This document provides a portfolio update from an investment advisor. It discusses changes made to bond fund allocations in client portfolios. Specifically, it eliminated three bond funds (focused on foreign bonds, TIPS, and short-term bonds) and replaced them with two new funds that have more flexible investment mandates. This was done to improve chances of success in a rising interest rate environment. It also discusses replacing an existing small-cap value fund with a new fund that has a strong long-term track record and is managed by an experienced team with a classic value investing approach.

1. Q2 2013
“THERE IS ONE CONSOLATIONWITH INFLATION:THE MONEYYOU HAVEN’T
GOT ISN’T WORTH AS MUCH AS IT USED TO BE.”
- ANONYMOUS
INSIDE THIS ISSUE
Portfolio
Update
By Mike Booker, CFP®, ChFC, CFS®
As I’m sure you have noticed, we’ve been
very busy in your account. We implement-
ed some recent asset allocation changes
which we believe will provide an even
more solid foundation for strong future
returns.
We eliminated three asset classes and
added two new managers, all on the fixed
income side of the ledger. We believe, as
do our bond management teams, that the
“Golden Era” that bonds have experienced
over the past 32 years is coming to an end.
The primary reason that this Golden Era
existed is that interest rates have been
steadily dropping down to where we find
ourselves today, near 0%. As you know,
when interest rates decline, bonds benefit
in the form of price appreciation. Likewise,
the values of bonds can drop in a rising in-
terest rate environment.
In May, we began to see the initial signs of
rising interest rates, a trend which could
last a very long time as rates return to nor-
mal historical levels. On May 22nd, Fed
Chairman Ben Bernanke signaled the be-
ginnings of a “tapering” of its long-stand-
ing quantitative easing program, causing
rates to spike and bond prices to decline.
As part of our strategic allocation, we elim-
inated three of our fixed income mutual
funds and replaced them with two funds
that are better positioned to survive and
even thrive over the years to come. Three
years ago, we began to favor bond man-
agers with flexible investment mandates,
and we added BlackRock Strategic Income
Opportunities to our portfolios. These ad-
ditions are a continuation of that same
thinking.
On the following pages, Bryan Zschiesche and Mike Minter provide additional de-
tails regarding the changes we’ve made in our portfolios. Here’s a preview:
Treasury Inflation Protected Securities (TIPS): This category is suffering some of
the most severe losses as rates have begun their ascent. By prospectus, the man-
agers of the fund, BlackRock Inflation Protected Bond, have very little flexibility in
their response to this environment, so we have exited the position.
Foreign Bonds: While there is opportunity abroad, the two bond funds we have
added will have the ability to invest in foreign bonds if they believe the environ-
ment is beneficial to this asset class. More importantly, they can elect to have little
or even no exposure to foreign bonds if the environment is deemed less than op-
timal. With our previous dedicated foreign bond fund, T. Rowe Price Institutional
International Bond, the manager was required to invest abroad, even if those areas
were overpriced or unattractive. Again, flexibility is critical going forward, so we
have exited the position.
Low Duration Bonds: The rationale for our exit from low duration bonds is similar
to the rational for our departure from foreign bonds. Because the managers of this
fund (T. Rowe Price Short-Term Bond) are required to invest in only certain areas of
the bond markets, we have eliminated the position in favor of more flexible manag-
ers.
Alternative Strategies: In our more conservative portfolios (those with less than
50% equity allocation) we have reduced this category from 20% to 15%. That 5%
difference was reinvested in the equity side of the portfolio. The reduction of the
alternatives to 15% in our moderate and aggressive portfolios was executed earlier
this year.
Queens Road Small Cap Value: While Queens Road was home
to a very capable manager, Diamond Hill Small Cap is a supe-
rior fund in our view. The Diamond Hill fund was our #1 choice
at the time we purchased Queens Road as our new small cap
value replacement fund, but due to investment restrictions in
the Diamond Hill fund, we were unable to buy it. Diamond Hill
recently loosened those restrictions, providing an entry point
for our clients. We pounced. 
ƒƒ PORTFOLIO UPDATE 1
ƒƒ BOND ALLOCATION CHANGES 2-3
ƒƒ VOLATILITY ISN’TTHE ENEMY 3
ƒƒ YOUR OUTSIDE ASSETS 3
ƒƒ SMALL-CAPVALUE CHANGES 4
ƒƒ 84YR OLDWIDOWWINS $590MIL 5
ƒƒ THE IMPORTANCE OF BEING 20-SOME-
THING5
ƒƒ ANNOUNCEMENTS6

2. 2
“EXPANDED MANDATES IMPROVE CHANCES OF SUCCESS IN A CHOPPY BOND MARKET”
Bond Allocation
Changes
By Bryan Zschiesche, CFP®, MBA
A big component of the changes Mike discussed in his opening article centered around our bond allocations. For clients whose portfo-
lios lean more aggressive, these bond fund changes will have little impact. But for our more conservative and moderate clients, these
moves represent a meaningful shift in our bond allocations. Before we get into the changes in detail, let’s start by looking at where
we’ve been, both over the past 30 or so years, and then more recently, over the last couple of months.
For a long-term perspective, take a look at the chart below from J.P. Morgan’s July 1st, 2013 Guide to the Markets. Focus on the blue line,
which represents the yield (or interest rate) on the 10-year U.S. Treasury bond. Beginning in the early 1960s, interest rates rose dramati-
cally until they peaked in Sept. 1981 at 15.84%. Many of our clients will remember mortgage rates and CDs in the double-digits during
the late ‘70s and early ‘80s. However, after that peak, a decline in rates commenced which has continued in a steady downward path
until it hit about 1.6% on May 2nd of this year. What is the significance of this persisent downward trend? As Mike mentioned earlier,
bond prices go up when interest rates go down. So this continual decline in interest rates over the past 30+ years has led to siginficant
increases in bond prices over that timeframe. In other words, bond investors have experienced a supportive tailwind of declining rates
to help boost bond returns.
Now for the more recent
perspective. From May 2nd
to the time of this writing
(July 8th), the 10-year Trea-
sury yield has risen from
1.6% to 2.6%. While a one
percentage point move
doesn’t seem like much, it
represents an increase of
nearly 63% in just over two
months. And, as we know,
when interest rates go
up, all things being equal,
bond prices go down. This
sudden spike in rates, while
not unprecedented, made
waves in the bond world
and led to losses by most
bond managers over that
short period. The spike in
yields was caused primarily
by hints from Fed Chairman
Ben Bernanke that the pace of “quanititative easing” (QE) may slow later this year as the economy appears to be on firmer footing,
reducing the need for stimulus by the Fed. While the Fed hasn’t actually reduced QE, the mere anticipation of a possible reduction
caused the bond market to react.
As we can see above, interest rates tend to move in prolonged cycles, potentially as long as 20 or 30 years. While we don’t profess to
have the ability to call an interest rate bottom, we saw opportunities in our bond investments to improve our chances of success in
what could be a prolonged rising rate environment. Now, onto the changes themselves…
We eliminated three bond funds from our portfolios entirely: T. Rowe Price Institutional International Bond fund, BlackRock Inflation
Protected Bond, and T. Rowe Price Short-Term Bond fund. (Again, not every client owned all of these funds, depending on the risk
profile of your portfolio.) All three of the funds represented very specific sectors of the bond markets: foreign bonds (primarliy govern-
ment bonds), Treasury Inflation Protected Securities (TIPS), and short-term bonds, respectively. While all of these funds are stand-outs
in their respective categories, we saw a need to expand the investment mandate within our bond portfolio to give our managers the
best opportunity to navigate a rising-rate enviornment. In that vein, the new additions to our portfolio include JPMorgan Strategic
Income fund (JSOSX) and PIMCO Income fund (PIMIX).

3. Volatility Isn’t the Enemy...
3
JPMorgan Strategic Income fund is managed by Bill Eigen, a 23-year veteran of bond management. Eigen has
free range in this “go-anywhere” fund, meaning he and his team can exploit opportunities in any sector of the
bond market they find attractive. It also means he will sit on a pile of cash until such opportunities present them-
selves. We recently spoke with Eigen as part of our due diligence on the fund. He started our conversation by
saying, “Well, the good news is that volatility is back!” Volatile environments provide Eigen the opportunity to
take advantage of“indiscriminate selling.” He expects continued“spurts of volatility”in the months and, poten-
tially, years ahead as interest rates find their way back to normal historical averages.
With 21 years of investment experience, PIMCO Income fund is managed by Dan Ivascyn at PIMCO’s Newport
Beach office. The fund’s objective is to target a steady income stream from multiple areas of the global bond
market. In Ivascyn’s words, the fund’s“flexibility allows us to pursue the most efficient and attractive sources of
income across the global bond markets and shift exposures from one country or sector to
the next, moving to wherever we believe the most attractive yields can be generated, while
actively managing portfolio risk.”
In addition to these two new funds, we have been investors in BlackRock Strategic Income
fund, which also boasts a “go-anywhere” investment mandate, since 2010. Together these
three funds now represent 75% of our bond allocation for most clients, and with proven expertise and great flex-
ibility, we are confident in their collective ability to exploit opportunities and mitigate interest rate risk in the
months and years ahead. 
BOND ALLOCATION CHANGES, CONTINUED...
In today’s fast paced world it’s easy to neglect outside accounts like your 401(k) or deferred compensation plan. We are pleased
to announce that we now have the ability to help you manage your 401(k) (or any investment account) held outside of Charles
Schwab for a nominal fee. We believe that a comprehensive understanding of our client’s financial lives is essential when providing
sound advice. We’ve always offered our clients asset allocation recommendations for these“held-away”accounts. However, only
now do we have the technology in place to help our clients with the ongoing management of accounts held outside of Charles
Schwab Co.
In addition to making investment recommendations, we can also provide detailed performance reporting, assistance with trading
and rebalancing, daily account monitoring, and online access through finsyn.com, just as we do now for your managed Schwab
accounts.
We strive to provide our clients with cutting edge service offerings. If you would like ongoing professional guidance with your
401(k), 403(b) or any other account held outside of Charles Schwab Co., please feel free to give us a call. 
Are your outside assets getting the attention they deserve?
Bruce Brugler, an advisor from San Francisco, wrote an interesting piece in the Wall Street Journal on June
10th. He conducted a study that looked at what would have happened over the past 50 years to a hypotheti-
cal investor who invested on the absolute worst possible day just prior to each of the 9 occasions the market
crashed, including 2008. His team wanted to find out how many occasions over the 50 years the investor
would have lost money five years after their portfolio tanked. Answer? NONE.
Conclusions: Have enough liquidity (cash) in your portfolio so you don’t have to sell in downturns, and create a
diversified mix of assets that don’t all sink during stock market downturns. Check and check. 

4. 4
“WINNING COMBINATIONS”
By Mike Minter, CFP®
As Mike mentioned in his opening article, we’ve made a change in our small-cap value stock category. We’ve replaced the Queens
Road Small-Cap Value fund with Diamond Hill Small-Cap Institutional (DHSIX). This fund has been on our radar for years, but only
recently were we able to purchase the institutional share class. The team at Queens Road did a fine job for us, but Diamond Hill was
always our first choice so we’re very happy that it’s now available for our clients.
I met with the Diamond Hill Investments founder and CEO, Ric Dillon, back in March of this year as part of our
continuing due diligence on the fund.The purpose of the meeting was to gain insight into their firm’s culture and
philosophy as we considered our options in the small-cap value category.
After only a few minutes I was genuinely impressed with Ric’s approach to the discussion. He came across as
very humble, and seemed more interested in learning about Financial Synergies than talking about himself. Ric
founded the firm in the year 2000. Diamond Hill Investments is publicly traded on the NASDAQ exchange with
$10.2 billion under management.
We’ve done extensive analysis on the fund, and there is no question that it’s been an exceptional performer since
its inception. So the bulk of my conversation with Ric was focused on the more qualitative factors that make up Diamond Hill In-
vestments, since this information is impossible to uncover by just looking at the numbers. I thought the following were particularly
noteworthy:
• Since the firm’s inception they have not lost one primary fund manager or lead analyst.
• All employees must own Diamond Hill funds to represent any asset class in which Diamond Hill runs a strategy.
• Fund managers must have a“significant”stake of their own money invested in Diamond Hill funds.
• To avoid conflicts of interest, no employee may own any individual stocks.
• Fund managers are compensated on fund performance only, not growth in fund assets.
• The firm is a model of transparency – the website offers a detailed description of their straightforward investment philoso-
phy, valuation models, and fees.
• They rarely launch new funds, preferring to stick to their areas of expertise rather than trying to capitalize on every new
investment fad.
• Morningstar awarded Diamond Hill their highest honor – the Gold Star Analyst Rating (in the areas of firm culture and stew-
ardship they are second to none).
• Lead manager on the small-cap strategy, Tom Schindler, is a young guy with a long tenure – and has had the privilege of
studying under Ric Dillon for more than 13 years.
As I mentioned above we’ve run the detailed analysis on the Diamond Hill Small-Cap fund, and the numbers speak for themselves. It
is a fantastic long-term risk-adjusted performer. Tom Schindler applies a classic value (Graham/Dodd) approach to investing. Simply
put, he buys stocks trading below his estimates of their intrinsic value, and sells them once they reach that value.
He keeps a long-term viewpoint (5-7 years) on his stocks’ performance, so the fund boasts one of the lowest portfolio turnovers in
the category. He’s not beholden to any benchmark’s sector weighting, and will pursue value where he finds it. It’s not unusual for the
fund to look very different than the Russell 2000 Value Index.
Inherent in the classic value style is the downside protection gained by buying undervalued stocks, and this
fund has not disappointed in that regard. Since its inception thirteen years ago the fund has handily outper-
formed the bulk of the category in down markets.
Diamond Hill is a first-class asset management firm. Their proactive effort to put their clients’interests ahead of
their own is a rare quality in the investment world. Couple this with outstanding risk-adjusted performance and
you’ve got a winning combination. Our clients will be well served with Diamond Hill. 
Small-Cap Value Changes

5. 5
By Heath Hightower, CFP®
Last month, the world learned that 84-year-old Gloria
MacKenzie was the sole winner of the $590 million Power-
ball jackpot. This makes her one of the biggest winners in
lottery history. The widowed great-grandmother chose to
receive her winnings as a lump-sum payment, worth over
$370 million.
Some people may talk about how lucky she is to win such
an extraordinary amount of money. But then again, maybe
she’s not so lucky. The National Endowment of Financial
Education estimates that as many as 70% of Americans
who experience a sudden windfall lose that money within
a few years. In fact, many people’s lives become notably
worse after they win the lottery. One can find countless
horror stories on the internet of people who have won the
lottery only to live a life of lawsuits, broken relationships,
and bankruptcy. The most ironic stories are the people
who win the lottery and then tell their boss to “shove it”,
and then end up interviewing for the same job a few years
later.
As I read the story about Ms. MacKenzie, I couldn’t help but
wonder if she will be the exception to the rule. At 84 years
old one would hope she has the wisdom to handle her fi-
nances appropriately. However, a quick Google search
will reveal that even the elderly are no match for greed.
I’ve come to believe that acquiring sudden wealth can be
more of a curse than a blessing. Time and time again, I’ve
seen people acquire wealth (typically from an inheritance)
and squander it away due to poor decision making. To the
contrary, I’ve also had the honor of working with people
who accumulated millions of dollars in their retirement ac-
counts by simply saving money and living a financially re-
sponsible lifestyle. These are the people
who tend to build the kind of wealth
that lasts for generations to come.
So the next time you buy a lottery ticket
with hopes of winning it big, think twice
about what you’re really doing. You may
be better off just buying a coke. 
By Marie Villard
I was 24 when I realized I was going through my quarter-life-crisis
(QLC).
Upon this discovery, which wasn’t identified as QLC at the time, I
decided to take extended leave from my job and see if I really had
what it took to become a flutist, which was a dream since child-
hood. So, I packed up my things and went to Europe to spend
some quality time alone with my flute. Granted, this sounds ri-
diculous now, but when I was there, I had a transformation.
The decision to abandon my current reality was probably the first
decision that I had made in my life that wasn’t already made for
me. My whole life had been a series of “supposed-tos” and pre-
set, society-driven milestones. Honestly, I felt a bit erratic, but I
also felt a new power charging inside of me, something that was
empowering and, yet, slightly terrifying.
With 15% of the population currently in their 20s, I know that I’m
not the only one who has gone through this, and I’m clearly not
the last.
The New York Times did a piece recently that discussed 20-Some-
things and their decisions to defer student loans while working
minimum-wage jobs, how they live with their parents to save
money, live in loads of debt (student loan and personal), and pro-
crastinate in most every aspect of their lives.
Because we 20-Somethings have always had decisions made for
us, we grow up thinking that we can put our own decisions until
later in life, whether it’s marriage, career, or even basic decisions –
that our 30s are the new 20s, and that we have all the time in the
world. An extended adolescence, if you will.
In that article, one late-20-Something remarked that he was told
“the world is at my fingertips, you can rule the world, be whatever
you want, all this stuff. When I was 15, 16, I would not have envi-
sioned the life I am living now.”
The truth is, the 20s are a time where we should be exploring,
not procrastinating, and it can’t be stressed how important that
journey is for self-awareness and adult development.
University of Virginia professor and private-practice Psychothera-
pist, Meg Jay, spends much of her time studying 20-Somethings.
Her book, “The Defining Decade”, focuses on some lesser-known
realities about handling life in your 20s. She highlights that 80%
of what we consider as life’s defining moments happen before
age 35, and that the first 10 years of our careers have an expo-
nential impact on our ability to earn in the future. She seeks to
remind us that “the best time to work on things is before they
happen.”
When I returned back from Europe, I was in absolute shambles;
this one decision to take a break from my life completely turned
everything upside down. Later on, I would find that it was ulti-
mately for the better. After that, I made a series of changes: I left
my relationship, left my job, and moved to a new place where I
could seek my passions. The most brilliant thing I learned from
that trip was that I have the power to choose everything in my
life, and that I can be intentional in those choices.
Do you know, love, or have a friend who is
a 20-Something? This is the time for those
people in your life to define themselves. It’s
time to encourage those we know in their
20s to embrace those difficult decisions and
take responsibility over their own lives, or
else we may see them kicking that same can
down the road for a very long time. 
84-year-old Florida Widow Wins $590
Million Lottery
The Importance of Being
20-Something

6. Congratulations
Bryan and Cele!
On Sunday, June 16th Bryan and Cele
Zschiesche’s newborn, Carson, was
baptized at St. Peter’s United Meth-
odist Church in Katy, TX.
Congratulations
Caitlin and Greg!
Mike and Pat Booker’s daughter,
Caitlin, tied the knot on Saturday,
July 13th in The Woodlands, TX. We
wish them a happy and prosperous
life together!
Heath Hightower celebrated his 10th anniver-
sary with Financial Synergies on February 16th,
and has been awarded a minority equity stake
in the firm.
Please join us in congratulating Heath on this
important accomplishment.
Congratulations
Heath Hightower!
For more information, please contact us at:
Financial Synergies Asset Management,
Inc
4265 San Felipe, Suite 1450
Houston, TX 77027
Phone: 713-623-6600
www.finsyn.com
©2013 – All rights reserved