IAR - Read this first!

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IAR
-

Read this first!

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Slides may not be provided in any form to clients and/or prospects.
Any modifications to this presentation must be submitted to LPL
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Speaker notes are accessed by going to View > Notes Page.
Microsoft PowerPoint (not Viewer) required to see Notes Pages.


S T R A T E G I C A S S E T M A N A G E M E N T (SAM)

A TIME
-
TESTED INVESTMENT STRATEGY


The LPL Financial family of affiliated companies includes LPL
Financial, UVEST Financial Services Group, Inc., IFMG
Securities, Inc., Mutual Service Corporation, Waterstone
Financial Group, Inc., and Associated Securities Corp., each of
which is a member of FINRA/SIPC.


Strategic Asset Management


Asset Allocation and
Diversification



My Role as an Advisor


The Consulting Process



My Advisory Platform


Strategic Asset Management


There is no guarantee that a diversified portfolio will enhance overall
returns or outperform a non
-
diversified portfolio. Diversification does
not ensure against market risk.

Charting the Course for your
Financial Future

Strategic Asset Allocation

Divide your portions between
seven or eight for you do not
know what misfortune will
come to this world.

Asset Allocation Drives
Performance

Market Timing 1.8%

Other Factors 2.1%

Security Selection 4.6%

Asset
Allocation
Decision

91.5%

Source: “Determinants of Portfolio Performance II: An Update”
-

Brinson, Singer, & Beebower,

Financial Analysts Journal, May / June 1991



How Many Baskets Do You Have?

Best

Performing

Worst

Performing

Indices are unmanaged and cannot be invested into directly. See attached page for disclosures.

1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
S Growth
51.2%
S Value
29.1%
Intl
33.0%
Intl
8.1%
L Value
38.3%
L
Growth
23.1%
L Value
35.2%
L
Growth
38.7%
HFRI
44.2%
S Value
22.8%
S Value
14.0%
Bonds
10.26%
S
Growth
48.5%
S Value
22.25%
Intl
14.02%
Intl
26.86%
L
Growth
11.81%
S Value
41.7%
HFRI
21.3%
HFRI
27.9%
L Growth
2.7%
S&P 500
37.6%
S&P
500
22.9%
S&P
500
33.4%
S&P
500
28.8%
S
Growth
43.1%
Bonds
11.6%
Bonds
8.4%
HFRI
-4.7%
S Value
46.0%
Intl
20.7%
HFRI
10.6%
S Value
23.48%
Intl
11.58%
L Growth
41.2%
L Value
13.8%
S Value
23.9%
HFRI
2.6%
L Growth
37.2%
HFRI
21.7%
S Value
31.8%
Intl
20.3%
L
Growth
33.1%
HFRI
9.1%
HFRI
0.4%
S Value
-11.4%
Intl
39.2%
L Value
16.49%
L Value
7.05%
L Value
22.25%
HFRI
10.65%
HFRI
40.1%
S Growth
7.8%
L Value
18.1%
S&P 500
1.3%
S Growth
31.0%
L Value
21.6%
L
Growth
30.5%
HFRI
16.0%
Intl
27.3%
L Value
7.0%
L Value
-5.6%
L Value
-15.5%
L Value
30.0%
S
Growth
14.31%
L
Growth
5.26%
S&P
500
15.79%
S
Growth
7.05%
S&P 500
30.5%
S&P 500
7.6%
S Growth
13.4%
S Value
-1.5%
HFRI
31.0%
S Value
21.4%
HFRI
23.4%
L Value
15.6%
S&P
500
21.0%
S&P
500
-9.1%
S
Growth
-9.2%
Intl
-15.7%
L
Growth
29.8%
S&P
500
10.9%
S&P
500
4.91%
S
Growth
13.35%
Bonds
6.97%
L Value
24.6%
Bonds
7.4%
S&P 500
10.1%
L Value
-2.0%
S Value
25.8%
S
Growth
11.3%
S
Growth
13.0%
Bonds
8.7%
L Value
7.3%
Intl
-14.0%
S&P
500
-11.9%
S&P
500
-22.1%
S&P
500
28.7%
L
Growth
6.30%
S Value
4.71%
HFRI
11.71%
S&P
500
5.49%
Bonds
16.0%
L Growth
5.0%
Bonds
9.8%
S Growth
-2.4%
Bonds
18.5%
Intl
6.4%
Bonds
9.7%
S
Growth
1.2%
Bonds
-0.8%
S
Growth
-22.4%
L
Growth
-20.4%
L
Growth
-27.9%
HFRI
20.9%
Bonds
4.34%
S
Growth
4.15%
L
Growth
9.07%
L Value
-0.17%
Intl
12.5%
Intl
-11.8%
L Growth
2.9%
Bonds
-2.9%
Intl
11.6%
Bonds
3.6%
Intl
2.1%
S Value
-6.4%
S Value
-1.5%
L
Growth
-22.4%
Intl
-21.2%
S
Growth
-30.4%
Bonds
4.1%
HFRI
2.2%
Bonds
2.43%
Bonds
4.33%
S Value
-9.78%
Sources

Bonds: LB Aggregate Bond Index

L Growth: Russell 1000 Growth Index

L Value: Russell 1000 Value Index

S Growth: Russell 2000 Growth Index


S Value: Russell 2000 Value Index

Intl: MSCI EAFE Index

HFRI: HFRI Equity Hedge Index


How Many Baskets Do You Have?



Disclosure:
Treasury bills are backed by the full faith and
credit of the United States Government. Please note that the
value of bonds generally have an inverse relationship to
interest rates. Stocks will experience market fluctuations
which can include loss of principal value while bonds offer a
fixed
-
rate of return. Small
-
cap stocks may be subject to a
higher degree of market risk than large
-
cap stocks, and the
illiquidity of the small
-
cap market may adversely affect the
value of these investments so that when redeemed, shares
may be worth more or less than their original cost. High
-
yield
securities inherently have a higher degree of market risk and
there are credit risks associated with the underlying issuers.
In addition, lack of liquidity associated with high
-
yield
securities may impair their value. International and emerging
market securities are also subject to additional risks such as
currency fluctuations and political instability. Prior to
investing in any security, consult with your financial
professional.

Our first investor,
Peter
, employs
an investing strategy known as
“chasing performance.” He invests
a hypothetical $10,000 at the end of
each year into the best
-
performing
market segment of that year and
continues this process for twenty
years.

A Tale of Three Investors

$496,731
$0
$200,000
$400,000
$600,000
$800,000
Peter
For purposes of this comparison, the overall market has been divided into six separate indices


Lehman Agg.
Bond Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell
2500. It is not possible to invest directly in an index.

Beginning 12/31/82 and ending 12/31/02, “Peter” invests $10,000 on January 1 of each year for twenty years
into the best
-
performing market segment of the previous year. The money is left in the specific sector for the
duration.

This is a hypothetical illustration and not representative of any specific investment. Your
situation will vary. Past performance is no guarantee of future results.

Our second investor,
Rhoda
,
is always hoping for the
“rebound.” She invests at the
end of each year in the worst
performing segment of that
year and continues this
process for twenty years.

A Tale of Three Investors

$545,404
$0
$200,000
$400,000
$600,000
$800,000
Rhoda

For purposes of this comparison, the overall market has been divided into six separate indices


Lehman Agg. Bond
Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell 2500.
It is not possible to invest directly in an index.

Beginning 12/31/82 and ending 12/31/02, “Rhoda” invests $10,000 on January 1 of each year for twenty years
into the worst
-
performing market segment of the previous year. The money is left in the specific sector for the
duration.

This is a hypothetical illustration and not representative of any specific investment. Your
situation will vary. Past performance is no guarantee of future results

Irvin

is the insightful investor. He
allocates and diversifies his $10,000
by investing equally in six different
market segments each year for 20
years. And not only does Irvin
allocate and diversify, but at the end
of every quarter, his portfolio’s assets
are rebalanced so that they are equally
distributed among six segments.

A Tale of Three Investors

$642,339
$0
$200,000
$400,000
$600,000
$800,000
Irvin
For purposes of this comparison, the overall market has been divided into six separate indices


Lehman Agg. Bond
Index, M.S. Capital International, Russell 1000, Russell 1000 Growth, Russell 1000 Value and Russell 2500. It is
not possible to invest directly in an index. “Irvin” follows this process from 12/31/82


12/31/02, investing an
addiional $10,000 every January 1.
This is a hypothetical illustration and not representative of any
specific investment. Your situation will vary. Past performance is no guarantee of future results.

$496,731
$545,404
$642,339
$0
$200,000
$400,000
$600,000
$800,000
Irvin

may be onto something.
His strategy combining asset
allocation and rebalancing
significantly outperformed the
other two approaches.


A Tale of Three Investors

Peter

Rhoda

Irvin

Maintaining a well
-
diversified portfolio worked

This is a hypothetical illustration designed to demonstrate the effects of diversification and
rebalancing and is not intended to project performance. No strategy assures success or
protects against loss. Past performance is no guarantee of future results.

The Lehman Brothers Agg. Bond Index is a measure of the U.S. bond market. The MSCI EAFE Index is a
measure of the international stock market. The Russell 1000 Index measures the performance of large
-
cap
U.S. stocks. The Russell 1000 Growth Index measures the performance of large
-
cap U. S. growth stocks. The
Russell 1000 Value Index measures the performance of large
-
cap U.S. value stocks. The Russell 2500 Index
measures the performance of U.S. small
-
cap stocks


Consistency, Consistency, Consistency

Investor A: Invests $100,000

Chases Returns



Goes up 30% one year, down
10% the next. Continues this
pattern for 20 years.

Investor B: Invests $100,000

Disciplined, Diversified Portfolio



Goes up 10% one year, up 10%
the next. Continues this pattern
for 20 years
.

Average Annual Return, Investor A:

10%

Average Annual Return, Investor B:

10%

Account Value after 20 years:

$480,674

Account Value after 20 years:

$672,735

This is a hypothetical illustration. Your results will vary.

Diversification is an
investment strategy that seeks to reduce risk an provide competitive returns. No
investment strategy guarantees against a loss.

The hypothetical rates of return do not reflect the cost inherent in investing.


How Diversified Are You?

Many Assets, Little Diversification


Large Company Growth Stocks

Appreciation

Fund

Stock investing involves risk, including loss of principal.

A World of Noise






Don’t Be That Guy!

Stuart and Mr. P

“Catch the wave of the future, m’man!”

Source: Ameritrade

My Role as Advisor:

Quiet the Noise and Remain Disciplined

Determine
Objectives

Asset
Allocation

Security
Selection

On
-
Going
Review

You

Step 1: Determine Your Objectives

Step 2: Build Asset

Allocation Framework

Large Cap U.S. Growth - 23%
Large Cap U.S. Value - 23%
Small Cap U.S. Growth - 4%
Small Cap U.S. Value - 3%
Large Cap Foreign - 7%
Int/LT Hi-Quality Bond - 21%
Int/LT High Yield Bond - 3%
Int/LT Foreign Bond - 3%
Short Int Hi-Quality Bond- - 8%
Cash- 5%
Growth with Income

Step 3: Select Underlying
Investments

Small Cap U.S. Growth

Small Cap U.S. Value

Small Cap/Emerging Market

Large Cap U.S. Growth


Large Cap U.S. Value

Large Cap Foreign

Int/LT Hi
-
Quality Bond

Int/LT High Yield Bond

Int/LT Foreign Bond

Cash

Large Cap U.S.Growth


Growth Fund of America

Columbia Marsico Growth

Harbor Capital Appreciation

IXIS Advisor Funds

T Rowe Price Growth Stock Fund

Investors should consider the investment objectives, risks, charges and
expenses of the investment company carefully before investing. The
prospectus contains this and other information about the investment
company. You can obtain a prospectus from your financial representative.
Read carefully before investing.

The Fund Selection Process



Management Team



Investment Philosophy



Risk



Expenses



Adherence to Style

Investing in mutual finds involves risk, including loss of principal.
Investments in specialized industry sectors have additional risks, which
are outlined in the prospectus.

Step 4: Ongoing Portfolio
Review



Discuss Account Performance


Revisit Client Objectives


Review Asset Allocation


Explain Rebalancing


Implement Decisions



Staying in Balance


Source: LPL Financial. Values represent the total return of unmanaged indices assuming full reinvestment of capital
gains and dividends. Equity allocation represented by the Russell 3000 Index; Bonds represented by the Lehman Brothers
Aggregate Bond Index; Cash represented by the Lehman Brothers 3
-
month T
-
Bill.
Past performance is no
guarantee of future results. Indices may not be invested into directly. No strategy assures
success or protects against loss. This hypothetical example is intended to demonstrate the
effects of rebalancing and is not intended to project performance.

My Advisory Process:



By building a relationship based on advice,
rather than transactions, my success is
directly linked to that of my client.

Benefits of Strategic Asset
Management


Multiple Investment Choices


Flexibility


World Class, Unbiased
Research


One Account, One Statement,
One Fee

Multiple Investment Choices


6,250+ No
-
load /Load Waived
Mutual Funds*


Individual Stocks & Bonds**


No
-
Load Variable Annuity


Previously Purchased Investments


Certain funds in SAM pay 12b
-
1 fees. Nominal transaction charges apply.


** Stock investing involves risk, including loss of principal.

Bonds are subject to market and interest rate risk if sold prior to maturity.
Bond values will decline as interest rates rise and are subject to availability
and change in price.


Sample Fund Families


AIM


Allianz


American Funds


Dreyfus


Fidelity


Franklin/Templeton


Janus


MFS


Neuberger/Berman



Oppenheimer


PIMCO


Putnam


RS Funds


Scudder


TCW


Transamerica


T Rowe Price


Vanguard


Investors should consider the investment objectives, risks, charges and expenses
of the investment company carefully before investing. The prospectus contains
this and other information about the investment company. You can obtain a
prospectus from your financial representative. Read carefully before investing.

Flexibility


Change Asset Allocation as
Your Objectives Change


Aligned Interest


Trade Without Paying
Commissions*

* Certain funds in SAM pay 12
-
b1 fees. Nominal
transaction charges occur.


LPL Financial World Class
Research


One of the Largest Independent
Investment Research Organizations


Analysts Covering Individual
Securities and Mutual Funds


No Investment Banking, No
Proprietary Products

LPL Financial Resources

LPL Financial Research

One Account, One Statement,
One Fee





Consolidated, Quarterly Report



Consolidated Tax Statement



Predictable Expenses Linked to

Portfolio Performance

The End Result


Consistent,
Risk
-
Adjusted
Investment
Returns

Determine Objectives

Ongoing

Review

Security Selection

Asset Allocation

Strategic Asset Management

A Time
-
Tested Investment Strategy

“The only thing new in this world


is the history you don’t know.”



-
Harry S. Truman

Your Next Step


Schedule a meeting for a more in depth
look at my practice and receive a
complimentary investment analysis.