The Financial Planning Association
description
Transcript of The Financial Planning Association
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The Financial Planning AssociationThe Financial Planning Association
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Opening AssumptionsOpening Assumptions
Future market growth will be slower
than in the past.
This greatly affects how you build your
business going forward.
Future market growth will be slower
than in the past.
This greatly affects how you build your
business going forward.
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Building Your Business in the ’90s…Building Your Business in the ’90s…
AUM
Your Market Share
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Asset Growth
Building Your Business in the ’90s…Building Your Business in the ’90s…
AUM
Asset Retention = Growth
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AUM
Building Your Business Today…Building Your Business Today…
You Need to Take AssetsAway From Competitors
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The Battle for the Affluent Market
The Battle for the Affluent Market
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Regaining Investor
Trust
Fending Off Name-Brand Brokerage
Firms
A Battle on Two FrontsA Battle on Two Fronts
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Fending Off Name-Brand Brokerage
Firms
A Battle on Two FrontsA Battle on Two Fronts
A battle you won in the past
A battle you won in the past
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Two Key FactorsTwo Key Factors
DifferentiationDifferentiation
Flight to Quality
Flight to Quality
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Fee-based Services
Financial Planning
Open Architecture
Wealth Management
Commission-based Services
Sales Culture
Proprietary Product; Revenue Sharing
Differentiated!
Independent Advisors
The 1990sThe 1990s
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Enron Auditor Raises Specter
of Crime
Enron Auditor Raises Specter
of Crime Lawmakers Say Files
Show Flagrant
WorldCom Fraud
Lawmakers Say Files
Show Flagrant
WorldCom Fraud
Ex-Tyco Chief
Indicted
Ex-Tyco Chief
Indicted
Adelphia Founder,
Sons Charged
Adelphia Founder,
Sons Charged
U.S. Opens Criminal Probe of
Freddie Mac
U.S. Opens Criminal Probe of
Freddie Mac
Former Chief of ImClone
Systems Charged
Former Chief of ImClone
Systems Charged
Rite Aid Trial Spotlights
Public View of Corporate
Scandals
Rite Aid Trial Spotlights
Public View of Corporate
Scandals
Grasso Quits NYSE
Amid Pay Furor
Grasso Quits NYSE
Amid Pay Furor
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Wall St. and Its Analysts Get
Warning From S.E.C.
Wall St. and Its Analysts Get
Warning From S.E.C.
Morgan Stanley Probed on Sales of
Mutual Funds
Morgan Stanley Probed on Sales of
Mutual Funds
Criminal Charges May Be Filed In
Bank of America Fund Case
Criminal Charges May Be Filed In
Bank of America Fund Case
Strong Capital Faces Calls for
Audit
Strong Capital Faces Calls for
Audit
Janus Review Uncovers Improper
Trades
Janus Review Uncovers Improper
Trades
Alliance Suspends 2 Fund Executives in Trading Inquiry
Alliance Suspends 2 Fund Executives in Trading Inquiry
U.S. Appoints a Monitor for Merrill Lynch
U.S. Appoints a Monitor for Merrill Lynch
Probe Forces Resignations at
Prudential Securities
Probe Forces Resignations at
Prudential Securities
J.P. Morgan to Settle Case Over IPO
Allocations
J.P. Morgan to Settle Case Over IPO
Allocations
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Flight to QualityFlight to Quality
1990
11%
47%
2004
Independent Advisor Affluent Market Share
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The “Brand” GameThe “Brand” Game
EF Hutton Shearson
Dean Witter
First Union
Prudential
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Citigroup and Legg Mason Release Details of Asset Swap
June 25, 2005
In a widely anticipated deal that highlights the financial and regulatory pressures facing Wall Street, Citigroup and Legg Mason yesterday announced the details of a $3.7 billion asset swap that would catapult Legg Mason to the ranks of the nation’s largest money managers.
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THE WALL STREET JOURNAL
BlackRock and Merrill Lynch Investment Management
to Combine, Forming One of the World’s Largest
Independent Investment Management Firms
Combined Firm to Have $1 Trillion in Assets Under Management
Will Operate Under BlackRock Name;
Merrill Lynch to Have a 50% Stake
February 15, 2006
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Wall Street FirmsWall Street Firms
Off-loading their
commoditized proprietary products…
but keeping their “sexy’ products,
such as hedge funds and private equity.
Off-loading their
commoditized proprietary products…
but keeping their “sexy’ products,
such as hedge funds and private equity.
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Fee-based Services
Financial Planning
Open Architecture
Wealth Management
Commission-based Services
Sales Culture
Proprietary Product; Revenue Sharing
Differentiated!
Independent Advisors
The 1990sThe 1990s
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Fee-based Services
Financial Planning
Open Architecture
Wealth Management
Fee-based Services
Financial Planning
Open Architecture
Wealth Management
Not Differentiated!
Independent Advisors
TodayToday
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Fee-based Services
Financial Planning
Open Architecture
Wealth Management
Independent Advisors
Hedge Funds
Private Equity
Mortgages
Credit Cards
An EdgeAn Edge
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Huge Brand Disparity
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Affluent Investors’ Primary AdvisorsAffluent Investors’ Primary Advisors
Source: The Spectrem Group Affluent Study 2005; cited in Investment News, 01/30/06.
Full-Service BrokerFull-Service Broker
Investment AdviserInvestment Adviser
Financial PlannerFinancial Planner
Investment ManagerInvestment Manager
24%20042004
20052005
AccountantAccountant
Discount/Online BrokerDiscount/Online Broker
Trust OfficerTrust Officer
Private BankerPrivate Banker
31%
18%17%
17%14%
9%10%
9%9%
3%7%
2%2%
3%1%
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
’05’05
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“Several factors contributed to the increase,
including…the chameleon-like ability of the
wirehouses to make their business models
look more like those of financial planners…”
“Several factors contributed to the increase,
including…the chameleon-like ability of the
wirehouses to make their business models
look more like those of financial planners…”
Source: Quoted in Investment News, 01/30/06.
George Walpert, president, The Spectrem Group
George Walpert, president, The Spectrem Group
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A Formidable AdversaryA Formidable Adversary
Sexier Products
Sexier Products
Camouflaged in Your
Business Model
Camouflaged in Your
Business Model
Huge Brand
Recognition
Huge Brand
Recognition
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The Second FrontThe Second Front
Regaining Investor
Trust
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Wall Street Analysts Exposed
CEO Scandals
Accountancy Malfeasance
Spitzer Takes on the Mutual Funds Tyco…
Enron… WorldCom
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Affluent assets flow away
from advisors
April 17, 2006
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Affluent assets flow away
from advisors
April 17, 2006
48.6%Lack of TrustLack of Trust
39%Dissatisfaction with
asset managementDissatisfaction with
asset management
Source: TNS Financial Services of Greenwich, Conn., Annual Survey; cited in Investment News, April 17,2006.
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Affluent Investor Attitudes
Quality of serviceQuality of service
Diminishing SatisfactionDiminishing Satisfaction
Quality of adviceQuality of advice
Advisor’s knowledgeAdvisor’s knowledge
Investment PerformanceInvestment Performance
Source: The Spectrem Perspective: The Affluent Investor
59%59%
45%45%
53%53%
32%32%
Satisfaction
Satisfaction
Satisfaction
Satisfaction
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Affluent Investors’ Primary AdvisorsAffluent Investors’ Primary Advisors
Source: The Spectrem Group Affluent Study 2005; cited in Investment News, 01/30/06.
Full-Service BrokerFull-Service Broker
Investment AdviserInvestment Adviser
Financial PlannerFinancial Planner
Investment ManagerInvestment Manager
24%20042004
20052005
AccountantAccountant
Discount/Online BrokerDiscount/Online Broker
Trust OfficerTrust Officer
Private BankerPrivate Banker
31%
18%17%
17%14%
9%10%
9%9%
3%7%
2%2%
3%1%
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
20052005
20042004
’05’05
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Independent
Advisors
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Your account is a brokerage account and not an advisory
account. Our interests may not always be the same as yours.
Your account is a brokerage account and not an advisory
account. Our interests may not always be the same as yours.
New SEC Required Disclosure…New SEC Required Disclosure…
Please ask us questions to make sure you understand your
rights and our obligations to you, including the extent of our
obligations to disclose conflicts of interest and to act in your
best interest.
Please ask us questions to make sure you understand your
rights and our obligations to you, including the extent of our
obligations to disclose conflicts of interest and to act in your
best interest.
We are paid both by you, and sometimes, by people who
compensate us based on what you buy.
We are paid both by you, and sometimes, by people who
compensate us based on what you buy.
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Advice Will Bifurcate…Advice Will Bifurcate…
Distributors Advisors
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“[The Merrill rule] is a good sales tool [for
advisors. The new rule] advances the
distinctions between brokers and advisors,
between fiduciary and suitability.”
William DonaldsonFormer SEC Chairman
“[The Merrill rule] is a good sales tool [for
advisors. The new rule] advances the
distinctions between brokers and advisors,
between fiduciary and suitability.”
William DonaldsonFormer SEC Chairman
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How will youmake the distinction?
How will youmake the distinction?
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Distributors Advisors
Sell-Side Platform
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Proprietary ProductsProprietary Products
Either-Or PortfoliosEither-Or Portfolios
Lack of TransparencyLack of Transparency
Biased ResearchBiased Research
ConflictsConflicts
Middleman FeesMiddleman Fees
Complexity Complexity
Sell-Side PlatformSell-Side Platform
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Distributors Advisors
Sell-Side Platform
Client-SidePlatform
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No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
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You change the game again…
You change the game again…
just like you did in the 1990s.
just like you did in the 1990s.
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No Product Bias
Holistic Portfolios
Transparency
Independent Research
No Conflicts
No Middleman Fees
Clear Expectations
You can do this! They can’t!
And, they won’t!
Differentiated Again!
Independent Advisors
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Business Solutions for
Independent Advisors
Business Solutions for
Independent Advisors
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Portfolio OptimizationPortfolio Optimization
V B G
L
M
S
Efficient FrontierEfficient Frontier
Style PurityStyle Purity
BenchmarksBenchmarks
PortfoliosPortfolios
A s s e t A l l o c a t i o n A s s e t A l l o c a t i o n
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Portfolio OptimizationPortfolio Optimization
V B G
L
M
S
Efficient FrontierEfficient Frontier
Style PurityStyle Purity
BenchmarksBenchmarks
PortfoliosPortfolios
A s s e t A l l o c a t i o n A s s e t A l l o c a t i o n
Theoretical PrecisionHas Overwhelmed
Good Judgment andCommon Sense
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No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does the Portfolio look like?What does the Portfolio look like?
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No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does the Portfolio look like?What does the Portfolio look like?
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3-Tier Structure3-Tier Structure
Efficient Market CoreTM
Active RingTM
Alpha RimTM
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Two Key PremisesTwo Key Premises
Management ValueHow much value active management can add
depends primarily on market efficiency.
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Large Cap = Efficient MarketLarge Cap = Efficient Market
The largest 100 companies dominate the S&P 500 Index.
“Negative-sum game”:1.5% avg. fund expense ratio + 0.9% transaction costs = 2.4% handicap.
* 12/31/83 - 12/31/04.
Accumulation on a $10,000 investment over the last 21 years:* - Avg. Equity Mutual Fund: $81,000 - S&P 500: $127,000
Only 1.8% of large cap managers beat the market in all 4 years from 1999 to 2002.
For taxable investors, the results are even more dramatic: Active management creates additional tax drag of 2.5% annually.
Drivers of market efficiency: Internet, institutional ownership, and low transaction costs.
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Management OptimizationManagement OptimizationInstitutional Investors
Indexation
Efficient Market
Exposure
Alternative Investments
Alpha Oriented
TraditionalActively Managed
Investments
45% 40% 15%Approaching
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Two Key PremisesTwo Key Premises
Management ValueHow much value active management can add
depends primarily on market efficiency.
Fee CorrelationManagement fees can and should be correlated
to managerial value received.Enhanced Perfo
rmance
Enhanced Perform
ance
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Active RingTM
Alpha RimTM
EM CoreTM
Management
Matched to
Market Efficiency
Management
Matched to
Market Efficiency
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Active RingTM
Alpha RimTM
EM CoreTM
LowerSmaller-Cap Stocks
High-Yield BondsReal Estate
ActiveMutual Funds
Managed Accounts
Lowest Special Opportunities
Highly SkilledHedge Funds
Private Equity, etc.
Efficiency Management
HighLarger-Cap Stocks
Investment-Grade Bonds
IndexedIndex Funds
ETFs
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Active RingTM
Alpha RimTM
EM CoreTM
Fees
Correlated
to Value-Added
Fees
Correlated
to Value-Added
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Active RingTM
Alpha RimTM
EM CoreTM ModerateCan be significant
HighestCan be very high
Value-Added Fees
Limited Lowest
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Intuitive
Transparent
Fair
Performance Advantage
Intuitive
Transparent
Fair
Performance Advantage
Investors Are ReceptiveInvestors Are Receptive
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Example:$1-Million Traditional Portfolio
Example:$1-Million Traditional Portfolio
Fixed Income
Sector Equity
International
Small-Cap Equity
Mid-Cap Equity
Large-Cap Equity
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Traditional PortfolioTraditional Portfolio
Mutual FundB/D 2
Mutual FundB/D 1
B/D 1 Managed AccountFIXED INCOME
direct
direct
B/D 2
B/D 2
B/D 1
B/D 1
B/D 1
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Managed Account
Managed AccountLARGE-CAP EQUITY
MID-CAP EQUITY
Mutual FundB/D 2
Mutual FundB/D 1SMALL-CAP EQUITY
SECTOR EQUITY
Mutual FundB/D 2
Mutual FundB/D 1
Mutual FundB/D 1
Mutual FundB/D 1
Mutual FundB/D 1
INTERNATIONAL
Mutual FundB/D 1
Managed AccountB/D 1
$43,791
$19,020
$119,850
$29,200
$22,510
$26,764
$36,202
$45,600
$223,350
$155,790
$30,558
$14,475
$15,690
$62,580
$24,420
$24,805
$23,700
$19,300
$17,400
0.49%
1.85%
N/A
0.18%
0.89%
0.65%
0.90%
2.00%
N/A
N/A
0.95%
2.02%
2.17%
N/A
0.90%
2.37%
1.57%
0.99%
1.61%
2.00%
N/A
1.00%
N/A
N/A
2.00%
2.00%
N/A
2.40%
2.40%
2.00%
N/A
N/A
2.40%
2.00%
N/A
N/A
N/A
N/A
2.49%
1.85%
1.00%
0.18%
0.89%
2.65%
2.90%
2.00%
2.40%
2.40%
2.95%
2.02%
2.17%
2.40%
2.90%
2.37%
1.57%
0.99%
1.61%
$1,090.40
$351.87
$1,198.50
$52.56
$200.34
$709.25
$1,049.86
$912.00
$5,360.40
$3,738.96
Managed AccountB/D 1
$16,440 1.44% N/A 1.44% $236.74Mutual FundB/D 1
$58,500 N/A 2.40% 2.40% $1,404.00
$901.46
$292.39
$340.47
$1,501.92
$708.18
$587.88
$372.09
$191.07
$280.14
JMIBX JP Morgan Bond Instl
TBHYX Pioneer High Yield B
-- Lord Abbett Bond
VFINX Vanguard 500 Index
JANSX Janus
EQPIX Fidelity Advisor Equity Income Instl
AIPGX AllianceBernstein Premier Gr Instl I
PBODX Pioneer B
-- Engemann Large Cap
-- Lord Abbett Large Cap
FSCIX Fidelity Advisor Small Cap Instl
GTSDX AIM Small Cap Growth C
FIDIX John Hancock Financial Industries I
IARCX AIM Real Estate C
SLMCX Seligman Communications&Information A
FSPHX Fidelity Select Health Care
RABTX PIMCO RCM Biotechnology A
TEDMX Templeton Developing Markets A
-- Brandes Investment Partners
-- Roxbury Mid Cap
GABVX Gabelli Value A
Instrument Fee
AdvisoryFee
TotalFee (%)
Total Fee ($)Amount
Type of InvestmentFirm Symbol Investment
TotalPortfolio
$1,029,945
WeightedAverage Fee
2.09%
TotalAnnual Fee$21,480.47
![Page 63: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/63.jpg)
Current ManagementCurrent Management
B/D 2
B/D 1
B/D 1
direct
direct
B/D 2
B/D 2
B/D 1
B/D 1
B/D 1
B/D 2
B/D 1
B/D 2
B/D 1
B/D 1
B/D 1
B/D 1
B/D 1
B/D 1
$43,791
$19,020
$119,850
$29,200
$22,510
$26,764
$36,202
$45,600
$223,350
$155,790
$30,558
$14,475
$15,690
$62,580
$24,420
$24,805
$23,700
$19,300
$17,400
B/D 1
B/D 1 $16,440
$58,500
Mutual Fund
Mutual Fund
Managed Account
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Managed Account
Managed Account
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Managed Account
Managed Account
Mutual Fund
JMIBX JP Morgan Bond Instl
TBHYX Pioneer High Yield B
-- Lord Abbett Bond
VFINX Vanguard 500 Index
JANSX Janus
EQPIX Fidelity Advisor Equity Income Instl
AIPGX AllianceBernstein Premier Gr Instl I
PBODX Pioneer B
-- Engemann Large Cap
-- Lord Abbett Large Cap
FSCIX Fidelity Advisor Small Cap Instl
GTSDX AIM Small Cap Growth C
FIDIX John Hancock Financial Industries I
IARCX AIM Real Estate C
SLMCX Seligman Communications&Information A
FSPHX Fidelity Select Health Care
RABTX PIMCO RCM Biotechnology A
TEDMX Templeton Developing Markets A
-- Brandes Investment Partners
-- Roxbury Mid Cap
GABVX Gabelli Value A
FIXED INCOME
LARGE-CAP EQUITY
MID-CAP EQUITY
SMALL-CAP EQUITY
SECTOR EQUITY
INTERNATIONAL
0.49%
1.85%
N/A
0.18%
0.89%
0.65%
0.90%
2.00%
N/A
N/A
0.95%
2.02%
2.17%
N/A
0.90%
2.37%
1.57%
0.99%
1.61%
2.00%
N/A
1.00%
N/A
N/A
2.00%
2.00%
N/A
2.40%
2.40%
2.00%
N/A
N/A
2.40%
2.00%
N/A
N/A
N/A
N/A
2.49%
1.85%
1.00%
0.18%
0.89%
2.65%
2.90%
2.00%
2.40%
2.40%
2.95%
2.02%
2.17%
2.40%
2.90%
2.37%
1.57%
0.99%
1.61%
$1,090.40
$351.87
$1,198.50
$52.56
$200.34
$709.25
$1,049.86
$912.00
$5,360.40
$3,738.96
1.44% N/A 1.44% $236.74
N/A 2.40% 2.40% $1,404.00
$901.46
$292.39
$340.47
$1,501.92
$708.18
$587.88
$372.09
$191.07
$280.14
Instrument Fee
AdvisoryFee
TotalFee (%)
Total Fee ($)Amount
Type of InvestmentFirm Symbol Investment
Indexed Active Alpha
![Page 64: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/64.jpg)
Management-Optimization OverlayManagement-Optimization Overlay
B/D 2
B/D 1
B/D 1
direct
direct
B/D 2
B/D 2
B/D 1
B/D 1
B/D 1
B/D 2
B/D 1
B/D 2
B/D 1
B/D 1
B/D 1
B/D 1
B/D 1
B/D 1
$43,791
$19,020
$119,850
$29,200
$22,510
$26,764
$36,202
$45,600
$223,350
$155,790
$30,558
$14,475
$15,690
$62,580
$24,420
$24,805
$23,700
$19,300
$17,400
B/D 1
B/D 1 $16,440
$58,500
Mutual Fund
Mutual Fund
Managed Account
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Managed Account
Managed Account
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Mutual Fund
Managed Account
Managed Account
Mutual Fund
JMIBX JP Morgan Bond Instl
TBHYX Pioneer High Yield B
-- Lord Abbett Bond
VFINX Vanguard 500 Index
JANSX Janus
EQPIX Fidelity Advisor Equity Income Instl
AIPGX AllianceBernstein Premier Gr Instl I
PBODX Pioneer B
-- Engemann Large Cap
-- Lord Abbett Large Cap
FSCIX Fidelity Advisor Small Cap Instl
GTSDX AIM Small Cap Growth C
FIDIX John Hancock Financial Industries I
IARCX AIM Real Estate C
SLMCX Seligman Communications&Information A
FSPHX Fidelity Select Health Care
RABTX PIMCO RCM Biotechnology A
TEDMX Templeton Developing Markets A
-- Brandes Investment Partners
-- Roxbury Mid Cap
GABVX Gabelli Value A
FIXED INCOME
LARGE-CAP EQUITY
MID-CAP EQUITY
SMALL-CAP EQUITY
SECTOR EQUITY
INTERNATIONAL
U s e I n d e x e s
U s e I n d e x e s
U s e I n d e x e s
U s e I n d e x e s
0.49%
1.85%
N/A
0.18%
0.89%
0.65%
0.90%
2.00%
N/A
N/A
0.95%
2.02%
2.17%
N/A
0.90%
2.37%
1.57%
0.99%
1.61%
2.00%
N/A
1.00%
N/A
N/A
2.00%
2.00%
N/A
2.40%
2.40%
2.00%
N/A
N/A
2.40%
2.00%
N/A
N/A
N/A
N/A
2.49%
1.85%
1.00%
0.18%
0.89%
2.65%
2.90%
2.00%
2.40%
2.40%
2.95%
2.02%
2.17%
2.40%
2.90%
2.37%
1.57%
0.99%
1.61%
$1,090.40
$351.87
$1,198.50
$52.56
$200.34
$709.25
$1,049.86
$912.00
$5,360.40
$3,738.96
1.44% N/A 1.44% $236.74
N/A 2.40% 2.40% $1,404.00
$901.46
$292.39
$340.47
$1,501.92
$708.18
$587.88
$372.09
$191.07
$280.14
Instrument Fee
AdvisoryFee
TotalFee (%)
Total Fee ($)Amount
Type of InvestmentFirm Symbol Investment
Indexed Active Alternative
![Page 65: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/65.jpg)
$100,510 1.50% 0.50%ALTERNATIVE
$163,798 1.00% 0.50% ACTIVE
Management-Optimized PortfolioManagement-Optimized Portfolio
TotalPortfolio
$1,029,945
WeightedAverage Fee
0.92%
TotalAnnual Fee
$9,444
AverageInstrument Advisory
Tier Amount Fee Fee
INDEXED-Fixed Income $163,641 0.15% 0.50%
INDEXED-Equity $601,996 0.15% 0.50%
![Page 66: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/66.jpg)
Traditional Structure Optimized Structure
WeightedAverage Fee
0.92%
TotalAnnual Fee
$9,444
WeightedAverage Fee
2.09%
TotalAnnual Fee
$21,480
The “Three Tier” AdvantageThe “Three Tier” Advantage
117 bp Lower 117 bp Lower
$12,037 Less
$12,037 Less
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$2,206m
$3,229m
$4,725m
$6,915m
$2,457m
$3,795m
$5,861m
$9,052m
$1,507m
$1,030m
$1,591m
$1,030m
Initial Value 5 Years 10 Years 15 Years 20 Years 25 Years
$84m
$251m
$566m
$1,136m
$2,137m
m = thousands (000)
Traditional Portfolio
Based on a 10% (pre-fee, pre-tax) rate of return.
Management-Optimized Portfolio
HypotheticalPerformance AdvantageHypotheticalPerformance Advantage
![Page 68: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/68.jpg)
$2,009m
$2,806m
$3,919m
$5,474m
$1,572m
$2,400m
$3,665m
$5,595m
$8,541m
$1,438m
$1,030m $1,030m
Initial Value 5 Years 10 Years 15 Years 20 Years 25 Years
$134m
$391m
$859m
$1,676m
$3,068m
HypotheticalPerformance AdvantageINCLUDING TRANSACTION COSTS*
HypotheticalPerformance AdvantageINCLUDING TRANSACTION COSTS*
*Transaction cost assumptions: Current portfolio 1.00%; Skill-Weighted Portfolio 0.25%. These costs include trading expenses, spread costs, market impact, interest expense and opportunity cost (due to holding cash).
m = thousands (000)
Traditional Portfolio
Based on a 10% (pre-fee, pre-tax) rate of return.
Management-Optimized Portfolio
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No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does Research look like?What does Research look like?
![Page 70: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/70.jpg)
No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does Research look like?What does Research look like?
![Page 71: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/71.jpg)
RogersCasey
Forward-Looking Fundamental Research
Independent, Unbiased
“Actionable Intelligence”
Best-of-Breed Manager Recommendations Best-of-Breed Manager Recommendations
![Page 72: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/72.jpg)
Coverage of Major Custody PlatformsCoverage of Major Custody Platforms
Fidelity
Pershing
Schwab
TD Ameritrade
Fidelity
Pershing
Schwab
TD Ameritrade
No Products! No Payments! No Conflicts!No Products! No Payments! No Conflicts!
![Page 73: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/73.jpg)
Active Ring
Defined by Asset Class characteristics
Manager Recommendations for SW PortfoliosManager Recommendations for SW Portfolios
Alpha Rim
Defined by Manager characteristics
![Page 74: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/74.jpg)
Alpha Rim: Defining CharacteristicsAlpha Rim: Defining Characteristics
Talent
Unobservable investment process
Specific ROI expectation
Strategy unconstrained
Risk defined by capital loss
Idiosyncratic (stock-specific) risk
Low benchmark sensitivity
Research-intensive
Liquidity variable
Willingness to hold cash
High concentration
Tactical
Inefficient markets and/or complex
Alternative securities / non-benchmark securities
Currency skill
Talent
![Page 75: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/75.jpg)
No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does Reporting look like?What does Reporting look like?
![Page 76: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/76.jpg)
No Product BiasNo Product Bias
Holistic PortfoliosHolistic Portfolios
TransparencyTransparency
Independent ResearchIndependent Research
No ConflictsNo Conflicts
No Middleman FeesNo Middleman Fees
Clear Expectations Clear Expectations
Client-Side PlatformClient-Side Platform
What does Reporting look like?What does Reporting look like?
![Page 77: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/77.jpg)
Active RingTM
Alpha RimTM
EM CoreTM Above-Market Return
With above-marketshort-term volatility
Absolute ReturnWith above-market volatility
and increased illiquidity
Market Return
Clearer, More Realistic ExpectationsClearer, More Realistic Expectations
![Page 78: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/78.jpg)
Integrated With MethodologyIntegrated With Methodology
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Market Return Above-Market
Absolute Return Combined
Reflects ExpectationsReflects Expectations
![Page 80: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/80.jpg)
Reinforces ExpectationsReinforces Expectations
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Client-Side PlatformClient-Side Platform
Differentiate from DistributorsDifferentiate from Distributors
Market-Share / Business Growth
Compete against the Wall Street GiantsCompete against the Wall Street Giants
Foster Investor TrustFoster Investor Trust
Increase Asset Management EfficiencyIncrease Asset Management Efficiency
Enhance PerformanceEnhance Performance
Promote Realistic ExpectationsPromote Realistic Expectations
![Page 82: The Financial Planning Association](https://reader035.fdocuments.in/reader035/viewer/2022062518/568140b5550346895dac76d0/html5/thumbnails/82.jpg)
The Financial Planning AssociationThe Financial Planning Association