• If they wanted to, then their marketing department would take the project over, and then they'd just get "paid off" to tout things like American Funds as the funding vehicles. Then the actual results would be very "sub-par."

• 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 will just get them into trouble),

So even if they did spend the resources to develop a working turnkey system, few of their customers would actually buy and use it. So from their point of view, big expensive projects like this would just be a risky endeavor, that would create a never-ending parade of new problems, so it would just fail because they wouldn't be able to charge enough for it to turn a profit.

Now about DFA: DFA is an outside manager that maintains several kinds of portfolios. They say that active investment management doesn't work, but then they're market timing and picking stocks - which is the definition of active management. So that makes no sense.

Their theme is market timing with asset classes that they "invented." So they're picking stocks and market timing based on their forecasts of which of their unique asset classes will do best.

Their money management system only uses their mutual funds.

Now about SEI: Their money management system only uses their mutual funds.

You can see our actual returns compared to DFA and SEI on the table here.

Many more competing systems will be compared one at a time around summer '12.

So the bottom-line is that we're the one and only way to get an actual turnkey investment management system that YOU can use and control, without just winging the whole process ad hoc, farming it out to "outside money managers," or just proposing whatever mutual fund families your Broker Dealer likes or makes the most money from.

More Marketing Blurbs

Both asset allocation programs come with marketing and backup pieces.

Look at the historical track records of the investing models, the return graphs on the demo, and the main asset allocation page and compare. They are most likely much better than what you, or your competition, have been getting.

Clients tend to let you manage their money when you can show them you actually have a sound plan for doing so that makes sense - and will deliver good returns with low risk. Being able to present prospects with something they agree with is not only what makes sales, but will also get results they expect. This will keep them with you as happy paying clients years after the first portfolio is implemented.

When presenting them correctly, both systems have a very high closing ratio (over 80% if we do it), because it's easy to show what you would do with their money going forward just by following the presentation directions. Most of the time, they say to make it so as soon as they see you have a system using more than a few asset classes, the returns are good compared to the markets, there's a healthy amount of bonds, you're recommending small amounts of risky asset classes, you're not trading stocks / ETFs, not trying to predict the future, and you're using mutual funds in a mostly "buy and hold" fashion.

Even though these allocation tools 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 managers' jobs. 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, then you're just going to lose most of the time.

Even if you do occasionally get lucky with superior returns, you lost tons of money because the time it took could have been better 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, slowly growing assets under management, while at the same time, not wasting / losing time and money trying to manage money.

You don't have to sell everything or anything in their current portfolio to obtain the correct mix with either program. For example, if they already own 20% of a large-cap growth fund that's doing fine (we can tell you if it's good or not for $9), and they scored Moderate, then you'd only need to sell 5% of it, because the recommendation is 15%. Actually, you could leave it the way it is, because you can do anything you want. You could just let them be overweighted, change the allocation weights, or let 5% spill into the Mid-cap asset class by saying it holds some mid-cap growth stocks (because they usually do).

We keep getting the same questions about our unusual investment performance, so here's an old client e-mail paste that will help:

Yes on one hand, the investment performance is remarkable. On the other hand it shouldn't be, because it's exactly what the CFA program teaches. I'm apparently the only CFA Charterholder that practices exactly what's taught. Everyone else went off to get rich being a hedge fund manager or creating derivatives like CDSs that started the '08 financial crisis.

What the CFA program teaches in a nutshell is this: Advisors should not be market timing at all, period. Nobody can predict the future, so this is worse than futile. Trading ETFs is just the current form of market timing.

Advisors should also not be trying to pick stocks, unless they have quasi-insider information, like they work for the company, used to work there, or know someone working there that's not technically an insider that's feeding them accurate and timely information. The only "people" that have enough information, resources, and data to profit by picking stocks (and/or time markets) are large institutions like mutual funds.

So once that battle is understood and won, and since there are only three ways to make investment decisions, and the most popular two are taught to be no-no's by the CFA program, there's only one methodology left - asset allocation. So I took that to mean this is what I should become an expert on, because my biz is managing money for investors in an RIA and financial planning setting.

What you're supposed to do is determine a mix of viable asset classes that fits an individual investor's life, and then either fund it with something very diversified like mutual funds, ETFs, or index funds (the CFA program likes index funds, as most advisers can't even pick open-ended mutual funds, or ETFs, well enough to beat an index fund).

So the questions then become, how do you determine what asset classes to use and how much? Well, I did it in both the Comprehensive Asset Allocation software and the Model Portfolios using the best asset-level portfolio optimizer, educated guesses, and way too much trial and error. After doing it thousands of times, I found what works and am sticking with it.

I've looked at everyone else's harebrained investment strategies since the mid-'80s, and found none to be better. I've stolen many ideas from many advisers (mostly from dozens of job interviews), and so I've tinkered with just about everything everyone else has come up with since '88 with actual client monies. The ideas that worked, I keep, and the ones that don't, I criticize.

Once that battle is over, the war is reduced to just deciding what to fund the asset classes with. To make a very long story short: Stocks - no, no diversification compared to a mutual fund that may own 100 stocks. Closed-end funds, no - there's no way to screen them to get any predictive value whatsoever because of the large and random premiums and discounts due to thin trading. ETFs, no they're mostly just lame index funds... with the same internal fees as non-index mutual funds (then commissions to pay when you both buy and sell them - plus my mutual fund picks also cream ETFs). Index funds, maybe, but the way I pick open-ended mutual funds creams index funds by way too large of a margin about 90% of the time.

So all of these questions are answered, war over: The way I allocate asset classes and then screen mutual funds adds by far the best value to the investment process than anything else, so I'm sticking with it to the bitter end.

The magic isn't all in the infrastructure (the allocation software), it has a lot to do with finding predictive value in the mutual fund picks. I look at many things, like historical performance, and try to predict what will keep up doing what it's been doing long enough to be useful. After thousands of trials and errors, I found a way to pick mutual funds that have a one- to two-year predictive value (all mutual funds crap out eventually and have to be replaced, which is why it's critical to keep the subscription going and rebalance. When I say crapped out, I don't mean it in a smelly sense, but the casino gambling way).

It doesn't always work (read about that on the disadvantages of asset allocation section of this page), but the winning picks beat the duds enough to add more long-term value than any other investing strategy I've ever seen. Plus every month I learn something new, so the screening process is continually refined and saved, so it gets better all the time.

I used to sell the little Morningstar screening filter mcr files that can be used by advisers in their offline version of Morningstar, but a big NY investment firm tried to copy my screening process in '03, so I don't sell them anymore. So if the information about how I pick mutual funds is not on the mutual fund recommendations page already, then it's a trade secret now.

There's no secrets about the allocator software nor models, just the opposite, every detail is explained. Also when you buy the models, not much is protected, so you can see exactly what's going on. Plus you'll get the same spreadsheet I use to calculate returns to account for fund switches, fees, and rebalancings since 1/1/99 or 1/1/03. So you can audit the returns and figure everything out.

If you liked reading this, then here's another page with even more annoying rants about the state of affairs.

How to get around compliance if they don't approve our money management systems.

Read about importing investment holdings data from the web into our asset allocation calculator.