Over a decade of teaching personal investing has convinced me that the way investing works today has a short lifespan. The MPT-based portfolio design and management approach is so confusing and filled with subjective judgments that the average person with money to invest sees little option but to entrust their savings to advisors who are also salespeople. Then they simply accept without question the portfolios they are given. Today, in the investing world, the "power" lies almost totally in the hands of the financial services industry with individual investors having little to none.

In such an environment millions of individuals with money to invest are not participating in the market in fear of losing control of their financial futures. They see an investing process that delivers mediocre returns at best and with excessive risk and high expenses. And the market crash of 2008 is still fresh in their minds.

The Catalyst for Change

The power imbalance that exists today needs to change. But what will enable this to happen? The answer is the introduction of a new approach to investing that transfers power from sellers to buyers. This is what has occurred with the introduction of Dynamic Investment Theory (DIT). Because DIT and Dynamic Investments are simple to understand, implement and manage, individual investors now have choices that they previously did not exist. Let’s look at how DIT empowers individual investors and by doing so greatly benefits the financial services industry.

Benefits for Individuals

The NAOI and our academic partners will teach the public what DIT and DIs are and how to use them. With the public empowered by this knowledge the investing environment will change in the following ways:

  • Individuals will demand portfolios that produce performance at least equal to that of the simple NAOI Alpha DI discussed on Slide 05. They will not accept lower returns or higher risk than they can receive by simply buying and holding that benchmark DI.

  • If their current advisor refuses to offer DIs, the investor can look for another advisor that does.

  • If they can’t find one, individuals can implement and manage DIs on their own using an online broker. The NAOI will give them a catalog of optimized DIs for this purpose.

You can see how the introduction of DIs gives power to the people. DIs give them choices that don’t exist today and choices are power. When individuals have the very real option of investing without the aid of an advisor, the financial services industry will change as discussed next.

Benefits for Advisors and Financial Organizations

The power-shift caused by DIT and DIs should not be seen by the financial services industry as a bad thing. Following is a list of just a few of the benefits that this new approach will give to them:

  • DIs enable advisors and the industry to provide to the public investments / portfolios that provide significantly higher performance than the MPT portfolios they provide today. And these new products will provide wealth protection components that MPT portfolios do not.

  • With simpler, higher return and lower risk products being offered, millions of people with money to invest who are currently on the market sidelines in fear, will enter the market with confidence. Of course this means more clients for those organizations that offer DIs and increased revenues.

  • DIs enable advisors and financial organizations to expand their product lines significantly and virtually overnight as DIs are created by simply combining existing ETFs or mutual funds in the DI format as discussed on Slide 04.

  • Financial organizations can open new revenue streams by creating catalogs of proprietary DI products that they can offer to the market.

The significant benefits offered by Dynamic Investments cannot be ignored by the financial services industry. Those that offer them will gain a significant competitive advantage over those that don’t.

Change Is Not Optional

The financial organizations that are open to change and integrate Dynamic Investments into their product offerings and strategic plans will thrive in the future of investing. They will be able to offer investing products that are far superior to those being offered today. Those that resist change will lose clients to those that do as the superior results of DIs and MPT / DIT hybrid portfolios becomes known throughout the industry. As the NAOI and our partners make the benefits of DIs known via books, academic classes, press releases and the media, change will not be optional. And those that embrace it first will benefit the most.

The NAOI is works with advisors and financial organizations to enable them to make this critical change with minimal disruption to current operations. And via a consulting contract we will show how offering DIs will greatly expand their share and open significant new revenue streams. NAOI support offerings are discussed on Slide 12.

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