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Eric C Hagen Professional Wealth Management brochure

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Eric C Hagen Professional Wealth Management brochure

  1. 1. ® 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.
  2. 2. 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
  3. 3. 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.
  4. 4. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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.
  5. 5. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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.
  6. 6. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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
  7. 7. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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.
  8. 8. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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.
  9. 9. ERIC C. HAGEN PROFESSIONAL WEALTH MANAGEMENT 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.”
  10. 10. 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.
  11. 11. If you would understand anything, observe its beginning and its development. -Aristotle INVESTMENT PHILOSOPHY– By Eric Hagen Professional Wealth Management 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.
  12. 12. If you would understand anything, observe its beginning and its development. -Aristotle INVESTMENT PHILOSOPHY– By Eric Hagen Professional Wealth Management 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.
  13. 13. If you would understand anything, observe its beginning and its development. -Aristotle INVESTMENT PHILOSOPHY– By Eric Hagen Professional Wealth Management 1952 1991 1992 2000-2002 2006 Academic Study & Findings 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.
  14. 14. If you would understand anything, observe its beginning and its development. -Aristotle INVESTMENT PHILOSOPHY– By Eric Hagen Professional Wealth Management 1952 1991 1992 2000-2002 2006 Academic Study & Findings 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.
  15. 15. If you would understand anything, observe its beginning and its development. -Aristotle INVESTMENT PHILOSOPHY– By Eric Hagen Professional Wealth Management 1952 1991 1992 2000-2002 2006 Academic Study & Findings 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.
  16. 16. ® 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.

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