June 4, 2015 | Volume 6 | Issue 9

Active investment management’s weekly magazine

Sell in June & go away?

A “living in the moment” guide to investing

Client appreciation: A sound investment

Market truths can change

Ryan Finnell

Right place,right time

Advisor perspectives on active investment management

- A custodian that makes your life as an RIA simpler.

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Active management is a different ballgame than traditional buy-and-hold strategies. As I explain to clients, their money is managed by experts who are constantly watching the markets. There is little guesswork or opinion involved, as these managers have strict rules-based methodologies and use quantitative decision-making. Clients with capital preservation concerns can employ a systematic and disciplined approach for long-term asset growth.

LOUD & CLEARRich Ralston • Pensacola, FL WRP Investments Inc. • Parkway Financial Group

3June 4, 2015 | proactiveadvisormagazine.com

LOUD & CLEAR

A“LIVING IN THE

M MENT”guide to investing

By Jerry Wagner

ecently I was speaking to a friend about some of the more memorable celebrations in our lives. I had to put on that list the

year that our family visited New York City’s Times Square to witness firsthand the famous ball drop and the overwhelming crowd scene.

But in thinking about it, what impresses me the most about New Year’s Eve is not the partying; it’s the hour-by-hour progression of the celebration, starting at the International Dateline somewhere east of New Zealand. As midnight is reached around the world, the crowds roar and the fireworks explode. An hour

R later it repeats—Auckland, Sydney, Tokyo, Bombay, Moscow, Berlin, Paris, London, New York, Los Angeles, and finally Honolulu.

For the ten-second countdown to midnight, and maybe a few seconds more, the people in each time zone are truly living in the moment.

Why’s that important? Since the beginning of recorded history, living in the moment has been valued. In Buddhism it’s said that “being mindful of the present is the key to happiness.” And according to Matthew 6:34, Christ said, “So do not worry about tomorrow; for tomor-row will care for itself.”

4 proactiveadvisormagazine.com | June 4, 2015

favorable outcomes and seek each day to profit from them.

Buy-and-hold investing does not have much relationship to the here and now. You buy and wait. You invest and hope. Rather than seeking to profit from what’s happening in the present, buy-and-hold investing considers the present—the moment—irrelevant.

Yet, we know from experience that even if active strategies do not return more to investors over a given period, what happens each day is relevant to even the buy-and-hold investor. Every financial market goes through peaks and valleys. Investors get euphoric and they also get despondent.

2014, corrections will come and go, but there is no evidence that the bull market is over as yet. The primary trend remains positive and most indicators are still pointing to higher prices in the intermediate term.

While stocks are not undervalued, it is noteworthy that Price Earnings ratios (the gen-erally accepted measure of valuation) are about

continue on pg. 13

While active portfolio management draws upon history for the basis of each strategy, it is continually focused on what is happening now

Optimism

Excitement

Thrill

Euphoria

Anxiety

Denial

Fear

Depression

Panic

Capitulation

Desperation

Despondency

Hope

Relief

Optimism

When stock prices fall day after day, when the percentage of the daily decline moves from decimals to single and then to double digits, even the most ardent of buy-and-hold investors has had second thoughts. Many have abandoned the approach, and their investments, at the very worst time—near the bottom. They begin to live in the moment and it becomes very relevant.

When the market puts in a fast 5-10% decline after several months of bullish action, it’s easy to understand the fear. Fear comes from our past, but it can influence our actions in the present and our plans for the future. It clouds our judgment.

But we can use the power of computers to test active strategies in advance. And we can use them to track and carry out high-probability trades in the present. Fear does not enter the picture or cloud their view of the present.

History shows that when the market is in a strong uptrend, it does not pay to try to time the short-term trends. It is a time when taking some short-term pain can be profitable in the intermediate term. Just as we saw periodically in

The Romans had their “carpe diem,” as they taught their young to “Seize the Day.” Our own David Thoreau counseled, “Live in the present, launch yourself on every wave, find eternity in each moment.” His contemporary historian and author, Alice Morse Earle, wrote, “The clock is running. Make the most of today. Time waits for no man. Yesterday is history. Tomorrow is a mystery. Today is a gift. That’s why it is called The Present.”

Recent studies have confirmed that we are happiest not when our mind is wandering, con-templating the past or future, but rather when it is focused on the moment.

Matthew Killingsworth, a Robert Wood Foundation scholar and Ph.D. in psychology from Harvard, created a project to measure and quantify the causes of happiness in real time using a smartphone app (www.trackyourhap-piness.org). He has written, “We developed a smartphone technology to sample people’s on-going thoughts, feelings, and actions and found that people are thinking about what is not happening almost as often as they are thinking about what is, and found that doing so typically makes them unhappy.”

I must say that while I agree with all of this, I’ve lived my life very differently. I’ve tried to balance my life with a healthy regard for the lessons of the past, have always planned for the future, and tried to make the most of the opportunities of the present. Yet, as I watched midnight occur across the globe this year, I realized that one of my lifelong passions was indeed governed by the philosophy of living in the moment.

Active management is all about living in the moment. While it also draws upon history for the basis of each active strategy, it is continually focused on what is happening now. Active man-agement strategies cannot see into the future, they can only seek to realize what the present provides. They are based on the probability of

The cycle of market emotions

June 4, 2015 | proactiveadvisormagazine.com 5

Last 100 Years Last 50 Years Last 20 Years3.0

4.0

2.0

1.0

0.0

-1.0

-2.0

January

February

March

AprilMay June

July

August

September

October

November

December

Source: Bespoke Investment Group

Sell in June and go away?

hile it is hardly unknown to profes-sional analysts, many investors may be unaware that “Sell in May and Go

Away” might be more appropriately phrased as “Sell in June …”

According to MarketWatch, “No other month really comes close when it comes to the poor June performance of the S&P over the past decade. This is especially true for financials, which have led all sectors in negative perfor-mance during this time frame, with the SPDR Financial Select Sector ETF (XLF) losing on average about 3% during the month.”

May 2015 saw a fairly respectable market performance, overcoming many ongoing worry points—the S&P 500 and Dow Jones Industrial Average were both up about 1% and the NASDAQ 100 put in a gain over 2%. Despite this strength, markets continue to fret over sev-eral issues: a sluggish economy (with Q1 GDP coming in at negative year-over-year growth of -0.7%), interest rate uncertainty from the Federal Reserve, questions on corporate profitability, and the Greece situation—to mention just a few. Some technicians are keeping a close eye on the Dow Transports, which continue to show marked divergence and weakness in the face of the broad-er markets probing all-time highs.

The corporate profitability situation might be the most concerning. According to a Commerce Department release at the end of last week, ad-justed pretax corporate profits fell 5.9% in the

W

first quarter and declined for the second quarter in a row for the first time since the middle of the 2007-09 recession. These results have added to market fears about realistic company growth expectations, especially as corporate spending on capital projects is projected to hit a four-year low in 2015 (Thomson Reuters estimates).

Historic market performance in June varies depending on time frame, but no matter how you look at it, June has been one of the weaker-performing months of the year. In the accompanying chart, Bespoke Investment Group looks at the June perfor-mance of the DJIA over the last 20, 50, and 100 years, concluding, “June has seen gains the least often of any month over the last 20 years, down 55% of the time and declining on average -0.60%.”

How the market fares this June, says USA Today, “could hinge on whether a slew of in-coming economic data points show signs that an economic rebound is in the works. If the weakness doesn’t prove to be ‘transitory,’ it’s unlikely the market can stay at near record levels given that val-uations are on the pricey side relative to history.”

There is a bright spot from Bespoke’s analysis, however. In years when the broad market has been positive year-to-date and the month of May has been up, “the frequency of positive returns increases substantially” for the June-August period and for the rest of the year overall. In fact, in such years, the post-Labor Day period has been up roughly 75% of the time, averaging an increase of about 7%. Any early summer market weakness, if it does occur, might be seen as a potential buying opportunity.

AVERAGE MONTHLY % CHANGE FOR THE DJIA

7June 4, 2015 | proactiveadvisormagazine.com

TOPPING THE CHARTS

Proactive Advisor Magazine: Ryan, what is your overall view of managing client portfolios?

My philosophy is pretty straightforward. In today’s environment, information is almost instantaneous and there is more of it than ever. Knowing that, why wouldn’t you use this to your advantage?

RIGHTplaceRIGHTtime

By David WismerPhotography by Chris Cone

Applying third-party analytics and models to help clients

reach their goalsproactiveadvisormagazine.com | June 4, 20158

Ryan FinnellRetirement Tax Advisory GroupLexington, KY

Ryan Finnell is chief compliance officer at Retirement Tax Advisory Group based in Lexington, KY. He is also a Registered Representative with American Equity In-vestment.

Mr. Finnell has over 15 years of experience in the fi-nancial advisory field and says, “This is really some-thing I have known I wanted to do ever since high school. I have always had a passion for the world of finance and I enjoy helping average American families and small businesses reach their financial goals.”

A graduate of Kentucky State University with a B.A. in business administration, Mr. Finnell began his career in the banking industry and then had increasing re-sponsibility at several financial services firms. During his tenure in the industry, he has served as a trainer, supervisor, principal, and regional office manager. He joined Retirement Tax Advisory Group in 2012.

His wife Katherine is an attorney and the Finnells have two children: an 8-year-old son, Daniel, and a 4-year-old daughter, Sophie Grace. Mr. Finnell coaches his son’s baseball and basketball teams, and he and his wife are very active with youth programs at their church. The Finnells love to travel with their children and to share with them the exploration of new and different places.

Yes, markets do tend to mean-revert over very long periods, but that does not mean they will match up on a sequencing basis with the needs of any particular client. Because of these important issues, I believe an active manage-ment strategy has to be the way to go for clients.

Institutional investors have access to active management and risk mitigation strategies, so why shouldn’t my clients? Over the last several years, I have converted 99% of my book of business to active strategies and my clients have embraced it wholeheartedly. There is no way I would go back to the way things used to be done in terms of portfolio construction and management.

change, if their comfort level with an approach changes, or if market conditions change dra-matically, we can make changes.

What is your process with a new client?

Most of it is formulated through building a level of trust and mutual understanding. I still believe in spending a good amount of time in a basic sit-down across the table with pen and paper in hand. I will sit with a client for howev-er long it takes until I have a good understand-ing of what he or she wants to accomplish and what is truly important to them.

Only then will I put in place the more formal process of things like a risk profile or

continue on pg. 10

The old methods, like standardized asset class diversification and a buy-and-hold mentality, just don’t work that well. Today there is too much correlation in the markets to get true diversification that will offer the kind of risk management required for a portfolio. And, frankly, clients often do not have the patience and lengthy timeframe to wait for a buy-and-hold strategy to work.

How do you see your role?

The spirit of our mission statement is help-ing everyday people have access to the most sophisticated planning tools and investment strategies out there. I worked for several years within hierarchal financial company structures and learned a lot there, but the independent path better fits my personality and what I feel is important for clients.

My job is to help clients identify and select the appropriate financial planning and invest-ment paths that match well with their overall life objectives and their resources. Nobody’s goal is to make more money, even if that is what they say it is or think it is. Their actual goal is to retire comfortably, or to send their kids to college, or to help their family achieve a better lifestyle.

Navigating them through all of the different investment choices out there and finding the correct vehicles to help them accomplish their goals is critical. By working at an independent firm, I am not under pressure to put forward certain products or investment managers. I can perform the appropriate analysis with a client and then select from a wide array of alternatives. And we emphasize with clients that the process is not carved in stone: If their life circumstances

suitability analysis. That will lead to the con-sideration of different portfolio approaches and the money managers that might be appropriate for that specific client. We will then have an-other session to discuss the overall investment approach, to build shared expectations, and to see if we can reach a level of comfort with a portfolio direction.

Do you have a specific target market?

My specific focus right now is on working with employees of the University of Kentucky on their 403(b) plans. They have a very generous plan and a large employee group. Going back to what I said was our overall mission statement, we try to provide sophisticated investment tools to people who might have relatively modest ac-counts, but that money is extremely important to their future. It is a very receptive audience once we get to explain our approach.

Where do active money managers fit into your approach to the 403(b) segment?

First of all, you have to understand the dy-namics of this group we are working with. Let’s use healthcare workers at UK as an example. They are a very hard-working group, with not a

Client portfolios are being managed according to the strategies appropriate to their needs—and with an eye to current market conditions.

June 4, 2015 | proactiveadvisormagazine.com 9

Retirement Tax Advisory Group Inc. (RTAG) is a Kentucky-based Registered Investment Advisory firm. Securities offered through American Equity Investments, member FINRA and SIPC.

lot of time for anything much beyond their jobs and their families.

When I meet with some clients for the first time, it is not an exaggeration that they might hand me a stack of unopened statements from their 403(b) account—I am talking years of unopened statements in some cases. It just moti-vates me when I see individuals who are either so time-stressed, so unaware of their options, or so intimidated by financial matters that they are not taking charge of their personal financial situation.

The 403(b) account is essentially the non-profit version of a 401(k) plan. In most cases, plan providers allow us to arrange for discretionary management of client accounts, obviously with the client’s full understanding and authorization. Then we usually choose a third-party active manager who has an array of portfolio or strategy options, based on suitability profiles.

When clients are told that they will be getting world-class investment professionals

managing their money with an emphasis on risk management, there is almost universal excitement. I explain that their accounts are no longer just taking whatever the market throws at them; they are being managed according to the strategies appropriate to their needs with an eye to current market conditions.

The bottom line is that we have the analytics and models of these managers helping us to try and be in the right place at the right time, and more importantly, staying out of the wrong place during bad times. We may not always see the highest returns every year, but clients come to see the significant value of this active approach, especially when the markets are headed south.

We are pleased that our 403(b) clients are spreading the word about our services to their friends and associates. I think that reflects our commitment to service, our understanding of client needs, and the model of money manage-ment that we are using.

continued from pg. 9Ryan Finnell

10 proactiveadvisormagazine.com | June 4, 2015

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Which asset allocation model outperforms?A highly diversified portfolio model, allocated among seven asset classes, might offer investors a better balance of risk and reward.

The economist who realized how crazy we areMichael Lewis reviews the “funny and personal” memoir of Richard Thaler, one of the “disruptive” pioneers of behavioral economics.

Marketing matters to firms that want to growMaking business development a priority is critical for sustainable growth—even if advisory firm principals don’t see the immediate need.

L NKS WEEK

June 4, 2015 | proactiveadvisormagazine.com 11

Market “truths” subject to change

Rob Hanna is president of Hanna Capital Management LLC and founder of Quantifiable Edges. In 2012, he founded Overnight Edges, which in 2014 merged with Master the Gap to become InvestiQuant, where he serves as vice president of Research.  A Boston College alum, Mr. Hanna lives and works in Massachusetts. www.quantifiableedges.com, www.InvestiQuant.com

here are many tools traders can utilize to gain an edge and identify opportunities: fundamentals, technical indicators,

sentiment, and seasonality. All of them can provide value. And with regard to the tools, there are many “truths” traders learn about the markets as they go through their careers. But these truths are subject to change. Let’s use a seasonality example to demonstrate change in the market.

Starting in the late 1980s and early 1990s, the stock market began to show unusual strength on the first trading day of each month relative to other days. This was not noticed by many market observers for several years, but eventually became fairly common knowledge. The most common explanation was that 401(k) plans began to gain popularity around that time. And since many people got paid at the end of the month, there tended to be mass inflows into mutual funds right around the first of the month. Fund managers would put that money to work and the increased liquidity flow would often help elevate the market on the first.

But first-of-the-month strength has not persisted in recent years. The charts here show just how drastic the change in market character has been. These charts compare the “first of the month” versus “all other days.” They show SPX (S&P 500) points gained (or lost) for two time periods: 2000-10 and 2011-present.

The stock market generally struggled during the 2000-10 period. Looking at the chart you can see that while the S&P 500 spent much of the time enduring two large bear markets, the first-of-the-month chart looks pretty bullish for most of the duration. Nearly 420 points were gained on the first of the month, while all other days combined to lose over 630 points.

T

That changed drastically around the begin-ning of 2011 (see Figure 2). Over the last 4.5 years the market has been in a bull market for much of the time—gains have been exception-ally strong. But almost none of those gains were thanks to first-of-the-month action.

I have no good explanation for “why” the market has changed. Maybe the unusual strength was noticed by so many that the edge was traded out of the market. Regardless, strat-egies that looked to take advantage of it have likely faltered.

It will be interesting to see how this plays out in the months and years to come. If the former “strongest day” cannot manage gains in a bull market, how badly might it fare when

the next bear market arrives? Is it a permanent change or is it temporary? Will “first of the month” devolve into “worst of the month?” At this point, it is too soon to tell.

What is clear is that this particular market trend has not acted the same in recent years. Changes like this are not always obvious, but they are constant. For traders to be successful over the long term, they must identify changes that impact their strategies and adapt as market “truths” evolve.

The bad news is that adapting to change can be difficult. The good news is that changing market dynamics ensure there will always be more to learn, the market will always be inter-esting, and there will always be new opportuni-ties to explore.

Proactive Advisor Magazine presents weekly commentary provided by well-known market analysts, financial authors, investment newsletter publishers, and economists. The opinions expressed each week represent their personal perspectives and not necessarily those of the magazine.

Source: QuantifiableEdges.com

proactiveadvisormagazine.com | June 4, 201512

HOW I SEE IT

There can be no assurance that any investment product will achieve its investment objective(s). There are risks associated with investing, including the entire loss of principal invested. Investing involves market risk. The investment return and principal value of any investment product will fluctuate with changes in market conditions. Guggenheim Investments represents the investment management businesses of Guggenheim Partners, LLC. Securities offered through Guggenheim Funds Distributors, LLC. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim Partners, LLC. x0516 #17180

Explore how a tactical approach may help maintain diversification.

How diversified are investor portfolios? The answer is that, when diversification is needed most, portfolios may not be as diversified as investors assume. In this paper, we will explore the concept of portfolio diversification, the impact of evolving financial markets, and why we believe tactical management is playing an increasingly pivotal role.

Call 800.258.4332 or visit guggenheiminvestments.com/dilemma

The Diversi� cation DilemmaTactical Management and Today’s Evolving MarketsBy Douglas C. Mangini, J.D., Senior Managing Director

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continued from pg. 5

the same today as they were a year ago, even though the S&P 500 grew by over 10% in 2014. Why? Because earnings have been growing at similar double-digit rates, keeping P/E multiples in check. As the chart indicates, the S&P 500’s trailing 12-month P/E ratio is only slightly higher than the average for the last 24 years.

Living in the present may promote happiness, but it does not guarantee it in the short term. Responsiveness is an advantage that active man-agement has over the buy-and-hold approach in most markets, but when a bull market is identi-fied, it usually pays to give the primary trend the benefit of the doubt until proven otherwise.

Investors utilizing active strategies for the first time have got to shrug off the buy-and-hold mindset. I know you have seen your buy-and-hold investments in the past rise to new heights and then be dashed when a major bear market arrives on the scene. And in the past you have had to simply hold and hope for a recovery.

But as active investors know, each strategy has high-probability trading parameters that can move your investments to safety when the

historically tested sell parameters are met, rather than when fear is at a maximum. It’s all about living in the present and not fearing the actions of the past or worrying about the future.

Guide to investing

S&P trailing 12-month P/E ratio: 1990-2015 (YTD)

Source: Bespoke Investment Group/Bloomberg

Jerry C. Wagner is founder and president of Flexible Plan Investments Ltd. Formerly a tax and securities attorney, Mr. Wagner recognized early on that technology and hedge fund techniques could be applied to help individu-als successfully invest while managing their downside risk. After spending time pioneering new techniques in market analysis, designing quantitative methodologies, and managing investment portfolios, Mr. Wagner founded Flexible Plan Investments in February 1981. www.flexibleplan.com

13June 4, 2015 | proactiveadvisormagazine.com

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Contactinfo@proactiveadvisormagazine.com

Copyright 2015© Dynamic Performance Publishing Inc. All rights reserved. Reproduction of printed form, whole or in part, without permission is prohibited.

EditorDavid Wismer

Associate EditorElizabeth Whitley

Contributing WritersRob Hanna

Jerry WagnerDavid Wismer

Graphic DesignerTravis Bramble

Contributing PhotographerChris Cone

June 4, 2015Volume 6 | Issue 9

Proactive Advisor Magazine is dedicated to promoting and educating on active investment management. Distribution reaches a wide audience of financial professionals who advise clients on investments and portfolio management. Each issue features an experienced investment advisor who offers insights on active money management, client service, and investment approaches. Additionally, Proactive Advisor Magazine offers an up-close look at a topic with current relevance to the field of active management.

The opinions and forecasts expressed herein are those of the author and may not actually come to pass. Any opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. The analysis and information in this edition and on our website is for informational purposes only. No part of the material presented in this edition or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any portfolio constitutes a solicitation to purchase or sell securities or any investment program.

Client appreciation: A sound investment

Jim BowenIndialantic, FL

LPL FinancialPresident, JD Bowen Financial Group

Jim Bowen is a Registered Representative with and Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA & SIPC. Investing involves risk, including potential loss of principal. No strategy ensures success or protects against a loss. JD Bowen Financial Group is a separate unaffiliated entity from LPL Financial.

about all of our interests, our families, and our lives. The topic of investments or finan-cial planning does not come up, unless the prospect wants to bring it up. But they can make a decision whether they are comfort-able talking to me and can relate to me as a person. If they then want to take the next step, it is up to them, totally on their own timetable.

We have found these types of events rep-resent the best way to spend our marketing money. They not only strengthen current client relationships, they open the door in a positive way for bringing in new clients.

ur firm has tried a number of ways to solicit new prospects: direct mail, seminars, appearing on local radio,

and other tactics. Each has its benefits, but the bottom line always comes back to how cost-effective or time-effective a marketing program really is.

We have found that we get the best return on our investment through referrals directly from current clients. We are located on the Space Coast in Florida, which has a fairly high concentration of technology and aerospace companies. A number of our clients have come from these industries and a good percentage of those are engineers who are close to retirement or are already retired.

They have had successful careers but most do not qualify as high-net-worth. They are concerned about retirement income. We have built our practice around providing a high level of service and specializing in income-producing investments and preser-vation of principal. It seems like a natural extension of our message to use our current client base to help us reach out to new prospects.

We do not do that in an overt sales-pitch way, but keep it low-key, and hopefully fun, through a number of events that are directed to clients. We host a semi-annual market review, which might include something like an ice cream social on a hot summer day. And in February, we have a Valentine’s luncheon specifically for our female clients. Lunch-and-learn informal discussions are popular on a current topic of interest, like preventing identity theft or enhancing com-puter security.

One technique that has worked particu-larly well for us is to arrange a client lunch and ask the client to bring a friend or rela-tive. We will have an informal conversation

O

14

TIPS & TOOLS

Active ManagementThere is a great deal of confusion surrounding the term “active

management” created by the business press. When one reads a headline in any given year that “active managers” are underperforming or overper-forming their benchmarks, this typically is referring to “active” managers of a mutual fund—who are being measured against a specific index or competing funds within that style.

Within the field of true active portfolio management, this narrow and misleading definition really has little significance.

Active investment management is not about exceeding a specific benchmark or “beating the market.” Active management seeks favorable risk-adjusted returns in any market environment, generally employing sophisticated algorithms and models to capture gains and protect against losses in a wide variety of sectors, asset classes, and geographies.

It is about controlling risk in the markets, finding new ways to dynamically diversify, and smoothing out the long-term volatility typically found in any asset class. Active managers tend to rely on quantitative approaches for asset allocation, exposure to the market, and adjustments to portfolios based on current market conditions. When it comes to evaluating returns, they generally will not compare to the S&P 500 or global total market indexes, but are far more interested in risk-adjusted returns and in meeting their portfolio objectives.

In theory, it is fundamentally about a long-term approach to portfolio management that is diametrically opposed to “buy-and-hold.”

Fee-based revenues remain strong among advisors

101

DynamicStrategic

Diversification

Tools Models

Strategies

5 reasons to consider active management

Buy-and-hold is dead(ly)—While bull market runs are impressive, history shows it is not a matter of “if” but more a matter of

“when” for the next bear market. Investment expert Kenneth Solow sums it up: “Patiently waiting for stocks to deliver historical average returns does not rise to the level of an investment strategy.”

Bear market math is daunting—It takes longer than most in-vestors think to recover from bear markets—a gain of 50% is

needed to overcome a 33% portfolio loss.

Risk first: Always—As one prominent active manager has said, “No one would ever jump into a car without brakes, so why

would investors even consider having an investment strategy that did not have a strong defense?”

Active management aligns with investor psychology—Behavioral finance studies have documented the tendencies of investors to

operate on the destructive principles of “fear and greed.” Disciplined active management takes emotion out of the equation.

Does “set it and forget it” really make sense?—For retirees or those approaching it, the “sequence of returns” dilemma can

have a devastating effect on future income needs. Active management offers a prudent path to achieving the twin goals of asset preservation and compounded capital growth.

Resources for AdvisorsWebsitesProactive Advisor Magazine: Active investment management’s weekly magazine, providing advisor perspectives, topical issues in active management and commentary on strategy and tactical tools. www.proactiveadvisormagazine.com

National Association of Active Investment Managers (NAAIM): Peer-to-peer networking in the active investment management community, providing best practices among successful advisors and advisory firms. www.naaim.org

Market Technicians Association (MTA): Leading national organization of investment analysts, stock market analysis professionals and certified market technicians. www.mta.org

Advisor Perspectives: Audience-generated and vendor-neutral forum where fund companies, wealth managers and financial advisors share their views on the market, the economy and investment strategy. www.advisorperspectives.com

Whitepapers“Bucket Investing with Dynamic Risk-Managed Portfolios,” Flexible Plan Investmentsgoto.flexibleplan.com/download/whitepaper-bucket-investing.pdf

“Comparison of ETFs and Mutual Funds—The True Cost of Investing,” Guggenheim Investments guggenheiminvestments.com/rydex

“Understanding Leveraged Exchange Traded Funds,” Direxion Investmentswww.direxioninvestments.com

“Small Accounts, Big Opportunities,” Trust Company of America www.trustamerica.com/resources

“Why Gold? Seven Enduring Reasons,” Flexible Plan Investments goldbullionstrategyfund.com

“The State of Retail Wealth Management, 5th Annual Report,” PriceMetrixwww.pricemetrix.com

2012 2013 2014

Fee-Based Assets (% of Total Assets) 28% 31% 35%

Fee-Based Revenue (% of Total Revenue) 45% 47% 53%

Average Fee Accounts per Advisor ($000s) $258 $293 $293

Average Assets of New Client HHs ($000s) $475 $477 $538

Source: PriceMetrix Insights – The State of Retail Wealth Management 2014 – 5th Annual Report (Aggregated data representing 7 million retail investors and over $3.5 trillion in investment assets.)