Steve Redelsperger • Cadaret, Grant & Co., Inc. - Risky business: How to create a better investor behavioral profile by Kellye Whitney - October lives up to volatility reputation - Creating tax-advantaged financial strategies (Gary Strawn, Transamerica Financial Advisors, Inc.)

1. A model
approach
Lowering client financial risk
Pg. 8
Steven Redelsperger
October’s reputation
for volatility • pg. 7
Reducing tax
exposure • pg. 3
Improving your investor
behavior profiles• pg. 4
October 23, 2014 | Volume 4 | Issue 5
First magazine focused on active investment management

2. TAX ALPHA
THE POWER OF
How can advisors level the playing field
in a rising tax environment?
For Financial Professional Use Only. Services are offered through Security Distributors, Inc., a subsidiary of Security Benefit Corporation (“Security Benefit”).
99-00471-50 2014/09/09
Download our white paper today to learn more:
The Power of Tax Alpha: Adding Value by Subtracting Tax
PowerOfTaxAlpha.com

3. Most people have done a fairly ade-
quate job in the accumulation phase of
benefiting from tax advantages. Most
people, on the other hand, have very
little idea of how to best manage their
finances and investments for taxes on
the distribution side. So we will design
those strategies for clients as a regular
part of our planning process.
We can put together a very attrac-
tive planning and investment package
that will meet clients’ risk tolerances,
provide income strength through
retirement—assuming adequate assets
are there—and create a legacy scenar-
io. All with an eye to minimizing tax
exposure.”
efore I entered the financial
services industry, I worked
for over ten years as an accountant and
controller. This has naturally led me to
add a strong tax analysis component to
everything I do on behalf of my clients.
Our focus as a firm is on
middle-American clients, and I have
found that to be a largely untapped
market for advisors—greatly under-
served—and also a group that needs our
services just as much as high-net-worth
clients. For this group, every dollar
counts in terms of building a total
financial strategy and providing for
their family’s retirement needs.
For each client, we go through a
complete financial analysis, building
toward setting up a strategy that will
meet goals for both the short term
and the long term. Most of the clients
I work with may have a combination
of taxable assets, tax-deferred assets,
and tax-exempt assets. As people move
closer to retirement, this naturally
includes factoring in such elements
as the sale of a house, rolling over a
401(k) plan, claiming strategies for
Social Security, and how to pass along
their estate to heirs.
The point is that all of these assets,
potential incomes streams, and their
current tax status must be considered in
developing a tax-advantaged financial
strategy. As a CPA, I feel extremely
well-qualified to do the bulk of this
analysis, calling upon the services of
estate planning attorneys, as necessary.
Creating tax-advantaged financial strategies
Gary Strawn
Plano, TX
Transamerica Financial Advisors, Inc. (TFA)
B“
Gary Strawn is a Registered Representative and an Investment Advisor Representative with Transamerica Financial Advisors, Inc. Securities
and Investment Advisory Services offered through Transamerica Financial Advisors, Inc. (TFA), Transamerica Financial Group Division—
Member FINRA, SIPC, and Registered Investment Advisor. Non-securities products and services are not offered through TFA. Tax and/or
legal advice not offered by Transamerica Financial Advisor, Inc., Transamerica Financial Group Division or their affiliated companies. Please
consult with your personal tax professional or legal advisor for further guidance on tax or legal matters. TFG004852-09/14.
Read text only
Advertising
proactiveadvisormagazine.com/advertising
Reprints
proactiveadvisormagazine.com/reprints
Contact
proactiveadvisormagazine.com/contact
Proactive Advisor Magazine
Copyright 2014 © 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
Kellye Whitney
David Wismer
Graphic Designer
Travis Bramble
Contributing Photographer
Marla Klein
October 23, 2014
Volume 4 | Issue 5
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.
October 23, 2014 | proactiveadvisormagazine.com 3
TIPS & TOOLS

4. Read text only
Risky Business
How to create a better
investor behavioral profile
By Kellye Whitney
proactiveadvisormagazine.com | October 23, 20144

5. It is hardly news that many investors remain
permanently scarred by the credit crisis of
2007-2009. Many research studies since have
detailed the long-lasting psychological impact
of the largest market declines since the Great
Depression. The Federal Reserve’s 2013 Survey
of Consumer Finance found that “only 48.8%
of Americans held stock either directly or indi-
rectly in 2012.” According to CNBC, that was
the lowest level since 1995.
So while equity markets have rebounded
to make new high after new high in 2013 and
2014, a large cohort of Americans has been ef-
fectively sitting on the equity sidelines. They are
now suffering from the doubly painful effects of
not only having memorialized permanent losses
to their net worth, but also mentally calculating
“what might have been” had they pursued some
other course of investing behavior.
Some investors in this category may be
having the exact opposite reaction, refusing
to pay any attention to the stock market as it
still represents a far too-recent and troubling
reminder of the losses suffered. Data from a
Wells Fargo/Gallup Investor survey reveals that
while 64% of respondents did know that the
broad stock market went up in 2013, only 7%
knew the average increase was anywhere close
to the 30% range.
These attitudes are highlighted by another
survey finding: 56% of U.S. investors favor
cash holdings or buying CDs versus investing
in stocks. This large group is likely suffering
from the phenomena of “anchoring bias,”
meaning they are “anchored” to a negative
frame of reference for investing. This bias, not
to mention the trauma of losing significant
amounts of money, has left them with a low
tolerance for riskier assets.
According to Victor Ricciardi, a finance
professor at Goucher College and co-author of
Investor Behavior: the Psychology of Finance
Planning and Investing, the pain of emotional
and financial loss can have a long-term effect
on an investor’s willingness to get back into the
stock market.
No matter the prospective client’s net
worth, an advisor must obviously begin with
a full understanding of the individual’s or cou-
ple’s financial state of health, current objectives,
retirement goals, and hopes for the future. But
assuming the advisor applies his or her usual
expertise to gaining that full financial picture
for planning purposes, what about the specific
issue of addressing an ongoing fear of the
markets? While a variety of financial asset class
or product “buckets” are available to advisors,
equities still usually represent the asset class of
choice for growth and protection against what
is likely to be some future uptick in inflation.
A full and thorough discussion of risk is
the fundamental starting point. Establishing
meaningful risk profiles can help advisors begin
to understand investor behavior and help cli-
ents understand their own behavior—so that
individuals have a fighting chance to get off
the bench and invest again. Time-tested ques-
tionnaires or tools evaluate risk perception and
risk tolerance—the maximum amount of risky
investments an investor would be comfortable
within their portfolio. But traditional versions
of these instruments don’t always contain the
right questions to elicit enough information
to help an advisor make a thorough evalua-
tion—nor are they powerful enough alone to
effect a change to now ingrained psychological
behaviors.
A competent risk tolerance questionnaire
identifies specific demographic information
and other important objective questions related
to identifying suitable investment strategies,
such as: level of investable assets, time horizons,
the expected frequency of contributions and
withdrawals, broad return objectives, and toler-
ance for risk. However, there is some likelihood
that they may fall short when trying to ascertain
an investor’s more-nuanced perception of risk.
Advisors who must counsel clients with fears
surrounding the markets might delve into more
behavioral questions like:
What is your history with investing? What
is your family’s history with investing? Do you
feel confident about investing? (Why or why
not?) Do you get emotional about investing?
Do you worry about investing? Are you knowl-
edgeable about investing? How do you react to
financial news about the markets? What were
your emotions and behavior during the 2008
financial crisis?
It may be equally important to probe an in-
vestor’s family situation growing up and current
life situation.
For example, did their parents fight about
money? Was there any stress in their family
related to financial issues? When and how did
they become financially independent? Did they
lose their parents at an early age? What is the
financial situation of their children? Are there
continue on pg. 11
Understanding clients’ behavioral biases and employing active risk management can
help overcome negative attitudes toward investing
The long-lasting effects of the
Great Recession
Going beyond planning basics
Investor Preference
If you had an extra $10,000 to save or invest, what would you do with it?
Invest in
the market
Keep
in cash
Buy a CD Other/
No opinion
41% 36% 20% 3%
Wells Fargo/Gallup Investor and Retirement Optimism Index, Jun 27 - Jul 9, 2014
Source: Gallup, Inc.
October 23, 2014 | proactiveadvisormagazine.com 5

7. 10
13
16
19
22
25
28
Date
N D
2013
J
2014
F M A M J J A S O
VIX Close VIX Futures
Value
October lives up to volatility reputation
lobal markets have experienced
what Barron’s this past weekend
called “extraordinary” moves over the last few
weeks, with October living up to its reputation
as the most volatile of market months.
While broad major U.S. equity indices
finished last week with relatively modest losses
(down 1% on the S&P 500 and only off 0.4%
on the NASDAQ Composite), the ride was
anything but calm. The Dow (DJIA) fell over
700 points, or 4.5%, from last week’s highs to
the low point, while ending the week with a loss
also of around 1%. The low point of 15,885 on
the Dow was the first excursion below 16,000
since February of this year. For the S&P 500,
the low point of last week marked a 9.9%
correction off of recent intraday all-time highs
set in September, fulfilling, at least temporarily,
the widespread calls for a 10% correction.
Volatility was also widespread around the
world, with European markets hit especially
hard on lowered growth expectations. For the
past month, none of the world’s larger stock
indices were in the green as of last Friday
(10/17), and only 14 of the top 46 markets
were positive for the year. The world’s worst-
performing equity market, according to Global
Guru Capital, was Greece, which is facing
issues that go far beyond the slower growth
story. Greece was down over 30% for the year
as of 10/17.
G
Source: Barron’s/CBOE
Volatility was also found in the U.S. in the
fixed income and treasury markets, with the
10-year benchmark note “slicing through 2%
on Wednesday (10/15) all the way to 1.86%
in a manner reminiscent of the infamous flash
crash of 2010” (Barron’s). However, the market
reversed itself, as with the flash crash, and the
10-year finished last week little changed at
2.20%.
In response to all of these moves, the CBOE’s
Volatility Index (VIX) made a major move off
of the consistently low levels of 2014. The VIX
broke briefly above 30 last week and closed
above 25, after trading for much of the year in
the 12-16 range. That such an occurrence hit
the markets in October is hardly a surprise, with
October historically the most volatile (though
not worst-performing) of all market months.
Since 1950, October is the clear “winner” of
all months showing 10% up or down market
moves, with 17 occasions, followed next by
January with 13.
According to Bespoke Investment Group,
since 1965, “the average spread between
October’s closing high and closing low for
the SPX has been 8.1%, while the median
has been 5.3%. At a range of 5.7% so far, this
October through mid-month has actually
been a bit below average in terms of relative
movement.”
Read text only
5 critical marketing questions
financial advisors must ask
themselves
As a financial advisor, progression is key when it
comes to marketing. Relying on the same tactics
and strategies used for previous years will not
provide an advantage.
On the tendency of large
market losses to occur in
succession
The distinctions between an overvalued market
that becomes more overvalued, and an overval-
ued market vulnerable to a crash, come down to
discernable shifts in risk aversion.
Half of HNW NextGen
investors keep parents’
advisors
Recent survey findings show better results due to
improved education and engagement by advisors,
but still substantial room for improvement.
CBOE VOLATILITY INDEX
7October 23, 2014 | proactiveadvisormagazine.com
TOPPING THE CHARTS
L NKS WEEK

8. Steven Redelsperger
By David Wismer
Photography by Marla Klein
A model
approach
Read text only
Lowering client financial risk has been a
top priority for Steve Redelsperger since 2008.
Integration of the strategic models of active
money managers with his firm’s financial
planning model has worked for the good of his
clients and the growth of his practice.
8 proactiveadvisormagazine.com | October 23, 2014

9. Proactive Advisor Magazine: Steve, what
are some issues you work through with
clients?
Steve Redelsperger: It is really the same
macro issue over and over for most of my
clients. People generally just do not have a
systematic tool or model to pull together all
of the elements of their financial life and to
track their progress versus their goals. They
have many financial tools or products that
they have accumulated over the years, but
no systematic way of making sure they are
working together in the most efficient and
coordinated fashion. Since one of my top
priorities is helping clients in lowering their
financial risk overall, I am very process-oriented,
especially in the area of risk management.
Can you describe the process?
We use a model that breaks elements of
financial planning into three broad categories:
protection, savings, and growth. Without going
into a great amount of detail, the protection
component covers all elements of insurance
products, disability coverage, personal liability,
Social Security, wills and trusts, etc. The savings
bucket covers liquid assets, CDs, savings ac-
counts, 401(k)s, IRAs, annuities, the cash value
of life insurance policies, etc. And growth refers
to investment assets outside of tax-deferred
vehicles, whether it is stocks and bonds, real
estate, MLPs, or other asset classes.
In all of these areas we are looking to
reduce risk while allowing for financial growth
and stability over time. The real beauty of our
model is how it can capture the most detailed
information and organize and illustrate it
in simple and highly visual one- or two-page
exhibits. It is a very fluid process that can be up-
dated frequently and efficiently, and also tracks
changes in debt obligations and cash flow.
Let’s focus in on the growth component.
What is your broad investing strategy for
clients?
It is all about risk management—I am not
interested in trying to hit home runs for clients
all of the time. I’m looking for decent rates of
return. I can see from my models that if I can
eliminate or limit those occasional negative
annual rates of return, then the portfolio can
have a decent rate of return over time. It is
about trying to avoid the one or two years of
deep losses that can derail a portfolio’s total
performance.
This is a prime reason why I’m using active
money management—to protect that down-
side, without losing too much of the upside.
I will also consider using insurance products,
especially for retirees who need to count on
stable sources of income. If our active money
managers, for whatever reason, have a lackluster
year, we know there will be an income stream
available without market risk for those retirees.
So we’re looking at all different ways to reduce
risk. If I can reduce risk overall in the portfolio
by combining products, then I will do it that
way, rather than use just a single product.
How did you first get introduced to active
money management?
I have been in the business for quite a few
years and started out with a pretty typical
investment approach: heavy on mutual funds,
smart allocation models, and rebalancing and
reallocating. My clients were well-diversified
going into the dot-com era of the early 2000s,
but still, the anxiety and depth of the losses
were very tough to swallow.
I believe buy-and-hold investing may work
in theory over a very long time frame. The issue
is that most people are not mentally prepared to
accept large losses that come with downturns—
nor should they be. It is a natural reaction
to want to run to cash near the bottom in a
downturn. 2008 was really the last straw for me
and I knew my clients needed more protection
from market crashes going forward.
Frankly, it was a little tough for me to turn
over some control of my clients’ portfolios. I
have a strong mathematical background, have
always been a student of the markets, and I think
am pretty sophisticated in terms of investment
strategy. But it has become apparent to me
that active money managers have tremendous
resources and models that I cannot replicate on
my own, nor would I have the time to monitor
anywhere near as effectively.
I also like the fact that some of the active
managers we use have tactical components
built into their strategies that allow for prof-
iting during down markets. That is a very
appealing strategic element for clients. The
more scientific and disciplined approach of
third-party active managers also fits in well
with my quantitative orientation in general.
continue on pg. 10
Steven Redelsperger
President, Redelsperger Financial Group
Minneapolis, Minnesota
Broker-dealer: Cadaret, Grant & Co., Inc.
Licenses: 7 & 63
Estimated AUM: $44M
B.S., Mathematics: University of Minnesota
Practitioner: Lifetime Economic
Acceleration Process TM
2012 Agency Leader: Wisconsin Financial
October 23, 2014 | proactiveadvisormagazine.com 9

10. Steve Redelsperger is a Registered Representative offering securities through Cadaret, Grant & Co., Inc. member FINRA/SIPC. Branch Office: 232 1st Avenue
E., Shakopee, MN 55379. Redelsperger Financial Group is not affiliated with Cadaret, Grant & Co., Inc.
Show your clients a
friendlier
bear market
800-347-3539 | flexibleplan.com
Past performance does not guarantee future results.
The opportunity for profits
carries with it the possibility of losses.
800-347-3539 | flexibleplan.com
A complete list of all of our recommendations over the last 12 months and Brochure Form ADV Part 2A are available upon request.
L E A R N M O R E
What other reactions do clients have to
active management?
I told you I am very process-oriented, but
that does not mean that there is just one solu-
tion for every client. Clients like the fact that
the managed accounts we use are completely
tailored to their specific risk profile and their
financial plan. While we use some excellent risk
profiling tools, we have to make sure that each
client’s response is fair and accurate, so I tend to
walk them through that very specifically.
We also need to make sure that those assets
earmarked for active money management
carry an appropriate risk level in the context
of every other element of a client’s financial
plan. Clients appreciate that we treat their
needs as very unique, linking them to the
appropriate method of professional investment
management.
There is also a secondary benefit to active
management in terms of client attitudes. Many
clients, especially prospects and new clients, are
still overall very concerned with the risk in the
stock market after two major crashes this cen-
tury. Explaining the active management story
and its risk management focus helps overcome
at least some of those fears.
As my practice continues to grow, I contin-
ue to move more and more client money into
active management. This approach has benefit-
ed the clients of our firm for several years, and
I believe it will remain a successful approach
going forward.
continued from pg. 9
10 proactiveadvisormagazine.com | October 23, 2014

11. There can be no assurance that any investment product will achieve its investment objective(s). There are risks associated with investing, including the entire loss of principal invested. Investing involves market
risk. The investment return and principal value of any investment product will fluctuate with changes in market conditions. Guggenheim Investments represents the investment management businesses of Gug-
genheim Partners, LLC. Securities offered through Guggenheim Funds Distributors, LLC. Guggenheim Funds Distributors, LLC is affiliated with Guggenheim Partners, LLC. x0515 #12526
Uncover the True Cost of Trading Mutual Funds
and ETFs
The reflexive perception that ETFs cost less, simply based on their low expense
ratios, and are more cost-effective than mutual funds, is not entirely true. In
addition to an expense ratio, there are additional considerations that should
be considered when making an informed choice between ETFs and funds—
including spreads and commissions. This informative white paper from Rydex
Funds provides an in-depth look at the cost of ownership of no-transaction-fee
(NTF) mutual funds and ETFs—with a focus on active investing strategies.
Request your free copy.
Call 630.505.3749 or visit guggenheiminvestments.com/rydex
Chicago | New York City | Santa Monica
Rydex Funds
A Comparison of ETFs and
Mutual Funds—The True
Cost of Investing
any special circumstances surrounding anyone in
their immediate family, such as health issues or
physical or intellectual special needs? What is their
role and financial responsibility for their parents’
or other relatives’ elder care? How do they view
their current job stability and salary expectations?
These answers will also inform their behav-
ioral risk tolerance.
assigned to different “buckets” of client assets or
those assets earmarked for different “purposes,”
i.e., imperatives such as funding retirement
income, purchasing a first or second home,
saving for college educations, assisting in elder
care, starting a new business, making charitable
contributions, or creating a transferrable legacy.
There are many types of risk. Systemic risk
covers broad external factors: how changes in
Fed policy might affect the current market
outlook or the possible adverse impact of geo-
political risk abroad. Then there’s investment
risk: what factors might be affecting a specific
company or large sector of companies. There’s
also sequential risk: how an individual investor
is affected by changes in their portfolio’s invest-
ment value at a specific point in their overall
time horizon. While all of these are important
considerations, it is really the latter that advisors
must carefully evaluate for each client.
For those clients still very nervous
about investing, reducing the fear of that
portfolio-destroying sequential risk is critical.
Gaining a deep understanding of a client’s
behavioral profile and biases is a major part
of the equation—employing investment
strategies with a strong risk management
component and non-emotional defensive
capabilities can be equally important.
Investments really fall into two broad
categories, says DALBAR’s Harvey: capital
appreciation and capital preservation. “It’s the
capital preservation side where we see a key
role for the active manager,” he explains. “In
other words, providing the tools that prevent
the investor from being out of the market (or
in) at the wrong time. If you’re invested in an
index and the index goes down, nothing is
going to change (with a buy and hold investing
strategy). If you look at market conditions and
the prudent action is to stand on the sidelines,
passive management doesn’t allow you to do
that—active management does.”
continued from pg. 5
Client risk profiles may vary
over time and by purpose
Louis Harvey, President of DALBAR, Inc.,
a prominent national financial services market
research firm, agrees with Ricciardi that many
investor risk profiles often fall short when
informing investor behavior. Traditional pro-
files assume an individual has one level of risk
tolerance, which is not always the case. Factors
change over time and risk profiles have to be
periodically reassessed. DALBAR goes so far as
to suggest different risk assessments might be
11October 23, 2014 | proactiveadvisormagazine.com