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401(k) Plans Unleash the Power of Your Plan. The System is Broken! The financial industry and 401(k) plans have failed their participants  In one year.

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Presentation on theme: "401(k) Plans Unleash the Power of Your Plan. The System is Broken! The financial industry and 401(k) plans have failed their participants  In one year."— Presentation transcript:

1 401(k) Plans Unleash the Power of Your Plan

2 The System is Broken! The financial industry and 401(k) plans have failed their participants  In one year you have lost 30% to 50% of your retirement money  80% of the participants find the investment selection process confusing  Your plan provider has no incentive to provide ongoing support to you Broken industry tied to a flawed business model, with no incentive to change  Based on product transactions, not ongoing education and service  Service and education sacrificed in the never ending search for new transactional business  Mutual Fund based 401(k) plans are fundamentally all the same The financial industry and 401(k) plans have failed their participants  In one year you have lost 30% to 50% of your retirement money  80% of the participants find the investment selection process confusing  Your plan provider has no incentive to provide ongoing support to you Broken industry tied to a flawed business model, with no incentive to change  Based on product transactions, not ongoing education and service  Service and education sacrificed in the never ending search for new transactional business  Mutual Fund based 401(k) plans are fundamentally all the same

3 Why We Are Different We replace the current broken system with a new financial investment model that works  Move assets from flawed Mutual Fund approach to Active Money Management that provides both defensive and offensive elements to maximize investment returns and minimize market losses  Simplify and bring clarity to the 401(k) investment selection process so you can sleep at night with confidence in your plan  Focus on ongoing education and service so participants have the knowledge to make informed investment decisions We replace the current broken system with a new financial investment model that works  Move assets from flawed Mutual Fund approach to Active Money Management that provides both defensive and offensive elements to maximize investment returns and minimize market losses  Simplify and bring clarity to the 401(k) investment selection process so you can sleep at night with confidence in your plan  Focus on ongoing education and service so participants have the knowledge to make informed investment decisions We are focused on changing the industry so people can finally realize their financial goals and retire in dignity

4 Your 401(k) Plan Suffers From Excessive Fees  Most are hidden from you (see Bloomberg Report June 2008 on DVD) Horrible Investment Performance  Typical returns for 2008 negative 30 to 50% Personal Liability  The really bad news: You are personally liable for the two issues above pursuant to the 2006 Pension Protection Act

5 Our Solutions for You Eliminate excessive fees  Typically reduce fees 40-60% Improve Investment Performance Significantly  Implement Institutional Third Party Active Money Management Significantly reduce personal liability  Currently over 11,000 lawsuits (and growing) due to excessive fees and poor investment performance. Third party Active Money Management Firms assume co- fiduciary responsibility

6 Let’s Look at the Problems in More Detail  Excessive Fees Horrible Investment Performance Personal Liability

7 Where do our Competitors Typically HIDE the Fees you May be Paying  12b-1 Fees  Revenue Sharing  Surrender Charges  Shelf Space  Finder Fees  Soft Dollars  Wrap Fees  … and more The U.S. Dept of Labor identified over 17 different fees you could be charged… here are a few of the common hidden fees: Ultimately, all of these fees result in drag on your 401(k) rates of return; excess fees can easily cost each and every participant over Half a Million Dollars (or more) over a 30 year period! This is why lawsuits are growing.!

8 Typical Fee Reduction Example

9 Our Fees are Completely Transparent No shell games… No moving fees to other categories to lure you into alleged ‘Free’ or ultra low-cost plans that sound enticing… …but defy common sense! The prior slide entitled ‘Typical Fee Reduction Example’ is representative of our Fee Disclosure and competitive comparison that our 401(k) clients receive from us. Our transparent fee structure and Active Money Management QDIA (Qualified Default Investment Alternatives) are fully compliant with ERISA and the 2006 Pension Protection Act.

10 Let’s Look at the Problems in More Detail Excessive Fees  Horrible Investment Performance Personal Liability

11 Why Mutual Funds Don’t Work The problem with Mutual Funds:  Legally bound by investment “style”, i.e. Large Cap, Small Cap, Growth, etc.  Legally bound by “prospectus”, i.e. the investment rules of the mutual fund  Typically 88% of the assets must be invested according to the fund style and prospectus The result:  Money Managers are bound by a Broken System, forced to pick the ‘best of the worst’  No defensive aspect to investing, constant cycle of ‘Buy and Hold (Hope)’ which has led to big losses  Big mutual fund companies have no incentive to change, they make all their profit from the Broken System !

12 Active Money Management What makes Active Money Management different from Mutual Fund Management? The answer is really quite simple; Mutual Funds by law and the mandates of the ‘prospectus’ must stay invested in the market, riding the ups and downs… purely an OFFENSIVE strategy that maximizes your risk, typically referred to as a Buy & Hold strategy! Third party Active Money Management Firms are very different. The manager has FULL Discretionary Authority over the account allowing them to react to persistent market trends thus providing BOTH an OFFENSIVE strategy AND a DEFENSIVE strategy! The discipline involves OFFENSIVELY catching 80% of the up (Bull) market while DEFENSIVELY avoiding 80% of the down (Bear) market… typically by moving out of equities in those devastating declining Bear markets which average a 34% loss every 5 to 7 years. “When you are out of the market can be more important that when you are in” - Barrons 2001

13 What Investors Tell Us Are Their Greatest Concerns 1.Outliving my Money 2.Protection of my Principal ( I want Less Risk) 3.Investment Performance Investors Believe: Performance is important, but not at the risk of losing my money.

14 Foxhall Money Manager vs. Typical Plan Foxhall Active Money Management more than doubles the returns of the S&P index. What would you rather have in your 401(k) account after 9 years… Have your cake and eat it too! Better investment returns with 80% less exposure to market risk! In this example, Vanguard would have the MOST RISK, and Foxhall’s most aggressive fund would have the LEAST RISK. $160,012 or only $71,878?

15 Foxhall Active Money Management Performance vs. Market

16 Understanding & Taking Advantage of the Fundamental Strength of Active Money Management’s DEFENSIVE STRATEGY is the Absolute KEY to Avoid Devastating Losses in Future Bear Market Cycles! Lets examine some typical losses during declining (Bear) markets which occur every 5 to 7 years. Then we will take a look at what it takes just to break even from those losses. Remember: The average loss every 5 to 7 years in typical investment portfolios is a devastating 34% (Not including the EXCESSIVE FEES you may already be paying!) Gain Required to Break Even After Bear Market Cycle  11% 50% 100% Your Loss in Bear Market Cycle 10% 33% 50% Your Loss in Bear Market Cycle 10% 33% 50% Typical Foxhall performance 1 vs. Typical loss in Bear Market cycle 1 1 – See 12 & 24 Month trailing performance on previous slide “Foxhall Active Money Management Performance vs. Market”

17 Let’s Look at the Problems in More Detail Excessive Fees Horrible Investment Performance  Personal Liability

18 Fiduciary Responsibility What does this mean? Did you know….. if:  You have fiduciary responsibility to plan participants if: ✔ You are or ever have made decisions on the plan ✔ You are listed as the Plan Sponsor  If you are determined to have fiduciary responsibility: ✔ You are personally responsible for legal damages awarded for paying excessive fees ✔ You are personally responsible for legal damages awarded for poor plan investment performance ✔ You are NOT protected by the corporation or E&O policies ✔ Your home & personal possessions are at risk to pay legal judgments! As unfair and unreasonable as this may seem, nevertheless, it is the law. Based on the 2006 Pension Protection Act

19 Common Questions Q1:How difficult is it to transition to the IAI 401 (k) platform? A:With simple online tools, local experts and dedicated phone support teams to assist in the transition, your part is easy! Q2:Is there local support when we move forward? A:Yes, a team of fully licensed Investment Advisor Representatives are at your disposal to assist in plan transition, provide education seminars, and complimentary financial strategies to plan participants! Q3:This is hard to believe, why haven’t I heard of this before and why isn’t everyone using Active Money Management Firms? A:Active Money Management has only been made available to small/medium 401(k) plans and average hard working families recently due to the ground breaking partnerships of IAI and world class money management firms.

20 Common Questions cont… Q4:Who else is taking advantage of Active Money Management firms? A:Endowments (Universities & Charitable Organizations), Pension Funds, large and small companies, and individual families! Q5:How do we know that this is not just another scam and the stated performance is real? A:We only work with money managers that meet GIPS (Global Investment Performance Standards), quarterly independent audits of performance data… only 5% of all money managers meet this rigorous standard. Q6:Is Active Money Management available outside a 401(k) plan? A: Yes, the Active Money Management advantage is available for qualified and non-qualified personal and family assets as well!

21 For more information: Talk to one of the attendees of the 3/27 Los Altos Hills CC presentation -or- Call Justin Wright Investment Advisor Representative 925.922.7770

22 We Provide Solutions That Enable You to Achieve Your Financial Goals With Less Risk Are you willing to do TODAY What others won’t do… …In order to have the life TOMORROW That others won’t have?


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