Eric C Hagen Professional Wealth Management brochure

®

ERIC C. HAGEN
N E X T
create. grow. preserve
financial
group

- www. Eric C Hagen .com -

WEALTH CONSULTING | INVESTMENT MANAGEMENT

Securities and advisory services offered through NEXT Financial Group, Inc., member FINRA/SIPC,
a Registered Investment Adviser and registered broker/dealer.
Copyright 2009. Eric Hagen LLC. All rights reserved.

Contents
Summary of Services 3
Wealth Consulting 4
Investment Management 5
Wealth Management Process 6
Company Philosophy 7
About Eric C. Hagen 8
*Research Declarations: As with any research or recognition program, it’s important that we provide you the following declarations: The 2009 Five
About NEXT Financial Group, Inc. 9
Star Wealth Managers do not pay a fee to be included in the research or the final list of Five Star in Client Satisfaction Wealth Managers. The over-
Investment Philosophy 10
all evaluations score of a wealth manager reflects an average of all respondents and may not be representative of any one client’s evaluations. Also,
please keep in mind that working with a a Five Star Wealth Manager or any wealth manager is not guarantee as to future investment success.
Important Disclosures 16

ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT
SUMMARY OF SERVICES
WEALTH CONSULTING
Successful wealth management is an ever-changing ideal. It demands an in-depth consultative process that delivers
customized solutions across a broad array of financial needs. We believe every household is different and view your
situation as unique to best help you achieve your specific goals.
INVESTMENT MANAGEMENT
By taking a global perspective of your overall financial situation, we provide investment management solutions specific
to your individual situation. Applying the academic principles of Selective and Expanded Diversification*, we utilize a
sophisticated open architecture investment management platform to give you an institutional-like portfolio at an
individual investor level.

CASH MANAGEMENT
Through a leading, nationwide, financial services institution—we are able to make available to you a full range of high-
yielding, FDIC-insured bank accounts, including money market and certificates of deposit…with yields pledged to
remain in the top 5% of competitive accounts1. With this one-of-a-kind pledge, you will never again question if you’re
getting one of the best yields available. We can also offer you checking with a free, user-friendly online banking
experience, plus optional online bill pay, free check writing, a consistently great yield, and much more.
TOTAL CONSOLIDATED REPORTING
Embracing technological advances, our total consolidated reporting capabilities gives you one statement summarizing
every account you have with us. This gives you a “global view” of every aspect of your portfolio such as allocations and
balances. 24/7 online access means you are always “in the know”.
CLIENT COMMUNICATION
Weekly Economic Updates via email Quarterly Performance Reports
Regular Financial Articles of Interest via email ”24/7” Online Account Access
Quarterly Economic Updates by mail Regular Client Appreciation Events
Quarterly Financial Articles of Interest by mail Regular Educational Workshops

*Diversification does not eliminate the risk of market loss.
EverBank pledges to keep the yield on your account in the top 5% of competitive accounts as tracked in the Bankrate.com National Indextm of leading banks and thrifts. For the Yield Pledge CD this pledge applies
1-

at the time of purchase, or when rolling your expiring CD into a new CD with EverBank.

WEALTH CONSULTING SERVICES
You are unique. Are you preparing for retirement? Maybe you are
currently retired. Maybe you’re on to your second career. Do you have kids?
Grandkids? Do you want to leave a legacy? Or enjoy what you’ve earned? Or
both? How did you attain your wealth? What are your values? Do you want
to pass those values on?

Successful wealth management is an ever-changing ideal. It
demands an in-depth consultative process that delivers
customized solutions across a broad array of financial needs.

Heir Distribution Plans Roth Conversion Planning*
Estate Planning Lifetime Income Modeling
WEALTH Long Term Care Protection Charitable Planning/Giving
Wealth Preservation Planning Legacy Planning
CONSULTING Tax Efficiency Planning* Independent Financing
Retirement Planning Self Insuring
SERVICES Health Care Funding Tax Preparation*
Cash Flow Analysis Small Business Planning

* We work closely with other independent CPA firms to provide a virtually seamless approach. NEXT Financial Group, Inc. does not provide tax advice.

INVESTMENT MANAGEMENT equities
large growth
mid growth
Taking a global perspective of your overall financial situation, we commodities
small growth softs
provide investment management solutions specific to your individual large value grains
situation. mid value livestock
small value precious metals
industrial industrial metals
Applying the academic principles of Selective and Expanded healthcare energy
Diversification, we utilize an open architecture investment utilities
energy currencies
management platform* to give you an institutional-like portfolio at an
cons cyclical Australian dollar
individual investor level. real estate British pound
gold Canadian dollar
network Euro
Most investment managers are specialists; focusing on big companies, telecomm Japanese yen
small companies, companies in Asia or Europe, companies in the technology Swiss franc
financial U.S. Treasury Bonds
banking sector or in the retail sector. As an Investment Strategist, we
basic materials U.S. Treasury Notes
research, hire, monitor and replace investment managers on your cons non-cyclical
behalf. financial services global REITs
biotechnology
software 130/30 funds
To do this, we use a platform called the semiconductor
transportation inverse strategies
Global Management Account (GMA).
emerging markets
The GMA is one of the most flexible, market neutral hedging
Japan
comprehensive and sophisticated Pacific ex-Japan
leveraging
Europe
investment management programs available. And, because GMA is
Latin America
not a commission based product, but rather a fee-based platform, momentum
both our goals come into alignment. bonds
absolute returns
government
treasury
options/derivatives
“How much did your portfolio grow? municipals
corporate
equity futures
Why didn’t it grow more?” fixed instruments
managed futures
cash
certificates of deposit
*An open architecture investment management platform gives investors with low
money market funds
investment amounts access to large institutional managers.

WEALTH MANAGEMENT PROCESS
Your perception of what it means to be successful, and what success should provide, has changed dramatically
over the past decade. Our approach to wealth management is built on the philosophy that your wealth should
enable your life.

Enabling your life through the successful management of your wealth...
Our consultative process consists of the following 5 steps:
The Discovery Meeting
At this session, we gather in-depth information on seven key areas: values, goals, relationships, assets, advisors, the
investment process and interests.
Wealth Management Solutions Meeting
Only after we fully understand you can we go to work to put together a custom Wealth Management Solutions Plan
tailored to your personal situation. It’s at this meeting that we’ll show you the best way to accomplish your goals.
Follow-Up Q&A
A follow-up to the Wealth Management Solutions meeting, this meeting is designed to address any
questions you have. After discussing your questions and working out the details, we will move forward with the
appropriate paperwork to establish & fund your plan.
45-Day Review
After initial implementation is complete, we’ll meet again to review what has taken place, review your personal
service requirements and answer any further questions you may have.
Regular Communication & Reviews
Maintaining regular contact is important and essential to your success.

Monthly Account Statements Weekly & Quarterly Economic Updates
Quarterly Consolidated Performance Reports Regular Financial Articles of Interest
Regular Reviews on Phone, in Office and/or via Internet Client Appreciation Events
24-Hour Access to Accounts on Secured Website Educational Workshops

COMPANY PHILOSOPHY
At NEXT FINANCIAL GROUP, INC., our commitment is to our clients; a commitment to exceed expectations. The following
highlights the quality of care and service we continually strive to provide.

A FIDUCIARY STANDARD
A Fiduciary is anyone legally responsible for managing or making decisions on behalf of someone else’s money or
property; such as retirement plan sponsors, trustees of private trusts and members of investment committees. This
relationship is highlighted by standards of good faith, loyalty and trust; standards we embrace, with or without the legal
responsibility. With the incredible complexities in today’s financial environment and so much at stake, we believe it is
the only standard by which any type of financial service should be provided.
PERSONALIZED EXPERTISE
By organizing, facilitating and managing a team of professionals who all work together for your best interests, we are
able to provide exceptional expertise in all areas of your personal situation.
CLIENT-CENTERED SERVICE
Committed to maintaining long-term relationships, vital to doing so is communication. You can take advantage of one,
two or all of the following forms of communication we offer:
Weekly Economic Updates via email Quarterly Performance Reports
Regular Financial Articles of Interest via email ”24/7” Online Account Access
Quarterly Economic Updates by mail Regular Client Appreciation Events
Quarterly Financial Articles of Interest by mail Regular Educational Workshops
Annual Tax Updates
COMMON MOTIVATION
By embracing a fiduciary standard, it’s important to minimize potential conflicts of interest. One way we
accomplish this is to offer our investment services for a fee; or a percentage of assets under management. This means
that no matter what the investment recommendation, our fee (as a percentage) remains constant. This structure further
allows you to always feel rest-assured that we are not persuaded by any underlining reason other than to meet your
goals & objectives.

ABOUT US — ERIC C. HAGEN
“The best advisers understand their clients are their business.” - Eric Hagen
Eric Hagen is a Twin Cities based wealth manager providing investment management
solutions and comprehensive financial advice to many private investors who desire to
create, grow & preserve wealth. Eric is an Investment Advisor Representative with NEXT
Financial Group, Inc and maintains an office in Eden Prairie and St. Louis Park. His clients
often refer to him as their head coach for whom he manages a team of professionals, each
suited for a different position, to work together for his clients best interests.
Eric grew up in Excelsior, Minnesota spending most of his time on Lake Minnetonka. After going through the
Minnetonka School system, he spent 4 years at Bethel College in St. Paul, Minnesota after which he attained a
degree in Business. He met his wife Kelly at Bethel and now reside in Eden Prairie with their daughter Ava and
son Micah. Along with spending time with his family; he enjoys golfing, boating, hunting, fishing and flying.

Named a “FIVE STAR: Best in Client Satisfaction Wealth Manager for 2009SM”, Eric was featured
in the January 2009 issues of both Mpls./St. Paul Magazine and Twin Cities Business Magazine.*
Eric has served on NEXT’s Investment Advisory Committee since 2007.
Eric is a General Securities Representative after having pursued and passed the Series 7 securities examination. The
exam topics include: Equity Securities, Debt Securities, Municipals, Options, Trading Markets, Margin, New Issues,
Investment Companies, Retirement Plans, Regulations, Taxes and Tax Shelters, and Investment Analysis.
Eric has also pursued and passed the FINRA Series 66 Uniform Securities Agent/Registered Investment Advisor
examination. This exam includes study in Uniform Securities Act and Federal Securities Laws, Regulatory
Oversight, Penalties, Provisions, Securities Exchange Act of 1934, Investment Company Act of 1940, Securities and
Exchange Release IA-1092 and Registration of Securities and Licensing Requirements.
Eric is also licensed by the State of Minnesota as a life, health, long-term care and variable annuity insurance
producer. He is also a notary.
*RESEARCH DECLARATIONS: As with any research or recognition program, it’s important the following declarations are made; The 2008 Five Star Wealth Managers do not pay a fee to be included in the research
or the final list of Five Star Best in Client Satisfaction Wealth Managers. The overall evaluation score of a wealth manager reflects an average of all respondents and may not be representative of any one client’s
evaluation. Also, please keep in mind that working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success.

ABOUT US — NEXT FINANCIAL GROUP, INC.
NEXT FINANCIAL GROUP, INC.
NEXT was founded in 1999 by several enterprising financial
services professionals who were unable to find a broker/dealer who met their
exacting standards. They wanted to create a place where they, and representatives
like them, could have a voice, decision-making ability, independence and freedom.

Since that time, NEXT has emerged as one of the fastest growing independent broker/dealers in the financial
services industry, and has at times been listed as the fastest growing broker/dealer. From these humble beginnings,
and despite considerable odds against them, NEXT has struck accord with representatives nationwide and grown
to over 1,200 affiliated registered representatives; all the while doubling annual revenue every other year since
inception. That revenue grew to over $100 million in 2007.

Today, top financial professionals that affiliate with NEXT find themselves with the same opportunity to have a
voice, independence and freedom; coupled with cutting edge technology, a highly experienced transitions team,
a visionary new fee-based platform, a comprehensive products list, no corporate parent and no proprietary
products.

NEXT HAS WON INVESTMENT ADVISOR MAGAZINES PRESTIGIOUS “BROKER/DEALER OF THE YEAR AWARD”1 FOR
SEVEN OF THE PAST EIGHT YEARS – 2001, 2002, 2003, 2004, 2005, 2006 AND 2008; AN INDUSTRY RECORD.

In the June 2006 issue of Financial Planning magazine, NEXT was ranked the #1 fastest growing Broker/Dealer in
terms of percentage revenue growth for 2005.

NEXT was also listed in the May 2006 issue of Investment Advisor magazine as the #1 fastest growing fee-based
firm in terms of percentage growth of fee-based advisors over five years.

*2001-2006, 2008; Based on a poll of registered representatives conducted by Investment Advisor magazine. Broker/Dealers rated highest by their representatives are awarded “Broker/Dealer (B/D) of the Year.”

INVESTMENT PHILOSOPHY– By Eric Hagen
Professional Wealth Management
1952 1991 1992 2000-2002 2006
Academic Study & Findings

If you would understand anything, observe its beginning and its development. -Aristotle
In 1952, Harry Markowitz formally presented1 what we now know as Modern Portfolio Theory. Rather than
viewing risk on an individual security level, Markowitz proposed that you measure the risk of an entire portfolio. When
considering a security for your portfolio, don't base your decision on the amount of risk that carries with it. Instead,
consider how that security contributes to the overall risk of your portfolio. His work teaches us that through
diversification, it's entirely possible to build a portfolio that has a much higher average return than the level of risk it
contains*. He later won the Nobel Prize.
Asset Allocation Long-Term Determinants of Investment Results
91.5% Brinson, Singer, Beebower (1991)
In 1991, a landmark study2 by
Brinson, Singer, & Beebower seemed
to validate Markowitz’s theory. The
study found that 91.5% of a
portfolios long term performance
was attributed to how a portfolio is
allocated among the various asset
classes (such as stocks, bonds and
cash); while market timing and
Stock Selection
security selection typically account
4.6%
for a smaller percentage.
Market Timing
1.8%
Other
2.1%
1– Source: Markowitz, Harry M. (1952). quot;Portfolio Selectionquot;. Journal of Finance 7 (1): 77-91.
2- Source: Brinson, Singer, Beebower, quot;Determinants of Portfolio Performance II: an Update,quot; Financial Analysts Journal, May-June 1991
*Diversification does not guarantee against market losses. It is a method to help manage investment risk.

1952 1991 1992 2000-2002 2006

During the years 2000-2002 and 2008, many people experienced substantial portfolio losses. I believe this came as a
result of many investors (or their advisors) assuming greater portfolio risk than they should have; and in many cases,
unknowingly. Increased risk comes from a lack of diversification*. However, the rules of diversification weren’t forgot-
ten; they just weren’t applied properly. To mitigate this risk, we adapt the application of Modern Portfolio Theory to to-
day’s investment environment; an environment that consists of more than stocks, bonds & cash.
Since 1952, we’ve seen market globalization, alternative financial instruments and sophisticated risk-management
techniques. Combine these developments with extraordinary technological developments and even the ‘average’ investor
is now able to apply sophisticated investment strategies to their own portfolio.
These sophisticated investment strategies have been used and validated by large institutions and institutional investors
for years. Knowing of and understanding that such sophisticated investment strategies exist is one thing;
implementation is entirely different.
We apply to our clients portfolios the techniques once limited to, and
currently used by, large institutional investors.
Strategic Asset Allocation Alternative Investments
Step One: Application of Expanded Diversification Commodities
Equities Currencies
Expanded Diversification Global REITs
Equipment Leasing
through Strategic Asset Bond/Fixed
Alternative Investing
Allocation 130/30 Funds
Inverse Strategies
Leveraging
Cash Market Neutral Hedging
Determine Allocation Momentum
Absolute Returns
by Broad Asset Class Options/Derivatives
Equity Futures
Alternatives Managed Futures

* Diversification does not guarantee against market losses. It is a method to help manage investment risk.

1952 1991 1992 2000-2002 2006
Expanded Diversification
The essence of diversification is to incorporate non-correlating assets;
investments that don’t react the same relative to each other. Attempting to
better diversify by adding non-correlating investments; investors have
traditionally integrated international stocks into their portfolios. However,
as the global economy becomes increasingly more integrated, the
correlation of domestic & foreign investments (as seen in the chart to the
right) becomes more closely tied making it more difficult to use together
for purposes of diversification. As such, a traditionally allocated portfolio
does not offer the downside protection it once did.
David Swensen grew the Yale endowment fund to over $22 billion in 2007 from $1.3 billion in 1985*; an annualized
return of over 18%. Today, just % 15of the endowment is committed to U.S. stocks & bonds... 85% isn’t.
You see, diversification means “not having all your eggs
in one basket”. We all know owning various, say, tech
stocks does not provide diversification; but did you ever
think about looking outside the stock market itself for
diversification? Well, diversification simply stated
involves owning non-correlated asset classes. I believe
David Swensen understood this when he first started
looking outside the realm of the stock and bond markets.
Up until a few years ago, the tools didn’t exist to allow
individual investors the opportunity to follow suit and as
a result, many investors only utilize a few of the many
asset classes.

*www.Yale.edu/investments. Other Data Source: Calculated by using information from Bloomberg.com. All correlations are measured vs. the S&P500 Index (the S&P500 Index is an un-
managed index used as a general measure of market performance. You cannot invest directly in an index). Past performance is no guarantee of future performance. The index returns do
not include any management fees, transaction costs or expenses. The indices are unmanaged and are not available for direct investment. Chart/graphic used with permission from
AlphaSource Investment Counsel; a WE2 Company: www.alphasourceportfolio.com. Diversification does not eliminate the risk of market loss.

1952 1991 1992 2000-2002 2006

According to another landmark study3 conducted by Dr. William Sharpe of Stanford University, up to 88% of equity
returns are determined by the chosen equity style (or asset class category), not the specific stock selections of the
portfolio.
Unpredictably, the various asset class styles perform differently as compared to their counterparts. Just as you build
a large-growth portfolio, small-value comes into favor. Technology is hot, then takes a back seat to real estate. On the
international market, Asia gives way to Latin America – and cycles back again. Yesterday’s winners become today’s
losers.

This is called “rotation,” and it occurs constantly within the market’s styles, sectors and international regions; driven
by changes in economic, financial and political climates. Along with fast moving markets and endless alternatives,
these rotations present daunting choices.
Should I own growth or value? Large cap or small?
Should I own Biotech? Real Estate?
Should I own Japan? Latin America?
When should I rebalance? When should I sell?

Step Two: Selective Diversification*
After the strategic allocation is determined, we apply a Selective
Diversification strategy to the equity portion of your portfolio.
With Dr. Sharpe’s findings as a solid foundation, the focus is on
asset class category selection, not individual stock picking.
This tactical strategy strives to allocate assets toward the
prevailing styles, sectors and international regions and away
from the poorer performing groups.
3– Source: Asset Allocation: Management Style and Performance Measurement by William F. Sharpe, Journal of Portfolio Management, Winter 1992, pp. 7-19 http://www.stanford.edu/~wfsharpe/art/sa/sa.htm
* Diversification does not guarantee against market losses. It is a method to help manage investment risk. Graphic above used with permission from Quantitative Advantage, LLC.

1952 1991 1992 2000-2002 2006

Selective Diversification* — Taking advantage of market volatility
Selective Diversification describes a mathematically based system that gives your portfolio the ability to change as the
markets change. And since the markets are constantly changing, Selective Diversification specializes in turning those
changes into potential opportunities for you — while seeking to reduce your downside risk.
This system proactively monitors the market to determine what styles, sectors and international regions are moving in and
out of favor. In the process, your portfolio is proactively steered away from lower-performing choices, and toward market
segments gaining strength. The attempt is to reduce the drag effect of low performers by selling them off in a timely way.
To do this, the system constantly collects, sorts and analyzes thousands of “strength markers” in the stock market on a
monthly basis. The results are used to evaluate the contents of your portfolio to make the changes you need to reap today’s
market opportunities. Your holdings are updated and rebalanced every month, if necessary, to help ensure your portfolio
stays on track.
Unlike single-style investing (buy & hold), you’ll be more broadly diversified; and
unlike blended-style investing, your portfolio will be leaner — designed
to let higher-performing investments carry the day.

Example: Markets Change
Large-cap, growth & technology stocks dominated the
market in the late ‘90s and into early 2000. Then, in the
Spring of 2000, a massive rotation emerged. Selective
Diversification is an analytical process designed to identify
trends like these and to transition portfolio holdings into
the prevailing market segments. Portfolios are updated
and rebalanced monthly.
Chartgraphic used with permission from Quantitative Advantage, LLC.
* Diversification does not eliminate the risk of market losses.

1952 1991 1992 2000-2002 2006

Investing is an emotional activity. You hear that something is hot in a magazine and it’s hard not to want to jump on
the bandwagon. You hear the latest negative news on TV and you want to get out completely. Unfortunately, allowing
your emotions to control your investment decisions is anything but prudent investment advice.

In fact, a study4 released in 2006, found that on
average, equity investors far underperformed the
S&P500 Index* as a whole during the greatest bull
market in history; 1986-2005.

To help mitigate the risk of allowing your emotions to
control your investment decisions, you can apply our
investment services to your portfolio using various
investment products. We can help you focus on cost-
efficient products or products that offer additional risk
protection.

Step Three: Platform/Product Selection
SOURCE: Dalbar, Inc. Quantitative Analysis of Investor Behavior - 2006.
Stocks
Bonds
Exchange Traded Funds
Mutual Funds
Unit-Investment Trusts Separately Managed Accounts
Alternative Investments Fee-Based Brokerage Accounts
Hedge Funds Multi-Manager Accounts
REITs Currencies
Fixed & Variable Annuities Commodities/Managed Futures
Certificates of Deposit Options/Derivatives
4- SOURCE: Dalbar, Inc. Quantitative Analysis of Investor Behavior - 2006. Represents average annually compounded returns of equity indices vs equity mutual fund investors; based on the length of time share-
holders 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.
* The S&P500 Index is an unmanaged index used as a general measure of market performance. You cannot invest directly in an index. Past performance does not guarantee future results.

®

ERIC C. HAGEN
N E X T
create. grow. preserve.
financial
group

- www. Eric C Hagen .com -

Registered Branch Office
12100 Singletree Lane, Suite 171
Eden Prairie, MN 55344
Office: (952)746-1321
Fax: (612)392-8612
Email: ehagen@nextfinancial.com
Online: EricHagen.NextFinancial.com

IMPORTANT DISCLOSURES:
Securities and advisory services offered through NEXT Financial Group, Inc., member FINRA/SIPC,
a Registered Investment Adviser and registered broker/dealer.
Diversification does not guarantee against market losses. It is a method to help manage investment risk.
The information contained herein does not constitute investment, tax or legal advice. Before making an investment, always read the prospectus and all relevant
information thoroughly. Most importantly, seek the advice of a skilled financial professional who can let you know how such investment could impact your
personal situation.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE
Embracing a fiduciary standard does not deem legal Fiduciary duty. A legal Fiduciary relationship must be established in writing.
Copyright 2009. Eric Hagen LLC. All rights reserved.

Eric C Hagen Professional Wealth Management brochure

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Viewers also liked

Viewers also liked (20)

Similar to Eric C Hagen Professional Wealth Management brochure

Similar to Eric C Hagen Professional Wealth Management brochure (20)

Recently uploaded

Recently uploaded (20)

Eric C Hagen Professional Wealth Management brochure