April 2, 2015 | Volume 6 | Issue 1

Active investment management’s weekly magazine

Most scrutinized Fed rate hike ever?

How often should you review investment returns?

Expanding the family business tradition

No “oomph” to Q1 highs

Matt Quattlebaum

Alpha, beta and R-squared

Phylyp Wagner

The technical terms clients should know

Advisor perspectives on active investment management

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

Let managers manageOur senior advisors collaborate at least every quarter on our third-party advisory choices, performance, changes, and adjustments to the roster and specific strategies. We let our managers actively manage the daily, weekly, and monthly changes, but we in turn take a close quarterly look at their performance. This approach has served us and our clients well. Our clients who were actively in the system had a very good 2008. They were very happy. They referred many, many clients to us as a result of that. We saw a lot of portfolios from more traditional investment firms that got very banged up. Those clients came to us.

LOUD & CLEARPaul Mauro • Westborough, MA Legacy Financial Advisors Inc. • SII Investments Inc.

3April 2, 2015 | proactiveadvisormagazine.com

LOUD & CLEAR

How often should you review your

investment returns?The results may surprise you.

By Jerry Wagner

4 proactiveadvisormagazine.com | April 2, 2015

n my position as president at Flexible Plan Investments Ltd., at least once a quarter for the last twenty years I have received the same request: “Can you

please make daily performance numbers avail-able on your strategies?” This week yet another request was made.

This is despite the fact that we make daily account balances available on our secure website and on each of our custodial partners’ websites. Our model account results are avail-able on our website to financial advisors with daily return numbers provided with a five-day delay (to allow all trades and dividend pay-ments to settle) and our “Hotline” newsletter provides the weekly returns for all of our most popular strategies.

Historically, I have not gone farther, first, because daily data has a higher incidence of mistakes even from the largest financial com-panies and these take time to be discovered and corrected. Why get worked up about something until it is verified?

Second, even professional investors have determined that for the most part daily data is too noisy to trade on the most popular technical analysis basis—momentum or trend-following. More than 20 years ago we studied whether to use daily or weekly data in our trend approach—Evolution. Every way we studied it, it always came back the same. Daily data did worse than weekly. There was too much noise—random price movements, event or headline spikes—to effectively discern the trend from daily data. When we did our FUSION strategy research, the results were the same.

Third, most investors have little interest in the daily data. While our daily account balance page is popular, fewer than 1% of our account holders go there daily.

Finally, and most importantly, I’ve always be-lieved that watching account returns daily is bad for the average investor’s financial health. Why do I believe this? Because there is a substantial body of academic research that supports this belief.

There has been a wide array of academic studies on how often the average investor should look at their financial statements. While one should check account balances at least once a month to make sure nothing untoward has occurred (identity theft or custodian error, for example), calculating or reviewing returns is an entirely different matter. Most studies have shown that the best review period is about every 12 months (some have concluded as short as eight months and others as long as 14 months).

Why not more often? Isn’t more, better? The reason researchers (including two Nobel Prize winners) have reached the opposite conclusion is

mention 2000-02, have caused many investors, professional and non-professional, to largely miss out on the current impressive bull market.

What does investor loss aversion have to do with how often an investor should review returns on a financial statement? It stems from another behavioral bias: Narrow framing.

By “narrow framing” we mean that people tend to make decisions by looking for simple decisions that can be made one at a time in a series. In contrast, broad framing looks at a series of options and makes a single com-prehensive decision after reviewing all of them. Studies show that broad framing will

continue on pg. 13

because of two behavioral biases uncovered among humans that especially apply to investors.

First, investors are loss-averse. This means that for investors, the fear of loss is greater than the pleasure they derive from gains (about twice as much). As a result, they pay a premium in the unrealized gains lost from the fear induced by past losses.

We have been seeing this play out for the last six years right before our eyes in the stock market. The losses endured by investors in 2007-08, not to

be superior or at least equal to the “one simple decision at a time” approach “in every case in which several decisions are to be contemplated together.”

Applying this to investors, studies have found that they tend to look at investing trade-by-trade or review their returns over very short time periods. When you consider this along with their tendency to be overly concerned with losses, you can see why reviewing strategy returns too often can be costly.

I

Closely following daily fluctuations is a losing proposition, because the pain of frequent small losses exceeds the pleasure of equally frequent small gains.

April 2, 2015 | proactiveadvisormagazine.com 5

5

4.5

4

3.5

3

2.5

2

1.5

1

0.5

0

2015 2016 2017 Longer run

Appropriate pace of policy firming: Midpoint of target range or target level for the federal funds rate

= Individual Fed participant’s target level for the federal funds rate Source: federalreserve.gov

The most scrutinized Fed rate hike ever? hether or not this is the most-analyzed Fed rate decision ever will have to be left up to the history books, but it surely

seems that way. The Fed last hiked short-term rates in June 2006—some nine years ago.

The drumbeat on the inevitable rate hike has essentially been with us since 2009, but really started in earnest with the announcement of “tapering” QE3 in December 2013 (QE3 finally ended October 2014). Many serious questions were raised then regarding future Fed policy and its implications: • When will the Fed hike interest rates? Will it

be a slow and graduated approach?• What is the U.S. central bank going to do

with the enormous level of assets it bought? • How will the financial markets perform with-

out stimulus? Is ending QE really a sign of a strong U.S. recovery?

• What will the impact be on inflation, employment, wages, housing, currencies and commodities? (To mention just a few concerns.)Markets have hung on the every word of

former Fed chair Ben Bernanke, and now Janet Yellen. Short phrases from Fed statements took on a life of their own, most notably: “consider-able time” (for near-zero interest rate policy), “data-dependent,” and “patient.”

The speculation and debate over the Fed’s next move remains front and center, with critics of an imminent rate hike such as Bridgewater’s Ray Dalio saying it may lead to a 1937-type

W

“self-reinforcing economic downturn.” On the other side, many analysts believe a rate hike is long overdue for a variety of good reasons, with “reloading the Fed’s arsenal” one of the more interesting arguments.

This past Friday (3/27) saw Ms. Yellen giving a lengthy speech where she emphasized again, according to Barron’s, that “the trajectory of rate hikes will be moderate and will depend on incoming economic data.” This played no small role in the market rebound early this week. Mr. Bernanke was also back in the news Monday (3/30), beginning a new blog for the Brookings

Institution, where he is a senior fellow. He kicked off his inaugural post both humorously and accurately, stating that “monetary policy is 98 percent talk and only two percent action.”

The chart above, from the Federal Reserve, details individual FOMC committee members’ assessments of the future path of rates. The latest infamous “dot plot” shows that top offi-cials expect the median federal funds rate, now near zero, to rise to 0.625% by the end of 2015, instead of 1.125% as predicted in December. For 2016, the median rate is expected to end at 1.875% instead of 2.5%.

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TOPPING THE CHARTS

ALPHA, BETA and R-SQUAREDFor clients who like to know technical terms, these three sum up an investment strategy that aims for risk management and competitive returns.

Proactive Advisor Magazine: Phylyp, you have had an extensive background in many areas of financial services. How has your planning philosophy evolved?

Phylyp Wagner: I have been around the block more than once and it has been an inter-esting journey. I started on the retail banking side, moved into selling insurance products, and then became one of the relatively early financial advisors to earn the CFP® designation. I cut my teeth on not just cold calling clients, but literally “cold knocking” on the doors of prospects in the Washington area.

The financial world has gone through many iterations since I started in the business. The universal school of thought back when I began managing client investments was plain vanilla. It was all about basic asset allocation theory, di-versifying among a few mutual funds, and per-haps some dividend reinvestment approaches.

Now, we see our planning firm as having three basic disciplines, of which there are mul-tiple subsets of each discipline. One discipline is investment advisory work, where we manage roughly a quarter of a billion dollars. The second discipline is risk management. And then the third discipline is alternative investments.

Everything that is in those three disciplines existed in some place during the evolution of fi-nancial planning, but it was a slow process to be able to pull everything together as an indepen-dent advisor. However, it is fundamental to our firm to be able to integrate all of those processes to create comprehensive and forward-looking financial planning.

You can’t just be an investment advisor, you have to protect people’s livelihoods with life insurance. You have to give them permanent income opportunities through very sophisti-cated variable annuities, and ensure that health care needs will be covered with long-term care

8 proactiveadvisormagazine.com | April 2, 2015

Phylyp Wagner CFP®

Founder, Wagner Resource Group Inc.McLean, VA

Broker-dealer: H. Beck

Estimated AUM: $225M

Member: Financial Planning Association (FPA)

Phylyp Wagner graduated from the University of Maryland with a degree in accounting in 1977,com-pleted the CPA exam in 1980 and CFP® designation in 1984. He is a published writer, contributing reg-ular financial columns to various trade association periodicals. Mr. Wagner is also a frequent speaker at industry events and presents often on effective time management for financial advisors.

Mr. Wagner founded Wagner Resource Group in 1979, and has as a driving objective to “help grow, protect, and conserve our clients’ wealth by deliver-ing what we feel is an unprecedented level of person-alized service and expertise.” He and his wife JoAnne have five daughters and enjoy “spending quality time with the family, boating, golfing, and dancing.”

Matt Quattlebaum CFP®

Senior Financial Planner, Wagner Resource Group Inc.McLean, VABroker-dealer: H. Beck

Estimated AUM: $225M

Matt Quattlebaum graduated from the University of Virginia with a degree in economics and obtained the CFP® designation in 2008. Prior to joining Wagner Resource Group, he conducted international and do-mestic mutual fund research. Mr. Quattlebaum strives to “earn his clients’ trust and help position them for long-term financial success.” Mr. Quattlebaum and his wife Mary have three young boys, so when they aren’t chasing them around they enjoy spending time with family and friends, outdoor activities and sports, good food and travelling.

Mr. Wagner and Mr. Quattlebaum are licensed in secu-rities and insurance, and are investment advisory rep-resentatives and registered representatives of H. Beck Inc. They offer a full range of financial planning services, with special focus on comprehensive financial planning and developing tax-advantaged investment strategies for their clients.

continue on pg. 10

and disability protection. Financial planning and wealth management is not just about man-aging investments—important as that is—but offering clients an integrated approach across all of their financial and risk management needs.

Matt, what investment strategies do you use?

Matt Quattlebaum: We take a multi-strategy approach, and this definitely has evolved over the years. We manage client money primarily through third-party managers. Regardless of the investment approach for our clients, we want to make sure that everything we recom-mend is best-in-class, so we seek managers that stand apart from their peers in whatever strategy type they are utilizing.

We often recommend to clients what we call “tactical constrained strategies,” where the broad objective is to participate in market movements with an emphasis on risk man-agement. We look for favorable risk-adjusted returns over longer timeframe market cycles with this approach. These strategies reflect whatever risk mandate we agree to with a specific client or couple.

Our firm has also evolved toward offering what we call more “unconstrained strategies,” which can work within the context of a well-di-versified portfolio. These strategies have the abili-ty to make money in both up and down markets, and are more tactical and proactive in approach.

We still firmly believe in diversification, and think there is a place in most clients’ portfolios for several elements that can work

well in any market environment—versus traditional strategies that can only profit when the market is going up. Different parts of the portfolio will react differently based on market conditions, with the unconstrained having the ability to get more aggressive in strong bull markets, and defensive, or even inverse the market, during bear markets.

Phylyp: Managing money is a very intense discipline that needs to be exclusive and focused. When I’m visiting with clients, talking to them about how to best use all of these financial plan-ning and investment approaches that fit their needs, I obviously cannot be sitting in front of a computer tracking the market. That is what sophisticated models and algorithms are for.

“My time cannot be spent sitting in front of a computer tracking the market. That is what sophisticated models and algorithms are for.”

9April 2, 2015 | proactiveadvisormagazine.com

Securities and investment advisory services offered through H. Beck Inc., member FINRA/SIPC and an SEC-registered investment advisor. H. Beck Inc. and Wagner Resource Group Inc. are not affiliated. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

To use a simple analogy, the person who sells a high-end, sophisticated automobile and intro-duces a client to its features is probably not the guy who builds the car. But if he’s doing the job correctly, he knows all of the components that go into the car and recognizes how to get the best performance out of it. We exclusively use the independent investment advisory platforms to achieve what we think is the best investment solution for our clients—and that can some-times be a blend of different strategies.

What criteria do you use in selecting third-party managers?

Matt: We really want to look hard at the pro-cess they employ. The track record of performance is certainly important, but getting comfortable with the investment process of the company is more important. Do they have a sustainable pro-cess that has been implemented for some time?

Back-tested results can be important, as strategies do change and evolve, but we need to ascertain their actual track record as well. No manager is going to consistently beat the market, or even their best-fit benchmark every year, but that is not the single criteria we are looking for. We are very interested in their pedigree, the quality of their people, the soundness of their approach, and the consistency with which they implement what they are trying to do.

Phylyp, how do you explain sophisticated investment concepts to clients?

Phylyp: One of the key components to building a successful financial planning practice is to be the quarterback of the process, showing leadership and clear direction. My strength is in being able to explain complicated financial planning processes in simple language and to motivate people to take action.

continued from pg. 9Wagner & Quattlebaum

We want our clients to have a clear and realistic set of expectations and part of that is demystifying Wall Street gibberish. I tell clients that there are only three technical terms they need to know and then explain as simply as pos-sible the concepts of alpha, beta and R-squared. When I am done, they usually have a good idea of what we are trying to achieve: Managing risk within their portfolios while trying to achieve competitive returns.

There is one thing I have learned for certain over my years running a successful firm. Clients pretty quickly understand that you have the technical expertise to deliver for them. But they care far less about what you know, than with knowing that you care. We do—and, thankful-ly, we have turned that into a very robust client roster and a high level of client satisfaction with our services.

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What’s on your mind?What investment pros say are their top concerns and considerations in managing portfolios in today’s volatile environment.

5 financial lessons from “Game of Thrones”Lesson #1: Be open to evidence that suggests that your view of the world is wrong.

A new playbook for diversification?Active or passive investing? The answer may be that the question is faulty.

L NKS WEEK

April 2, 2015 | proactiveadvisormagazine.com 11

Recent Q1 highs lacked “oomph”

Tony Dwyer joined Canaccord Genuity in March 2012 as the firm’s U.S. equity market strategist and a senior managing director. In 2015, Mr. Dwyer was named co-director of research, and currently sits on the firm’s operating committee. Prior to joining Canaccord Genuity, he served as equity strategist at Collins Stewart, and also held the additional role of director of research while sitting on the firm’s executive committee. Mr. Dwyer started his career at Prudential-Bache Securities in 1987 as an equity market strategist. www.canaccordgenuity.com

espite the move to new market highs in Q1, the tactical backdrop contin-ues to suggest a 5-10% correction is likely, especially given the lack of

conviction shown in the most recent rallies. The fundamental excuse for a pause in the upside is likely the anticipation of a 2Q15 Fed rate hike, but the good news is our fundamental core thesis demands investors use any meaningful correc-tion as an opportunity to add equity exposure.

Lackluster demand was driving the market

Obviously, the market isn’t oversold, so the question becomes, was the move to Q1 highs strong enough to suggest significant and sus-tainable follow-through without experiencing a deeper correction? We doubt it based on some key indicators we track with our friends at the Lowry’s service:

Buying Power and Short-Term Index saw no oomph. The Lowry’s Buying Power and Short-Term Index measures NYSE composite market internals using price change, volume and number of advancing issues. These indicators suggest that there was a lack of demand for stocks as the market made new all-time highs. The Buying Power Index remained below the recent peaks in November and December of 2014. Also, the Lowry’s Short-Term Index was closer to recent lows rather than recent highs. Generally, we look for these indicators to move higher as the market moves higher.

The NYSE cumulative volume advance- decline line did not confirm the market high. This indicator measures overall NYSE volume on a cumulative basis. When the NYSE closes higher, volume for that day is added, when the index closes lower, volume is subtracted (see chart).

D

Summary

Given the consistency of the fundamental thesis, we must turn to tactical signs that would suggest the next leg higher. These signs are that the market needs to get oversold enough, or break out to the upside with conviction, in order to bring in significant and sustainable buyers. The Q1 move to new highs lacked the conviction that would cause a rush to buy.

The most recent near-term weakness has not been surprising, but ultimately will make us more aggressive buyers as we believe: (1) our core fundamental thesis is firmly in place; (2) we are a number of years away from recession

risk; (3) a lack of investment alternatives should continue to drive investors to equities; and (4) historical precedent suggests a continuation in the current valuation expansion.

Given the solid fundamental backdrop, there are basically two reasons to be an aggres-sive buyer in a well-defined bull market: (1) the market gets oversold enough using our key indicators, or (2) there is enough of a thrust to new highs that causes investors to rush in. There will clearly be more volatility and corrections along the way, but we remain focused on the intermediate-term opportunity rather than the near-term risk.

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: Cannacord Genuity

NYSE CUMULATIVE VOLUME

proactiveadvisormagazine.com | April 2, 201512

HOW I SEE IT

Rydex FundsA Comparison of ETFs and Mutual Funds—The True Cost of Investing

continued from pg. 5

In fact, one of those Nobel Prize winners, Daniel Kahneman, in his book, “Thinking Fast and Slow,” concludes:

The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of broad framing while also saving time and agony, by reducing the frequency with which they check how well their investments are doing. Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough, and may be more than enough for individual investors.

Kahneman offers additional advice to investors beyond less-frequent return review. He says investors should learn to think like traders.

How do traders who are glued to the com-puter screens seeing an unending stream of gains and losses survive the stress and avoid the effects of loss aversion? They take a broader view and adopt an attitude of “you win a few and you lose a few” whenever deciding to accept a small risk (emphasis on “small”).

I know the first time I heard this phrase ap-plied to investing it sounded a bit cavalier, but

think about it: If you have a properly diversified portfolio, be it made up of strategies or asset classes, will one trade or one day’s return really have that big an effect on your total investments?

When you chose that portfolio, did you choose it based on the results the day before or, instead, over a much longer period? And when you chose each asset class or strategy, did you think that every one of them would be prof-itable every day? Every month? Every quarter? Probably not.

So why look at returns every day, or every month, or even every quarter? Why give in to the tendency to overly fear a loss causing you to miss opportunities?

When most of this research was done, the predominant “strategy” for investing was “buy and hold” investing. Yet, Kahneman and Richard Thaler, the other Nobel Prize winner behind much of this research, still firmly believed these

principles applied. If, instead, your investments are being managed by an investment advisor that is already actively managing the investment portfolio on a day-to-day basis, aren’t these con-siderations even more applicable?

Furthermore, if they are following a strategy that demonstrates a statistical edge based on years of research, aren’t you paying them to adopt the trader’s attitude for you? Why overrule your previous, broadly framed decision and fall prey to “narrow framing”? It frankly makes little sense for advisors or their investor clients.

Investment returns

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

The combination of loss aversion andnarrow framing is a costly curse.

13April 2, 2015 | proactiveadvisormagazine.com

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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 WritersTony DwyerJerry Wagner

David Wismer

Graphic DesignerTravis Bramble

Contributing PhotographerMike Morgan

April 02, 2015Volume 6 | Issue 1

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.

Expanding the family business tradition

Jeff PestaSan Jose, CA

LPL Financial

Jeff Pesta 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 poten-tial loss of principal. No strategy ensures success or protects against a loss. Pesta & Pesta Tax Preparation is a separate unaffiliated entity from LPL Financial.

our tax planning services and then look to introduce the financial planning piece as part of the tax planning process. My associate is a great networker and we have found that mortgage brokers can be a good source of tax planning leads or become clients themselves. I also appear on a local radio station where I talk about tax issues and informally about investments. That has been a good resource for branding our firm.

y parents started a tax business in 1970, Pesta & Pesta Tax Preparation, a name that lives on today. I will never forget that all six of the kids in the

family were recruited to help pass out flyers during tax season, but we were always reward-ed with an ice cream sundae! It was a real family affair.

I joined the business in the 1990s and my parents retired in 2008, though they are still a sounding board for me. I have both the tax practice and my full financial advisory business.

I have worked hard to systematically ensure my clients have access to our broad financial services offerings. I have found that my best prospects are the people who have already built up some trust with me. People I have worked with in the past are very open to having me manage their investments. They understand that I will look out for their best interests, and are receptive to my message about active investment management.

I have also formed a partnership with a CPA who works out of our office space. He engages both individual clients and cor-porations, and we have an effective referral method that allows me access to his clients.

He more or less says, “Jeff and I have a partnership and please accept his phone call. He will be able to take a look at your financial situation, give you a second opinion, and see if he has a way to help you improve your re-tirement planning and investment approach.”

I also have an in-house marketing associ-ate and a tax-planning specialist. We will put most of our marketing messages out regarding

M

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 assets continue to grow among advisors

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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 Investments Ltd.web.flexibleplan.com

“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 go.trustamerica.com

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

“The State of Retail Wealth Management, 4th Annual Report,” PriceMetrixwww.pricemetrix.com

2011 2012 2013

Fee-Based Assets (% of Total Assets) 25% 28% 31%

Fee-Based Revenue (% of Total Revenue) 43% 45% 47%

Fee Accounts per Advisor 85 92 101

Average Fee Account Assets ($000s) $240 $258 $293

Source: PriceMetrix Insights – The State of Retail Wealth Management 2013 – 4th Annual Report (Aggregated data representing 7 million retail investors and over $3.5 trillion in investment assets.)