Many organizations offer “investor education”. Only the National Association of Online Investors (NAOI) offers total “Investor Empowerment”. As you will read on this Web page, the difference is huge!

The Five Components of Investor Empowerment

The diagram below shows the components involved in the investor empowerment process defined by the NAOI and the five information flows that connect them. Below the diagram each of these components is discussed with reference to the circled numbers.

 
 

1. Education

Education is at the core of investor empowerment. Learning the basics of how equity markets work is essential for individuals to participate in the market with confidence and success. Unfortunately this is a life-skill that is not taught with any degree of rigor at any level of academia. The NAOI is meeting this need with comprehensive, objective and actionable education as discussed at this link.

However, we found that teaching individuals how investing works today is not sufficient. We cannot make the assumption that current investing techniques are optimal in modern markets. As a result, education alone will not empower individuals to become successful investors. The components listed below are needed as well.

2. Investor-Market Research

The NAOI has learned from 25+ years of working with individual investors that the financial services industry needs to spend more time and effort understanding the wants and needs of the investing public.

In today’s investing environment financial advisors tell individuals the types of investments and portfolios they should purchase in order to match their risk tolerance. Then investors are advised to simply hold these portfolios for the long term. Unfortunately, because of the complex nature of investing today most people see little option but to simply accept the portfolios recommended to them without question and just hope for the best. The NAOI is taking a different approach.

The NAOI corporate structure includes an Investor-Market Research Division having the sole purpose of understanding how individuals view the market, how they make investing decisions and what they want and need from advisors to participate in the market with confidence. We use this critical information to create more effective education content and to develop innovative investing products / methods, discussed in Point 3, below, that better meet the goals of the investing public than the products they are offered today.

3. Investment Innovation

As we teach individuals to invest, they also teach us. And we know that far too many people who need investing income are not participating in the market today. Why? The main reason is that the are afraid of holding static, buy-and-hold portfolios that are dangerously vulnerable to market crashes in modern volatile markets.

The source of this fear is the exclusive use of a portfolio design and management approach called Modern Portfolio Theory (MPT). MPT was introduced in the 1950’s when markets were a far different place. While markets have evolved, MPT has not and this approach is no longer optimal in current markets. To solve this problem and mitigate investor fears, the NAOI Research and Development Division (see this link) has created an alternative to MPT called Dynamic Investment Theory (DIT) - see this link.

The NAOI is now teaching DIT methods in addition to MPT methods throughout our education network and students tell us that this is finally the approach that will enable them to enter the market with confidence and without fear. We also teach our consulting clients how to build more effective portfolios using both MPT and DIT methods. Innovation is a critical element of investor empowerment that the NAOI provides.

4. Consulting

NAOI students and the investing public in general tell us that, to them, all financial organizations and advisors look alike. They all seem to offer the same products and investing methods. In other words, none have a major competitive advantage. NAOI consulting agreements show advisors and financial organizations what they need to offer in order to attract new clients. The NAOI knows that competitive advantage is gained by offering investor education as well as superior investment products, portfolios and wealth solutions using Dynamic Investments as discussed in Point 5, below. Both of these offerings are critical to investor empowerment. More information related to NAOI consulting is found at this link.

5. Superior Wealth Creation Solutions

Based on 25+ years of interacting with current and potential investors, the NAOI knows the type of investments and portfolios that the public will buy. And we know what they won’t buy. This is information that we provide to our consulting clients to show them how to create and offer investing solutions that will attract far more clients than they do today. The introduction by the NAOI of Dynamic Investments is one example. They provide advisors and product developers with a set of innovative tools that make the creation of of simpler, safer and higher return investment products possible. And advisors/organizations that offer them will hold a massive advantage over competitors that adverse to change.

Closing the “Power Gap” Between Investment Sellers and Buyers

It is an unfortunate fact today that most people have not been taught how investing works with any degree of rigor at any level of academia. Therefore, when working with an investment advisor they see little option but to simply accept the portfolios recommended to them without question. The massive knowledge/power gap that exists between investment buyers and sellers is causing in far too many people who need investing income to avoid the market - unwilling to entrust their financial futures to a third party who they also know is a salesperson.

The diagram below shows how the NAOI resolves this issue by working with both investment buyers and sellers to “even the playing field”. We empower investors to become active participants in the design of their portfolios, enabling them to evaluate the investment recommendations they are given and to ask the questions needed to ensure its quality and effectiveness. They learn this information and how to use it in the “DI Users Manual” that is discussed at this link.

We consult with advisors and investment developers, showing them how to offer wealth creation products and solutions that survive this questioning and meet the high standards of NAOI-educated investors. We also offer to the financial services industry a Research Report entitled “The Power of ETF Combinations” that shows how DIT was developed, how it works, the benefits it provides and how financial advisors and financial organizations can take advantage of these benefits NOW. The Research Report is discussed at this link.

By shifting a degree of “power” from investment sellers (who today hold all of the power) to investment buyers, a more efficient and effective world of investing emerges; one that will bring a massive number people into the market who now are on the sidelines in fear.

The Investor Empowerment Participants and Information Flows

The diagram below shows the three entities involved in the investor empowerment process as well as the “power flows” among each. The arrows show that the NAOI is uniquely positioned to empower individuals to become successful investors and to enable investment advisors to gain a massive competitive advantage in the crowded market of financial services.

 
 

The NAOI “Empowerment” Publications

The NAOI enables the empowerment of both investment buyers, via our education courses/books, and sellers via consulting agreements. The NAOI has also created two publications that empower both buyers and sellers as follows:

  • The “Dynamic Investment User’s Manual” targeted at the investing public

  • The NAOI Research Report entitled “A Blueprint for the Future of Investing”.

Both are described at this link.

The Unique Structure of the NAOI

The NAOI is uniquely structured to provide the 5 components of investor empowerment discussed on this Web page. You can learn about the unique organization of the NAOI on the site’s Home Page. This is the organizational structure that will enable us to not only improve how investing works at a fundamental level but also to take these changes “mainstream”. Financial organizations and advisors who learn about these changes first, will benefit the most.