Financial & Investment Planning

WEALTH ADVISORY | OUTSOURCING | AUDIT, TAX, AND CONSULTINGInvestment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor

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Financial & Investment Planning

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Create Opportunities

Intro to CliftonLarsonAllen Wealth Advisors, LLC– Your Speaker

Adam Bourk, CFP®Senior Wealth [email protected]

ProfileAdam is a Senior Wealth Advisor with more than 18 years of experience in the financial services industry. He works with individuals and families to provide financial planning, investment guidance and insurance services. He also works with CLA’s Institutional Investment team to assist organizations with investing reserves, strategic planning, developing investment policy statements and designing and implementing retirement plans.

Education/Professional Involvement• Bachelor of Science in Business Administration, Bryant University, Smithfield, RI• Certified Financial Planner™• Financial Industry Regulatory Authority (FINRA) Series 66 and 63• Life, Health and Annuities licenses

mailto:[email protected]

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Learning Objectives

• At the end of this session, you will be able to:– Explain what financial planning is and why it is important– Understand the importance of investing – Discuss key investment principles– Identify specific drivers of investment returns

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Goals Based Financial PlanningBuilding Your Retirement Roadmap

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Goals Based Planning

Things That

Matter

Things You Can

Control

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Why is Financial Planning Important?New Home Are you ready to trade-up or justwant more space? Maybe it’s timefor that vacation home you’vealways wanted. Make it a Goal andmake it come true.

Major Purchase You’ve always wanted a ______? A sail boat? A motor home? A hot tub? A snowmobile? Whatever it is, go for it. Fill in the blank, and make it a Goal.

Provide Care for Someone If you need money to take careof someone you love (e.g., your mother in a nursing home, or a childwith special needs), make sure youhave a Goal to pay for it.

Leave Bequest Do you want to leave something forthe kids, your church or alma mater?Create bequests for the money you’d like to leave at your death to family, friends, charities and institutions.

Setting goals helps drive conversations that may not have been considered. The impact of retirement is not only financial but mental and emotional. Consider what will give you purpose in your next chapter.

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Your Financial Health: Organizing Your Thoughts

Distribution: Retirement Income From Savings and Investments

Accumulation: Regular Savings, Emergency Fund, Education and Retirement Funds, Investments (Stocks, Bonds, Mutual Funds, ETFs)

Protection: Create a Will, Life Insurance, Health Insurance, Disability Insurance, Debt Reduction

Foundation: Establish your goals, objectives, and values

What can you do now to better your financial future?

Do you have sufficient insurance coverage?

How are you managing your expenses and cash flow?

Are your funds invested in such a way to outpace inflation?

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Know Your Flow

Know what you spend and don’t forget to plan for unexpected expenses!

It helps to have a tool to keep you organized and on track.

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Identifying Cash Flow Needs

1. Are you able to cover your needs from fixed income sources?2. What will you need to accumulate in investment assets in order to generate

the cash flow to cover your wants and wishes?3. Based on a 4% withdrawal rate, you would need to have $871,000 in

investable assets to cover $34,860 worth of expenses in year one.

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Cash Flow Planning & The Impact of Inflation

Assumes 3% annual inflation and 3% annual increase in Social Security Income with a pension benefit that stays constant.

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Implementing Your Plan

• Identify the factors that will improve your financial situation the most and prioritize those items.

• Build a timeline and identify who is responsible for implementation of each step.

• Review your plan regularly, make changes where necessary and track progress.

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Exercise: Identify Your GoalsShort-Term

(1-3 yrs.)Intermediate

(3-7 yrs.)Long-Term

(7+ yrs.)

Needs

Wants

Wishes

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Invest with FocusStay on Track

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Why Invest?

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Your Money Today Will Likely Buy Less Tomorrow

In US dollars.Source for 1916 and 1966: Historical Statistics of the United States, Colonial Times to 1970/US Department of Commerce. Source for 2017: US Department of Labor, Bureau of Labor Statistics, Economic Statistics, Consumer Price Index –US City Average Price Data.

1916 1966 2017

$0.09 = Quart of milk $0.09 = 1 Small Glass of milk

$0.09 = 7 Tablespoons of milk

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Investing means taking risks.

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Notinvesting means taking risks,

too.

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The Capital Markets Have Rewarded Long-Term Investors

• In US dollars. • US Small Cap Index is the CRSP 6–10 Index; US Large Cap Index is the S&P 500 Index; Long-Term Government Bonds Index is 20-year US government bonds; Treasury Bills are One-Month US Treasury bills; Inflation is the Consumer Price Index. 1-Month Treasury Bills Index is the IA SBBI US 30 Day TBill TR

USD. Treasury Index data sourced from Ibbotson Associates, via Morningstar Direct. CRSP data provided by the Center for Research in Security Prices, S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Bonds, T-bills, and inflation data provided by Morningstar. • Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results

Monthly growth of wealth ($1), 1926–2017

$0

$1

$10

$100

$1,000

$10,000

$100,000

1926 1936 1946 1956 1966 1976 1986 1996 2006 2016

$22,985 US Small Cap Index

$7,347 US Large Cap Index

$143 Long-TermGovernment Bonds Index

$21 Treasury Bills$14 Inflation (CPI)

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How DoMany People Invest?

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They Try to Predict the Future

“I have a proven system for picking winning stocks.”

“The market is primed for a retreat.”

“That sector will continue advancing through next year.”

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They Act on Impulse

“I can’t take this bear market—I’m getting out!”

“Everyone’s making money—I want a piece of the action.”

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They Bet their Savings on Tips and Hunches

“I heard it on the news. I’d better sell!”

“I got a hot tip from my neighbor. It’s a slam dunk.”

“My friend works in the industry—he’s got the inside scoop.”

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They Are Swayed by the Media

“How to Reach $1 Million”Money, 08/2012

“The Death of Equities”Business Week, 08/13/1979

“The Crash of ’98Can the US Economy Hold Up?”FORTUNE, 09/28/1998

“Retire Rich – A Simple Plan to Have it All”FORTUNE, 08/16/1999

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Key Principles of InvestingRules of the Road

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Develop an Investment Plan

Picking the Fastest Lane Isa Stressful Guessing Game

Likewise, trying to anticipate the movement of the market adds anxiety and undue risk.

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Outsmarting other investors is tough

• In US dollars. The sample includes funds at the beginning of the 15-year periods ending December 31, 2017. Survivors are funds that had returns for every month in the sample period. Winners are funds that survived and outperformed their respective Morningstar category benchmark over the period. US-domiciled open-end mutual fund data is from Morningstar and Center for Research in Security Prices (CRSP) from the University of Chicago. See Data Appendix for more information. Past performance is no guarantee of future results.

Few mutual funds survive and beat their benchmarks

15-year performance period ending December 31, 2017

EQUITY FUNDS

FIXED INCOME FUNDS

2,828

51%

14%

1,599

57%

13%

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Together, We Know More Than We Do Alone

Illustration based on voluntary participation at client event hosted by a financial advisor, August 2013. Results audited by advisor.

Participants were asked to estimate the number of jelly beans in a jar.

Range: 409-5,365

Average: 1,653

Actual: 1,670

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Let the Market Work for You

When you try to outwit the market, you compete with the collective knowledge of all investors.

By harnessing the market’s power, you put their knowledge to work in your portfolio.

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There’s a World of Opportunity in Equities

• In US dollars. Market cap data is free-float adjusted and meets minimum liquidity and listing requirements. Dimensional makes case-by-case determinations about the suitability of investing in each emerging market, making considerations that include local market accessibility, government stability, and property rights before making investments. China market capitalization excludes A-shares, which are generally only available to mainland China investors. Many nations not displayed. Totals may not equal 100% due to rounding. For educational purposes; should not be used as investment advice. Data provided by Bloomberg.

Percent of world market capitalization as of December 31, 2017

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Diversification May Prevent You from Missing Opportunity

• The “All stocks” portfolio consists of all eligible stocks in all eligible Developed and Emerging Markets. The portfolio for January to December of year t includes stocks whose free float market capitalization as of December t-1 is greater than $10mln in developed markets and $50mln in emerging markets and with non-missing price returns for December of year t-1. Annual portfolio returns are value-weighted averages of the annual returns on the included securities. The portfolios “Excluding the top 10%” and “Excluding the top 25%” are constructed similarly. Individual security data are obtained from Bloomberg, London Share Price Database, and Centre for Research in Finance. The eligible countries are: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Colombia, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hong Kong, Hungary, India, Indonesia, Ireland, Israel, Italy, Japan, Republic of Korea, Malaysia, Mexico, Netherlands, New Zealand, Norway, Peru, Philippines, Poland, Portugal, Russia, Singapore, South Africa, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, and the United States. Diversification does not eliminate the risk of market loss. Past performance is no guarantee of future results.

Compound average annual returns: 1994-2017

Attempting to identify that group of future winners is a guessing game.

Diversification improves the odds of holding the best performers.

8.0%

3.6%

-4.4%

All stocks Excluding the top 10%

of performerseach year Excluding the

top 25%of performers

each year

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Diversification Helps Take the Guesswork out of Investing

• In US dollars. Source: S&P and Dow Jones data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Dimensional Index data compiled by Dimensional. MSCI data © 2018, all rights reserved. ICE BofAML index data copyright 2018 ICE Data Indices, LLC. Bloomberg Barclays data provided by Bloomberg. FTSE fixed income indices © 2018 FTSE Fixed Income LLC. All rights reserved. See "Index Descriptions" in the appendix for descriptions of Dimensional's index data. Diversification does not eliminate the risk of market loss. Past performance is not a guarantee of future results. Indices are not available for direct investment. Their performance does not reflect expenses associated with the management of an actual portfolio.

Annual returns (%): 2003–2017

You never know which markets will outperform from year to year.

By holding a globally diversified portfolio, investors are positioned to capture returns wherever they occur.

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 201761.6 34.2 34.5 36.0 39.8 8.8 79.0 28.1 9.4 18.7 38.8 32.0 5.3 21.3 37.8

56.3 33.2 25.2 32.6 8.2 6.6 49.2 26.9 3.4 18.6 32.4 13.7 4.5 12.0 32.0

47.3 26.0 13.8 24.8 6.3 4.7 28.5 22.9 2.3 17.1 27.3 4.9 1.4 11.6 21.8

36.2 18.3 4.9 18.4 5.9 -33.8 27.2 19.2 2.1 16.3 1.2 1.9 1.0 6.7 14.6

28.7 10.9 4.6 15.8 5.5 -37.0 26.5 15.1 0.6 16.0 0.6 1.2 0.9 5.7 3.8

2.0 2.7 3.1 4.3 5.3 -39.2 2.3 3.7 -4.2 2.1 0.3 0.2 0.2 1.5 1.1

1.9 1.3 2.4 4.1 -1.6 -47.0 0.8 2.0 -13.6 0.9 -0.1 -1.8 -4.4 1.0 0.7

1.5 0.8 1.3 3.8 -17.6 -53.2 0.2 0.8 -18.2 0.2 -2.3 -5.9 -14.6 0.8 0.6

S&P 500 Index

Russell 2000 Index

Dow Jones US Select REIT Index

Dimensional International Small Cap index

MSCI Emerging Markets Index (gross div.)

ICE BofAML One-Year US Treasury Note Index

Bloomberg Barclays US Treasury Bond Index 1-5 Years

FTSE World Government Bond Index 1-5 Years (hedged to USD)

LowerReturn

HigherReturn

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Manage Your Emotions

People may struggle to separate their emotions from their investment decisions.

Following a reactive cycle of excessive optimism and fear may lead to poor decisions at the worst times.

NervousnessOptimism

Fear

Elation

Optimism

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In US dollars. For illustrative purposes. The missed best day(s) examples assume that the hypothetical portfolio fully divested its holdings at the end of the day before the missed best day(s), held cash for the missed best day(s), and reinvested the entire portfolio in the S&P 500 at the end of the missed best day(s). Annualized returns for the missed best day(s) were calculated by substituting actual returns for the missed best day(s) with zero. S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. “One-Month US T- Bills” is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Data is calculated off rounded daily index values. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Reacting Can Hurt PerformancePerformance of the S&P 500 Index, 1990–2017

Missing only a few days of strong returns can drastically impact overall performance.

TotalPeriod

Missed 1 Best

Day

Missed 5 Best Single

Days

Missed 15 Best

Single Days

Missed 25 Best

Single Days

One-Month

US T-Bills

Annualized Compound Return 9.81% 9.38% 8.21% 6.18% 4.53% 2.77%

$13,739$12,313

$9,114

$5,365

$3,455$2,150

Gro

wth

of $

1,00

0

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Focus on What You Can Control

Diversification neither ensures a profit nor guarantees against loss in a declining market.

No one can reliably forecast the market’s direction or predict which stock or investment manager will outperform.

A financial advisor can help you create a plan and focus on actions that add value.

Creating an investment plan to fit

your needs and risk tolerance

Structuring a portfolio around dimensions of returns

Diversifying broadly

Reducing expenses and turnover

Minimizing taxes

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Pursuing a Better Investment Experience

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Dimensions of Expected Returns

1. Relative price as measured by the price-to-book ratio; value stocks are those with lower price-to-book ratios. 2. Profitability is a measure of current profitability, based on information from individual companies’ income statements.

To be considered a dimension of expected return, a premium must be:• Sensible• Persistent• Pervasive• Robust• Cost-effective

Expected returns are driven by prices investors pay and cash flows they expect to receive

DIMENSIONS POINT TO SYSTEMATIC DIFFERENCES IN EXPECTED RETURNS

EQU

ITIE

S

Company Size Small cap premium—small vs. large companies

Market Equity premium—stocks vs. bonds

Relative Price1Value premium—value vs. growth companies

Profitability2Profitability premium—high vs. low profitability companies

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Yearly Observations of Premiums

• Information provided by Dimensional Fund Advisors LP.• In US dollars. The equity premium is the Fama/French Total US Market Index minus one-month US Treasury Bills. Fama/French indices provided by Ken French. The information shown here is derived from such indices. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson

Associates via Morningstar Direct. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP.• Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Market minus one-month Treasury bills: US Markets1928–2017

Arithmetic Average of Annual Premiums

Within 2% of Average

Premiums within Range

8.27%

1928 1938 1948 1958 1968 1978 1988 1998 2008 2017-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Prem

ium

s

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. The size premium is the Dimensional US Small Cap Index minus the S&P 500 Index. Dimensional indices use CRSP and Compustat data. S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. The information shown here is derived from such indices.

Index descriptions available upon request. • Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Small cap minus large cap: US Markets1928–2017




4.08%

1928 1938 1948 1958 1968 1978 1988 1998 2008 2017-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%Pr

emiu

ms

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. The relative price premium is the Fama/French US Value Research Index minus the Fama/French US Growth Research Index. Fama/French indices provided by Ken French. The information shown here is derived from such indices. Index descriptions available upon request. Eugene Fama and Ken

French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP.• Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Value minus growth: US Markets1928–2017




4.92%

1928 1938 1948 1958 1968 1978 1988 1998 2008 2017-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%Pr

emiu

ms

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. The profitability premium is the Dimensional US High Profitability Index minus the Dimensional US Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. Dimensional indices use CRSP and Compustat data.

The information shown here is derived from such indices. Index descriptions available upon request. • Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

High profitability minus low profitability: US Markets1964–2017




3.57%

1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2017-50%-40%-30%-20%-10%

0%10%20%30%40%50%60%70%80%

Prem

ium

s

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Historical Observations of Five-Year Premiums

• Information provided by Dimensional Fund Advisors LP.• In US dollars. Five-year rolling equity premium is computed as the five-year annualized compound return on the Fama/French Total US Market Index minus the five-year annualized compound return of the one-month US Treasury Bill. Five-year rolling size premium is computed as the five-year annualized

compound return on the Dimensional US Small Cap Index minus the five-year annualized compound return on the S&P 500 Index. Five-year rolling relative price premium is computed as the five-year annualized compound return on the Fama/French US Value Research Index minus the five-year annualized compound return on the Fama/French US Growth Research Index. The five-year rolling profitability premium is computed as the five-year annualized compound return on the Dimensional US High Profitability Index minus the five-year annualized compound return on the Dimensional US Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Dimensional indices use CRSP and Compustat data. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: US Markets

MAR

KET

m

inus

BIL

LSSM

ALL

CAP

min

us L

ARG

E C

APVA

LUE

min

us G

RO

WTH

HIG

H P

RO

F m

inus

LOW

PR

OF

1932 1940 1950 1960 1970 1980 1990 2000 2010 2017-20%-10%

0%10%20%30%

Prem

ium

s

1932 1940 1950 1960 1970 1980 1990 2000 2010 2017-20%-10%

0%10%20%30%

Prem

ium

s

1932 1940 1950 1960 1970 1980 1990 2000 2010 2017-20%-10%

0%10%20%30%

Prem

ium

s

1932 1940 1950 1960 1970 1980 1990 2000 2010 2017-20%-10%

0%10%20%30%

Prem

ium

s

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. Five-year rolling equity premium is computed as the five-year annualized compound return on the MSCI World ex USA Index (gross dividends) minus the five-year annualized compound return of the one-month US Treasury Bill. Five-year rolling size premium is computed as the five-year annualized

compound return on the Dimensional International Small Cap Index minus the five-year annualized compound return on the MSCI World ex USA Index (gross dividends). Five-year rolling relative price premium is computed as the five-year annualized compound return on the Fama/French International Value Index minus the five-year annualized compound return on the Fama/French International Growth Index. The five-year rolling profitability premium is computed as the five-year annualized compound return on the Dimensional International High Profitability Index minus the five-year annualized compound return on the Dimensional International Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. Dimensional indices use Bloomberg data. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. MSCI data copyright MSCI 2018, all rights reserved. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: Developed ex US Markets

MAR

KET

m

inus

BIL

LSSM

ALL

CAP

min

us L

ARG

E C

APVA

LUE

min

us G

RO

WTH

HIG

H P

RO

F m

inus

LOW

PR

OF

1979 1985 1990 1995 2000 2005 2010 2015 2017-10%

0%10%20%30%

Prem

ium

s

1979 1985 1990 1995 2000 2005 2010 2015 2017-10%

0%10%20%30%

Prem

ium

s

1979 1985 1990 1995 2000 2005 2010 2015 2017-10%

0%10%20%30%

Prem

ium

s

1979 1985 1990 1995 2000 2005 2010 2015 2017-10%

0%10%20%30%

Prem

ium

s

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. Five-year rolling equity premium is computed as the five-year annualized compound return on the Fama/French Emerging Markets Index minus the five-year annualized compound return of one-month US Treasury Bills. Five-year rolling size premium is computed as the five-year annualized

compound return on the Dimensional Emerging Markets Small Cap Index minus the five-year annualized compound return on the MSCI Emerging Markets Index (gross dividends). Five-year rolling relative price premium is computed as the five-year annualized compound return on the Fama/French Emerging Markets Value Index minus the five-year annualized compound return on the Fama/French Emerging Markets Growth Index. The five-year rolling profitability premium is computed as the five-year annualized compound return on the Dimensional Emerging Markets High Profitability Index minus the five-year annualized compound return on the Dimensional Emerging Markets Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. Dimensional indices use Bloomberg data. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. MSCI data copyright MSCI 2018, all rights reserved. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: Emerging Markets

MAR

KET

m

inus

BIL

LSSM

ALL

CAP

min

us L

ARG

E C

APVA

LUE

min

us G

RO

WTH

HIG

H P

RO

F m

inus

LOW

PR

OF

-20%0%

20%40%

Prem

ium

s

-20%0%

20%40%

Prem

ium

s

-20%0%

20%40%

Prem

ium

s

-20%0%

20%40%

Prem

ium

s

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Historical Observations of 10-Year Premiums

• Information provided by Dimensional Fund Advisors LP.• In US dollars. 10-year rolling equity premium is computed as the 10-year annualized compound return on the Fama/French Total US Market Index minus the 10-year annualized compound return of the one-month US Treasury Bill. 10-year rolling size premium is computed as the 10-year annualized compound

return on the Dimensional US Small Cap Index minus the 10-year annualized compound return on the S&P 500 Index. 10-year rolling relative price premium is computed as the 10-year annualized compound return on the Fama/French US Value Research Index minus the 10-year annualized compound return on the Fama/French US Growth Research Index. The 10-year rolling profitability premium is computed as the 10-year annualized compound return on the Dimensional US High Profitability Index minus the 10-year annualized compound return on the Dimensional US Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Dimensional indices use CRSP and Compustat data. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: US Markets

MAR

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1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017-6%0%6%

12%18%

Prem

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1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017-6%0%6%

12%18%

Prem

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1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017-6%0%6%

12%18%

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1937 1942 1947 1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007 2012 2017-6%0%6%

12%18%

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. 10-year rolling equity premium is computed as the 10-year annualized compound return on the MSCI World ex USA Index (gross dividends) minus the 10-year annualized compound return of the one-month US Treasury Bill. 10-year rolling size premium is computed as the 10-year annualized

compound return on the Dimensional International Small Cap Index minus the 10-year annualized compound return on the MSCI World ex USA Index (gross dividends). 10-year rolling relative price premium is computed as the 10-year annualized compound return on the Fama/French International Value Index minus the 10-year annualized compound return on the Fama/French International Growth Index. The 10-year rolling profitability premium is computed as the 10-year annualized compound return on the Dimensional International High Profitability Index minus the 10-year annualized compound return on the Dimensional International Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. Dimensional indices use Bloomberg data. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. MSCI data copyright MSCI 2018, all rights reserved. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: Developed ex US Markets

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1984 1990 1995 2000 2005 2010 2015 2017-5%0%5%

10%15%

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1984 1990 1995 2000 2005 2010 2015 2017-5%0%5%

10%15%

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1984 1990 1995 2000 2005 2010 2015 2017-5%0%5%

10%15%

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1984 1990 1995 2000 2005 2010 2015 2017-5%0%5%

10%15%

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• Information provided by Dimensional Fund Advisors LP.• In US dollars. 10-year rolling equity premium is computed as the 10-year annualized compound return on the Fama/French Emerging Markets Index minus the 10-year annualized compound return of one-month US Treasury Bills. 10-year rolling size premium is computed as the 10-year annualized compound

return on the Dimensional Emerging Markets Small Cap Index minus the 10-year annualized compound return on the MSCI Emerging Markets Index (gross dividends). 10-year rolling relative price premium is computed as the 10-year annualized compound return on the Fama/French Emerging Markets Value Index minus the 10-year annualized compound return on the Fama/French Emerging Markets Growth Index. The 10-year rolling profitability premium is computed as the 10-year annualized compound return on the Dimensional Emerging Markets High Profitability Index minus the 10-year annualized compound return on the Dimensional Emerging Markets Low Profitability Index. Profitability is measured as operating income before depreciation and amortization minus interest expense, scaled by book. Dimensional indices use Bloomberg data. One-Month Treasury Bills is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Fama/French indices provided by Ken French. MSCI data copyright MSCI 2018, all rights reserved. Index descriptions available upon request. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results.

Equity, size, relative price, and profitability: Emerging Markets

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-5%0%5%

10%15%20%

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-5%0%5%

10%15%20%

Prem

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-5%0%5%

10%15%20%

Prem

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-5%0%5%

10%15%20%

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Historical Performance of Premiums over Rolling Periods

• In US dollars. • Information provided by Dimensional Fund Advisors LP.• 1. Profitability is a measure of current profitability, based on information from individual companies’ income statements, scaled by book. • Based on rolling annualized returns using monthly data. Rolling multiyear periods overlap and are not independent. “One-Month Treasury Bills” is the IA SBBI US 30 Day TBill TR USD, provided by Ibbotson Associates via Morningstar Direct. Dimensional Index data compiled by Dimensional. Fama/French data

provided by Fama/French. S&P data copyright 2018 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Indices are not available for direct investment. Past performance is not a guarantee of future results. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Index descriptions available upon request.

US Markets

Small beat large 96% of the time.

MARKET beat T-BILLSOverlapping Periods: July 1926–December 2017

VALUE beat GROWTHOverlapping Periods: July 1926–December 2017

SMALL beat LARGEOverlapping Periods: June 1927–December 2017

HIGH PROFITABILITY1 beat LOW PROFITABILITYOverlapping Periods: July 1963–December 2017

Market is Fama/French Total US Market Research Index. T-Bills is One-Month US Treasury Bills. There are 979 overlapping 10-year periods, 1,039 overlapping 5-year periods,and 1,087 overlapping 1-year periods.

Value is Fama/French US Value Research Index. Growth is Fama/French US Growth Research Index. There are 979 overlapping 10-year periods, 1,039 overlapping 5-year periods,and 1,087 overlapping 1-year periods.

Small is Dimensional US Small Cap Index. Large is S&P 500 Index. There are 968 overlapping 10-year periods, 1,028 overlapping 5-year periods, and 1,076 overlapping 1-year periods.

High is Dimensional US High Profitability Index. Low is Dimensional US Low Profitability Index. There are 535 overlapping 10-year periods, 595 overlapping 5-year periods, and 643 overlapping 1-year periods.

70% of the time

78% of the time

85% of the time

1-Year

5-Year

10-Year

61% of the time

75% of the time

84% of the time

1-Year

5-Year

10-Year

57% of the time

64% of the time

72% of the time

1-Year

5-Year

10-Year

67% of the time

89% of the time

100% of the time

1-Year

5-Year

10-Year

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provided by Fama/French. MSCI data copyright MSCI 2018, all rights reserved. Indices are not available for direct investment. Past performance is not a guarantee of future results. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Index descriptions available upon request.

Developed ex US Markets


MARKET beat T-BILLSOverlapping Periods: January 1970–December 2017

VALUE beat GROWTHOverlapping Periods: January 1975–December 2017

SMALL beat LARGEOverlapping Periods: January 1970–December 2017

HIGH PROFITABILITY1 beat LOW PROFITABILITYOverlapping Periods: January 1990–December 2017

Market is MSCI World ex USA Index (gross div.). T-Bills is One-Month US Treasury Bills. There are 457 overlapping 10-year periods, 517 overlapping 5-year periods, and 565 overlapping 1-year periods.

Value is Fama/French International Value Index. Growth is Fama/French International Growth Index. There are 397 overlapping 10-year periods, 457 overlapping 5-year periods, and 505 overlapping 1-year periods.

Small is Dimensional International Small Cap Index.Large is MSCI World ex USA Index (gross div.). There are 457 overlapping 10-year periods, 517 overlapping 5-year periods, and 564 overlapping 1-year periods.

High is Dimensional International High Profitability Index. Low is Dimensional International Low Profitability Index. There are 217 overlapping 10-year periods, 277 overlapping 5-year periods, and 325 overlapping 1-year periods.

64% of the time

68% of the time

88% of the time

1-Year

5-Year

10-Year

69% of the time

89% of the time

95% of the time

1-Year

5-Year

10-Year

65% of the time

82% of the time

87% of the time

1-Year

5-Year

10-Year

79% of the time

87% of the time

100% of the time

1-Year

5-Year

10-Year

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provided by Fama/French. MSCI data copyright MSCI 2018, all rights reserved. Indices are not available for direct investment. Past performance is not a guarantee of future results. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP. Index descriptions available upon request.

Emerging Markets


MARKET beat T-BILLSOverlapping Periods: January 1989–December 2017

VALUE beat GROWTHOverlapping Periods: January 1989–December 2017

SMALL beat LARGEOverlapping Periods: January 1989–December 2017

HIGH PROFITABILITY1 beat LOW PROFITABILITYOverlapping Periods: July 1995–December 2017

Market is Fama/French Emerging Markets Index. T-Bills is One-Month US Treasury Bills. There are 229 overlapping 10-year periods, 289 overlapping 5-year periods, and 337 overlapping 1-year periods.

Value is Fama/French Emerging Markets Value Index. Growth is Fama/French Emerging Markets Growth Index. There are 229 overlapping 10-year periods, 289 overlapping 5-year periods, and 337 overlapping 1-year periods.

Small is Dimensional Emerging Markets Small Index. Large is MSCI Emerging Markets Index (gross div.). There are 229 overlapping 10-year periods, 289 overlapping 5-year periods, and 337 overlapping 1-year periods.

High is Dimensional Emerging Markets High Profitability Index. Low is Dimensional Emerging Markets Low Profitability Index. There are 151 overlapping 10-year periods, 211 overlapping 5-year periods, and 259 overlapping 1-year periods.

66% of the time

73% of the time

83% of the time

1-Year

5-Year

10-Year

50% of the time

84% of the time

86% of the time

1-Year

5-Year

10-Year

63% of the time

72% of the time

86% of the time

1-Year

5-Year

10-Year

76% of the time

100% of the time

100% of the time

1-Year

5-Year

10-Year

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Implementing Your Investment Strategy

• Ensure that your allocation is in alignment with your plan and goals. – If you want to build a house in five years, the money set aside for that

goal may have a different risk/return profile than retirement money.

• Reassess and rebalance at least annually. • Be mindful of tax consequences.

– Distribution– Rebalancing– Tax Loss Harvesting

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Talk To A Trusted Advisor!

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Appendix

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Disclosures Regarding Risk & Return Estimates

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Disclosures ContinuedCliftonLarsonAllen Wealth Advisors, LLC (“CLA Wealth Advisors”)

The purpose of this publication is purely educational and informational. It is not intended to promote any product or service and should not be relied on for accounting, legal, tax, or investment advice. The views expressed are those of CLA Wealth Advisors. They are subject to change at any time. Past performance does not imply or guarantee future results. Investing entails risks, including possible loss of principal. Diversification cannot assure a profit or guarantee against a loss. Investing involves other forms of risk that are not described here. For that reason, you should contact an investment professional before acting on any information in this publication.Financial information is from third party sources. Such information is believed to be reliable but is not verified or guaranteed. Performances from any indices in this report are presented without factoring fees or charges, and are provided for reference and competitive purposes only. Any fees, charges, or holdings different than the indices will effect individual results. Indexes are unmanaged; one cannot invest directly into an index. Investment Advisory Services offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC Registered Investment Advisor.

Prior approval is required for further distribution of this material.

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Index Descriptions

Information provided by Dimensional Fund Advisors LP.The Dimensional Indices have been retrospectively calculated by Dimensional Fund Advisors LP and did not exist prior to their index inceptions dates. Accordingly, results shown during the periods prior to each Index’s index inception date do not represent actual returns of the Index. Other periods selected may have different results, including losses. Backtested index performance is hypothetical and is provided for informational purposes only to indicate historical performance had the index been calculated over the relevant time periods. Backtested performance results assume the reinvestment of dividends and capital gains.

Dimensional US Small Cap Index was created by Dimensional in March 2007 and is compiled by Dimensional. It represents a market-capitalization-weighted index of securities of the smallest US companies whose market capitalization falls in the lowest 8% of the total market capitalization of the Eligible Market. The Eligible Market is composed of securities of US companies traded on the NYSE, NYSE MKT (formerly AMEX), and Nasdaq Global Market. Exclusions: Non-US companies, REITs, UITs, and investment companies. From January 1975 to the present, the index also excludes companies with the lowest profitability and highest relative price within the small cap universe. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: CRSP and Compustat. The index monthly returns are computed as the simple average of the monthly returns of 12 sub-indices, each one reconstituted once a year at the end of a different month of the year. The calculation methodology for the Dimensional US Small Cap Index was amended on January 1, 2014, to include profitability as a factor in selecting securities for inclusion in the index.

Dimensional US High Profitability Index was created by Dimensional in January 2014 and represents an index consisting of US companies. It is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index represents the average return of the three high-profitability subgroups. It is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: CRSP and Compustat.

Dimensional US Low Profitability Index was created by Dimensional in January 2014 and represents an index consisting of US companies. It is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index represents the average return of the three low-profitability subgroups. It is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: CRSP and Compustat.

Dimensional International Small Cap Index was created by Dimensional in April 2008 and is compiled by Dimensional. July 1981–December 1993: It Includes non-US developed securities in the bottom 10% of market capitalization in each eligible country. All securities are market capitalization weighted. Each country is capped at 50%. Rebalanced semiannually. January 1994–Present: Market-capitalization-weighted index of small company securities in the eligible markets excluding those with the lowest profitability and highest relative price within the small cap universe. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. The index monthly returns are computed as the simple average of the monthly returns of four sub-indices, each one reconstituted once a year at the end of a different quarter of the year. Prior to July 1981, the index is 50% UK and 50% Japan. The calculation methodology for the Dimensional International Small Cap Index was amended on January 1, 2014, to include profitability as a factor in selecting securities for inclusion in the index.

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Index Descriptions

Information provided by Dimensional Fund Advisors LP.The Dimensional Indices have been retrospectively calculated by Dimensional Fund Advisors LP and did not exist prior to their index inceptions dates. Accordingly, results shown during the periods prior to each Index’s index inception date do not represent actual returns of the Index. Other periods selected may have different results, including losses. Backtested index performance is hypothetical and is provided for informational purposes only to indicate historical performance had the index been calculated over the relevant time periods. Backtested performance results assume the reinvestment of dividends and capital gains. Eugene Fama and Ken French are members of the Board of Directors of the general partner of, and provide consulting services to, Dimensional Fund Advisors LP.

Dimensional International Low Profitability Index was created by Dimensional in January 2013 and represents an index consisting of non-US developed companies. It is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization of each eligible country. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index represents the average return of the three low-profitability subgroups. The index is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: Bloomberg.

Dimensional International High Profitability Index was created by Dimensional in January 2013 and represents an index consisting of non-US developed companies. It is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization of each eligible country. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index represents the average return of the three high-profitability subgroups. The index is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: Bloomberg.

Dimensional Emerging Markets Low Profitability Index was created by Dimensional in April 2013 and represents an index consisting of emerging markets companies and is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization of each eligible country. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index

represents the average return of the three low-profitability subgroups. The index is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: Bloomberg.

Dimensional Emerging Markets High Profitability Index was created by Dimensional in April 2013 and represents an index consisting of emerging markets companies and is compiled by Dimensional. Dimensional sorts stocks into three profitability groups from high to low. Each group represents one-third of the market capitalization of each eligible country. Similarly, stocks are sorted into three relative price groups. The intersections of the three profitability groups and the three relative price groups yield nine subgroups formed on profitability and relative price. The index represents the average return of the three high-profitability subgroups. The index is rebalanced twice per year. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. Source: Bloomberg.

Dimensional Emerging Markets Small Cap Index was created by Dimensional in April 2008 and is compiled by Dimensional. January 1989–December 1993: Fama/French Emerging Markets Small Cap Index. January 1994–Present: Dimensional Emerging Markets Small Index Composition: Market-capitalization-weighted index of small company securities in the eligible markets excluding those with the lowest profitability and highest relative price within the small cap universe. Profitability is measured as operating income before depreciation and amortization minus interest expense scaled by book. The index monthly returns are computed as the simple average of the monthly returns of four sub-indices, each one reconstituted once a year at the end of a different quarter of the year. Source: Bloomberg. The calculation methodology for the Dimensional Emerging Markets Small Cap Index was amended on January 1, 2014, to include profitability as a factor in selecting securities for inclusion in the index.

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CLAconnect.com

Thank you!Adam Bourk, CFP®Senior Wealth [email protected]

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