Park Avenue Securities Investment Advisory Services

Quantitative Innovations

GEAR # 2011-118552

Key Terms Defined

Risk – The chance of an event different from what one expects.

“Risky Asset” – Any asset that commands a risk premium above the yield of a T-Bill.

Asset Class – Broad classifications of investment opportunities with similar capital structures and/or characteristics.

Risk Tolerance – The compilation of an investors ability to accept risk to achieve a required return given a specific time horizon and investment amount.

Asset Allocation – The process by which multiple classes risky assets are utilized within a portfolio to achieve a specific risk/return objective.

Exchange Traded Fund (ETF) – A collection of securities assembled to mimic the return of a specific index or benchmark (traded and priced intraday on an exchange)

GEAR # 2011-118553

Initial Roles and Responsibilities

Investor•Define Investment Goals and Time Horizon

•Define Reasonable Expectations

•Review Recommendations

•Update on any Changes that may Influence Investment Goals

Park Avenue Securities Advisor•Help Client Define Investment Goals and Risk

Profile (Expectations)

•Team with PAS to Develop a Portfolio With Clients Specific Goals in Mind

•Review Recommendations

Park Avenue Securities Investment Advisory Services

Team•Team with Advisor to Develop a Portfolio With

Clients Specific Goals in Mind

•Monitor Models and Assumptions

•Provide Insight and Research to Support Decisions

•Provide Quarterly Performance Reports & Rebalancing

GEAR # 2011-118554

Process of Disciplined Investing

Investor’s Process Investment Advisor’s Process

Interpret and Quantify your Risk Tolerance

Listen Your Goals Objectives Time Horizon

Help define the best asset allocation solution

Assist you in managing your ongoing expectations

Assist the Evaluation of your Portfolio

Define Your Investor Profile Realistic look at expectations

and an unemotional appraisal of the ability to accept risk in order to achieve a desired outcome

Select the Right Asset Allocation Strategy

Evaluate Your Portfolio

GEAR # 2011-118555

What is Diversification?

Fixed Income

Money Market

Domestic Equity

International Equity

Real Assets

Opportunistic Assets

Spreading your assets among a number of different investments in an effort to reduce the risk of an excessive loss in any one security.

GEAR # 2011-118556

Uncertain Markets

The Only Certainty About the Markets is That They Are Uncertain

The indices listed herein are unmanaged indices. Individual Investors cannot invest in these indices.

Source: Callan Associates

GEAR # 2011-118557

Do These Companies Sound Familiar?

American Cotton OilAmerican Sugar

American TobaccoChicago Gas

Distilling and Cattle FeedingGeneral Electric

Laclede GasNational Lead

North AmericanTennessee Coal & IronUS Leather Preferred

US Rubber

GEAR # 2011-118558

How Does Quantitative Innovations Account For This?

Diversification and Asset Allocation are Key

By concentrating on asset classes rather than individual equity or debt securities we ensure

that the active risk associated with your portfolio is not dominated by a single position

We strive to understand the risks and potential rewards inherent of each asset class as well

as how they interact with others, i.e. correlation

Volatility is Important

Valuations are Most Important

We seek opportunities in asset classes that are undervalued

We work to invest in asset classes that provide favorable opportunities on a forward-looking basis

Only purchasing asset classes that have already done well versus their peers creates

“whipsaw risks”

Chasing performance is a zero-sum game and can detract from ongoing results

Market Timing is Destructive

We are Investors, not Speculators

GEAR # 2011-118559

Portfolio Construction

Attempt to Build Portfolios that Maximize Return Per Unit of Risk Within Designed Parameters

GEAR # 2011-1185510

Portfolio Construction

Evaluate and Adjust Asset Allocations, on a Forward-Looking Basis, to Gain Exposures to Potentially Beneficial Sub-Asset Classes.

*Source: Financial Analysts Journal, May/June 1991. Due to rounding, figures may not equal 100%

GEAR # 2011-1185511

Portfolio Construction

Selecting Fund Managers Selecting the ETFs

GEAR # 2011-118551212

Combining Passive and Active in One Strategy

By maintaining an active or tactical outlook via Quantitative Innovations we

look to maximize the return per unit of risk

We are able to exploit the most attractive opportunities in various asset

classes with the most appropriate vehicle

Quantitative Innovations is a marriage between the two often divergent

investment philosophies in the marketplace today…Active and Passive

Benefits of combining ETFs and Mutual Funds ETFs are inherently tax efficient

Low Turnover Investor’s own trading activity generates capital gains or losses

ETFs have low expenses relative to other investment vehicles allowing

investors to potentially save significantly on internal expenses over a long-

term investment horizon

For Financial Advisor Use Only in One on One Presentations with Sophisticated Investors

GEAR # 2011-1185513

A Three-Pronged Approach

Standard Models (Hybrid Solution)Designed for qualified assets or situations where an investor does not have

specific tax considerations

The account may contain a robust mix of active mutual funds and ETFs

Tax Sensitive Models (Hybrid Solution)Designed for non-qualified assets

The account may contain a robust mix of active mutual funds and ETFs

ETF-Only Models Designed for qualified or non-qualified assets

All asset class assignments will be filled with Exchange Traded Funds

GEAR # 2011-1185514

Monitoring the Portfolio… An Ongoing Partnership

Investor•Re-evaluates risk tolerance and expectations

•Reviews Account and Quarterly Performance

•Notify Advisor and PAS Concerning Any Changes in Risk Tolerance and/or Time Horizon

(Goals and Objectives)

Park Avenue Securities Financial Advisor

•Help Client Manage Ongoing Expectations and Goals

•Maintain Ongoing Dialogue with Client and PAS to Ensure Prudent Management and Allocation

•Monitor Portfolio and Interpret Any Changes to the Portfolio

•Review Recommendations

Park Avenue Securities - Investment Advisory Services

Team•Team with Advisor to Develop a Portfolio With

Clients Specific Goals in Mind

•Monitor Portfolio

•Make Recommendations to Change ETFs or Allocation When Research Would Suggest

•Provide Quarterly Performance Reports & Rebalancing as Necessary

GEAR # 2011-1185515

Client Implementation Process

Complete the Client Questionnaire Generate a Proposal Based on the Results From the Client’s

Questionnaire

Review the Proposal

Implement the Portfolio

We value your trust and confidence and thank you for the

opportunity to serve you

GEAR # 2011-1185516

About PAS/Guardian

About Park Avenue Securities LLCPark Avenue Securities LLC is registered with the Securities and Exchange Commission as an investment adviser and broker dealer. Park Avenue Securities is located at 7 Hanover Square, New York, NY 10004 and 81 Highland Avenue, Bethlehem, PA 18017. Park Avenue Securities LLC is an indirect wholly owned subsidiary of The Guardian Life Insurance Company of America, a mutual company founded in 1860. Guardian has earned consistently high ratings from independent agencies such as Standard & Poor’s, Moody’s Investor Services and A.M. Best Company. Park Avenue Securities is a member NASD, SIPC.

About The Guardian Life Insurance Company:A mutual insurer founded in 1860, The Guardian Life Insurance Company of America and its subsidiaries are committed to protecting individuals, business owners and their employees with life, long term care insurance, disability income, group medical and dental insurance products, and offer 401(k), annuities and other financial products. Guardian operates one of the largest dental networks in the United States, and protects more than six million employees and their families at 120,000 companies. The company has more than 5,400 employees in the United States and a network of over 3,000 financial representatives in more than 80 agencies nationwide.

GEAR # 2011-1185517

Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. ETF Managed Solutions performance results do not reflect management fees or expenses. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security.

Joseph Capone is a Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 7 Hanover Square, New York, NY 10004, 888-600-4667. Securities products/services and advisory services offered through PAS, a registered broker-dealer and investment advisor. OmniMed Financial & Insurance is not an affiliate or subsidiary of PAS.

PAS is a member FINRA, SIPC.

Disclosures