Behavioral Finance & Client Expectation Management Cal Cpa Presentation For July 16 2008

Larkspur Financial Advisors
Asset Management & Financial Planning

B E H AV I O R A L F I NA NC E & YOU R C L I E NTS

P R E S E N TAT I O N T O :
A
C A L I F O R N I A C PA S F / M A R I N
DISCUS SION GROUP

P R E S E N T E D B Y:
VINCENT J. CRIVELLO
F I N A NC I A L A DV I S O R & P R I NC I PA L

J U LY 1 6 , 2 0 0 8

Agenda
2

Background
g
Introduction to Behavioral Finance
Managing Clients & Expectations
gg p
Q&A

For Professional Use Only—Not intended for the public distribution

Background
3


Background: About Me
4

Current
Financial Advisor and Owner with Larkspur Financial
Advisors—an independent advisory firm founded in 1968
Comprehensive Financial Planning and Asset Management for
p g g
individuals, families, and small businesses
Target Market: “Millionaire next door” and the mass affluent
Past
NorthStar Systems: Wealth Management Consulting
Charles Schwab: Business & Product Management in Schwab’s
retail advisory di i i (P i
il d i division (Private Cli
Client, M
Managed P f li )
d Portfolios)
Marketing & Industry Research: Multi-channel consumer
marketing strategies with an emphasis in financial services


Background: About Investors
5

A 2003 Schwab consumer survey found that “Despite the
warnings of economists and money management experts
that Americans need to pay more attention to their
finances…”
93 percent said they planned to have an annual medical or dental check-up.
check up.
Nearly half (47 percent) of those polled would rather do laundry than
carefully read their investment statement even though many investors may
be seeing some improvement in their portfolios.
Only 38 percent of those surveyed said they planned an annual face-to-face
face to face
meeting with their broker or financial advisor.
Investors who work with a financial advisor are almost twice as likely to
cancel an appointment with their advisor (22 percent) than they are to
cancel a car service appointment ( 3 p
pp (13 percent).
)
Only 22 percent of respondents ranked quot;investmentsquot; as among their top
three priorities in 2004.
Source: http://www.businesswire.com/portal/site/schwab/index.jsp?ndmViewId=news_view&ndmConfigId=1009915&newsId=20050916005258&newsLang=en


Background: The Results
6

EQUITY MARKET RETURNS VS VS.
EQUITY MUTUAL FUND INVESTOR
RETURNS* (1985-2004)

13.2%

3.7%

S&P 500 Average
Index Equity Fund
Investor
*SOURCE: Dalbar, Inc. Quantitative Analysis of Investor Behavior - 2005. Represents average
annually compounded returns of equity indices vs equity mutual fund investors; based on the
length of time shareholders actually remain invested in a fund and the historic performance of the
funds appropriate index. Past performance is no guarantee of future results. Investors cannot
invest directly in an index.


Behavioral Finance
7

quot;SHARE PRICES ARE DRIVEN BY
FEAR AND GREED.quot;
- JOHN MAYNARD KEYNES


Pop Quiz
8

I would rate my driving abilities as…
y g
Below average
Average
Better than average
B h
Please jot down your answer—we’ll come back to this
later in the session


Standard Theory of Finance (Efficient Markets)
9

The Standard Theory of Finance states:
Investors
I
Are rational beings
Consider all information and accurately assess its meaning
Make decisions that maximize wealth while minimizing risk
Markets
Quickly incorporate all known information
Reflect the collective actions of rational investors
Represent the true value of all securities
Industry Developments over the past few decades:
Diversification through Asset Allocation
g
Portfolio Design & Efficient Frontier (MPT)
Mutual Funds
Index funds and ETFs


Why Behavioral Finance?
10

If we always behaved rationally…
Nobody would ever sell stocks in a panic at the first sign of trouble
Nobody would ever buy stocks (or other investments) based on
hunches, hot tips or media hype
, p yp
Nobody would ever keep money in the bank instead of using it to pay
off high-interest credit card balances
Harvard found that humans are not “wired” to make
wired
rational decisions:
Human beings are simply not good at accurately calculating odds
Left to our own regards, we make the same mistakes over and over
again.


Behavioral Finance
11

Behavioral Finance provides an ‘overlay’ to the Standard
Theory.
Theory It provides a framework to understand
‘non-rational’ investor and market behaviors…
Investors
Are
A not totally rational
ll i l
Often act based on imperfect information
Make “non-rational” decisions in predictable ways
Markets
M kt
May be difficult to beat in the long term
In the short term, there are anomalies and excesses
The t
Th two aspects of b h i l fi
t f behavioral finance are:
The behavior of investors
The behavior of markets


Our Brains…
12
Dough v. Dope Greed vs. Gain

Source: Hans Breiter, Harvard Medical School Brian Knutson, Sanford University, Jason
Zweig (Author) Your Money & Your Brain


Pop Quiz: Guess Who?
13

“Greed, for l k of a
G d f lack f
better word, i good.”
b d is d


Answer: Gordon Gecko
14


Behavioral Characteristics
15
Loss aversion Media response
Disposition effect
i ii ff Herding
di
Narrow framing Optimism
Mental
M t l accountingti Overconfidence
O fid
Regret Anchoring
Hindsight bias Recency


Loss Aversion: Pop Quiz
16

A friend wants to make a bet with you. If y accept
y you p
the bet you will have a 50% chance of losing $10,000
and a 50% chance of winning $_______.
How much would you want to have a chance of
winning before you would take the bet?

Please right down your number


Loss Aversion: The Disproportion of Gain & Loss
17

Most people want to g
pp gain between 2 and 2.5 times as
5
much as they put at risk. So most people will want a
chance to win $20,000 before they will play.
Practical Example:
Between 1926 and 2000* Question: Why would
anyone invest in bonds?
y
Stocks returned 8% (real)
Bonds returned 2% (real)
The answer is loss aversion: The less frequently you evaluate
stocks, the less risky they appear. People tend to evaluate
stocks as if they had a short time horizon.
*Source of data: Stocks, Bonds, Bills, and Inflation 2001 Yearbook. Ibbotson Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex a Sinquefield). Used with permission. All rights reserved. Stocks are
represented by the S&P 500 C
db h Composite S k I d
i Stock Index, an unmanaged i d widely regarded as an i di
d index id l dd indicator of d
f domestic stock performance. S&P 500 performance i l d reinvestment of di id d b d
i k f f includes i f dividends but does not take sales
k l
charges or taxes into consideration. Bonds represented by long-term government bonds are measured using a one-bond portfolio with a maturity near twenty years. Cash represented by U.S. Treasury bills is measured by
rolling over each month a one-bill portfolio containing, at the beginning of each monthly, the bill having the shortest maturity not less than one month. An investment in common stocks will fluctuate with changes in market
conditions. An investment in government bonds and Treasury bills are guaranteed by the U.S. Government and, if held to maturity, all bonds offer both a fixed rate of return and fixed principal value. Past performance of stock
and bond indexes is no indication of their future results.


Loss Aversion: How Investors see risk
18

Clients view risk differently than p
y professionals
Focus on fear of losing money, not mathematics or
abstract concepts like ‘time-weighted returns’
Client’s risk profile changes over time
Two time horizons
Long-term (an abstraction)
Short-term (the real standard)
Self-assessed vs. actual risk t l
S lf d t l i k tolerance


Loss Aversion: The Importance of Time
19


Disposition Effect
20

The disposition effect refers to p p
p people’s tendency to:
y
Hang on to losers
Sell the winners
This allows them to enjoy the feeling of winning and
defer the pain of loss
Investors are about 1.5 times more likely t sell
I t bt ti lik l to ll
winning stocks as they are to sell losing stocks
Behaviors:
“I’m going to wait for the stock to come back to $15/share.”


Narrow Framing: Trees vs. Forest
21

Would you accept this gamble…
50% chance to win $15,000
50% chance to lose $10,000
Most people would say “no” because they want a
no
chance to win at least twice what they might lose.
Assume you have a net worth of $ million. Would
y $2
you accept the gamble now?
50% chance that your wealth increases $15,000
50% chance that your wealth decreases $10 000
$10,000
Most people say “yes.” They become less risk averse
as their frame of reference broadens.


Narrow Framing: Aggregation
22

Would you flip a coin if…
You get $15,000 if you win
You pay $10,000 if you lose
Again,
Again most people would say “no ” but
no, but…
What if you got to flip the coin 100 times?
Most people would say “yes.” Loss aversion is diminished by
aggregation.
i
Implications:
Time ‘in the market’ is critical.
in market
100 months in the market (like 100 flips of a coin) creates a
quasi-aggregation effect


Mental Accounting: The “House Money Effect”
23

You have just won $30. Choose between:
j 3
1.
A. 50% chance to win $9 and
50% chance to lose $9
B. No further bets
BNf h b
70% of participants chose A
2 You have not won anything. Choose between:
anything
2.
A. 50% chance to win $39 and
50% chance to win $21
B. A sure gain of $30
43% of participants chose A


Mental Accounting: 401k Plans
24

In retirement plans that do not offer company stock
as an option, the average allocation is:
49% stocks
49% Equities
51% fixed income
In plans that do offer company stock, the average
allocation is:
42% company stock
71% Equities
29% other stock
29% fixed income
Company stock is placed in a separate “mental
account” from the other options


Regret: Omission vs. Commission
25

Q
Question: Who is more upset, Mr. Q or Ms. R?
p,
Omission: Mr. Q owns shares of Company A. He considers
selling his shares and buying stock in Company B, but decides
against it He now finds he would have been better off by
it.
$20,000 if he had switched to Company B.
Commission: Ms. R owns shares in Company B, but switched
to Company A She fi d she would h
tC A. Sh finds h ld have b
been b tt off b
better ff by
$20,000 if she had kept her shares of Company B.
Answer: Ms. R. People typically regret errors of
p yp yg
commission more than errors of omission.


Regret & Hindsight Bias
26

The inevitability of past events
Events that happen seem predictable
Events that do not happen will seem unlikely
People distort their own past beliefs
“I always knew…”
Past beliefs are reconciled with actual
events
People take credit for good outcomes
and blame others for bad outcomes
(this is also related to optimism and
overconfidence)


Media Response
27


Media Response
28

Investors often feel the need to react to new information
Study of the effects of news on investment decisions:
Two groups: one received news and one did not
The
Th groups with no news outperformed th group th t received news
ith tf d the that id
News is often irrelevant to long-term performance and is
often misinterpreted
p
News sources are often perceived as ‘authoritative’
sources which impacts behavior
Real World: “Put my entire portfolio in cash—this
hurricane season is going to kill the market.”


Media Response: Market Timing
29


Herding
30

Investors have a tendency toward “herd behavior”
y
They may even disregard their own beliefs to follow
the herd
Study of the effects of herd behavior:
Participants were asked to answer easy questions about the
lengths of li
l th f lines
About 1/3 changed their answers to be part of the herd
Real World: Disproportionate flow of money into
top-rated funds despite ratings’ lack of predictive
abilities


Herding: Reading the ‘stars’
31

5-Year Performance Next 5-Year Period
6/30/92 – 6/30/97 6/30/97 – 6/30/02

21% Top Quartile
Top Quartile
14% 2nd Quartile
14% 3rd Quartile
2nd Quartile
50% Bottom Quartile
3rd Quartile

Bottom Quartile Past performance is a very poor predictor of future
results.
Odds are against top quartile managers performing
in top quartile during the next period and only 50/50
pq g p y /
to be above the median for the next 5 years.


Optimism & Overconfidence
32

People believe it is likely that: People are overconfident
about what they know
Good things will h
G d thi ill happen t
to
them Even when “certain,” they are
often wrong…
Bad things will happen to
others 20% e d up be g incorrect
0% end p being co ec
Others are more likely to: (@ 98% certainty level)*
10%-15% end up being
Become an alcoholic
incorrect when “absolutely
Have a heart attack
sure
sure”*
Develop
D l cancer
They underestimate the
Others are less likely to: uncertainty of events
Become rich
“This time it’s different.”
Become famous
–1999 B bbl Investor
Bubble I
Warren Buffet once said,
“Optimism is the enemy of the A related tendency is that of overconfidence. Fact is, people are often

rational buyer” unjustifiably overconfident in assessing their abilities and what they know
about the world around them. Studies show that people are wrong about 20%
of the time when asked to estimate things with a 98% confidence level and by
10% to 15% when asked to be “absolutely sure” of their answers. The result is
that people often underestimate the uncertainty of events and believe that
they are much better at assessing future possibilities than they really are.


Overconfidence: “We’re all above average”
33

People tend to overestimate their abilities
90% believe they are above average in…
Driving ability
Sense of humor
Getting along with others
They misperceive their ability to control events
They seek confirmation of their abilities and find it in
random events
Whoever first said, “Don’t confuse brains with a bull
market” probably was a student of behavioral finance.
Real World: “Rising tide floats all boats.” The real test of
ability is in a sideways or down market
market.


Overconfidence: Real World
34

Two types of client
Trader: Speculated on price. Traded often.
Investor: Buy & Hold. Fundamental focus.
Stocks sold outperformed those purchased by:

“Trader” “Investor”
After 12 months: 3.2%
3 2% 5.0%
5 0%
After 24 months: 3.6% 8.6%

The higher the turnover, in general, the worse the results.

*Source: American Economic Review 1999, Terrance Odean, Associate
Professor of Finance at the University of California at Davis


Pop Quiz: Anchoring
35

Take the last three numbers of your Social Security
number and add 400. Insert the sum i place of [d ]
b d dd h in l f [date]
below.

Attila and the Huns invaded Europe and penetrated deep
into what is now France where they were defeated and
forced to return eastward
eastward.

1. Did these events occur before or after [date] AD?
______ Before ______ After

2 .In what year did Attila s defeat occur? ______
In Attila’s


Pop Quiz: Anchoring
36

Answer: 451 AD
45

Research Results:
Anchor Mean Answer
400-599 626
600-799
600 799 660
800-999 789
1000-1199 865
1200-1399 988
88


Anchoring
37

“Anchors” affect an investor’s frame of reference
Can you think of common investment anchors?
S&P 500 Index
Dow Jones Industrials
Performance benchmarks
CNN
Cocktail party chatter
Behaviors
“I’ll sell the stock when it gets back to $20”
“I’m t i to ll
“I’ not going t sell my h home f THAT price!”
for i !”
“I’ll sell the real estate now to lock in the long-term capital gains rate
prior to the election.”


Recency Effect
38

When do people buy burglar alarms?
pp y g
Behaviors
Acting on momentum or a run-up in price (aka chasing
returns)
Real Estate (2002-2006)
Gold
Oil
BRIC (Brazil, Russia, India, China)
Wanting to go to cash in volatile markets the markets will
markets—the
keep going down.
Client has to get into the action


Pop Quiz: Recency & Overconfidence
39

For the period between 1986 and 2006, which asset classes
represent Investments A and B:
End value of
$
$100
Return Inflation Real Return investment
Investment A 11.9% 3.0% 8.9% $951
Investment B 55
5.5% 3
3.0% 2.5%
5 $9
$292

Clue #1: In 2006, the ‘herds’ wanted a piece of this action—
many jumped into these markets we’re now hearing about.
Clue #2: Homeowners would have answered this wrong
back in 2006.

Source: JP Morgan, BEA, S&P. S&P includes dividends. Past performance is not indicative of future results.


Behavioral Finance: Key points
40

Anticipation of gain (greed) is more satisfying than the
actual gain
Pain of loss has a larger emotional impact than the pleasure of gain
Investors lose confidence in markets due to the media response,
herding, and anchoring effects
g, g
Excessive conservatism and aversion to risk is exacerbated by
narrow framing, mental accounting and short time horizons
Investor overconfidence, optimism and minimization of
uncertainties create i fl t d egos
t i ti t inflated
Investors often repeat predictable, destructive behaviors and don’t
learn from past mistakes

Bottom line: These behaviors and reacting to ‘recency’ events leads
to lower overall returns over the long-term.


Pop Quiz: Guess who?
41

“I got my mind on my
I
money and my money
on my mind ”
mind.


Answer: Snoop Dogg
42


Managing Clients
43

GOALS, OBJECTIVES, &
EXPECTATIONS


Look Inward First
44

Recognize that behavioral issues affect us all—
g
including financial advisors, institutional money
managers, and individual investors
Do a self-assessment to determine what behaviors
you’ve exhibited and how it may impact the advice
you provide clients or the advice your clients have
clients—or
received from other advisors
Challenge the financial advisors you work with—see
with see
if their advice and recommendations are influenced
by latent behavioral biases


Helping your Clients: Questions to Ask
45

When your clients ask…
“How do you think my account did last year?
How year?”
“What do you think of the job my financial advisor has done?”
“How do I know if my investment advisor is doing a good job?”
“The market is tanking—should I fire my advisor? Do it on my own?”
You should answer…
If they’re working with an advisor:
What’s does your financial plan state? What are the assumptions?
What are your return requirements to meet your financial goals?
What are your portfolio’s objectives? What are the return and risk parameters in your IPS?
If they’re managing their own investments:
What are your benchmarks? How do you define success? How do you know when you’re doing
well?
Are you using time-weighted returns to measure progress?
Do you have a sell strategy in p
y gy place?
Ask to take a look at your client’s other financial documents:
Financial Plan
Investment Policy Statement (IPS)
Q
Quarterly Performance Report
y p
Consolidated Net Worth Statement


Reviewing their Financial Plan
46


Reviewing the IPS
47
A well-formed Policy Statement
should include these items:
Goals & Objectives
Time Horizon
Risk tolerance
Liquidity or distribution needs
Tax rates
Asset Allocation requirements
Client preferences or constraints
Return Expectations (often inflated):
Consumers: 10.4%-14%
Institutional Mgrs: 8.0%
Expected volatility/risk
Methodologies and selection criteria
Monitoring, benchmarks, & evaluation
criteria
The advisor should also factor in
other assets:
401k/Qualified Plans
Investment Real Estate
Non-correlated Assets such as
Managed Futures

Monitoring the Plan
48
What’s relevant:
What’s are the return/risk
/
objectives of the portfolio?
What’s “time-weighted
performance” (TWR) since
inception (net of all fees and
expenses)?
How has the portfolio
performed vs. its benchmark?
How are the assets performing
h f i
vs. the financial plan?
What’s irrelevant:
Monthly statements
Gain/loss reporting
Specific winners or losers


Sample Performance Reports
49


Sample Performance Reports
50


A word about Benchmarks…
51

Benchmarks are a contentious topic in the industry. There’s
no clear accepted means of benchmarking financial or
portfolio performance for individual investors (despite what
the academics say).
The following benchmarks are generally the best ones to help
you answer your client’s question, “How am I doing?”:
Financial Plan: rate of return required to achieve goal
Portfolio’s Expected Return (e.g. CPI + 6%) vs. actual Time-weighted
return
Standard Deviation or Volatility
Composite benchmark (e.g. S&P500, Lehman Aggregate, MSCI EAFE)
which could include peers or a ‘passive’ p
p p portfolio of index funds and
ETFs
Remember the ‘qualitative’ benchmark—how a client feels
about his or her portfolio is also important. In other words,
how is the j
h i th journey? ?


Getting from point A to point B…
52

Mr. Smith’s Mr. Jones’
American Funds Portfolio American Funds Portfolio

Washington Mutual 60% Growth Fund of Amer. 60%

Intermediate Bond of Am. 40% High Income Fund 40%

Beta: 0.43 Beta: 0.74

Standard Deviation: 7.81 Standard Deviation: 12.81

Worst year return: -7.14% Worst Year Return: -21.50%

Extra Credit: Based on what you’ve learned, Is Mr. Smith or Mr. Jones more
likely to give up on their plan?
Analysis based on Morningstar Principia Data from 09/30/1996-9/30/2006. Past performance is not necessarily indicative of future results.


Summary: Managing Clients
53

The Financial Plan: Helps clients focus on the big picture
1.
Strategic, Long-term
Strategic Long term goals
Reorients them towards goal attainment not reactive portfolio tinkering or trading
Achieving the financial goal(s) is ultimately what matters to clients
Investment Policy & Design: Drives disciplined, rational decision-making
2.
Provides rational guidance and parameters that drive investment decision making and
changes
Provides a framework through which one can measure ‘success’
Allows the incorporation of strategies or products that mitigate downside volatility
(hedging, absolute return, non-correlated assets) and/or approaches that allow for
‘satellite’ or speculative opportunities (e g have your cake and eat it too)
satellite (e.g.
Plan Monitoring: Tracking towards objectives
3.
Consistent, risk-adjusted performance net of fees, expenses, and taxes is presumed—this
is not a differentiator. Investment advisors must deliver over the long-term
How does the client ‘feel’ about the plan? Can they sleep at night?
feel
Check-in periodically to determine if their goals and objectives have changed (e.g. annual
tax review with the financial advisor). If not, there’s no reason to diverge from the plan.

Ultimately, Financial Planning and Asset Management is a process that should factor in both
quantitative reviews as well as qualitative (b h i
ii i ll li i (behavioral) f
l) factors.


Pop Quiz: Guess who?
54

“I made a big mistake in not selling several of our
larger holdings during The Great Bubble. If these
stocks are fully priced now, you may wonder what I
was thinking four years ago when their intrinsic
value was lower and their prices f hi h
l l d th i i far higher.

So d I.”
do ”


Answer: Warren Buffett
55


For further reading…
56

Wikipedia: A great starting point
http://en.wikipedia.org/wiki/Behavioural_economics
h // iki di / iki/B h i l i
Money.com Quiz: A view inside the brain
http://money.cnn.com/quizzes/2007/moneymag/wiredforwealth/inde
x.html
hl
Slate.com: A layman’s guide and something to send your clients
http://www.slate.com/id/2110977/
UC Berkeley Haas School of Business: Academic perspective
http://faculty.haas.berkeley.edu/odean/papers/returns/returns.html
Your Brain from CNN Money: Test yourself
http://money.cnn.com/pf/features/popups/brain_popup/1.frame.html


57

Thank you.
y
Vincent J. Crivello
J
415.924.6703 x5

vcrivello@larkspurfinancialadvisors.com


Disclosures
58
Before investing in any of the funds or strategies listed in this report, investors should carefully consider a fund’s investment objectives, risks, charges and expenses. Fund prospectuses
contain this and other information about the funds, and may be obtained by calling us at 1.415.924.6703 or visiting our website at www.larkspurfinancialadvisors.com. Investors should
read prospectuses carefully before investing.

Investments are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the
possible loss of the principal amount invested.

For Institutional Use Only. This material has been prepared by Vincent J. Crivello of SFA for institutional use only. It has not been filed with NASD and may not be reproduced, shown or
quoted to, or used with, members of the public.

Stocks, Commodities, Real Estate, and Gold
International stocks, real estate, commodities, and gold have traditionally served to l
i l k l di i d ld h di i ll d lower the overall risk of a d
h ll i k f domestic portfolio.
i f li
This image illustrates the hypothetical growth of a $1 investment in domestic stocks, international stocks, commodities, real estate, and gold over the time period January 1, 1988 to
December 31, 2007. The best performing asset class over this 20-year period was domestic stocks, with $1 growing to approximately $9.33.

International stocks, commodities, real estate, and gold are often overlooked in an investor’s asset allocation decision. These assets can be excellent vehicles for diversification purposes,
because their returns have demonstrated low or even negative correlation with more traditional assets. In other words, when traditional assets have done poorly, these alternative assets
may have done well, thereby reducing the overall volatility (risk) of your portfolio. Commodities, real estate, and gold can also be an effective hedge against rising inflation rates.
Diversification does not eliminate the risk of investment losses. Returns and principal invested in stocks are not guaranteed. International investments involve special risks such as
fluctuations i currency, f i taxation, economic and political risks, and diff
fl i in foreign i i d li i l i k d differences i accounting and fi
in i d financial standards. The smooth slope of the real estate i d li seems to
il dd h hl fh l index line
indicate stable returns. However, these returns are based on appraisal values rather than actual prices. This method of valuing real estate assets tends to smooth price fluctuations that
would be more readily apparent if more frequent transaction data were available. The real estate industry is highly cyclical, and the value of securities issued by companies doing business
in that sector may fluctuate widely. The commodities index represents a passive unleveraged investment in commodity futures. The risk of loss in trading commodity futures and options
can be substantial. Investors could lose the full balance of their account when trading commodities. Gold like any other coin or bullion is subject to investment risks like perceived
scarcity of coin, its quality, current demand, market sentiment, and economic factors.

About the data
U.S.
U S stocks i this example are represented b the S d d & P ’ 500®, which i an unmanaged group of securities and considered to b representative of the stock market i general.
k in hi l d by h Standard Poor’s ® hi h is d f ii d id d be i fh k k in l
International stocks are represented by the Morgan Stanley Capital International Europe, Australasia, and Far East (EAFE®) Index, commodities by the Goldman Sachs Commodity
Index, real estate by the NCREIF Property Index, and gold by the Federal Reserve (2nd London fix) from 1977–1987 and Wall Street Journal London P.M. closing price thereafter. An
investment cannot be made directly in an index.

Past performance is no guarantee of future results. The information in this document is for illustrative purposes only and not indicative of any investment. An investment cannot be made
directly in an index.

Securities and advisory services offered th
S iti d di i ff d through Th Strategic Fi
h The St t i Financial Alli
i l Alliance, Inc. (SFA), member FINRA/SIPC which is otherwise unaffiliated with Larkspur Financial Ad i
I (SFA) b FINRA/SIPC, hi h i th i ffili t d ith L k Fi i l Advisors or
Tributary Advisors, Inc. Ronald Murphy (CA Insurance #0290052) is a Registered Principal and Investment Advisor Representative and Vincent Crivello (CA Insurance #0F54430) is a
Registered Representative and Investment Advisor Representative of SFA.


Behavioral Finance & Client Expectation Management Cal Cpa Presentation For July 16 2008

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Behavioral Finance & Client Expectation Management Cal Cpa Presentation For July 16 2008