Katie Williams, AIF, CRPC, CRPS, CFP • LPL Financial - Women & investing: Is this time different? Why the message of active investment management should resonate with female prospects by Greg Gann - Dow Theory says market divergence is troubling - Sentiment readings as a market indicator by Jeanette Schwarz Young - The soft sell of cross-marketing (Rod Smith, National Planning Corporation)

1. February 12, 2015 | Volume 5 | Issue 6
Active investment management’s weekly magazine
Market divergence is troubling,
says Dow Theory
Women and
investing: Is this
time different?
The soft sell of cross-marketing
Sentiment readings as a
market indicator
Katie Williams
Managing
403(b) accounts
Going beyond suitability standards

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3February 12, 2015 | proactiveadvisormagazine.com
LOUD & CLEAR

7. Dow Theory says market divergence is troubling
hile the Dow Jones Industrial
Average (DJIA) had its biggest
weekly gain in two years last
week (+3.8%), analysts who
adhere to the “Dow Theory” are
saying things are not looking all that rosy based
on their indicators.
Dow Theory looks at the relationship of
the Dow Jones Industrial Average (DJIA)
and the Dow Jones Transportation Average
(DJT), and while it can get complicated, says
that divergences between the two can signal a
change in direction for the broader market.
And in the recent market, to keep it simple,
the DJIA recorded an intermediate-term high
last week, while the Dow Transports have
shown weakness and a series of lower highs.
Bespoke Investment Group says the chart of the
Dow Transports is “rather puzzling”:
“While lower oil prices have been a real
tailwind for the group, since its peak right
around Thanksgiving, the Dow Transports
index has stalled out in recent weeks. Now,
including Friday’s (2/6) pullback, it has made
three lower highs. While oil prices did see a big
rebound last week, prices are still down sharply
over just about any time frame longer than a
week. For followers of Dow Theory, this lack of
upside action is a concern.”
One theory has it that as global growth has
been slowing, the market has priced weaker
manufacturing numbers into the Transports’
W
Source: Bespoke Investment Group
forecast, reflecting lower demand for shipping-
related services needed to move goods around
the world. This has been reinforced in the recent
earnings season, where global U.S. companies
have cited the strength of the U.S. Dollar as a
potential headwind to future export growth.
Reuters reported on the price-weighted
Transports’ trouble last month, as the Index
dropped over 5% on the back of an 11%
plunge in United Parcel Service (UPS) after the
package delivery company forecast quarterly
earnings below expectations. Reuters quoted
Art Hogan, chief strategist at Wunderlich
Securities, who said, “The easy answer is to look
at this and say we got very excited about the
benefit to transportation companies in general
by the significant pullback in energy prices; now
we have to wait and see if this comes to fruition
… and works its way into balance sheets.”
DOW JONES TRANSPORTS: LAST 12 MONTHS
7February 12, 2015 | proactiveadvisormagazine.com
TOPPING THE CHARTS

8. Katie Williams
AIF,®
CRPC,®
CRPS®
, CFP
Minneapolis, MN
President, Classic Financial Services
Broker-dealer: LPL Financial
Focus of practice: 403(b) plan consulting
Licenses: Series 6, 7, 63 and 65
Estimated AUM: $100M
Managing
403(b) accounts
Going beyond suitability standards
By David Wismer
Photography by Ackerman & Gruber
The growing trend that allows participants more
say in their 403(b) accounts is opening the door for
advisors to use third-party active money managers for
risk mitigation and asset growth.
8 proactiveadvisormagazine.com | February 12, 2015

9. continue on pg. 10
In 1987, Katie Williams’ father founded the 403(b)
division of National Benefits, a well-regarded 457
and 403(b) consulting service and benefits com-
munication firm. Over the course of two decades,
Katie had the opportunity to learn and further grow
the business, working alongside and learning from
both of her parents. She later established Classic
Financial Services to continue the family legacy of
providing 403(b) plan consulting and communica-
tions services to a diverse mix of school districts
and not-for-profit organizations, and their respec-
tive plan participants.
As a retirement planning specialist, Katie has
spent the past 15+ years serving the needs of
403(b) plan sponsors and their participants. She
brings extensive experience working with over
100 plans and school districts. Her knowledge
and experience as an Accredited Investment
Fiduciary® enable her to assist school districts
in plan design and fiduciary guidance; educate
plan participants in aligning their investment al-
locations with their individual goals and values;
and facilitate retirement plan rollovers. Based near
Minneapolis, she is widely known among school
districts throughout Minnesota as a strong educa-
tor and trusted advisor.
Proactive Advisor Magazine: Katie,
what attributes have made your practice
successful?
I have at least four distinct constituencies:
the providers or vendors of 403(b) plans,
consultants when they are part of the picture,
school system administrators, and the plan
participants themselves. It is very important
to make sure the needs of each are being met
professionally and with expert guidance. But it
is equally important to understand where their
needs intersect and to be able to facilitate a
productive working environment and process
that benefits all parties.
In my credentialed capacity, I am commit-
ted to a high standard of fiduciary care and
guidance. This includes regularly scheduled
How does active investment management fit
into your practice?
There is a growing trend for plans to allow
participants to have more of a self-directed
option where I can help clients actively
manage their 403(b) accounts, but that is still
relatively limited within the school districts I
work with.
My experience with third-party active
money managers is much more concentrated
with my personal financial planning clients,
who in many cases have come to me with
rollover funds or inheritances, or other
non-qualified money they have been able to
save over the years. In many cases, they may
be clients who first met me through the school
environment.
follow-up meetings with plan administrators,
ongoing investment monitoring and fund
benchmarking, and group and one-on-one
participant education and guidance. I think
what really sets my practice apart is that I do
not just work in a sales capacity—I am an
active partner and plan consultant.
What is your role with the participants?
I want to provide objective, unbiased
advice from a fiduciary perspective that seeks
to place client interests first at all times. My
clients come to recognize the important role
that professional guidance and a compre-
hensive financial strategy play in the pursuit
of their financial goals. As I serve clients
in this fiduciary capacity, I need to act in a
client’s best interests, not simply meet suit-
ability standards where investment decisions
are concerned. I want to provide all of my
clients with the information and guidance
required to help them make the most appro-
priate financial decisions for their needs and
circumstances.
The protection of capital is just as important as having the
opportunity to see assets grow over time.
Describe active money management.
There are two important distinctions about
active management I explain to clients versus
a passive allocation approach. First of all is the
element of providing risk management tools
within a portfolio that can offer some level of
downside market protection during trending
market corrections. Second is the ability to
more proactively rotate among asset classes, ex-
posure levels, and strategies that are dependent
upon current market conditions, whether they
are bullish or bearish.
The active managers I use look at the market
environment on a continual basis and imple-
ment changes to portfolios according to their
models, as required, as frequently as bi-weekly. I
explain to clients how this makes so much more
sense than just passively accepting whatever the
market throws their way. I also tell them that
these active managers are not restrained by
prospectuses or fund restrictions telling them
that they need to keep exposure to a certain
asset class, no matter what is happening to that
asset class. Some managers even have the ability
9February 12, 2015 | proactiveadvisormagazine.com

10. to employ an inverse position to the market,
taking advantage of declining market condi-
tions when the trend is pointing that way. This
is where one of the real differentiations of the
active approach can become apparent.
How does active management fit with your
typical client profile?
Of course, no client is typical and everyone
has their own specific financial planning and
investment needs. And each client is very differ-
ent in their attitude toward risk. But that is one
of the things I find most advantageous to the
third-party managers that I use. Their approach
to active management provides a very broad
umbrella of strategies that can accommodate
investors of all types, from the most risk-averse
to those leaning toward the aggressive side.
If I were forced to generalize, I would say my
client base is generally not high-net-worth, but
your average hard-working, middle-class types.
Many of them are teachers, and frequently in
dual-income households—sometimes even two
teachers within the same household. Typically,
teaching professionals may have a very nice
pension plan in addition to the 403(b) option,
but even then they are not individuals who will
have an overwhelming amount of money from
all sources for their retirement.
I take the responsibility of helping them to
manage their investments very seriously, and
the protection of capital is just as important
as having the opportunity to see their assets
grow over time. Active money management is
one tool in my practice’s arsenal that fits these
criteria very well.
continued from pg. 9
Katie Williams
No strategy assures success or guarantees against loss. Investing in securities is subject to risk and may involve loss of principal. Active money management may involve more frequent buying and selling of assets and will tend to
general higher transaction costs. Investors should consider the tax consequences of moving positions more frequently. Asset allocation does not ensure a profit or protect against a loss. Bonds are subject to market and interest rate
risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Alternative investments and leveraged strategies may not be suitable for all investors and should
be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments and leveraged investments may accelerate the velocity of potential losses.
Katie Williams offer Securities and Advisory Services through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
10 proactiveadvisormagazine.com | February 12, 2015

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Versta Research recently evaluated financial issues involving
women on behalf of Wells Fargo. Their survey found that 82% of
affluent women managed the household budget and purchasing de-
cisions. However, only 46% were taking primary responsibility for
their investment accounts. For married women, this rate dropped
to 34%, more or less in line with my personal experience. Kathleen
Murphy, Fidelity Investments’ president of personal investing, has
recently made similar comments, saying, “Women work really hard
to progress in the workforce; they work hard for that money. But
when you take the next step (towards investing), that’s where they
lose confidence.” Murphy sees the issue continuing even for mil-
lennial women who, though well-educated and ambitious, tend to
defer to their spouses or partners on financial decisions.
The importance of cracking this marketing door open is high-
lighted in a 2013 Prudential study that reported that most women do
not work with a financial advisor. Yet for those women who do, they
report having more assets, more diversified portfolios, and greater
confidence and preparedness in reaching their goals. Furthermore,
as you undoubtedly know, life expectancy for females exceeds that
for their male counterparts. Once a wife loses her husband, the same
study found that 70% will leave “their husband’s” advisor.
Other reasons to re-energize marketing efforts to women come
from a recent study conducted by BlackRock that found that
women are generally more patient investors than men. They are
continued from pg. 5
continue on pg. 13
Women & investing
Nine key communication
points for advisors
Advisors should put their mouths where their
money is—educating and preparing clients for
what they will ultimately deliver.
More advisors moving to
TAMPs
Turnkey asset management programs (TAMPs)
are increasing market share rapidly, as more
advisors recognize the benefits of outsourced
investment management and administration.
Mohamed El-Erian: Beware
the bubble in liquidity
In 2000, it was technology stocks. In 2007, it was
real estate prices. Among today’s overvalued asset
classes, which one will crash most spectacularly
when the bubble bursts?
L NKS WEEK
February 12, 2015 | proactiveadvisormagazine.com 11

12. Sentiment readings as a market indicator
Jeanette Schwarz Young is the author of the Option Queen Letter, a weekly newsletter issued and published every Sunday and the OPTIONS DOCTOR, published by
John Wiley & Son in 2007. She was the first director of the CMT program for the Market Technicians Association and is currently President of the American Association
of Professional Technical Analysts.
his article is about sentiment.
So what am I talking about? Sentiment
is based on the feelings, either to
buy or to sell stocks, that portfolio
managers and the general investing public have
regarding the stock market. If there is a feeling
that all is well and that the economy is growing,
bullish feelings will appear. The press will call it
“risk-on.” Why? A risk-on trade is one which is
based on taking some risk when the economy
appears to be stable and growing. A “risk-off”
trade occurs when the general feelings regarding
the market are very cautious. At that time,
purchases of insured bonds will be made even
with next to nothing on a coupon: buyers are
scared of a market retreat and will take safety
with little income rather than risking money on
growth or uninsured investments. The feelings,
sentiment-wise, are negative.
There are many services providing weekly
sentiment readings. Investors use this as a gauge
to measure the mood of the market and it is
widely seen as a contra-indicator. It is generally
believed that when there are too many buyers or
bulls in the market, the market is near a top and
that a retreat will occur in the not-too-distant
future.
On the other side of the coin, if there are
too many sellers or bears in the market that
may indicate nearing a bottom and a rally
is in the future. The theory, which actually
works, states that the crowd is always wrong
and that when the market becomes too frothy,
something will knock it off its perch. The
readings are always a lagging indicator but can
be used to understand how close we are to a
decline or a rally.
T
There is a lot of data showing us that, for
example, that when bullish sentiment gets
to be above 50%, something will knock the
market down in the not too distant future.
At the same time, if bears gain traction, the
opposite could occur. This year, we have not
seen the bears able to consistently rally much
above 20% on bearish sentiment. When the
differential between bullish sentiment and
bearish sentiment is more than 40%, then a
major market move is usually going to happen.
(Actually, a difference of 30% is worrisome
for me.) Services also measure the correction
camp or fence-sitters.
Basically, the take-away from all of this is
that if there are too many bulls or too many
bears hovering around the market place, you
should take note of that and perhaps adjust your
investments to protect yourself: hedge it if bearish
or just go long if you are bullish.
Remember that when the bulls run, you
cannot stand in front of that herd without
getting trampled—this not a time to short but
rather a time to hedge or to place tight trailing
stops on your positions. On the other hand,
when the bears are prowling around and there
is blood in the streets, it may be difficult to buy,
but perhaps you should begin to nibble on a few
selected favorites.
Proactive Advisor Magazine presents weekly commentary provided by well-known market analysts, financial authors, investment newsletter publishers, and economists. The opinions expressed
each week represent their personal perspectives and not necessarily those of the magazine.
Monday, February 2, 2015
Investor Sentiment Readings
Last week 2 weeks ago 3 weeks ago
Consensus Index (Source: Consensus Inc.)
Consensus bullish
sentiment
63% 64% 65%
AAII Index (Source: American Association of Individual Investors)
Bullish 42.2% 37.1% 46.1%
Bearish 22.4 30.8 21.5
Neutral 33.4 32.1 32.4
Market Vane (Source: Market Vane)
Bullish consensus 59% 59% 58%
TIM Group Market Sentiment (Source: TIM Group)
Indicator 47.8% 53.5% 51.9%
proactiveadvisormagazine.com | February 12, 201512
HOW I SEE IT

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continued from pg. 11
more open to opinion from others, and view
investing from the vantage of a long-term
planning process rather than a competition or
a contest. This is the antithesis of an attitude
that frequently impacts male clients, who are
more likely to consider themselves experts with
respect to financial management (whether they
truly are or not).
As evidence of women’s analytical skills
and inherent business and financial acumen,
Barclays recently launched an exchange traded
note that specifically links its performance to
companies led by a female executive officer.
Because many of these companies and their
female executives are younger, it may be that we
are finally at the verge of change. It also likely
means that there will be far greater opportuni-
ties to work with and help female millennials
become more engaged in investment decisions.
Because the female client is so underserved,
and because women, as the research so clearly
indicates, are more averse to risk and very
concerned with capital preservation, their
characteristics make them in many ways the
perfect clients for anyone who practices active
investment management. The tenets of active
investment management also dovetail perfectly
with an interest in securing self-sustaining re-
tirements while also preserving a family legacy.
Combining all of these factors with the
female market’s receptivity to financial edu-
cation, and the potential for learning about a
new and more modern approach to portfolio
management, makes them ideal candidates
for a holistic active management investment
plan. We should all make this the time that we
nurture our skills and approach in a way that
motivates more women to take an active stake
in their financial success.
Women & investing
Gregory Gann has been an independent financial advisor since 1989. He is President of Gann Partnership LLC, based in the Baltimore, MD area.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The opinions expressed in this material do not necessarily reflect the views
of LPL Financial. Securities offered through LPL Financial, Member FINRA/SIPC.
Women are more averse to risk and concerned with
capital preservation making them ideal candidates for
active investment management.
13February 12, 2015 | proactiveadvisormagazine.com

14. Advertising
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Contact
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Copyright 2015 © Dynamic Performance Publishing,
Inc. All rights reserved. Reproduction of printed form,
whole or in part, without permission is prohibited.
Editor
David Wismer
Associate Editor
Elizabeth Whitley
Contributing Writers
Greg Gann
David Wismer
Jeanette Schwarz Young
Graphic Designer
Travis Bramble
Contributing Photographer
Ackerman & Gruber
February 12, 2015
Volume 5 | Issue 6
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.
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.
The soft sell of cross-marketing
Rod Smith
Bank of Stockton, CA
National Planning Corporation
No investment strategy will guarantee a profit or protect against a loss. The S&P 500 is an unmanaged stock index. Investors cannot invest
in the S&P 500 index. Past performance is not a guarantee of future results.
Securities and Advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC and a Registered Investment
Adviser. Bank of Stockton Investment and Insurance Services are separate and unrelated to NPC. SECURITIES ARE NOT INSURED BY THE
FDIC OR ANY OTHER FEDERAL GOVERNMENT AGENCY, HAVE NO FINANCIAL INSTITUTION GUARANTEE, AND MAY LOSE VALUE.
I emphasize that this should be a soft
sell, making others aware that our area
offers some state-of-the-art money manage-
ment techniques and strategies. When I can
get in front of prospects with the message
of active investment management, it can
be an effective presentation. It does not
hurt that several of my clients are bank em-
ployees themselves and are happy to make
that soft referral. A lot of them have active-
ly managed portfolios and believe I have
made a difference in how they think about
and approach their investments. They may
refer me to both their personal contacts as
well as their banking clients. That is very
gratifying.
work in a somewhat different model
than most independent advisors.
I am employed as an Investment
Representative by the Bank of
Stockton and provide investment advisory
services to banking clients. However, I also
have my own independent roster of clients
who are not necessarily clients of the bank.
My investment advisory practice is an
independent department within the bank,
and we must be very diligent about the
guidelines regarding client solicitations and
cross marketing among the different disci-
plines at the bank. But within that context
we have a fair amount of leeway on rela-
tionship building among colleagues who
touch a client. We also have some helpful
training and protocols on making introduc-
tions and referrals.
It is critically important that my col-
leagues are aware of the wealth manage-
ment services we can provide to bank cli-
ents. I take every opportunity to reinforce
that message, describing the types of ad-
visory services we can offer. With several
branch offices and a variety of departments,
it is certainly an ongoing challenge but also
a great opportunity.
My basic message is to ask colleagues to
always be on the alert for clients who might
have a need in the investment advisory
area, whether it be individuals who have
non-managed investment or cash accounts,
or companies with prime key executive
wealth management prospects or 401(k)
needs.
I
14
TIPS & TOOLS