Unlike allocation models, which exist before someone is around to invest in them, the investor submits various life factors needed to calculate a custom allocation mix that reflects their life situation. So it's not just using one of a few generic pre-existing model allocations.

Model portfolios only take one life factor into account - investment risk tolerance category. This is determined by filling out and scoring an investment fact finder. There's little to no "work" involved. You just determine investor risk tolerance, allocate money according to the appropriate allocation model, and then make the trades. So from an investment manager's point of view, model portfolios are best suited for smaller clients (e.g., under $200,000).

Comprehensive asset allocation software also takes investing risk tolerance into account as the most important factor in determining the mix. But it also uses several more life factors.

The investor's portfolio is then analyzed after inputting current holdings. This is then compared to the recommended mix of asset classes. Then assets are shuffled around to create the proposed mix of asset classes. These are the investment recommendations (proposed snapshot).

It then displays current and proposed snapshots, and future projections of both current and proposed portfolios. This allows complete control over every aspect of the asset allocation process. Model portfolios only show investment recommendations (proposed snapshot).

So there's work involved in creating an investment portfolio that's custom tailored to fit the investor's life. This makes comprehensive asset allocation software best suited for larger clients that are paying enough to make it worth doing the extra work (or investors managing their own money).

Our portfolio models only use 16 asset classes, and the asset allocation software accommodates an unlimited amount of asset classes (but we screen mutual funds for 21).

The asset allocation software costs more than models because it provides more value.

Why Most Professional Money Managers and Financial Planners Use Portfolio Models

· They can usually do it themselves for free. The very most ours is going to cost is $179 initially, and then $169 annually to keep it updated.

· Although there is a lot of work involved in setting them up (which we have already done), there is very little work when it comes to implementing them for people in the Real World (presenting/selling them, tracking, compliance paperwork, analysis/computer work, making trades, rebalancing, and keeping them updated).

You just buy investments in the proportions given in the model allocation. For example, if a client gave you $100,000 of new money, and scored Moderate risk tolerance, then you'd just buy $15,000 of the Large-cap Growth mutual fund pick (because the allocation is 15%). The combination of being easy to sell, simplicity, low risk/turnover/trading/maintenance, easy to keep in compliance, and great returns are very attractive. This is especially so for younger financial consultants without the big education in investment management, or the decades of experience in developing their own investment management strategies. All of this time saved on not having to develop a money management system can be put to better use building infrastructure, drumming up new business, and maintaining client relationships.

· These asset allocation models work for all methods of doing business: Fee-based (where mutual fund front-end loads are waived), no-load mutual funds/Index funds/ETFs, and all front-end loaded mutual funds. Unlike all other asset allocation software, they work great using all investments you like using: Closed-end mutual funds, bank investments, real estate, stocks, bonds, VA or life insurance subaccounts, 401(k) investment options, stock options, fixed annuities, GICs, non-publicly traded securities, etc. Stockbrokers and life agents can use whatever they want to sell in these investment models with just a few minutes of work.

You can also use only your favorite mutual fund families. For example, American Funds has eight of the sixteen asset classes. Oppenhiemer has 13. You can modify these model investment portfolios to accommodate anything you want to do like this. You're going to get the best returns, with the least amount of risk, by using our mutual fund recommendations, but you can fund the asset classes with anything you want to.

· Compared to other investing strategies, they're very easy for you and your clients to understand. It works well if you like the KISS philosophy (Keep It Simple Stupid!).

· They're easy to get Broker Dealer compliance/FINRA/SEC approval, compared to other investment strategies. This is because they're used to seeing them because everyone else is doing something similar. You'll need to show people both the investment models along with this Word document that explains the investing models to clients, and everyone will be happy, including your compliance department.

If you're interested in using these model allocations, but your Broker Dealer didn't approve them after submitting them (or told you you'd have to spend too much money on getting FINRA's opinion), then here's what to do:

Gather the client's data needed for input into the software using any investment fact finder that's approved. Use the model allocations as normal, other than tinkering with the details of printing reports.

Then just make the trades and manage the portfolio as it recommends. All you need to do is not show or give any of the reports to clients, don't put anything in their files, don't store the spreadsheets on a computer that anyone can poke around in, and nobody will ever know that you're using an "unapproved system" to manage money.

You'll get the same great results and people will think you're a genius and wonder how you're doing it. Just tell them you use a little of this and a little of that and you're a good mutual fund picker. The only difference is that clients won't have printed reports. If what you're limited to using doesn't have any printed reports of value anyway, then they won't be missing anything. This way you can get the low-risk and great returns of using mutual funds with asset allocation, you'll save tons of time, money, and work, and there's no way to get into trouble.

· They are something investors want and need, so it's easy to get prospects to say yes and become clients. After determining someone's risk tolerance category, you just print one of the model pages and present just that one page. This way, they never see the other investor models. This minimizes having to spend time on questions like, "Why do you want to put me in a loaded moderately conservative model and not the no-load conservative model?" If they do ask to see the others, and/or the Index Model to compare returns, then you can just pull out what they asked for.

· You can track investment returns that match what actual investors hold to a reasonable degree (as well as possible unless you want to spend ~$10,000 annually on portfolio management software or you want to pay up for a service that does this for you).

For example, if a client calls and wants to know ballpark how the portfolio is doing, you can just pull out the model allocation you put them into and give them the answer in seconds. It won't be exact, but it will be in the ballpark. Any other way, like calling the BD, custodian or looking it up online, would take at least ten minutes to get a more accurate number.

· It only takes a few minutes per day to update investment models with fresh year-to-date mutual fund returns from a newspaper or online source, so it's practical to do it daily. Having a fresh allocation model on salespeople's desks when they come in to work is a great motivational tool to get on the phone and use it to drum up new business. Hounding the same elusive prospect is much easier when you can tell them you beat the markets, and the prospect's current investment manager, month after month after month. Just get on the phone and say, "So what's your performance been? Oh, the S&P500 did better than that. The Moderate Model I've been wanting to put you in is up x%, so that's x% better!" We've seen over $100 million moved by using this simple technique alone.

· When salespeople present them, it's far easier to remember the details on only five investment portfolios. The best salespeople we've seen are old, fluffy, computer illiterate, seasoned "people people" that can barely remember their employees' names. But when they get their sales scripts down when it comes to presenting the model investment portfolios, they can open up ten times more new accounts than anyone else. These folks just want something simple that works, and that they can KISS (Keep It Simple Stupid!).

· Investor models are a lot less work when you manage money for hundreds of clients (especially from a compliance point of view). When it comes time to switch a mutual fund, or rebalance, some trading software can accommodate large numbers of essentially the same trade. When you have hundreds of clients, you can get rid of all of the same investment (e.g., a mutual fund), and then turn around and use all of the sale proceeds to buy all of the same new investment, all with relatively few mouse clicks, and only in a few minutes.

This is also very helpful for people that have compliance people watching their every move, because when they see hundreds of trades in one day, it only takes one phone call to figure out what you're doing. After seeing the same thing a few times, they'll eventually stop bothering you. When they want to know why you're switching mutual funds, just say you're using our service. When they read about it, they'll leave you alone.

· It's quick and easy to rebalance. Just input the actual current holdings into the Comparison Models sheet (not shown in the demo) and it automatically compares it with all of the model portfolios. Then it tells you how much it's off by, so you can make trades to bring it back into balance.

· Pros can input annual investment management fees charged to clients into the Fee-Based Model Linked Returns spreadsheet, and it recomputes the actual historical performance (accounting for past trades). You can also input your fees into the model portfolios.

· You don't need a FINRA Series 7 securities license to manage money using these asset allocation models on a commission basis. A Series 6 is all that's required.

· Even though using asset allocation models eliminates the need for you to waste time and money on stock picking (security selection) and market timing, it still has to be done by someone. That's the mutual fund manager's job. They have the armies of analysts and millions invested in computer hardware and software needed to perform these mostly futile tasks. You don't, and that's the point!

If you want to compete with them, you're just going to lose. Even if you do occasionally get lucky and get superior returns, you lost tons of money because the time it took could have been spent drumming up new business. Using asset allocation with mutual funds is just about the only way to win these days. Winning means keeping your clients happy by getting low risk and great returns, while at the same time, not wasting/losing time and money trying to manage money.

Why Our Asset Allocation Software is Superior Compared to the Competition

NaviPlan, Ibbotson, MS Money, Morningstar, MoneyTree, Money Guide, Frontier Analytics, AdvisoryWorld, and Financial Profiles Users:

Financial Profiles was doing so well that NaviPlan had to buy them in Sept '06. Ibbotson was bought by Morningstar around the same time.

This is partially because they don't have a turnkey money management system. In August '07, Profiles made their users upgrade to their new version, which costs around $1,200 annually. People that didn't want to upgrade were deliberately abandoned because the old version stopped working, rendering all of the past work of inputting client data useless (so they lost everything with no hope of recovering any data). This could never happen with our system

Unlike most all other investment software, this is a turnkey system, which allows you to actually manage money for clients without having to use or buy any other software/database/system/or service.

Most all Broker Dealers and other investment software vendors have all of the tools to allow one to manage money, but only after the user already has a methodology to do so. The investment manager still needs to develop an actual system to do the work of portfolio management before they can use their investing software to put it into practice. They offer little-to-no system to actually do anything useful, because:

º It's too hard to program and maintain.

º They're too cheap to employ real money managers to help them come up with a feasible system, so they don't know how.

º They're afraid of compliance problems and don't want to be on the hook as being labeled a fiduciary (because they know their buggy software, conflicts of interest, and biased investment recommendations will just get them into trouble).

º And last but not least, most investment managers eventually come up with their own way of managing money anyway and don't want to use whatever concept investment software vendors come up with. So even if they did spend the resources to develop a working system, very few of their customers would actually buy and use it. With all of our investment software, you can tweak it to fit any money management strategy.

In other words, all of the usual investment software vendors have tons of tools and data that are great to combine assets into portfolios, backtest to compare past results, display portfolio statistics, make nice presentation reports, and support peoples' money management methodologies.

But they offer no way of actually coming up with a system of doing anything useful in the first place. There is no step-by-step process one can follow to do anything that will get decent investing results over time. If one already has a money management strategy or methodology, then there are step-by-step instructions on how to implement that program into their software to spit out meaningful reports with current and historical data. But one has to develop their own way of managing money in the first place to use it.

For example, take Morningstar (Principia). They are the best at maintaining investment data, and we buy their software for the historical return data and to screen the mutual funds. One can input all of a client's current holdings and come up with slick pie charts and statistics on the asset allocation mix that prints out nice and easy. Then one can use various tools to generate its historical performance and portfolio statistics. But - only assuming everything was bought and held since inception. This doesn't account for any past trades, distributions, or rebalancings which results in a gross misrepresentation of performance.

Then one can input what investments they think clients' should have for a proposed/recommended portfolio. Then these two portfolios are compared. These reports have all of the popular Sharpe ratios and dozens of other cool statistics, which have no predictive ability and thus are useless when it comes to getting decent investment performance in the future. The proposed portfolio usually has better returns when using this kind of sales method, so clients usually say yes and buys.

This is how the vast majority of investments have been sold in the past. Because it works and is easy, there appears to be no change in sight.

But it doesn't give you a methodology to select appropriate asset classes, what to fund them with, or determine how much of each people should own considering their life situation. This is the most important factor that goes into matching portfolios to people lives, so they can get the performance they need and expect. If there is, then you're limited to a too small number of major asset classes the vendor hard-coded into the program (and can't be changed).

Because of the state of the investment and financial planning industries, financial planners usually just input proposed mutual funds from whatever mutual fund families either they, or their Broker Dealer likes or makes the most money from. This usually results in an "all American Funds" portfolio.

Read about the mutual fund recommendation, screening, and analysis service where you can get professional, unbiased, opinions on just about any open-end mutual fund, with no conflicts of interest.