Realizing The Investment Opportunity

How Managed Accounts Can Help You Meet Your Investment Goals

Presented By: Jorge Reyes

Firm: CP Capital Securities
Date: August 16, 2010
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 Privately Managed
Account

What Is A Managed Account?

Wrap Account
Individually Managed Account

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A Managed Account – a portfolio of stocks, bonds, or a
combination of stocks and bonds chosen by a professional investment manager
to achieve a specific objective, such as long-term growth or current income.

AN EXAMPLE OF A MANAGED ACCOUNT PORTFOLIO

Domestic Equity Domestic Equity

(Large Cap Growth) (Small Cap Value)

Fixed Income
Domestic Equity (Intermediate Bond)
(Large Cap Value)

International Equity
(Int’l Developed Markets) 3
The Basics:
How Do Managed Accounts
Compare with Mutual Funds?

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Managed Accounts 101:
Managed Accounts are like Mutual Funds in that…

• they are managed by professional investment managers who

continuously monitor the portfolio to stay on top of new
opportunities.
• each managed account has a clearly defined objective.
• each managed account can be compared against a benchmark (or
family index) which will identify the progress being made towards
your investment goals.

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 Managed Accounts 101:
Managed Accounts vs. Mutual Funds

Managed Accounts Mutual Funds

• You own shares in individual
securities
• You have no embedded gains
• You can time capital gains or losses
• You can avoid or include certain
investments
• You always know which investments
are in your account
• You own fund shares, not individual
securities
• You’re vulnerable to embedded gains
• You have no control over capital gains or
losses
• You have no influence over the fund
portfolio
• You learn twice a year what investments
the fund owns

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The Flexibility to Restrict Securities

In a managed account,
investors are offered the
flexibility to customize
their portfolios and can
restrict the purchase of
securities that they do
not want to own.
A MANAGED ACCOUNT
PORTFOLIO

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 Keep More of What You Earn
MANAGED ACCOUNTS MUTUAL FUNDS

Capital Gains Taxes on

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Investment Earnings
Let’s Recap

Benefits of Managed Accounts

• You own shares in individual securities
• You have no embedded gains
• You can time capital gains or losses
• You can avoid or include certain investments
• You always know which investments are in
your account

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The Key Players:
How Does A Managed
Account Work?

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Using Managed
Accounts is Like
Playing on a
Winning Team

Investor = Advisor = Investment Manager =

Team Owner Coach Player(s)

• Investor accumulates wealth to
“buy the team”
• Goals need to be articulated in
order to “win” (retirement,
children’s education, etc.)
• Has neither time nor expertise to
be his own “coach”
• Hired to help “owner” identify
goals
• Recruits the right “players” (asset
allocation & manager selection)
• Ensures that “players” adhere to
their positions (due diligence
guarantees consistency)
• Provides feedback on how
“players” are doing (performance
monitoring)
• Replaces players if not fulfilling
role (manager termination if necessary)
• Excel at respective positions
• Focused style of “play” (manager
skills are unique to discipline)
• The right combination of “players”
leads to improved performance
(diversification)
• Each “player” contributes to a
particular position (specific style with
no style drift)
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Working with Your Financial Advisor

Your Financial Plan

• A statement of your specific goals
• Your timeframe for achieving those goals
• Your risk tolerance
• Your need for liquidity, or available cash
• Your tax situation
• A summary of your current investments,
including both taxable accounts and retirement
saving plans
• Any special concerns that affect your investment
choices

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 Allocating Your Assets
INVESTMENT STYLES

EQUITY: FIXED INCOME: STOCKS

•Large Cap Growth •Intermediate Bond

•Large Cap Value •Intermediate REAL
•Large Cap Core Municipals ESTATE
BONDS CASH AND
•Mid Cap Growth •Total Return OTHERS
•Mid Cap Value Municipals
•Mid Cap Core •High Yield
•Small Cap Growth •REITs (Real Estate The appropriate blending of managers in an
•Small Cap Value Investment Trusts) asset allocation recommendation can add
•Small Cap Core value. Constructing a portfolio with multiple
•International investment managers can enhance overall
•Global portfolio performance over time.

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An Investment Manager Will:
• Follow a certain investment style – the approach a
manager takes in choosing investments to meet a
specific objective.
• Monitor, evaluate, add and sell investments in response
to changing economic conditions or the shifting value
of individual holdings.
• Provide an analysis of why decisions were made, what
securities the portfolio currently contains, and whether
or not the portfolio is on track to meet its goal(s).

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Making the Right Choice
Questions to Consider in Selecting an Investment Manager:
• How will this manager help me meet my financial goals and will the
manager’s investments be consistent with my account’s objective?
• Will the manager match or surpass the appropriate benchmarks and what
risks would I be accepting?
• How will I know what’s happening in my account?
• Will the manager follow my special instructions?

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 The Managed Account Process
STEP STEP
1 2 Step 1: Identify goals and objectives
STEP STEP
4 3

STEP
STEP
1 2 Step 2: Determine asset allocation policy
STEP STEP
4 3

STEP STEP
1 2 Step 3: Recommend investment managers and implement strategy
STEP
4
STEP
3

STEP STEP
1 2 Step 4: Continuous portfolio and manager monitoring
STEP
STEP
3
4

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Investment Choice:
Are Managed Accounts Right
For You?

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A Perfect Fit
• You have $300,000 or more to invest
• You feel you’ll benefit from professional
investment management
• You’ve recently inherited a substantial sum, sold
your interest in a business, or won a financial
settlement
• You have retirement assets you’re ready to roll over

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A Question of Fees
If you have a fee-based arrangement with your financial
advisor, then managed accounts could be the best option
for you.
Your annual fee covers:
• Consultations with your financial advisor
• Consultations with some of the world’s leading institutional
investment managers
• A strategic asset allocation model that reflects your goals
• Ongoing manager due diligence
• Comprehensive quarterly statements
• Tax selling at year-end for taxable accounts
• Portfolio management and rebalancing
• Custody services
• Commission-free transactions (thru investment managers)

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Reporting:
Is Your Portfolio On Track?

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Account Statement
Reviewing your account statements with your
financial advisor can help you accommodate
for life changes that affect your investment
goals, and/or developments in the financial
markets that may have changed your attitude
towards risk.

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Managed Accounts are ideal for investors
seeking a long-term, customized, goals-
driven approach to investment planning.

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Thank You
Jorge Reyes
CP Capital Securities
(305) 702-5531
Jorge.reyes@cpcapital.com

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