and property and casualty insurance. The ICG is a leader in the delivery of independent life insurance, annuities, long term care and wealth transfer solutions for high net worth individuals and includes wholesale life brokerage, retail life and wealth management services. The ASG, including NFP Securities, Inc. ("NFPSI"), a leading independent broker-dealer and corporate registered investment advisor, serves independent financial advisors whose clients are high net worth individuals and companies by offering broker-dealer and asset management products and services. The ASG attracts financial advisors seeking to provide clients with sophisticated resources and an open choice of products. NFP promotes collaboration among its business lines to provide its clients the advantages of a single coordinated resource to address their corporate and individual benefits, insurance and wealth management planning needs.

NFP enhances its competitive position by offering its clients a broad array of insurance and financial solutions. NFP's continued investments in marketing, compliance and product support provide its independent advisors with the resources to deliver strong client service. NFP believes its operating structure allows its businesses to effectively and objectively serve clients at the local level while having access to the resources of a national company. NFP's senior management team is composed of experienced insurance and financial services leaders. The Company's principals, and in certain instances employees, who manage the day-to-day operations of many of NFP's subsidiaries, are professionals who are well positioned to understand client needs.

The economic environment remains challenging, and many economic indicators continue to point to a slow and uneven recovery. This uncertain environment has reduced the demand for the Company's services and the products the Company distributes, particularly in the life insurance market. 2010's temporary estate tax laws have also had a continuing impact on the high net worth life insurance market. The ICG's fourth quarter 2011 results are expected to be lower than the ICG's fourth quarter 2010 results.

Reportable Segments

Corporate Client Group

The CCG is one of the leading corporate benefits advisors in the middle market, offering independent solutions for health and welfare, retirement planning, executive benefits, and property and casualty insurance. The CCG serves corporate clients by providing advisory and brokerage services related to the planning and administration of benefits plans that take into account the overall business profile and needs of the corporate client. The CCG accounted for 40.8% of NFP's revenue for the nine months ended September 30, 2011 and 40.0% of NFP's revenue for the nine months ended September 30, 2010. The CCG has organized its operations by region in order to facilitate the sharing of resources and investments among its advisors to address clients' needs.

Effective July 1, 2011, NFP's property and casualty business is presented as a separate business line. Previously, NFP's property and casualty business was included within the corporate benefits business line. The CCG now operates primarily through its corporate benefits, executive benefits and property and casualty business lines. Prior periods presented have been conformed to the current period presentation.

The corporate benefits business line accounted for approximately 82.8% of the CCG's revenue for the nine months ended September 30, 2011 and 83.8% of the CCG's revenue for the nine months ended September 30, 2010. Generally, corporate benefits are available to a broad base of employees within an organization and include products and services such as group medical and disability insurance, group life insurance and retirement planning. The corporate benefits business line consists of both retail and wholesale benefits operations. These businesses have access to advanced benchmarking and analysis tools and comprehensive support services which are provided to both NFP-owned businesses and non-owned entities that pay membership fees to NFP Benefits Partners. NFP Benefits Partners is a division of NFP Insurance Services, Inc., a licensed insurance agency and an insurance marketing organization wholly-owned by NFP.

The executive benefits business line accounted for approximately 10.2% of the CCG's revenue for the nine months ended September 30, 2011 and 10.4% of the CCG's revenue for the nine months ended September 30, 2010. Executive benefits products and services provide employers with the ability to establish plans that create or reinstate benefits for highly-compensated employees, typically through non-qualified plans or disability plans. Clients may utilize a corporate-owned life insurance funding strategy to finance future compensation due under these plans. The executive benefits business line consists of NFP-owned businesses and non-owned entities that pay membership fees for membership in one of NFP's marketing and wholesale organizations.

The property and casualty business line accounted for approximately 7.0% of the CCG's revenue for the nine months ended September 30, 2011 and 5.8% of the CCG's revenue for the nine months ended September 30, 2010. Property and casualty products and services provide risk management capabilities to businesses and individuals by protecting against property damage, the associated interruption of business and related expenses, or against other damages incurred in the normal course of operations. Effective July 1, 2011, NFP Property and Casualty Services, Inc., one of NFP's wholly-owned businesses, acquired Lapre Scali & Company Insurance Services, LLC ("Lapre Scali"), a property and casualty insurance brokerage. In addition to managing their own operations, NFP's property and casualty resources are positioned to serve NFP's businesses and members of NFP's marketing and wholesale organizations with commercial, personal and surety line capabilities.

The CCG earns commissions on the sale of insurance policies and fees for the development, implementation and administration of corporate and executive benefits programs and property and casualty products and services. In the corporate benefits business line, commissions and fees are generally paid each year as long as the client continues to use the product and maintains its broker of record relationship with the Company. Commissions are based on a percentage of revenue but they may also be based on a fee per plan participant. In some cases, such as for the administration of retirement-focused products like 401(k) plans, fees earned are based on the amount of assets under administration or advisement. Generally, in the executive benefits business line, consulting fees are earned relative to the completion of specific client engagements, administration fees are earned throughout the year on policies, and commissions are earned as a calculated percentage of the premium in the year that the policy is originated and during subsequent renewal years, as applicable. Through the property and casualty business line, the CCG offers property and casualty insurance brokerage and consulting services for which it earns commissions and fees. These fees are paid each year as long as the client continues to use the product and maintains its broker of record relationship with the Company.

NFP believes that the corporate benefits business line and the property and casualty business line provides a relatively consistent source of revenue to NFP because recurring revenue is earned each year a policy or service remains in effect. NFP believes that the CCG has a high rate of client retention. NFP estimates that revenue from the executive benefits business line tends to be split between recurring revenue and revenue that is concentrated in the year of sale. Historically, revenue earned by the CCG is weighted towards the fourth quarter.

Individual Client Group

The ICG is a leader in the delivery of independent life insurance, annuities, long term care and wealth transfer solutions for high net worth individuals. In evaluating their clients' near-term and long-term financial goals, the ICG's advisors serve wealth accumulation, preservation and transfer needs, including estate planning, business succession, charitable giving and financial advisory services. The ICG accounted for 33.8% of NFP's revenue for the nine months ended September 30, 2011 and 37.6% of NFP's revenue for the nine months ended September 30, 2010. The ICG operates through its marketing organization, PartnersFinancial, its wholesale life brokerage businesses, consisting of Highland Capital Brokerage, Inc. and other NFP-owned brokerage general agencies, as well as through its retail life and wealth management business lines.

The marketing organization and wholesale life brokerage business line accounted for 52.1% of the ICG's revenue for the nine months ended September 30, 2011 and 54.0% of the ICG's revenue for the nine months ended September 30, 2010. Annual fees are paid for membership in PartnersFinancial, which develops relationships and contracts with selected preferred insurance carriers, earning override commissions when those contracts are used. The ICG is supported by shared service technology investments, product management department, advanced case design team, underwriting advocacy specialists, training and marketing services. Highland Capital Brokerage, Inc. has a significant focus on financial institutions, providing point of sale and insurance marketing support. Highland Capital Brokerage, Inc. and the ICG's other wholesale life brokerage businesses operate through a brokerage general agency model that provides brokers, typically either independent life insurance advisors or institutions, support as needed. The independent life insurance advisors or institutions then distribute life insurance products and services directly to individual clients. The support provided by the wholesale life brokerage businesses may include underwriting, marketing, point of sale, case management, advanced case design, compliance or technical support.

The retail life business line accounted for 28.8% of the ICG's revenue for the nine months ended September 30, 2011 and 30.0% of the ICG's revenue for the nine months ended September 30, 2010. The retail life business line provides individual clients with life insurance products and services and consists of NFP-owned businesses.

The ICG's wealth management business line accounted for 19.1% of the ICG's revenue for the nine months ended September 30, 2011 and 16.0% of the ICG's revenue for the nine months ended September 30, 2010. The ICG's wealth management business line provides retail financial services to individual clients. This business line consists of NFP-owned businesses.

Commissions paid by insurance companies are based on a percentage of the premium that the insurance company charges to the policyholder. In the marketing organization and wholesale life brokerage business line, the ICG generally receives commissions paid by the insurance carrier for facilitating the placement of the product. Wholesale life brokerage revenue also includes amounts received by NFP's life brokerage entities, including its life settlements brokerage entities, which assist advisors with the placement and sale of life insurance. In the retail life business line, commissions are generally calculated as a percentage of premiums, generally paid in the first year. The ICG receives renewal commissions for a period following the first year. The ICG's wealth management business line earns fees for offering financial advisory and related services. These fees are generally based on a percentage of assets under management and are paid quarterly. In addition, the ICG may earn commissions related to the sale of securities and certain investment-related insurance products.

Many of the NFP-owned businesses comprising the wealth management business line of the ICG conduct securities or investment advisory business through NFPSI. Like the other business lines in the ICG, the wealth management business line generally targets high net worth individuals as clients. In contrast, the ASG's primary clients are independent investment advisors, who in turn serve high net worth individuals and companies. The ICG's wealth management business line is composed of NFP-owned businesses. In contrast, the ASG serves independent financial advisors associated with both NFP-owned and non-owned businesses. When independent financial advisors associated with NFP-owned businesses place business through NFPSI, NFPSI receives a commission and the independent financial advisor associated with the NFP-owned business receives the remaining commission. When independent financial advisors associated with non-owned businesses place business through NFPSI, NFPSI receives a commission and the independent financial advisor associated with the non-owned business receives the remaining commission. See also "-Advisor Services Group."

Revenue generated by the marketing organization and wholesale life brokerage and retail life business lines tends to be concentrated in the year that the policy is originated. Historically, revenue earned by the marketing organization and wholesale life brokerage and retail life business lines is weighted towards the fourth quarter as clients finalize tax planning decisions at year-end. 2010's temporary estate tax laws have had a continuing impact on the high net worth life insurance market. The ICG's fourth quarter 2011 results are expected to be lower than the ICG's fourth quarter 2010 results. Revenue generated by the ICG's wealth management business line is generally recurring given high client retention rates, and is influenced by the performance of the financial markets and the economy, as well as asset allocation decisions if fees are based on assets under management.

Advisor Services Group

The ASG serves independent financial advisors whose clients are high net worth individuals and companies by offering broker-dealer and asset management products and services through NFPSI, NFP's corporate registered investment advisor and independent broker-dealer. The ASG attracts financial advisors seeking to provide clients with sophisticated resources and an open choice of products. The ASG accounted for 25.4% of NFP's revenue for the nine months ended September 30, 2011 and 22.4% of NFP's revenue for the nine months ended September 30, 2010.

The ASG earns fees for providing the platform for financial advisors to offer financial advice and execute financial planning strategies. These fees are based on a percentage of assets under management and are generally paid quarterly. The ASG may also earn fees for the development of a financial plan or annual fees for advising clients on asset allocation. The ASG also earns commissions related to the sale of securities and certain investment-related insurance products. Such commission income and related expenses are recorded on a trade date basis. Transaction-based fees, including incentive fees, are recognized when all contractual obligations have been satisfied. Most NFP-owned businesses and members of NFP's marketing and wholesale organizations conduct securities or investment advisory business through NFPSI.

Independent broker-dealers/corporate registered investment advisors, such as NFPSI, tend to offer extensive product and financial planning services and heavily emphasize investment advisory platforms and packaged products and services such as mutual funds, variable annuities and wrap fee programs. NFP believes that broker-dealers serving the independent channel tend to be more responsive to the product and service requirements of their registered representatives than wire houses or regional brokerage firms. Advisors using the ASG benefit from a compliance program in place at NFPSI, as broker-dealers are subject to regulations which cover all aspects of the securities business.

In February 2010, NFPSI announced the launch of NFP IndeSuiteTM, a wealth management platform designed to bring technology, scale and services to the independent registered investment advisor market.

Revenue generated by the ASG based on assets under management and the volume of securities transactions is influenced by the performance of the financial markets and the economy.

Acquisitions

NFP anticipates continuing acquisitions and sub-acquisitions, in which an existing NFP-owned business acquires a new entity or book of business, focusing on businesses that provide high levels of recurring revenue and strategically complement its existing businesses. Businesses that supplement the Company's geographic reach and improve product capabilities across business lines are of particular interest to NFP.

As NFP continues its acquisition and sub-acquisition activity, it may also enter into transactions or joint ventures that fall outside its historical acquisition structure in order to address unique opportunities. For instance, NFP has previously purchased a principal's economic interest in the management agreement, acquiring a greater economic interest in a transaction. NFP may again purchase all or a portion of such economic interest of other principals in the future through a management agreement buyout, generally resulting in an expense to NFP. In addition, the recent acquisition of Lapre Scali was completed through a transaction that did not involve a management agreement. In that transaction, NFP bought 100% of the equity interest in the entity and Mr. Scali became an executive vice president of NFP, with oversight of the property and casualty business line.

While consideration for acquisitions and sub-acquisitions in 2011 has been paid in cash, NFP has historically generally required principals to receive a minimum portion of the acquisition price (typically at least 30%) in the form of NFP common stock. In recent acquisition transactions, the Company has required new employees/principals to purchase shares of NFP common stock on the open market by the end of a certain period of time (the "Purchased Shares"). The Purchased Shares are subject to liquidity restrictions similar to those set forth in the amended and restated stockholders agreement or lock-up agreement, but are not subject to agreements that give such new principals rights as security holders.

Regulation

The Company is subject to extensive regulation in the United States, certain United States territories and Canada. Failure to comply with applicable federal or state law or regulatory requirements could result in actions by regulators, potentially leading to fines and penalties, adverse publicity and damage to the Company's reputation. The interpretations of regulations by regulators may change and statutes may be enacted with retroactive impact. In extreme cases, revocation of a subsidiary's authority to do business in one or more jurisdictions could result from failure to comply with regulatory requirements. NFP could also face lawsuits by clients, insureds or other parties for alleged violations of laws and regulations.

The insurance industry continues to be subject to a significant level of scrutiny by various regulatory bodies, including state attorneys general and insurance departments, concerning certain practices within the insurance industry. These practices include, without limitation, conducting stranger-owned life insurance sales in which the policy purchaser may not have a sufficient insurable interest as required by some states' laws or regulations, the receipt of contingent commissions by insurance brokers and agents from insurance companies and the extent to which such compensation has been disclosed, bid rigging and related matters.

Employees

As of September 30, 2011, the Company had approximately 2,770 employees. NFP believes that its relations with the Company's employees are generally satisfactory. None of the Company's employees are represented by a union.

Results of Operations

The Company earns revenue that consists primarily of commissions and fees earned from the sale of financial products and services to the Company's clients. The Company also incurs commissions and fees expense and compensation and non-compensation expense in the course of earning revenue. NFP pays management fees to non-employee principals and/or certain entities they own based on the financial performance of each respective business. The Company refers to revenue earned by the Company's businesses less the operating expenses of its businesses and allocated shared expenses associated with shared corporate resources as income (loss) from operations. The Company's operating expenses include commissions and fees, compensation and non-compensation expense, management fees, amortization, depreciation, impairment of intangible assets and (gain) loss on sale of businesses.

In addition to its evaluation of its reportable segments' performance, the Company also evaluates the profit it shares with the principals on a reportable segment basis. In order to monitor this, it uses the following non-GAAP financial measures: income before management fees, adjusted income before management fees, management fees as a percentage of adjusted income before management fees, and management fees (excluding accelerated vesting of certain restricted stock units ("RSUs")). For a reconciliation of these non-GAAP financial measures to their GAAP counterparts, see "-Operating expenses-Management fees."

Information with respect to all sources of revenue, income from operations, and income before management fees by reportable segment for the three and nine months ended September 30, 2011 and September 30, 2010 is presented below (in millions).

                                                   Three Months Ended                                         Nine Months Ended
                                     September 30, 2011           September 30, 2010            September 30, 2011          September 30, 2010

Revenue
Commissions and fees
Corporate Client Group              $              105.7          $              94.6          $              295.6         $             279.3
Individual Client Group                             84.8                         91.9                         244.4                       262.0
Advisor Services Group                              61.0                         51.0                         184.2                       156.3

Total                               $              251.5          $             237.5          $              724.2         $             697.6


Income from operations
Corporate Client Group              $               13.0          $               2.9          $               34.3         $              30.0
Individual Client Group                              3.1                         (1.6 )                         7.8                         6.0
Advisor Services Group                               2.0                          0.9                           7.2                         4.6

Total                               $               18.1          $               2.2          $               49.3         $              40.6


Income before management fees
Corporate Client Group              $               39.5          $              34.4          $              106.0         $              99.1
Individual Client Group                             23.2                         31.2                          61.4                        72.3
Advisor Services Group                               2.7                          1.2                           8.5                         5.6

Total                               $               65.4          $              66.8          $              175.9         $             177.0

Overview of the Nine Months Ended September 30, 2011

During the nine months ended September 30, 2011, revenue increased $26.6 million, or 3.8%, as compared to the nine months ended September 30, 2010. The revenue increase was driven by revenue increases within the CCG and ASG of $16.3 million and $27.9 million, respectively, and offset by a revenue decrease of $17.6 million within the ICG. Results in the CCG included commissions and fees revenue of $8.2 million from acquisitions in 2011 that had no comparable . . .