Gary Ziegler • Transamerica Financial Advisors, Inc. - Active management for the mass affluent: Bringing dynamic, risk/managed strategies to all clients by Katie Hebert - Jobless claims continue to support U.S. equity markets - Find a "value void" - grow your practice (Jay Blanchard, NEXT Financial)

1. Jobless claims
support S&P pg. 7
Finding a
“value void”pg. 3
Active management
for mass affluent pg. 4
Portfolio
climate
controlpg. 8
Gary Ziegler
August 14, 2014 | Volume 3 | Issue 7
First magazine focused on active investment management

3. information they have never heard
anywhere else. They are very ap-
preciative and this becomes a great
source of referrals.
I have developed seminars and
marketing materials covering the
specific needs of women, whether it
be widows facing retirement alone,
high-achieving professionals with
little time, or simply someone who
wants to be as knowledgeable as pos-
sible. My goal is to make sure they
are all empowered and inspired to
be independent and free of financial
worry. Life is too short to spend time
worrying about your financial situ-
ation when there are so many other
things that matter.”
y personal value
proposition as an ad-
visor is empowering and educating cli-
ents so they can feel confident in their
financial decision-making. This starts
with respecting their intelligence and
ability to absorb information—not
trying to dictate solutions. I take the
time to expose all clients to invest-
ment concepts and strategies that can
often be unfamiliar, including tactical
active investment management and
the relationship of risk to return.
One of my personal initiatives is
called Wealth to Women.This is a pro-
gram I have developed and registered
that is specifically geared to the finan-
cial needs of women, who I think have
been underserved by the financial ser-
vices industry. The investment field, in
my opinion, has been discounting and
ignoring women for too long.
I am not going to tell any other advi-
sor this is the route they should follow,
but I will tell them they should find a
specialty they enjoy to help round out
and expand their practice and find
areas where there is a ‘value void.’
I found this simply by working
with my female clients and discover-
ing that void. It gives me great sat-
isfaction to sit down over a series
of three to four sessions and deliver
Find a “value void”—
grow your practice
Jay Blanchard
Williamsville, NY
NEXT Financial Group, Inc.
The Financial Guys LLC
M“
Last week’s results
VIEWER RESPONSE
78% of younger investors say
their relationship with their
financial advisor is enhanced
by:
Vote to see results
This week’s poll
In Q2 2014, what
concerned advisors
the most?
Answer: Technology
78 percent of younger investors credited
technology with enhancing their relation-
ship with financial advisers. Only half of
Baby Boomer investors surveyed agreed.
Read more.
57%
0%
43%
Technology
Face-to-face meetings
Regular mailings
Read text only
Securities & Investment Advisory Services offered through NEXT Financial Group, Inc. Member, FINRA/SIPC.
The Financial Guys LLC is not an affiliate of NEXT Financial Group, Inc.
VOTE
Portfolio management
Fixed income
Managing risk
August 14, 2014 | proactiveadvisormagazine.com 3
TIPS & TOOLSPOLLS

4. Active management
FOR THE MASS AFFLUENT
Bringing dynamic, risk-managed strategies to all clients
By Katie Hebert
advisor brought in over $1 million of assets in a month
from accounts under $50,000.
Today, more financial advisors think it makes great
sense to not just focus on serving the relatively narrow
universe of high-net-worth clients when there are millions
of potential customers needing their expert services and
those of third-party active managers. Indeed, 40 million
people in the U.S. have assets of $100,000 to $1 million
outside of the value of their home, according to Forrester
Research.
There is a misconception among some financial advisors
that active risk management should be reserved for only the
wealthiest of clients.
Not so. A growing number of financial advisors say they
are finding a wealth of opportunity in helping the mass
affluent actively manage their investments, as more modest
portfolios can have an even greater need for the most so-
phisticated risk-managed strategies than those with seven
figures. And just like Walmart or McDonald’s, serving
volumes of customers can quickly add up—one financial
Read text only
4 proactiveadvisormagazine.com | August 14, 2014

5. And many within the mass affluent sector now value the exper-
tise of a financial advisor more than ever, considering that millions
suffered major losses due to the recent financial crisis. Indeed,
many potential clients have become much more risk-averse in
their subsequent investment decisions. And though many “buy-
and-holders” have since recovered their losses, many exited the
markets at the worst possible time and have yet to return.
A study by consulting firm Deloitte LLP notes the post-2008
increase in risk-averse behavior on the part of the mass affluent
segment. According to the data, these types of investors are twice
as likely to rank themselves as “very or somewhat conservative”
since the financial crisis. As the chart shows, “protecting principal”
is the most highly-rated investment attribute they seek, closely
followed by “long-term growth.”
Since long-term asset growth is so important for the mass afflu-
ent as they enter or plan for retirement, there is clear opportunity
for financial advisors to help find the appropriate balance of risk
and return. That’s where financial advisors who utilize active-
ly-managed and risk-mitigating strategies might find a significant
competitive advantage.
Active management relies heavily on risk management prin-
ciples, offering a potential solution to the “market fear” still
prevalent for many mass affluent investors. Active management
seeks favorable risk-adjusted returns in any market environment,
generally employing sophisticated algorithms and models to cap-
ture gains and protect against losses in a wide variety of sectors
and asset classes.
People who are less affluent actually have less wiggle room for
losses within their retirement portfolios and, as such, a much great-
er need for active risk management by their financial advisors. For
example, a retired ultra-wealthy client with a multi-million-dollar
portfolio could likely better absorb a 30% hit to his/her portfolio
and corresponding annual income, than could a mass affluent
investor taking the same percentage hit on his/her more modest
retirement assets and associated income stream.
Mass affluent investors might also need the expertise of a finan-
cial advisor who practices active risk management to help them
get out of their “comfort zone”—so they can make the kinds of
decisions necessary to have optimal risk-adjusted returns on their
portfolios. According to well-known psychologist and consultant
Alasdair White, the concept of a comfort zone is “a behavioral
state within which a person operates in an anxiety-neutral con-
dition, using a limited set of behaviors to deliver a steady level of
performance, usually without a sense of risk.”
In other words, to avoid anxiety, many mass affluent investors
remain in comfort zones by making one of two equally poor
choices: a) traditional buy-and-hold portfolio management strate-
gies—even when such strategies came back to bite them when the
financial crisis hit, or b) avoiding equity markets altogether and
instead investing in asset classes delivering low returns in today’s
low interest rate environment.
However, a financial advisor who utilizes active risk manage-
ment strategies can demonstrate the wisdom of breaking out of
such comfort zones, so that mass affluent portfolios can deliver a
fair share of equity market returns, while being extremely mindful
of current market conditions.
An advisor can coach such investors that it is okay to feel a
certain level of anxiety when stretching one’s perceptions—in fact,
such a feeling can be the “optimal anxiety” experienced when one
truly begins to grow. To greatly simplify, behavioral psychology
encourages the conquering of fears and those who seek to take
sensible control in situations full of unknowns.
continue on pg. 11
Percent of respondents rating the following as “extremely/very important”
Protecting
principal
Opportunity
for long-term
growth
Balancing risk
and reward
Minimizing
taxes
Minimizing cost
of investing
A guaranteed
income stream
Minimizing
volatility
Opportunity
for large
gains
Opportunity
for short-term
gains
72% 68% 55% 53% 53% 49% 46%
39%
27%
Source: Deloitte Center for Financial Services
RESPONDENTS RATED THE FOLLOWING “EXTREMELY/VERY IMPORTANT”
... to avoid anxiety, many mass affluent
investors remain in comfort zones by
making one of two equally poor choices.
5August 14, 2014 | proactiveadvisormagazine.com

7. INITIAL JOBLESS CLAIMS (SEASONALLY ADJUSTED): 2005-2014
INITIAL JOBLESS CLAIMS (INVERTED) VS S&P 500:
MARCH 2009-2014
Jobless claims continue to
support U.S. equity markets
ast week saw another roller-coaster
U.S. equities market performance,
as headlines over Ukraine and the
Mideast dominated trading, along
with increased concerns over weakness seen
in many European economies. The VIX hit
a high of 17.6, its most elevated level since
April, and up 71% from lows in July. The
week’s ending relief rally, largely driven by
Russian headlines, brought the VIX back
down to a close of 15.8.
Another part of last week’s story, however,
was the continued pace of improvement in
U.S. jobless claims. Throughout the bull
market run of 2010-2014, the consistent
decline in U.S. jobless claims has been a
steadying influence on markets, supporting
the belief that the outlook for U.S.
consumers is on the road to recovery.
Last week was no exception, as for the
fourth time in the last five weeks, claims
came in below forecasts. While economists
were forecasting a level of 304,000, the
actual reading came in 15,000 claims
below at 289,000. With last week’s decline,
the four-week moving average dropped to a
post-recession low of 293,000, which is the
lowest level since February 2006.
Bespoke Investment Group notes that
this was the fourth straight week exhibiting
a new low in the four-week moving average
of claims, “underscoring how strong this
data has been of late.” The chart below
compares the S&P 500 over time to
jobless claims (on an inverted scale). This
illustrates how closely market performance
has tracked with jobless claims throughout
the bull market, and, according to
Bespoke, provides a level of reassurance
that the recent decline in stocks may be
“more of a blip than beginning of a major
downtrend.”
L
Source: Bespoke Investment Group
Read text only
Source: Bespoke Investment Group
7August 14, 2014 | proactiveadvisormagazine.com
TOPPING THE CHARTS

8. Read text only
business media and some famous investors who
are always giving interviews. They were pretty
sold on the idea that you cannot time the mar-
kets and that low cost index funds were the way
to go, despite how painful 2008 was.
How did you go about convincing those
who were unsure?
First of all, I think there is a role for many types
of strategies and vehicles in a portfolio. It is not
necessarily all or nothing. I have many clients for
whom a blend of active and more passive strategies
is appropriate. We also use many other vehicles
aside from equities and bonds, most frequently
variable annuities and variable life insurance.
On the tactical side, TFA has developed some
excellent client materials and presentations that
consistent with the principles of buy-and-hold
investing.
The financial crisis of 2007-2009 totally
changed my thinking. I really saw no reason
to ever have clients fully exposed to that type
of risk and drawdowns—and the uncertainty
about how long it would take to recover.
How did your clients react as you intro-
duced more tactical strategies to them?
Most were very excited about it. They
agreed that “buy-and-hope” was becoming a
less viable way to go about planning for their
future security.
Some were hesitant, as the concept of active
management was very new to them. It flew
in the face of things they had read from the
Proactive Advisor Magazine: Gary,
when were you first introduced to active
investment management?
Gary Ziegler: It was in the 2006-2007 time
frame, well after the dot-com crash. Our firm
began introducing the availability of active
strategies from several third-party managers.
It was a relatively long process for me to
fully embrace active or tactical investment man-
agement. I had been brought up in the business
on the theories of traditional style-box portfolio
allocations. Though it was difficult to watch my
clients’ portfolios go through volatility at times,
that all came with that style of asset manage-
ment. Portfolios did historically rebound over
time, generally speaking, and that was pretty
Portfolio
climate control
By David Wismer
A Wisconsin native, Gary Ziegler has weathered scorching
summers and frigid winters. Like the thermostats he relies on
for climate control, active management is at work around the
clock—adjusting his clients’ portfolios in all market conditions.
Gary Ziegler
8 proactiveadvisormagazine.com | August 14, 2014

9. help explain active management. So have many of
our third-party managers.
I will thoroughly go through these materials
with clients, explaining about market cycles, risk
and return, the math of drawdowns, and the
need to play both offense and defense with your
portfolios. We look together at some numbers
showing how portfolios protected against down-
side risk, and minimizing those drawdowns, can
perform over time versus just sticking with the
performance of a market index.
I also use some simple analogies. My favorite
involves a thermostat. I will ask my client what
their ideal temperature is in their house all
year-round. Let’s say they answer 70 degrees.
In Wisconsin, weather can go above 90 degrees
in the summer and below zero in the winter.
However, if you have a thermostat, a furnace and
an air conditioner, you can keep your home at a
comfortable temperature all of the time. That is
the goal of tactical money management—to make
your investing experience less volatile. Sometimes
you need to run the furnace and other times you
need the air conditioner. It is nice to have a ther-
mostat to help keep things comfortable and under
control. I try and relate this back to the markets
and the fact that you cannot do the same thing
in all market conditions—it just does not make
practical sense.
How do you counter some of those client
beliefs on market timing and low-cost
index funds?
Tactical strategies, to my mind, are not
exclusively about market timing. Far from it. It
is a disciplined, quantitative approach that is fol-
lowed week after week, not some dramatic one-
time call on the markets. Active management can
include a wide variety of different philosophies,
strategies, hedges, and diversified asset classes. It
is not just a market timing approach.
On the low-cost index funds, there is certain-
ly a place for them, but not an exclusive place.
Strictly investing in that fashion is the essence of
buy-and-hold. Even though markets are healthy
right now, investors that invested passively from
2000 to 2013 experienced two downturns of
over 40% that dramatically impacted their port-
folio returns.
continue on pg. 10
Photography: Nick Berard
Gary Ziegler is a Registered Representative and an Investment Advisor Representative with Transamerica Financial Advisors, Inc.
Securities and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA), Transamerica Financial Group Division—
Member FINRA, SIPC, and Registered Investment Advisor. Non-securities products and services are not offered through TFA.
9August 14, 2014 | proactiveadvisormagazine.com

10. M U LT I - M A R K E T
+
MULTI-STRATEGY
+
MULTI-MANAGER
One p rtfolio
D Y N A M I C A L LY R I S K - M A N A G E D
L E A R N M O R E
Past performance does not guarantee future results.
The opportunity for profits
carries with it the possibility of losses.
800-347-3539 | flexibleplan.com
A complete list of all of our recommendations over the last 12 months and Brochure Form ADV Part 2A are available upon request.
How do you set expectations with clients
about active strategies?
It entirely depends on their risk profile and
the overall objectives we are trying to reach with
each client or couple. But to generalize about
tactical management, I will tell clients that
some of the strategies might underperform a bit
in a strong bull market, but should outperform
by a wide margin in a down market.
That relates back to the math piece, and
how hard it is to recover in your portfolio from
steep losses. We want the power of compound-
ing—the Rule of 72, if you will—to work on
portfolios that have more consistent, less vola-
tile performance, not wild swings. That makes
sense to most clients.
For clients with more appetite for risk, we
do have available some leveraged strategies that
have done quite well in both bull and bear mar-
kets, but they carry with them more volatility
and the potential for larger drawdowns. That
all has to be carefully explained in detail and
understood by the client.
We have a very wide range of tactical
managers and strategies available to us, and
different ways to structure portfolios. It is my
job to put together the most appropriate com-
bination of strategies for clients. It is the job
of our third-party managers to maintain their
disciplined approaches and execute well against
their specific strategies.
With both of those elements working well
together, I explain to clients that we can better
manage market cycles and help them in meet-
ing their long-term investment and planning
objectives.
What types of clients do you tend to
work with?
I have in the neighborhood of 800 clients,
coming in all sizes and shapes and with all sorts
of life circumstances. That is what makes the
job interesting and enjoyable, as I love helping
people with their unique challenges.
Our organization is totally vested in helping
all families with their financial needs, so my
clients range from the very affluent to those
just starting out—with perhaps relatively little
to invest right now. It is gratifying to be able
to bring the most sophisticated investment
strategies to a wide universe of clients.
continued from pg. 9
10 proactiveadvisormagazine.com | August 14, 2014

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risk. The investment return and principal value of any investment product will fluctuate with changes in market conditions. Guggenheim Investments represents the investment management businesses of Gug-
genheim Partners, LLC. Securities offered through Guggenheim Funds Distributors, LLC. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim Partners, LLC. x0515 #12526
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Financial advisors who practice active risk management have
the expertise to explain to clients the balancing act of risk and
return. For most mass affluent investors, such a balancing act is
even more critical as they typically have a myriad of specific goals
that can each carry specific risk characteristics and time frames.
For example, many within the mass affluent sector seek exper-
tise on how to best invest for their children’s college education,
save for an eventual retirement home purchase, or manage their
retirement income so they won’t outlive it. Since meeting these
specific life event goals can result in differing time horizons for
investment risk, active management can simultaneously handle
the multiple horizons, and then tailor the strategy even further
to satisfy the investor’s comfort with risk and appetite for growth.
It is not unreasonable to suggest that mass affluent investors—
more than the ultra-wealthy—fundamentally need the expertise of
active risk management to meet such life event goals, because “the
rich” simply have less concern on whether they can afford such
things—they already have the wherewithal for such life events.
Many financial advisors have also found that serving the mass
affluent can be just as—if not more—profitable than strictly
serving the wealthy.
Take advisor Scott Hanson, who wrote about this topic in a
2013 Investment News article. Since his Sacramento, California
firm uses a sliding scale fee structure based on the level of client
assets, fees on smaller accounts are higher as a percentage of assets
than fees on larger accounts. Hence, serving volumes of clients
with smaller portfolios can add up.
“As an advisor, I would rather have a hundred $1 million accounts
rather than five $20 million accounts,” Hanson writes. “The revenue
generated on those 100 mass affluent clients would be much greater
than the revenue generated by the five ultra-wealthy clients.”
Not all financial advisors may see it this way, but it is clear that
expanding one’s practice to further serve the mass affluent could
very likely strengthen the bottom line, as millions more potential
clients need to be helped. A recent WSJ article cites research by
Cerulli Associates, showing only 15% of U.S. financial advisors
focus on households with $100,000 or less in assets.
Those advisors using active risk management principles may
well have a competitive advantage with such prospects (or those
with assets somewhat higher), as investors with more modest
portfolios arguably have much more at stake when fulfilling
their lifelong goals.
continued from pg. 5
11August 14, 2014 | proactiveadvisormagazine.com

12. The opinions and forecasts expressed herein are those of the author and may not actually come to pass. Any opinions and viewpoints regarding the future of the markets should not be
construed as recommendations of any specific security nor specific investment advice. The analysis and information in this edition and on our website is for informational purposes only.
No part of the material presented in this edition or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed
nor any portfolio constitutes a solicitation to purchase or sell securities or any investment program.
Editor
David Wismer
Marketing Coordinator
Elizabeth Whitley
Contributing Writers
Katie Hebert
David Wismer
Graphic Designer
Travis Bramble
Contributing Photographer
Nick Berard
August 14, 2014
Volume 3 | Issue 7
Proactive Advisor Magazine is
dedicated to promoting and educating
on active investment management.
Distribution reaches a wide audience
of financial professionals who advise
clients on investments and portfolio
management. Each issue features
an experienced investment advisor
who offers insights on active money
management, client service, and
investment approaches. Additionally,
Proactive Advisor Magazine offers
an up-close look at a topic with
current relevance to the field of
active management.
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