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 along with 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 Investor 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 investor solutions that will attract far more clients than they do today. The introduction by the NAOI of Dynamic Investments is one example. DIs provide the higher returns that investors want with the protections from loss that they need. Advisors that offer them will hold a massive competitive advantage over those that remain “stuck” in the MPT box.

Closing the “Gap” Between Investment Buyers and Sellers

Today their exists a massive knowledge-gap between individual investors and investment advisors. Due to the lack of comprehensive investing education programs investors today have little option but to simply buy what their advisors - who are also salespeople - recommend. This is not how investing should work.

The diagram below shows how the NAOI closes this knowledge-gap by working with both investment buyers and sellers to the benefit of both.

The elements of investor empowerment provided by the NAOI will bring thousands of people into the market who are now on the sidelines in fear of holding static portfolios in dynamic markets. And advisors that work with the NAOI to mitigate this fear will expand their client base and increase their revenues exponentially.