IAR - Read this first!

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IAR - Read this first!

• This presentation is for advisory clients and
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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.
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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.
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Charting the Course for your Financial Future
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Strategic Asset Allocation
Divide your portions between seven or eight for
you do not know what misfortune will come to this
world.
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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
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How Many Baskets Do You Have?
BestPerforming
WorstPerforming
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
Indices are unmanaged and cannot be invested into
directly. See attached page for disclosures.
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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.

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A Tale of Three Investors

• 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.

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.
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A Tale of Three Investors

• 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.

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
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A Tale of Three Investors

• 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
  portfolios assets are rebalanced so that they
  are equally distributed among six segments.

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.
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A Tale of Three Investors
Maintaining a well-diversified portfolio worked

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

Peter
Rhoda
Irvin

• 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

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Consistency, Consistency, Consistency

• Investor B Invests 100,000
• Disciplined, Diversified Portfolio
• Goes up 10 one year, up 10 the next.
  Continues this pattern for 20 years.

• Investor A Invests 100,000
• Chases Returns
• Goes up 30 one year, down 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.
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How Diversified Are You?
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Many Assets, Little Diversification

• Large Company Growth Stocks

Stock investing involves risk, including loss of
principal.
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A World of Noise
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Dont Be That Guy!
Stuart and Mr. P
Catch the wave of the future, mman!
Source Ameritrade
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My Role as AdvisorQuiet the Noise and Remain
Disciplined
Determine Objectives
Asset Allocation
On-Going Review
You
Security Selection
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Step 1 Determine Your Objectives
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Step 2 Build Asset Allocation Framework
Growth with Income
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Step 3 Select Underlying Investments
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.
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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.
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Step 4 Ongoing Portfolio Review

• Discuss Account Performance
• Revisit Client Objectives
• Review Asset Allocation
• Explain Rebalancing
• Implement Decisions

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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.

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My Advisory Process

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

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Benefits of Strategic Asset Management

• Multiple Investment Choices
• Flexibility
• World Class, Unbiased Research
• One Account, One Statement, One Fee

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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.

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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.
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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.
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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

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LPL Financial Resources
LPL Financial Research
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One Account, One Statement, One Fee

• Consolidated, Quarterly Report
• Consolidated Tax Statement
• Predictable Expenses Linked to Portfolio
  Performance

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The End Result

• Consistent, Risk-Adjusted Investment Returns

Ongoing Review
Security Selection
Asset Allocation
Determine Objectives
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Strategic Asset ManagementA Time-Tested
Investment Strategy
The only thing new in this world is the
history you dont know. -Harry S. Truman
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Your Next Step

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