News

Building a championship team—on the field and in a portfolio

Tue, 11 Aug 2026 03:44:00 GMT

There are many similarities between building a championship baseball team and a winning investment portfolio: finding the right balance between offense and defense, assembling a diversified roster of high-performing assets, and remaining adaptable and resilient through inevitable challenges.

I was reminded of this last week, when Major League Baseball’s 2026 trade deadline arrived on August 3, following several days of aggressive roster moves.

Contending teams sought the final pieces that could strengthen a postseason run, while struggling clubs traded established players for prospects who might contribute in future seasons.

Although the approaches were very different, each organization faced the same basic challenge: evaluating its current roster, identifying strengths and weaknesses, and deciding which changes offered the best opportunity for long-term success.

How the MLB trade deadline played out

Several teams took markedly different approaches to the trade deadline, influenced by their results this season, the resources available to them, and their determination to improve.

The Los Angeles Dodgers demonstrated how an already powerful team can continually look for ways to improve. The two-time defending champions acquired arguably the top pitcher in the game, Tarik Skubal, from the Detroit Tigers in the deadline’s biggest blockbuster. The Dodgers paid a significant prospect price for Skubal among other deadline moves, reinforcing the organization’s commitment to maximizing its current championship window.

The New York Mets took an entirely different approach. With their season falling well short of expectations, they traded many veterans and brought 11 prospects into the organization, including several highly regarded young players. The trades weakened the current roster, but they allowed the Mets to replenish their development system and create additional options for reshaping the team in future years.

The American League East provided a sharp contrast in approaches. The red-hot Boston Red Sox, who recently won 32 of 37 games, made a bold move by acquiring catcher Adley Rutschman from the Baltimore Orioles in exchange for a substantial prospect package. Division-leading Tampa Bay added catcher Liam Hicks, whose power should complement the Rays’ lineup, as well as pitcher Freddy Peralta from the Mets. The New York Yankees added two productive hitters—Luis García Jr. and Heliot Ramos—but did not address their needs at catcher and shortstop or reinforce an overworked bullpen.

The difference was especially noticeable because both Boston and Tampa Bay strengthened a key position the Yankees left unresolved. While many Yankees fans were sorely disappointed, the team did promote top shortstop prospect George Lombard Jr. to the major league roster, and he has already impressed in his first few games.

Having the right “team” for an investment portfolio

Let’s dive a little deeper into the analogy between MLB team-building efforts and sound portfolio construction—especially diversification and having a roster of “players” that fulfill specific roles.

I like the perspective of a financial adviser who had a stellar baseball career, reaching the professional minor leagues. He uses this experience to explain his role with clients:

“I tell the client they are like the owner of a professional sports team. It is their hard-earned money and, ultimately, they have the authority and the responsibility to make the decisions.

“But they have hired me as their general manager and head coach. It is my job to do everything in my power to put together a sound plan of action and to assemble the highest-quality coordinators, assistant coaches, and players to help their team achieve consistent success. For example, I conduct an extensive evaluation and selection process of third-party money managers on behalf of my clients. I will recommend the use of those that fit the investment needs for a specific client. I think this simple analogy of assembling a great team makes a lot of sense to people.”

This concept is especially relevant in a year like 2026, when markets face both macroeconomic headwinds and tailwinds and significant uncertainty. Seven months into the year, we’ve seen notable bouts of volatility, particularly in the NASDAQ Composite, alongside a mixed economic picture, soaring energy costs, war in the Middle East, a new Federal Reserve chair, and an investment environment heavily influenced by the shakeout of the AI trade.

Financial advisers we have interviewed for Proactive Advisor Magazine frequently talk about combining actively managed strategies with different performance characteristics that are designed to work as a cohesive portfolio over full market cycles.

As one adviser puts it, “A cornerstone of my active management approach is offering a very wide potential combination of diversified strategies. In line with this overall risk-managed active approach, I will generally use several different noncorrelated strategies, in several different asset classes. While not every strategy ‘will fire on all cylinders’ at the same time, that is exactly the point.”

Jerry Wagner, founder of Flexible Plan Investments, has often written about this same aspect of diversification. He explains, “If every strategy in a portfolio is going up or down at the same time, there is a high probability that the portfolio is not properly diversified.”

He also notes that dynamic multi-strategy diversification allows portfolios to respond to different market environments. By adjusting allocations based on market conditions, portfolios can lean into strategies that historically perform better in each type of environment.

For example, a dynamic, risk-managed approach can seek to do the following:

• Allocate more to trend-following, high-beta, and leveraged strategies in rising, bullish markets.

• Allocate more to inverse, leveraged inverse, or defensive-asset-class strategies in falling, bearish markets.

• Allocate more to mean-reversion or pattern-recognition strategies during sideways markets, taking advantage of volatility and market swings.

The ultimate point? As our adviser noted, when strategies are “objectively quantified” and work together within a well-diversified portfolio, “emotion and ego can be put aside for the most part, and clients can more freely allow their strategies to perform as designed, without constant second-guessing.”

For both baseball fans and investors, it’s easy to get caught up in the emotions of day-to-day action. But in the end, it’s a long season for both. All that really counts is achieving their respective objectives.

What’s the recipe for disciplined investing?

Tue, 04 Aug 2026 03:29:00 GMT

By Will Hubbard

Every Saturday morning, I make baked French toast for my family. My daughters love it, and it has become our regular weekend treat. Lately, making it has me thinking about the difference between a good result and a repeatable process.

Since the French toast has to be assembled the night before, I usually start making it on Friday evening. I like rules and processes, so I naturally began by following a recipe. But over time, especially on hectic Friday nights with my 2-, 4-, and 6-year-olds, I have become more flexible.

I follow the general idea, but I adjust by feel. I keep adding ingredients until my brain says, “That’s fine.” I may substitute something because we’re out of it, or because I can’t easily find it and don’t feel like looking. At that point, my main goal is to get to bed, because if my kids are sleeping, I want to be too.

Most weeks, it works out fine. As long as I stay close to the original recipe, everyone is happy.

This past Saturday, though, I had to improvise more than usual because we were missing a few ingredients. I eyeballed the measurements, made a few substitutions, and added what seemed to make sense at the time. When it came out of the oven the next morning, everyone agreed it was one of the best versions I had made.

That was great to hear. The problem was, I had very little idea what I had actually done.

Investing can work a lot like that.

A good result is not the whole story

No one’s knocking a good outcome. It’s great when the market goes up and takes your portfolio with it. And in my case, the French toast turned out great, the reaction was even better, and no one was disappointed by a successful Saturday morning breakfast.

But if I want to make that same version every Saturday, the result alone is not enough. I need to understand what produced it.

Was it how long the apple cider vinegar sat in the almond milk? The type of bread? The cinnamon? The coconut sugar mixed in and sprinkled on top? Or is the usual light brown sugar actually better? Did a missing ingredient improve the texture, or did the recipe turn out well despite its absence?

Investors should ask a similar question: Was the result good because the process was sound, or was it because we got lucky?

A portfolio can produce a strong return over a short period, such as a quarter, and still leave that question unanswered. Stocks can rally because earnings are improving. They can also rise because interest rates fall, sentiment improves, liquidity expands, short positions unwind, or investors choose to look past an as-yet unresolved risk.

The return number may look the same, but what produced it can be very different.

That does not mean investors should dismiss every rally or assume every favorable outcome is fragile. Results matter, but so does the explanation behind them. When a strategy performs well, investors should want to understand why. When it struggles, they should want to know whether the weakness is temporary, consistent with how the strategy is designed to behave, or a sign that something has changed.

Separating luck from skill

When something goes well, we often want to credit skill: “My French toast was good. I must be a great chef.”

When something goes poorly, we may be just as quick to blame bad luck: “We didn’t have the right sugar, so the topping didn’t have that tasty crunch.”

The same tendency shows up in investing. A strong return can make a decision or strategy look smarter than it was, while a disappointing return can make a sound process seem flawed.

Disciplined investors have to resist both conclusions.

One good result does not prove the process was right, just as one poor result does not prove it was wrong. The more useful question is whether the outcome is consistent with a repeatable, understandable process—and with the conditions in which that process was designed to operate.

Why a disciplined process matters

That is one reason a quantitative, risk-managed investment process can be valuable.

Rather than relying on a single decision, forecast, or interpretation of the current environment, a thoughtful quantitative process can test ideas across many observations and market conditions. It allows investment managers to test signals and assumptions, study how they have behaved over time, and better understand what has historically driven performance. This repeatable, evidence-based approach is central to Flexible Plan Investments’ (FPI’s) investment philosophy.

The goal is not to create certainty. That is impossible.

A disciplined process can, however, provide a more consistent basis for evaluating results. It can help identify the environments in which a strategy has tended to work, where it may struggle, and whether current results are consistent with what it was designed to do.

Dynamic risk management adds another important element: the ability to respond as market conditions change. A process can be disciplined and repeatable without being rigid. As risks, trends, and market relationships shift, FPI’s strategies can adjust according to their established rules rather than relying on an emotional reaction or an improvised decision.

Repeatable does not mean predictable

I can follow the same French toast recipe week after week, and the results may still vary. The oven may run hotter. The bread may absorb more liquid. Even the humidity in the house can affect how it turns out.

Investing is no different. No process will work perfectly in every market environment. But without a disciplined framework, investors can be left reacting to each new outcome and making emotional decisions based on whatever the market is doing at the moment.

I am glad the French toast turned out well. But if my daughters ask for that exact version again, then I’m in trouble.

Investing should not operate that way.

A good outcome is always welcome, but one result tells us only so much. A disciplined, repeatable process provides a clearer way to understand what produced that result and whether it was consistent with how the strategy was designed to behave. That is how FPI approaches investing.

Investing should not be about chasing the latest return or the hottest market index. It should be about understanding the process behind the result, evaluating whether that process remains effective, and staying humble enough to recognize when it may need to evolve.

Right now, the market may be serving investors a version of French toast they like. The harder question is whether anyone actually knows the recipe.

Que sera, sera: Terrible investing advice

Tue, 28 Jul 2026 03:30:00 GMT

By Jerry Wagner

A familiar song got me thinking about the many “buy and hope” investors who take a passive approach to investing—and how risky it can be.

The song was “Que Sera, Sera,” recorded by Doris Day, one of my favorite entertainers and a top box-office draw of the 1950s and early 1960s. Some may not recall that, in addition to her movie career, Doris Day was also a pop recording artist. She got her start during the big-band era and went on to have numerous hit records during a singing career that spanned decades.

The song most associated with her is probably “Que Sera, Sera.” Although the song reached No. 2 on the hit parade and became the theme for the five-season run of her TV show, Day was not a fan. “I just, I didn’t think it was a good song,” she once said.

I have to say I agree with her. While I like the tune, the lyrics turn me off. “Que Sera, Sera” translates to “Whatever will be, will be.” I could never approach life that way. I have always been more hands-on and determined to shape my own future.

I guess it’s not surprising that I take a similar approach to investing. Too often, I’ve seen investors who adopt a “whatever will be, will be” attitude suffer when bull markets crash abruptly.

Investing for “whatever will be”

A bull market can feel like living in the 1950s—a time often remembered as easygoing and prosperous. The economy was roaring, and the stock market was soaring. It seemed like the good times would never end.

I know that’s how I felt during my first 10 years of life. Then a recession hit, and I noticed the increasing concern on my father’s face. He started his own business in 1954, and it had done well. Three years in, he purchased a lot for a new home. He was in the middle of building it when the recession hit, and money got tight. It was touch and go for a while. But he worked harder, recovered, and saw even greater success in the 1960s.

Investors can be lulled into a false sense of security during good times, often taking on more risk than they realize. Unfortunately, as Dad found out, a recession or unforeseen event can change circumstances quickly.

One way investors can prepare for such uncertainty is to invest as if such an event is always possible. More than 50 years of actively managing my investment portfolio have taught me this.

The 1950s were also when “buy and hope” investing came of age. Believe me, no one would have told an investor to just “buy and hope” in the 1930s or 1940s. Instead of sitting and taking it, the dynamic, risk-managed approach that I believe should guide investing activity seeks out opportunities for both profits and risk avoidance in all market environments.

“Que Sera, Sera” may be a pleasant tune to whistle during the good times, but it can sound decidedly out of tune when bad times hit. During a nasty economic environment, you don’t want your investment plan to amount to “whatever will be, will be.”

Changing with the times

Mon, 20 Jul 2026 18:35:00 GMT

By Jerry Wagner

Paging through the business section of the Detroit Free Press several years ago, I came across an article by business columnist Josh Linkner, a tech entrepreneur and best-selling author. He contrasted Ringling Bros. and Barnum & Bailey’s 2017 closure with the booming success of Cirque du Soleil, which grew from a troupe of street performers, to illustrate the importance of adapting to shifting consumer preferences.

Linkner remarked, “In our current climate of unprecedented change, we can no longer run yesterday’s playbook and expect to win. Animal rights activists didn’t put Ringling Brothers out of business, complacency did.”

Preparing for change

The Linkner article resonated with me deeply, especially when I think about how it relates to our investment philosophy at Flexible Plan Investments (FPI). Since our inception in 1981, we have been committed to active management that adapts to meet the challenges of evolving market conditions rather than simply buying and holding.

Market environments change, and so must the investment strategies designed to navigate them. Although most people understand that principle when applied to, say, a quantitative bond strategy, fewer seem to realize that buy-and-hold and index investing are also strategies subject to changing market conditions.

Meeting investor needs with diverse investment strategies

Financial advisers often ask me two questions: Why do we have so many strategies? And why do we make changes to them?

The answer to both is simple: to keep up with changing times. Investor needs and preferences change. While market timing of stock indexes was what FPI was founded on, investors eventually sought similar responsive strategies for bonds, gold, and other asset classes. When sideways markets hampered momentum-based strategies, we added strategies that used other approaches, such as asset rotation, price patterns, and mean reversion.

Managing change requires constant review and adjustment

Markets evolve. As investors recognize and respond to a market anomaly that a strategy seeks to capitalize on, the opportunity may weaken, at least temporarily. New data may become available that can improve a strategy, or investors may begin responding differently to market stimuli. Regardless of the cause, investment strategists must continually review performance and determine whether strategy rules should be adjusted.

Financial advisers and investors must also adapt. FPI offers numerous investment strategies across several categories, allowing portfolios to be constructed for current market conditions and, through multi-strategy diversification, for future markets whose conditions cannot be known in advance.

FPI makes it easier to move among strategies as conditions or investor needs change, offering a wide range of choices involving mutual funds, ETFs, and other investment vehicles.

Someone who began with a single strategy intended to address a particular need might consider exploring an appropriate profile within one of our core strategies. Investors who want their portfolios to reflect individual preferences, including faith-based or socially responsible principles, can choose from risk-managed solutions. Those who prefer to have strategy selection handled for them can consider one of our turnkey options.

Change is constant, but we’re here to help you navigate it

At FPI, we understand the importance of adaptability. By offering a diverse range of strategies and continuously refining our approach, we seek to help investors navigate changing market environments. Our commitment to dynamic risk management is designed to help portfolios respond to market shifts while remaining aligned with each investor’s objectives and risk tolerance.

Investors interested in building a portfolio that can adapt to changing conditions should consider discussing with their financial adviser how FPI’s investment solutions may support their goals.

AI’s generational opportunity comes with generational uncertainty

Tue, 14 Jul 2026 03:27:00 GMT

By David Wismer

Over the past several months, Americans have closely followed several momentous events:

• The Artemis II mission, which set a record for the greatest distance humans have traveled from Earth.

• The national celebration of the Semiquincentennial, marking the 250th anniversary of the signing of the Declaration of Independence.

• The unprecedented staging of the FIFA World Cup across three North American host countries: Canada, Mexico, and the United States.

Yet the story that continues to captivate retail investors, institutional managers and analysts, and financial advisers is the rapid growth, adoption, and evolution of artificial intelligence (AI).

The rise of AI represents a generational, transformative technological shift that rivals, if not surpasses, the emergence of the internet or the spread of personal and cloud computing. Its effects will extend far beyond the technology industry, reshaping how companies operate, how people work, and how decisions are made. Over time, AI is likely to influence nearly every sector of the economy and become increasingly embedded in daily life. Its full consequences will unfold over many years, creating significant opportunities as well as difficult challenges.

The scale of AI-related capital expenditures

As AI continues to change the nature of cybersecurity and modern warfare, and to drive advances in medicine, manufacturing and logistics, communications, software development, and many other fields, it will require significant ongoing investment.

In May 2026, Goldman Sachs published a lengthy, high-level look at the projected growth of AI-related capital expenditures—and the assumptions and drivers behind them, noting the following:

“The scale of these expenditures is enormous. Estimates of $4 trillion to $8 trillion of total capital investment over the next five years have featured prominently in recent market commentary. That capital is used to buy new chips, build new data centers, and construct new power, all in an effort [to] assemble sufficient computing infrastructure to meet the moment. Debates about whether this figure is ‘too high’ are usually framed around a demand-side question: Will AI adoption and monetization justify the spend?”

Although the answer may be unknowable today, the sheer magnitude of the projected spending is impressive.

The changing dynamics of AI infrastructure and AI hyperscalers

The artificial-intelligence trade is starting to split into two distinct groups: the companies supplying the infrastructure needed to power AI, and the large technology companies racing to build AI into their products, platforms, and business models.

The first group includes the “picks and shovels” of the AI build-out: chips, data centers, power, cooling, networking, memory, and other critical components. The second group includes many of the best-known platform companies, which are spending heavily to develop, deploy, and monetize AI capabilities.

That distinction matters because the economics of the AI boom may not be evenly distributed. Infrastructure companies may benefit more directly from the current capital-spending cycle as demand for computing power, storage, energy, and specialized hardware continues to rise. Meanwhile, the companies building AI applications still have to prove that their investments can translate into durable revenue growth, margin expansion, and shareholder returns.

MarketWatch recently reported on analysis from Holt, UBS’s research unit, which said that artificial-intelligence infrastructure stocks are set to vastly outperform most of the “Magnificent Seven” technology companies:

“Three years ago, Holt’s framework ranked Apple, Microsoft, Alphabet, Meta and Amazon as the top five economic profit generators in the industry. For 2027, Nvidia, Samsung, SK Hynix, Micron and Alphabet are in the lead.”

The following chart illustrates how one segment of the infrastructure build-out—semiconductors—outperformed the Magnificent Seven during the first half of 2026.

The vast, unpredictable opportunity of AI

The following chart shows the gap between AI’s theoretical capabilities and its observed use across occupational categories. Note that Anthropic, the company that conducted the analysis, develops large language models (LLMs) and agentic workflows.

One commentator described the implications of that gap this way:

“In most knowledge work roles, computer science, finance, management, AI could theoretically handle 80-95% of tasks. Real usage is closer to 15-40%.

“That’s not just a workflow problem. The technology is still immature. … Most businesses can’t bet core operations on a tool that’s still figuring itself out.

“Adoption is going to take years. That’s not pessimism, that’s just how it goes with any major technology shift. …”

Balancing AI investment exposure with risk management

Even the largest technology companies could come under pressure if their extraordinary spending on AI infrastructure fails to produce adequate returns. As a result, the eventual winners and losers may be more numerous—and less predictable—than the initial boom in several well-known stocks might suggest.

Whether the AI trade is overvalued is a subject of intense debate among financial analysts. Pure-play AI analytics and software companies can command elevated price-to-earnings ratios as investors price in expectations for rapid future growth. Some economists warn that market concentration and stretched multiples resemble the dot-com bubble. Others point to tangible AI-related revenue and suggest that using low-cost index funds may help reduce the risk associated with owning individual stocks.

Yet financial advisers say that fear of missing out, or FOMO, is a very real concern among clients—one that broader index funds may not fully address.

What if advisers could help clients gain more direct exposure to some of the biggest, most visible names in the S&P 500 and NASDAQ while also incorporating risk-management tools?

In late 2025, Flexible Plan Investments (FPI) launched FlexDirex, the first U.S. suite of actively managed strategies using leveraged and inverse single-stock ETFs.

FlexDirex includes two offerings—Tech Plus and Focused Core—designed to give financial advisers tactical options for both growth-oriented and more diversified portfolios. Both use Direxion single-stock ETFs, which seek daily leveraged or inverse exposure to individual stocks. Direxion is a leading provider of tactical ETFs.

Most relevant to this discussion is the Tech Plus strategy, which is designed for investors and advisers managing portfolios with QQQ exposure. It offers a focused, tactically managed way to participate in the performance of many major technology names while seeking to manage volatility and concentration risk. The strategy is intended for aggressive growth investors who want to enhance or hedge NASDAQ-heavy exposure. It is also designed to pursue opportunities in both rising and falling high-volatility stocks.

While it might be immodest to call FlexDirex a generational product, it offers advisers and their clients what FPI President and CIO Jerry Wagner calls “a significant step forward in ETF innovation.”

You can learn more about FlexDirex here or watch a replay of a recent webinar about the strategies here (the webinar is for financial professionals only).

Holding investor hands through market ups and downs

Tue, 07 Jul 2026 03:46:00 GMT

by Jerry Wagner

Hand-holding. We learned to do it innocently as children, and it continues to carry meaning throughout our lives.

Whether providing comfort, assurance, or assistance, holding hands can be a powerful gesture. As Toni Coleman, LCSW, a psychotherapist and relationship coach, explains, “Research shows that touch, like holding hands, releases oxytocin, a neurotransmitter that gives you that feel-good buzz.”

In the world of investing, hand-holding takes on a figurative meaning. Financial advisers often serve as a steadying presence for investors during turbulent times, offering reassurance and support. This is particularly important when investors face uncertainty and may feel anxious about their portfolios.

How advisers “hold your hand” through tough times

One prominent value proposition often pops up on the websites of advisers: “We’ll help you manage your investment behavior.”

For most advisory services using such a value proposition, they really mean, “We’ll hold your hand when the bear market comes.” Their primary purpose is to support a “buy-and-hope” mode of investing by working to keep you invested and to avoid the common investor mistake of selling out at or near market bottoms.

The previously referenced article tells us that there are at least seven different ways we can hold hands. I think numbers four (the firm but non-interlaced grip) and six (one hand gently resting on top) may be applicable here.

In hand-holding technique number four, the article says, “The hand-holder may be tightening their grip in a protective way to offer comfort or reassurance if the other is anxious. ...”

I think this is the primary grip used in adviser-investor hand-holding. The adviser is trying to comfort the investor and reassure them that they are doing the right thing in waiting out a market decline.

However, if the decline lasts long enough, the hand-holding may change character. With hand-holding technique number six, the article says it doesn’t necessarily mean that you are “doomed,” but you do need to pay attention: “When you put your hand on top of someone else’s and let it rest for a minute while you speak, it may mean that you’re delivering bad news.”

Can we alleviate the need for investor hand-holding?

The significant declines (the 50% to 75% variety) we’ve experienced this century meant different things to different investors. Some were young and had time to start over again. Others were older and saw their dreams of an early retirement substantially delayed or abandoned. Some retired investors were forced to return to the workforce or materially reduce their standard of living.

When I started Flexible Plan Investments (FPI) in 1981, I did so with the belief that I could create a different type of asset-management service. My market timing would be so accurate that it would alleviate the need for investor hand-holding.

In the 45 years that we have been in business, I learned that no market-timing approach is so consistently precise in its timing that counseling isn’t still needed. As I moved into using trend-following strategies, in search of wealth-preservation methods for different asset classes, I had to settle for trades “close to” bottoms and tops instead of being precisely at them.

Since trend following works in many but not all market environments, I sought other types of strategies. Finally, I realized that only by using multiple types of strategies in a single portfolio could I get close to my goal.

But, alas, perfection is elusive, or more accurately, impossible. I have not been able to eliminate the need for anxious clients to seek counsel (and, yes, hand-holding); hopefully, our approach has reduced the need.

The value of dynamic risk management in volatile times

When global politics and economic events cause markets to become more volatile, it’s not surprising that investors look for hand-holding. Even financial advisers who work with us need to spend some hand-holding time with their clients. Part of that time is used to explain the value of an asset manager, such as FPI, that employs dynamic risk management.

First, and most importantly, investors use us so that they don’t have to make their own investment decisions. They don’t have to try to understand the conflicting messages of the markets. They don’t have to worry about being right or wrong. We take all the actions for them.

Dynamic risk management allows for a proactive response to changing market conditions. By using multiple strategies in a single portfolio, it’s possible to manage risk more effectively and help investors navigate uncertain markets.

At FPI, we’ve developed a range of tactical strategies designed to manage risk across different market environments. While no strategy can eliminate the need for reassurance, our approach seeks to reduce the frequency and intensity of those hand-holding moments.

How we can help make hand-holding conversations more valuable

Even with dynamically risk-managed strategies in place, there will always be times when investors need guidance and support. Your financial adviser is well-equipped to offer this, using the tools and resources we offer to help investors evaluate their FPI portfolios and stay on track.

For example, the OnTarget Benchmark Monitor (available after you log in to your account on the OnTarget Investing website, ontargetinvesting.com) helps you see how your investments are performing relative to customized benchmarks, providing clarity and insight.

Ultimately, while hand-holding may be necessary during volatile periods, a thoughtful and dynamically risk-managed approach to portfolio management can help both advisers and investors feel more confident about the future. As always, we at FPI are here to help both of you work toward that goal.

Financial lessons from the Founding Fathers

Tue, 30 Jun 2026 03:09:00 GMT

By David Wismer

As the Fourth of July approaches and our country marks its Semiquincentennial (the 250th anniversary of the Declaration of Independence), it’s a good time to look back at what some of the Founding Fathers said about money, wealth, and finances.

At a time of great political division, it’s important to note that the founders did not claim to have created a perfect nation—but rather “a more perfect Union.”

Even with some shortcomings at its founding, the United States remains one of the world’s most enduring self-governing republics—and arguably the most successful.

A recent Newsweek editorial piece commented on the reaction of visitors to the U.S. during the ongoing World Cup matches:

“Americans are routinely told that our nation is hopelessly divided, irredeemably flawed, and perhaps even in terminal decline. …

“But something remarkable is happening during the 2026 World Cup. … Fans from all across the world have arrived in America—and they are absolutely loving it. We too often take our way of life for granted, but many soccer tourists now here cannot stop marveling at what they see.

“America, like every country, has problems. The risk of prolonged decline is very real. Patriotism also does not require pretending that everything is perfect.

“But it does require perspective—and, above all, gratitude.”

The Founding Fathers and finance

According to many sources, seven of the most important Founding Fathers were instrumental both at the time of the Declaration of Independence and in later roles for the new nation: George Washington, Thomas Jefferson, Benjamin Franklin, John Adams, James Madison, Alexander Hamilton, and John Jay.

The historian Richard B. Morris identified key founders based on what he called the “triple tests” of leadership, longevity, and statesmanship. Some add others to the list of most important founders, including Robert Morris, Thomas Paine, John Hancock, and James Wilson.

The founders often came from widely divergent backgrounds and held conflicting views on many key topics, from American foreign policy to the role of banking, public versus private finance, abolition, and the relative importance of a domestic agrarian versus international mercantile economy.

The late Cornell historian Walter LaFeber, known for a half-century of interpreting American history and foreign relations, did not write a definitive book on the Founding Fathers. However, he addressed their ideological differences in his broader scholarship on the U.S. Constitution and foreign policy, arguing that clashes between figures like Alexander Hamilton and Thomas Jefferson established the fundamental, enduring tension between American capitalism and republican democracy.

The History Channel has an interesting perspective on the Founding Fathers, noting that they pledged to risk “our lives, our fortunes and our sacred honor.” While the risk to life was clear for many founders, the Declaration of Independence and subsequent war and nation-building also had negative financial consequences for several leading figures, including Washington, Jefferson, Adams, and Morris. Even Hamilton, the financial architect of the new nation, wasn’t immune.

Some practical monetary advice

The Founding Fathers believed that personal enterprise, financial independence, and broad-based property ownership were essential to protecting individual liberty. While many were wealthy, they generally championed frugality, warned against the dangers of personal debt, and noted the power of compounding wealth.

Many quotations and sayings about money have been attributed to the founders. Here are a few that reflect themes often associated with their writings and public lives.

George Washington:

“To contract new debts is not the way to pay old ones. … We must consult our means rather than our wishes.”

“System in all things is the soul of business. To deliberate maturely & execute promptly is the way to conduct it to advantage. With me, it has always been a maxim. …”

Alexander Hamilton:

“Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions.”

“Industry is increased, commodities are multiplied, agriculture and manufacturers flourish: and herein consists the true wealth and prosperity of a state.”

Thomas Jefferson:

“Never spend your money before you have it.”

“I know nothing more important to inculcate into the minds of young people than the wisdom, the honor, and the blessed comfort of living within their income.”

Benjamin Franklin is recognized as the only founder to sign all four key documents establishing the U.S. His prolific insights on money, wealth, and debt were popularized through his “Poor Richard’s Almanack” and the essay “The Way to Wealth”:

“Remember that time is money. … Lost time is never found again.”

“A penny saved is a penny earned.”

“Think what you do when you run in debt; you give to another power over your liberty.”

“Wealth is not his that has it, but his that enjoys it.”

“Money makes money. And the money that money makes, makes money.” (Colloquial version)

The power of compounding

Franklin famously put his words on compounding to a real-life test, according to several sources.

Upon his death in 1790, Franklin left 1,000 pounds each to the cities of Boston and Philadelphia “with strict instructions: the money was to be lent to young tradesmen for exactly 100 years.”

“Franklin calculated that after a century of compound growth, each fund would multiply substantially. … After 100 years, each city could spend part of the money on public works, but the remainder must continue growing for another 100 years. Franklin predicted that these funds would be worth millions after 200 years of compounding.”

His experiment proved highly successful, with each city’s fund growing into the multiple millions while also supporting public projects and helping to create The Franklin Institute of Philadelphia.

The power of compounding can affect many areas of investors’ financial lives, from simple CDs to college funds, real estate, and—perhaps most importantly—in their eventual investment outcomes.

It also lies at the heart of Flexible Plan Investments’ (FPI’s) risk-managed approach to long-term portfolio growth, where there can be a significant compounding advantage in seeking to mitigate deep portfolio losses through full market cycles.

Veteran strategist and trend follower Greg Morris put it well in an article for Proactive Advisor Magazine: “If you can avoid large negative months (or quarters, or years), your returns can compound at a higher rate over time since large negative numbers destroy compounding—it’s just math.”

As we look forward to July Fourth and the 250th anniversary, FPI wishes everyone a safe and enjoyable holiday—as well as continued success on their journeys toward financial independence now and in the future.

A “living in the moment” guide to investing

Tue, 23 Jun 2026 03:02:00 GMT

By Jerry Wagner

I have tried to balance my life by respecting the lessons of the past, planning for the future, and making the most of the opportunities in the present. Yet, I realize that one of my lifelong passions—active management—is indeed governed by the philosophy of living in the moment.

What’s your investing approach: Respond to the present, or “buy and hope”?

While active management draws on history as the basis of each active strategy, it is continually focused on what is happening now. Active management strategies cannot see into the future—they can only seek to realize what the present provides. They are based not on forecasting, but rather on the probability of favorable outcomes—and they seek each day to profit from them.

Buy-and-hold investing does not relate much to the here and now. You buy and wait. You invest and hope. Rather than seeking to profit from what’s happening in the present, buy-and-hold investing considers the present—the moment—irrelevant.

Yet we know from experience that even if active strategies do not return more to investors over a given period, what happens each day is relevant to even the buy-and-hold investor. Every financial market goes through peaks and valleys. Investors get euphoric, and they also get despondent.

When stock prices fall day after day, when the daily declines move from decimals to single digits, and then to double digits, even the most ardent buy-and-hold investors have had second thoughts. Many have abandoned the approach, and their investments, at the very worst time—near the bottom. They begin to live in the moment, and it becomes very relevant.

It’s easy to understand the fear. Fear comes from our past, but it can influence our actions in the present and our plans for the future. It clouds our judgment.

But we can use computing power to test active strategies in advance. And we can use it to track and carry out high-probability trades in the present. Fear does not enter the picture or cloud a computer’s view of the present.

Invest for the moment, but be prepared when the moment changes

Living in the present may promote happiness, but it does not guarantee it in the short term. Active management is not a panacea. Like every other human endeavor, any strategy can be out of sync with the current market environment.

That’s why we urge clients to diversify among strategies and not expect a truly diversified portfolio to contain only winning strategies. If every strategy is going up together, they will likely fall together. This lack of diversification will provide no protection.

It is fine to prune underperforming strategies, but usually they should be replaced with strategies from the same category to maintain diversification. Of course, this assumes your portfolio was well-diversified in the first place.

Active management is designed to respond during bad periods. After all, responsiveness is an advantage that active management has over the buy-and-hold approach in many market environments.

Investors using active strategies for the first time need to shrug off the buy-and-hold mindset. I know you have seen your buy-and-hold investments rise to new heights and then be dashed when a major bear market arrives.

Sooner or later, you get tempted to sell, even though the market may be down 50% by then. Fear can eventually do that to you. That same fear may keep you from buying back into the stock market when it finally turns around.

When you sign up for an active management strategy, your investing decisions no longer need to be driven by emotion. The strategies are automated. They are developed on computers and run daily on computers. There are no emotions. They just execute trades that years of research have identified as likely to improve outcomes relative to buy-and-hold investing.

Each strategy has high-probability trading parameters. These can move your investments to safety when historically tested sell parameters are met.

It’s all about living in the present. Your investing decisions no longer need to be driven by fear of the past or worry about the future.

Should we be seeking perfection in our investment returns?

Tue, 16 Jun 2026 03:39:00 GMT

By Jerry Wagner

It was the fall of 1956. Action from the World Series blared from the radio: the New York Yankees versus the Brooklyn Dodgers, game five. Don Larsen threw his 97th pitch. “Strike!” called the umpire, and the audience witnessed perfection. Twenty-seven batters up, 27 retired—all without a hit, walk, or error. The perfect game.

The press made much of the event. I can still see the front-page photo of an exuberant Yogi Berra being held in the arms of a smiling Don Larsen, just off the pitcher’s mound. That image has maintained a permanent spot in my memory and probably influenced me and many of my contemporaries to seek this elusive thing called “perfection”: the perfect education, the perfect job, the perfect spouse, the perfect children, the perfect home, the perfect bank account—the perfect life.

In the years since, I think most of us have learned more about perfection. We know that humans can’t attain it (as St. Jerome said, “True perfection is to be found only in heaven”). Larsen didn’t get his 27 outs on 27 pitches. It took 97.

In investing, the pursuit of perfection can distract us from the more important question: Are we making progress toward the goal?

The fallacy of the “Perfect Timer”

Once a quarter, at statement time, most investors look at returns and judge their investment experience. I always wonder what standard they use in making that judgment. Having spent decades running an investment advisory business, I’ve heard many of these judgments. The one I have the most difficulty with is the standard of the client who I call the “Perfect Timer.”

The Perfect Timer believes that active investment is about selling at the “top” and then buying back in at the “bottom,” repeating the process as often as possible. If you don’t sell at the top, they say, you’ve lost them money.

Of course, there are many problems with this approach. First, no one can pinpoint tops and bottoms consistently for any reasonable period—including the Perfect Timer. “Tops” and “bottoms” can only really be identified in hindsight. And even the exercise of hindsight depends on what period you’re examining. Second, did the Perfect Timer indicate that they wanted to buy when that bottom was hit or sell on the date of that top? Not likely. So why do they talk about “losses” from some unattainable goal that they were not prepared to act upon?

The line of a stock market chart is not smooth—it’s jagged. When you look at any 10-year chart, the major highs and lows jump out at you. They seem so obvious.

But the highs and lows are also obvious in hindsight when you zoom in at the one-year, quarterly, monthly, weekly, or even daily view. At each level, it is easy to imagine getting out at the top and buying in at a low during the ever-shorter life of the chart.

The sad fact is that none of these trades is consistently obtainable except with perfect hindsight. I love the ad that shows a couple asking a bank teller for a pair of “hindsight glasses.” The teller informs them that they have been discontinued. The fact is they never existed. As Salvador Dalí wrote, “Have no fear of perfection—you’ll never reach it!”

The chart does, however, focus our attention on the fact that, in evaluating performance, the period is important. And this is also a big part of what we consider perfection. Often when we say something is “perfect,” what we mean is “in that moment.” It’s only “perfect” in that snapshot clipped from the long-running movie that is our life.

Technology provides us with examples of this. We get the latest Apple iPhone. It’s the “perfect” phone, we say. Two years later, we must have the newest version of the Apple iPhone—it’s now “perfect.” Time changes. Even what’s “perfect” changes.

Clients invest for a purpose—to meet their long-term goals

Most clients invest not for the moment but for a purpose. They are looking to fund a future obligation or goal, be it a home, a child’s future education, or their own retirement. Obviously, these long-term goals have little to do with the highs and lows of a stock index on a daily chart. Nor are the weekly, monthly, or even quarterly charts very relevant to deciding if we are meeting our investment goals.

Research in behavioral finance suggests that most people should not look at their returns more often than once a year. Why? Because experience has shown that there are two major impediments to successful investing: 1. Overconfidence at market tops can cause some investors to overcommit to risky investments. 2. Conversely, overwhelming pessimism at market bottoms can lead to abandonment, usually at a very inopportune time.

So why do we send out quarterly statements? We have no choice, even though we know that by doing so we increase the chances of clients making decisions based on results that are too short term to properly evaluate progress toward their goals. This is just one more example of where the law and science are not really in sync.

At our firm, we seek to minimize this tendency to focus on short-term results (technically called “narrow framing”) by providing a long-term chart called our OnTarget Monitor. It puts performance in a long-term perspective based on an established goal and the likely performance of the mix of strategies chosen by each client.

The OnTarget Monitor does not put this perspective in exact or “perfect” terms but rather provides ranges of probabilities of performance. If performance is in the blue zone, the portfolio is outperforming expectations. The green zone represents normal performance, and the yellow and red zones are areas of increasing divergence from expectations. A bear market can throw even the best strategies or diversified portfolios briefly into the yellow or red zones. However, prolonged duration in the red zone calls for a discussion between the client and financial adviser to consider a different combination of strategies.

By quantifying expectations and displaying them graphically, we seek to focus our clients on a standard of performance that matches their goals and stated suitability profile. (A client’s suitability profile is extremely important in judging performance. Since all of the profiles target less long-term risk than the S&P 500, for example, comparing returns to that index is comparing apples and oranges.) This objective standard stands in sharp contrast to what we often call “perfection.”

Forget perfection. Strive for progress.

What is declared “perfect” is often subjective. Your “perfect” sandwich may be completely unappealing to someone else. That’s another reason why focusing on perfection is a problem: The target is not the same for every person, so how can a money manager focus on it?

The word “perfect” comes from the Latin verb “perficio,” which means “to finish.” That is consistent with Aristotle’s definition of “perfect”—a finished thing, something to which nothing can be added or removed to make it better.

Unfortunately, Aristotle’s definition of perfection results in what philosopher Giulio Cesare Vanini, hundreds of years later, termed the “perfection paradox.” For something to be perfect, it must also be perfectly adaptable. And if it is adaptable, it is not finished. As such, Vanini said, “Perfection must be imperfect.”

These days, you can’t go two minutes without encountering some inspirational quote that reflects this paradox and suggests a solution: “Strive for progress, not perfection.” “Striving for perfection is demoralizing.” Or, as Edwin Bliss said, “The pursuit of excellence is gratifying and healthy; the pursuit of perfection is frustrating, neurotic, and a terrible waste of time.”

I’ve spent decades seeking the “perfect” strategy, one that generates positive results no matter what period I examine—daily, weekly, or even quarterly. There is no such strategy.

Instead, our firm seeks progress and excellence in the process of attaining it. We have always been committed to dynamic, risk-managed strategies that can change to meet the challenges of evolving market conditions rather than simply buying and holding. Market environments change, and so the strategies that flourish in them also change.

The investment strategies we offer will not yield gains in every quarterly report. But each has been designed to seek strong risk-adjusted returns over time. It’s not a “perfect” game, but helping our clients progress toward their long-term goals is, after all, what investing is all about.

The final score matters—but it doesn’t tell the whole story

Tue, 09 Jun 2026 03:01:00 GMT

By Will Hubbard

I played a round of golf recently where I walked off the course thinking, “I should probably be happier with that score than I am.” It was a good reminder that a final number—whether on a scorecard or in an investment return—can leave out a lot of important context.

On paper, it was a good round for me. I shot a 39. As a 10 handicap, I would usually consider that a respectable score—though Scottie Scheffler might disagree. He once described a 10-handicap friend who beat him as “not a very good golfer.”

But a 39 is something I should feel pretty proud of. And yet, as I walked off, replaying the round in my head, I could not shake the feeling that the number was telling only part of the story.

There were not many routine pars where I hit the green in regulation, lagged a birdie putt close, and tapped in. Instead, it felt like I was scrambling all day. Up and down for par. A long putt to save the hole. A well-struck recovery shot to cover up something less precise before it.

The card said 39, but let me tell you, it was a grind. The score looked good, but the process felt less convincing.

The scorecard doesn’t explain the round

Golf has a funny way of separating outcomes from inputs. You can shoot a disappointing score and still feel like you hit the ball well. You can also shoot a good score and know that it took a little too much scrambling to get there. The scorecard tells you what happened, but it does not always explain how it happened.

I can make that judgment because I have enough history with my own game. Having played my whole life, I have a general sense of how much variance I might see around my handicap. I may play better than that on a given day, and I may play worse. Conditions, the course, the weather, and a few breaks can all influence the outcome.

But over enough rounds, a pattern begins to emerge. And that pattern is more useful than any single score.

The same idea applies to investing.

One return does not define a strategy

Investors often want to judge a strategy by the most recent result. If the return was strong, the strategy must be working. If the return was weak, something must be wrong.

That reaction is natural. We all feel the latest outcome most intensely because it is the one directly in front of us. But a return number, like a golf score, is only the final output. It does not automatically tell us whether the process was sound.

A strategy can have a strong year because its signals were effective, its risk management worked, and the market environment rewarded the behavior it was designed to capture. But it can also have a strong year because of happenstance. A few positions worked unusually well. A specific regime favored the strategy. A handful of decisions or signals carried the result.

The same is true in reverse. A strategy can have a weak stretch because the process is deteriorating. Or it can simply be operating in an environment that is temporarily out of favor for that particular approach.

Why sample size matters

The danger of judging too quickly is one reason quantitative investing can be so valuable. At its best, it is not about trusting one outcome or one discretionary narrative. It is about testing ideas across many observations, regimes, markets, and environments.

It is about building a sufficient sample size to determine whether a signal has been durable, whether a process has been repeatable, and whether the results fall within a reasonable range of expectations.

The point is not to eliminate uncertainty. That is impossible. Markets are too complex, too adaptive, and too emotional for any process to work perfectly all the time. The point is to create a framework that allows us to be critical of the process.

Was the strategy behaving as designed?

Were the trades consistent with expectations for the environment?

Was performance within the range of expected outcomes?

Those questions matter because every strategy will have periods when it looks better than it really is, and periods when it looks worse than it really is. Just as I may play like a 7 handicap one day and a 13 handicap another day, a strategy can run above or below its longer-term expectation for a period of time.

That does not automatically mean something has changed. But if the deviation becomes large or persistent enough, it may signal that something warrants deeper review.

A baseline for staying disciplined

A rules-based, risk-managed approach helps keep decision-making grounded. It does not guarantee success. It does not mean every strategy will work in every market environment. And it does not mean the future will look exactly like the past.

But it does give us a relevant, quantifiable baseline—not just an opinion. It gives us a way to compare current outcomes against tested expectations.

I believe disciplined investing starts with recognizing what one result can—and cannot—tell us. A strong return does not always prove a process is durable, and a weak return does not always prove it is broken.

Whether we are talking about golf or investing, the final score does matter. But the more important question for long-term durability is what it took to get there. Was it a lucky wedge on 18 or the predictability of thousands of swings on repeat? The more we understand that, the better our chance of staying disciplined when the next round—or the next year—does not go exactly as planned.

Riding the volatility dragon

Tue, 02 Jun 2026 03:09:00 GMT

By Jerry Wagner

Picture this: A dragon, black as a storm cloud, soars above a burning battlefield—scales flashing, wings blocking out the sun.

The rider leans forward, steering straight into the fight below, calm and controlled. Suddenly, the course of the battle turns.

That image—from HBO’s “Game of Thrones” and its prequel, “House of the Dragon”—has captivated millions. The appeal isn’t safety. It’s fire, fury, and unpredictability. But with a rider, that raw power can become a strategic and tactical force.

In financial markets, volatility is that dragon—unpredictable, powerful, and always lurking. The challenge is not to avoid it but to learn how to ride it effectively.

The same idea applies to risk management. It’s just as the ancient Chinese proverb states:

“If you ignore the dragon, it will eat you. If you confront the dragon, it will overpower you. If you ride the dragon, you take advantage of its might and power.”

Three ways investors face volatility, each with its own fate

Every investor who has ever faced a turbulent market has made one of three choices.

Ignore the dragon

In calm markets, risk is easy to forget. Crashes in 2000–2002, 2008, and 2022 hurt investors who became complacent, letting the dragon sleep in their portfolios without considering the consequences of its awakening.

Confront the dragon

Market timers and panic sellers often respond emotionally, buying at tops and selling at bottoms. They fight volatility rather than manage it. The dragon isn’t moved by emotion.

Ride the dragon

Respect volatility by understanding its patterns and timing. Then build a disciplined process with skilled management. Act purposefully, neither recklessly nor timidly.

For more than 45 years, Flexible Plan Investments (FPI) has been refining, testing, and building ways to ride volatility on behalf of advisers and their clients.

The dragon investors rarely discuss

Volatility is often treated as an enemy to minimize. This misses the point: volatility drives returns.

Without volatility, there is no trend to capture or opportunity to pursue. The equity risk premium exists because stocks are volatile and investors expect compensation for taking risk. Seeking no volatility means accepting no return premium.

The real risk is unmanaged volatility—the kind that can quietly compound and turn paper losses into permanent ones once fear takes over.

Dynamic risk management is designed to address volatility with process, discipline, and tools, making the challenge of riding it less frightening and more purposeful.

The dragon rider’s kit

No dragon rider succeeds on courage alone. At FPI, more than 45 years of managing risk across market regimes—bulls, bears, crashes, and surprises—have shaped the tools we use to ride volatility.

The saddle: Rules-based process

Decisions made before the pressure arrives—before the headlines scream, before the client calls in a panic. Rules help remove emotion from decisions best made before pressure builds.

The reins: Volatility targeting

Our proprietary Targeted Volatility Analysis (TVA) continuously adjusts exposure—more when conditions support it, less when they don’t. It is a process of constant, active calibration.

The shield: Hedging and defensive positioning

FPI uses short-term Treasury exposure, cash allocations for deteriorating assets, inverse instruments when appropriate, and tactical overlays that can limit equity exposure when market conditions weaken. All are designed to shield portfolios from harmful market volatility.

The map: Diversification and asset-class rotation

The Evolution momentum algorithm ranks and weights 12 leveraged asset classes and cash by momentum, risk, and correlation—moving weaker assets aside when trends break down.

Together, these tools reflect a core belief: Managing investments is as important as owning them.

Three ways we ride the dragon

FlexDirex ETF strategies

If volatility is a dragon, a 2X leveraged single-stock ETF is a fire breather. Think 2X Tesla (TSLL), 2X Nvidia (NVDU), 2X Palantir (PLTU), and 40 more of the same breed. These instruments can move 10%, 20%, or more in a single session. Unmanaged, they can be instruments of success or destruction.

FlexDirex—our first-to-market suite of actively managed SMA strategies built from Direxion’s universe of more than 40 single-stock leveraged and inverse ETFs—applies TVA targeting, SHY Treasury hedging, and the Classic overlay to help manage exposure when the dragon bucks hardest. Two strategies are available: FlexDirex Focused Core (FDXSE), which targets S&P 500 volatility, and FlexDirex Tech Plus (FDXNE), which targets NASDAQ 100 volatility. Both are designed to capture the upside volatility of the indexes while seeking to limit their drawdowns.

QFC Evolution Plus mutual fund strategies

FPI’s Evolution Plus strategies have been available for more than a decade, with the QFC version available since 2020. Today, QFC Evolution Plus allocates primarily to the Quantified Evolution Plus Fund (QEVOX) across five risk profiles, delivering dynamic risk management at both the fund and strategy levels. Affiliated fund fee credits can reduce FPI’s advisory fee to as low as 0%.

The Quantified Evolution Plus Fund (QEVOX)

QEVOX, subadvised by FPI, gives investors direct access to the Evolution momentum framework. Gold, commodities, currencies, real estate, bonds, and equities all respond to unique pressures. QEVOX ranks leveraged investments in each of these asset classes by momentum, weights positions by volatility and correlation, and shifts deteriorating asset classes to cash to create a diversified, hedged, and leveraged portfolio.

The power—and risk—of riding volatility

FlexDirex strategies have delivered strong after-fee results in the current environment, with our most aggressive profile returning about 90% year to date. Final composite performance figures will be available following the standard reporting period.

The Quantified Evolution Plus Fund (QEVOX) has returned more than 55% year to date after fees through May 29, 2026—in a year when the S&P 500 has been … volatile. As a result, the QFC strategies using it have delivered returns for the Conservative to Aggressive SMA portfolios ranging from 9% to 49%, after fees are deducted.

These results do not happen by hiding from volatility. They happen by participating in powerful market moves with tools built to manage the accompanying risks. They do not mean every future period will look like this one. Leverage cuts both ways. These strategies are not for every investor. They belong where they fit the client’s objectives, risk tolerance, time horizon, and portfolio role. And as with any investment strategy, past performance does not guarantee future results. Investment return and principal value will fluctuate.

The dragon rider’s creed: Don’t ignore the dragon. Don’t blindly fight the dragon. Respect it. Measure it. Manage it.

The goal is not to slay the volatility dragon. The real goal is disciplined volatility management—with a skilled manager guiding the journey.

The greatest Targaryen riders built bonds through knowledge and engagement with dangerous power. Advisers serve clients best not by promising to eliminate risk, but by partnering with managers who have built robust tools and discipline to stay committed through volatility.

Since 1981, FPI’s purpose has not been to predict markets. It has been to tame and ride them with discipline, tested processes, and experience for clients who trust us with their journey.

The volatility dragon is already here among us. Clients deserve an experienced rider who knows what to do when it takes flight.

To learn more about FlexDirex ETF strategies, QFC Evolution Plus strategies, and the Quantified Evolution Plus Fund (QEVOX), contact our Sales team at 800-347-3539 or visit flexibleplan.com.

The pitfalls of DIY investing

Wed, 27 May 2026 03:18:00 GMT

By Jerry Wagner

DIY investing has become easier than ever. With a few taps, investors can open an account, place a trade, and build a portfolio on their own. But easier access does not always lead to better outcomes.

Investors would be wise to remember that there are costs to trying to do it yourself.

Since 1984, analysts at independent investment research firm DALBAR Inc. have published their annual “Quantitative Analysis of Investor Behavior” report (QAIB). Over time, the report has shown that investors managing their own accounts consistently underperform the mutual funds in which they invest.

While Flexible Plan Investments (FPI) was one of the first to create a turnkey asset management platform that allows the adviser to be the portfolio manager (DIY investing for your financial adviser), we’ve also learned that there are four common pitfalls to attempting to do it yourself.

1. Investors may not fully understand what they own

Whether you are investing in assets or strategies, you have to spend the time to learn about the investment. This sounds pretty basic, but many investors buy before they fully understand what they own. Losses by inexperienced investors in options, bitcoins, volatility vehicles, and leveraged and inverse funds show how costly that can be.

This knowledge is important for more than avoiding mistakes. The more you understand the characteristics of an asset class or strategy, the more likely you are to trust it to do what it is intended to do within an investment portfolio. This trust can make it easier to stick with a plan and invest for the long run.

2. Investing takes time many people do not have

Most investors cannot devote all of their time to their investments. Yet today’s 24-hour investment and news cycle can make it feel like investing requires constant attention. The demands of everyday life only make that harder. Most people simply cannot do everything all the time.

3. Emotion can get in the way

Markets can be noisy, uncertain, and uncomfortable. For many investors, that can lead to frustration, anxiety, and rushed decisions.

Fintech entrepreneur George Mitra made this point in an article about DIY investing:

“The two emotions that always compete in investment decisions are Greed and Fear. In reality, it is only one—Fear. It’s either FOMO (Fear of Missing Out) or the fear of losing something. One leads to making a decision when times are good and gives investors more confidence in their ability, their risk tolerance, and knowledge about their needs. Whereas, the other freezes us, or makes us take decisions in haste looking at short term rather than longer horizons.”

The interplay of these and other investment biases has spawned a whole new field of study: behavioral finance. We now know that the internal mechanisms of the human brain can work against successful investing. Successful professional investors establish procedures and conduct the quantitative research needed to help overcome these emotional roadblocks.

4. Discipline is hard to maintain

Lack of discipline can undermine the best-laid plans and overcome years of research. When I was doing weekly seminars for investors, I used to tell attendees that I had researched thousands of investment systems. Many of these systems had long-term records of success. But based on my experience with investors, I knew that I could explain a profitable system’s rules and history and, in most cases, investors still would not go home and follow it.

It’s similar to subscribing to an investment newsletter. The writer tells investors when to buy and sell. But investors often respond in a predictable way: They wait to see if a recommended trade works in real time. After enough successful trades, they finally start investing. Then, after one or two losing trades, they stop following the signals and let the subscription expire. DIY investors tend to be easily discouraged.

Over time, investors often learn that the best buy and sell signals can come when they are hardest to follow. The market falls and falls, and then the buy signal arrives. At that point, losses may have mounted for weeks, and investors may be down 20%, 30%, or 40%. Now they are being told to invest. It can be very hard to do. The same challenge can happen on the other side. If a sell signal comes when gains are multiplying and it feels like the best of times, will investors sell?

If not DIY investing, then what?

For FPI, the answer is turnkey investment management. With turnkey separately managed accounts, we choose the investments, allocate and reallocate them, and provide the dynamic risk management we are known for.

Since FPI’s founding in 1981, we have provided turnkey separately managed accounts. In the past, those accounts mostly consisted of a single strategy, often involving a single asset class.

As we developed hundreds of these strategies over the years, advisers and investors began asking whether we could also choose the strategies and decide when to invest in them. The result was our turnkey multi-strategy offerings: QFC Multi-Strategy Core, QFC Multi-Strategy Explore, and QFC Multi-Strategy Portfolios.

How turnkey multi-strategy investing addresses the four DIY pitfalls

Turnkey multi-strategy investing changes the investor’s role. Instead of selecting, monitoring, and adjusting strategies on their own, investors and advisers can rely on a defined investment process built to handle those decisions over time.

1. Choosing investments becomes less complicated

Investors don’t have to learn the ins and outs of FPI’s full strategy lineup to decide what may be appropriate in the current market environment. They also do not have to review the statistics on each strategy to gain enough confidence to stay with it for the long run.

This is also an advantage for financial advisers. It gives them a limited number of strategies to become familiar with and a consistent concept to explain to clients: the advantages of multi-strategy investing.

Instead of deciding which strategies to buy, when to buy them, and how much to invest in each one, investors and advisers can rely on FPI’s turnkey process. FPI monitors individual strategy performance, evaluates whether strategies remain effective, and adjusts the lineup as market conditions change.

2. Time constraints become less of a burden

FPI has a team of financial service professionals helping monitor client accounts when investors have pressing personal or business concerns. Investors can even take a vacation, knowing that FPI is there to help oversee the process.

3. Investor emotion has less influence

Our quantitative strategies are drawn from years of research, backtesting, and experience. The rules for buying, holding, and selling are laid out in advance and monitored for improvement. Because the process is defined ahead of time, investors are not left trying to decide what to do in the moment.

4. Trading discipline is built into the process

Our quantitative systems are designed to reduce indecision. Signals are generated by our computers and sent to a trading staff that is separate from the strategy development. The trading team is focused on executing the signals accurately and promptly once the computers generate a buy or sell signal. The trading staff is judged not by the profitability of a trade, but by precision and timing in each trade’s execution.

DIY investing remains susceptible to all of these pitfalls. Turnkey multi-strategy investing is designed to help address them.

***

Fintech entrepreneur George Mitra concluded the following:

“DIY investors tend to perceive risk management as avoiding losses. In reality, risk management is about taking chances while mitigating potential negative fallout with safer bets: it’s about maintaining an acceptable level of risk to enable higher returns. Part of this process is also reviewing investments. To not be swayed by personal bias, hindsight bias, or being too attached to them. This helps in identifying losers and pruning them, to make way for the new potential winners.”

Robert R. Johnson, president and CEO of the American College of Financial Services, in Bryn Mawr, Pennsylvania, sums it up like this:

“Basically, when people get sick, they go to a doctor. When people get in a legal tangle, they seek the advice of a lawyer. Yet, somehow, people believe they should be able to navigate the complex financial waters on their own.”

Generally, people can’t. But today, people don’t have to.

Turnkey multi-strategy investing gives investors and advisers a way to put a defined, risk-managed process to work without having to do everything themselves.

When markets don’t follow the script, dynamic risk management matters

Tue, 19 May 2026 03:24:00 GMT

By Jerry Wagner

Markets rarely give investors a clear path forward. Economic signals can conflict, rate expectations can shift, and investor sentiment can change quickly. Some trends last longer than expected. Others reverse with little warning. And sometimes markets get stuck in a frustrating pattern that rewards neither full offense nor full defense.

Since I began investing in the late 1960s, I have believed investment management should be active, responsive, and risk-aware. When I started Flexible Plan Investments (FPI) in 1981, the only investment services we offered were actively managed—and that is still true today. I believed then, as I do now, that an investment manager should be “flexible” rather than locked into a rigid buy-and-hold approach.

Active management, or “dynamic risk management” as I now view it, is necessarily tactical. It seeks to participate in favorable market environments while recognizing that market conditions can change quickly. Dynamic risk management, as we apply it, is responsive to market forces. We don’t try to predict where the market is going. Rather, we respond to the directional clues the market itself provides.

Why active management?

In 1988, I met with a small group of colleagues to create the industry trade association now known as the National Association of Active Investment Managers (NAAIM). Formed in 1989, NAAIM brought together managers who had chosen active management over passive, buy-and-hold approaches. But the reason was often different from the common perception.

At the time, many members of the press and the financial industry viewed active managers, or “market timers,” as investors simply trying to “beat the market.” By that, they meant outperforming market indexes, such as the Dow Jones Industrial Average and the S&P 500, every quarter or every year, purely on returns.

But as I listened to my colleagues, I heard the same point I had long been making: Active management was about seeking to manage downside risk. It was not part of the go-go investment philosophy of the 1970s or the tech bubble of the 1990s. It was a way to help investors reduce the impact of major market declines that could do serious damage to portfolios.

We did not believe asset allocation or simple asset-class diversification was the only defense against these downturns. We had been in the business too long to believe that this approach alone could sufficiently address client risk. In every firm’s case, active management was viewed as an essential tool. NAAIM’s first president, John Sosnowy, would often say, “If you see a train bearing down on you, the best defense is to get off the tracks.”

One of NAAIM’s first projects was completed by three of us. We wrote a paper published by the Journal of Portfolio Management demonstrating that active management firms outperformed indexes on a risk-adjusted return basis. In other words, they earned more than would be statistically expected for the risk they were taking. The research was later replicated and validated in a different time period by a group of academic researchers.

So, we were active managers for defensive purposes. Why? Because when you reduce your losses in a market correction, you can have more money working for you when the market recovers. Over a full market cycle, you may end up with more money while taking less risk.

Simple math shows why reducing downside losses can matter more than trying to capture every bit of upside potential.

Let’s examine two hypothetical accounts. One account uses an active, tactical approach. The other uses a traditional, passive, buy-and-hold allocation model.

In the traditional account, the market and the investor lose 30% in one of the bear markets that we have experienced every four to five years over the last century. Then, over the next few years, as often happens, the market gains 30% back.

The investor is back to breakeven, right? No. The investment is still 9% lower because the 30% gain was earned on the smaller portfolio balance that remained after the loss.

By comparison, the active, tactical investor avoids half the market loss but captures only two-thirds of the market rally. Who has done better? The active investor has a 2% overall gain, while the passive investor has a 9% loss.

The active investor has more at the end of the market’s ups and downs compared to the passive investor. Year after year, cycle after cycle, losses can really add up.

The pros and cons of active management

Since many active managers are trend followers in some form, they face a couple of common challenges.

First, they have to wait for a trend to change. And that takes time. As a result, active managers may leave some money on the table when markets are topping out and may be late to participate when markets begin to recover. Their goal is to seek to avoid much of the downside while participating in a meaningful portion of the upside.

Second, markets are not always in a clear uptrend or downtrend. Sometimes they move sideways while investor forces are marshaling for a new bullish charge or a bearish retreat.

These periods are like encountering a curvy stretch of highway. For that kind of driving, automakers gave us two pedals: a brake and an accelerator. A buy-and-hold investor keeps a foot on the gas through every twist and turn. An active manager can use both pedals, seeking to stay on course while managing risk along the way.

Active management can perform well when markets are not trending clearly and investors are trying to get their bearings. But it can also underperform when market movements are just noisy rather than trend-driven.

That is why expectations matter. Defensive, active management generally does not seek to keep a portfolio fully invested through every period of turmoil. Short periods of underperformance can happen, especially when markets are choppy and trends are unclear. The key question is whether the strategy is still performing as expected based on its process, research, and long-term purpose.

A better way to evaluate performance

You cannot evaluate a risk-managed portfolio by comparing it only with a market benchmark such as the S&P 500. The S&P 500 is an unmanaged stock index, and it may carry more risk than some investors can tolerate during market corrections. A benchmark can be useful context, but it does not always reflect an investor’s goals, risk tolerance, or time horizon.

To help address that challenge, we developed a methodology for monitoring strategy performance in terms of probabilities. It gives us a way to evaluate whether a strategy is performing in line with our research or showing signs that something may have changed.

Our OnTarget Investing process brings that methodology to our clients. The OnTarget Monitor uses hundreds of Monte Carlo simulations of the client’s portfolio against the strategy’s benchmark. The portfolio value (the black line) is plotted against a color-coded projection of possible investment outcomes over the client’s stated investment time horizon.

Source: Flexible Plan Investments. See disclosures.

As long as the client’s portfolio is tracking through the green or blue areas, it is performing as expected or better. If it moves into the yellow area, the client may want to talk with their financial adviser about whether any changes are needed or complete a new suitability questionnaire. If it moves into the red area, a change may be appropriate.

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Dynamic risk management may not be perfect, but we believe it is a practical way to manage investment risk. It is responsive and gives managers more defensive tools to address the unexpected risks that can emerge in the financial landscape. At FPI, we combine dynamic risk management with multi-strategy diversification and our OnTarget Investing process to help keep client portfolios aligned with their financial goals.

Sell in May? Or let your strategies show the way?

Tue, 12 May 2026 03:56:00 GMT

By David Wismer

Wall Street has produced many time-honored expressions. Most contain at least a grain of truth—and sometimes much more. But when it comes to investing, even the most useful market sayings are not a substitute for a disciplined strategy.

Consider a few of the classics:

“Don’t fight the Fed.”

“The trend is your friend.”

“Buy the rumor, sell the news.”

“Never catch a falling knife”—and the related thought, “Markets climb a wall of worry.”

Now that the calendar has turned to a new month, it seems timely to examine one of the more famous sayings: “Sell in May and go away.”

This financial adage suggests that investors sell stocks in late April or early May and re-enter the market in November to avoid the historically weaker six-month period from May through October.

According to many sources, the concept originated in London’s financial markets. Barron’s notes,

“The phrase dates back to 18th century London, when months-long vacations were the norm for the financial elite–and no one else. (An alternative version of the saying is ‘sell in May and go away, and come back on St. Leger’s Day,’ referring to a horse race historically held in mid-September.)”

Regarding its adoption in the U.S., Investopedia writes,

“The Stock Trader’s Almanac popularized the idea of the historical pattern, which found that investing in stocks as represented by the Dow Jones Industrial Average from November to April (we’ll discuss this as the ‘winter’ period) and switching to fixed-income investments the other six months (the ‘summer’) would have ‘produced reliable returns with reduced risk since 1950.’”

What does the data suggest about “Sell in May”?

As with any review of historical data, the conclusions depend on the time frame and criteria used in the analysis. For example, some reviews of the “Sell in May” thesis start in 1928, while others begin in 1950 or 1990. A few also exclude years with statistically significant outliers in monthly returns.

Let’s start with the simplest view: average monthly returns since 1950.

You don’t have to add up the numbers to see a significant advantage for the six-month period from November through April. Investopedia points out that since 1990, “the S&P 500 has averaged a return of about 3% annually from May to October versus about 6.3% from November to April.”

The most obvious question might be, “Why not include October for a seven-month stretch of historically stronger returns?”

Aside from the symmetry of having two six-month periods, I think the answer lies in October’s history. It is not only the highest-volatility month on average, but it is also a time of year many traders associate with several of the market’s worst drawdowns, including those in 1929, 1987, and September/October 2008.

An analysis from AthenaInvest provides an interesting risk-adjusted answer to the question, “What are the best months to invest?” It considers both the monthly returns and volatility shown above.

The following chart ranks the months of the year using a score that combines the highest maximum, minimum, and average returns with the lowest standard deviation. The bars show the absolute range of minimum to maximum monthly returns, while the line shows average monthly return.

When ranked this way, says Athena, “April is the most attractive month to invest, while September is the worst. January, usually considered one of the best months to invest because of new-year inflows, is actually in the middle of the pack. November is usually viewed as wild due to election-based market fluctuations, but in reality, it is a great month for investing. September is the only month with a negative average return.”

What are we to make of this?

After reviewing many examinations of the “Sell in May” theory, I think a team of Deutsche Bank analysts, cited by Barron’s, summed it up most simply and effectively:

“Overall, the sell in May strategy beat the market in only 22 out of 53 years [since 1973] … and more recently, adherents would have missed out: In 2025, U.S. equities gained 14% from May through September, while U.S. [Treasuries] returned only 3%. … The ‘sell in May’ strategy offers no greater certainty of success than flipping a coin.”

Strategist Charlie Bilello adds,

“While lower than the November-April 6-month period, the S&P 500’s total returns from May-October are still positive on average (+6.6% annualized) with stocks higher 72% of the time.

“Not exactly something you would want to ‘go away’ from.”

Strategies should seek to improve the probabilities for success—no matter the time of year

A few of Flexible Plan Investments’ (FPI’s) many strategies incorporate seasonality as a factor that helps inform positioning. The most notable example is the QFC Political Seasonality Index strategy (found under Domestic Tactical Equity), which uses daily changes in the Dow Jones Industrial Average, along with political and seasonal factors, to help determine the strategy’s buy and sell signals.

However, most FPI strategies look for opportunities regardless of market seasonality. These rules-based strategies use a variety of price and momentum technical indicators as their foundation, with different performance criteria and objectives.

The broad mission is to help financial advisers guide their investor clients with diversified, risk-managed portfolios designed to adapt to shifting markets. The goal is to capture as much upside as possible while mitigating volatility and downside exposure in difficult market environments.

An important way FPI helps advisers select appropriate strategies for each client’s portfolio is through the firm’s proprietary market-regime indicator, a tool designed to help advisers identify the current market state (e.g., bull, bear, or sideways). FPI’s Crash Test Analyzer then allows advisers to simulate how selected portfolio strategies may react in different market scenarios, highlighting potential risks and outcomes in advance and facilitating the selection of the historically best-performing strategies for each specific environment.

While “Sell in May” might be an interesting theoretical construct, FPI’s investment philosophy focuses more on the ever-changing current market environment than static historical data. That emphasis helps drive FPI’s investment philosophy far beyond a passive, nonadaptive approach.

Cultivating the weeds

Tue, 05 May 2026 03:06:00 GMT

by Jerry Wagner

To many, there is nothing more meditative and relaxing than building and nurturing a garden. But a healthy garden requires more than planting the right seeds. It also needs ongoing care, regular attention, and the judgment to know what belongs and what may be crowding out everything else. Investment portfolios are not so different.

Gardens need different kinds of care at different times. Early in the season, the focus may be on planting and preparation. Later, the work shifts to tending what has already taken root. In every season, though, one task never seems to go away: weeding.

Weeds can choke out our gardening efforts. They compete with our flowers, herbs, and vegetables for nutrients and sunshine. And certainly, many weeds are ugly, prickly things that diminish the beauty of our gardens. They have been referred to as nature’s “botanical thugs.”

Yet weeds can play a useful role, even when they seem unwanted. In a New York Times book review of Richard Mabey’s “Weeds: In Defense of Nature’s Most Unloved Plants,” Elizabeth Royte writes,

“Mabey reminds us with wry and subtle humor of weeds’ usefulness: they stabilize soil, curb water loss, provide shelter for other plants and repair landscapes shattered by landslides, flood, fire, development and artillery. (One 1945 survey found 126 plant species in London’s bomb craters.) Weeds have served as food, fuel, medicine, dyes and building material for a variety of insects, birds and humans. All that, and pulling them from the earth builds character too. As the 17th-century herbalist William Coles wrote, they ‘exercise the Industry of Man to weed them out.’”

“Weeds” can have a place

I think one of the better definitions of a weed is a plant that finds itself in the wrong place or time.

I believe most investors would agree that we don’t need to look too closely at our portfolios to see when weeds are growing within them. And like nature’s variety in our gardens, it sometimes feels like they are draining the life out of them.

Most often, these investment “weeds” are simply the underperformers in our portfolios—the laggards that seem ugly when compared with the portfolio’s best performers.

Yet just as weeds often have their time and place (they were the first crops and medicines, and they even inspired Velcro), these laggards may also simply be out of sync with the performance of other members of the portfolio. In another time and place, they may serve a very necessary function.

Most investors today create diversified portfolios to take advantage of what Nobel Prize winner Harry Markowitz called “the only free lunch in investing.” Diversification within a passively managed asset allocation helps the portfolio withstand the “baby bears” (declines of 10% to 20%) that plague financial markets.

Diversified portfolios make use of a variety of asset classes. When one goes down, another may be gaining ground. The different components also respond differently to volatility. When these baby bears occur, the “differentness” of the assets provides a layer of protection and may offset the losses of the asset classes with the biggest declines. Because the biggest gainers in a bull market tend to be the worst performers when markets tumble, this added protection is valuable.

To achieve this protection, it is necessary to be truly diversified. Obviously, if all your investments are rising by the same amount, you are not diversified. Everything is just a variant of the other elements of the mix; therefore, their performance is the same. And if nothing is falling in a portfolio when most are going up, you are probably not diversified either.

To be properly diversified, you need a few “weeds” in your portfolio “garden.”

Turnkey solutions that manage and pull the “weeds” for you

I used to stop here in past explanations and simply say, “This is why you must have a portfolio that is truly diversified by asset classes and strategies.” Such diversification aims to ensure that, no matter the market environment, you have some “weeds” to put up a defense and maybe add a little beauty to your portfolio when the market falters.

But that was before the arrival of our turnkey QFC solutions: QFC Multi-Strategy Core, QFC Multi-Strategy Explore, and QFC Multi-Strategy Portfolios. Now you are no longer required to own “weeds” in your portfolio all of the time in the hope that they will provide diversification—that they will, at some point, cease to be the plants that are in “the wrong place or time.”

Instead, with these turnkey solutions, we cultivate the weeds for you. Each solution dynamically selects, monitors, and reallocates among strategies. We don’t just find new strategies to plant—we also weed out those that are failing.

For example, in QFC Multi-Strategy Core, we choose from among our core strategies and regularly allocate a greater percentage to the better performers, taking into account return, volatility, and how each strategy relates to the others. And if a new strategy is developed or an existing one becomes ineffective, we can automatically take the appropriate action to cultivate your portfolio. QFC Multi-Strategy Core is available for Conservative, Moderate, Balanced, Growth, and Aggressive suitability profiles.

Our QFC Multi-Strategy Explore: Equity Trends turnkey strategy can combine investments in up to six of our top trend-following strategies. The same concept is used for our other QFC Multi-Strategy Explore options, including Low Volatility, Low Correlation, and Special Equity. QFC Multi-Strategy Explore Blend takes this approach one step further by dynamically allocating among all four QFC Multi-Strategy Explore strategies, investing in a blend designed to maximize risk-adjusted returns.

Our QFC Multi-Strategy Portfolios are true turnkey solutions that monitor FPI’s dynamic, risk-managed strategies and reallocate monthly among them, aiming to invest in what is working best in the changing market environment. The portfolios are also available in Conservative, Moderate, Balanced, Growth, and Aggressive suitability profiles.

We’ve all seen what a mess a garden can become if we go away and leave it unattended—whether by neglect or just because we are taking a needed break. The same can happen when you don’t have the time or energy to maintain your investment portfolio. But with our turnkey solutions, the “cultivation” is done for you—without your constant involvement.

Because these turnkey options are QFC solutions, you automatically receive three levels of risk management:

The dynamic risk management employed within the Quantified Funds used in each strategy.
The active management between the funds required by the strategies themselves.
The dynamic allocation employed among strategies by the turnkey solution itself.

The QFC solutions also have our lowest advisory fee structure. The FPI portion of the billed advisory fee can be as low as zero, meaning you would be billed only for your financial adviser’s normal fee.

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When it comes to maintaining your portfolio “garden,” you no longer have to do the worst task— weeding. Our turnkey multi-strategy solutions are designed to adjust as market conditions change—reducing exposure to strategies that are not working and emphasizing those that may be better suited for the current environment.

We do it all for you, with no effort or time expended on your part. These turnkey solutions are designed to get your portfolio growing like … well … a weed.

When risk tolerance clashes with reality

Mon, 27 Apr 2026 18:52:00 GMT

By Jerry Wagner

Risk tolerance can be tricky to pin down. An investor may describe it one way during a planning conversation with a financial adviser and feel very differently when the market gets bumpy.

That disconnect between expectations and experience is where real stress can start to show up. At Flexible Plan Investments (FPI), we believe that understanding both a person’s capacity for risk and their comfort with it is key—and that portfolios should be built to reflect both.

Suitability is more than numbers

That mindset isn’t unique to us. A few years ago, financial commentator Michael Kitces hosted a webinar called “Rethinking Risk Tolerance,” where he emphasized the importance of assessing both risk capacity and risk tolerance.

Risk capacity measures what an investor can afford to risk financially, based on their assets, liquidity, income needs, and time horizon. It is essential to determine how much risk a client can absorb given the volatility of the financial markets.

Risk tolerance, on the other hand, is about the client’s emotional ability to endure losses and volatility. Attitude toward risk can determine whether a client can stick with the financial plan once it is developed and deployed.

Understanding both is critical, but what’s revealed in the numbers doesn’t always match how someone feels when faced with real market volatility—and both factors can shift over time.

At FPI, we’ve built these dual measures into our process. Our suitability questionnaire, developed decades ago, helps advisers assess both capacity and tolerance. It’s also not a one-time event. Through our OnTarget Investing website, investors can review and resubmit their suitability information at any time. They also receive quarterly reminders to reflect on whether their goals or outlook have changed.

When the plan doesn’t match the person

Kitces also noted that risk capacity and risk tolerance don’t always line up. For example, two people may both have conservative attitudes toward risk (low risk tolerance), but one might also have a low risk capacity, while the other could financially afford to take on more risk.

Kitces seemed to be saying that to deal with this mismatch, advisers have to help clients “reset” their expectations—though what this really means is adjusting their risk tolerance, which is no small task.

Traditional advice might include educating clients about long-term market returns and the need to “grin and bear it” through short-term volatility. But as many experienced advisers will tell you, that usually requires a lot of reassurance and hand-holding along the way.

At FPI, we believe there’s another way: Adjust the portfolio instead of asking the client to change.

Most conventional portfolios rely on static asset allocation to manage risk. That provides only one layer of defense—diversification among assets.

In contrast, our actively managed portfolios use multiple, complementary strategies to manage risk dynamically. These strategies diversify not only by asset class, but also by how they behave in different market environments. Because the strategies are actively managed, the mix of aggressive and defensive positions is continually adjusted in response to changing market conditions—adding a layer of adaptability that static allocation simply can’t provide.

A portfolio’s risk should be less than the sum of its parts

By combining actively managed strategies that respond differently to market environments, our portfolios seek to offer layered protection. Different strategies—trend following, mean reversion, or volatility targeting, for example—can help smooth out the ride. And because these strategies adapt over time, the portfolio can respond more quickly to market shifts.

This dynamic approach may better bridge the gap between what an investor can handle and what they need to achieve their financial goals. In many cases, the result is a portfolio with lower overall risk exposure than any single strategy alone could provide—while still allowing for growth.

This thinking informs the portfolios we offer—designed to help advisers align investors’ strategies with both the plan and the person behind it.

A tradition of aligning portfolios with real people

Risk isn’t just a number—it’s personal. That’s why we believe portfolios should reflect not only market realities but also the individual behind the investment plan. At FPI, we’ve spent decades developing actively managed strategies that adapt to changing conditions while helping investors stay aligned with their goals.

Our focus has always been on delivering investment solutions that go beyond one-size-fits-all advice. And as markets, needs, and investor mindsets continue to evolve, we’ll keep building portfolios designed to do the same.

Why a 5% pullback can feel like a crisis

Tue, 21 Apr 2026 02:42:00 GMT

By Will Hubbard

I was talking with someone recently about the economy and the markets, and they said, “March was a bad month.”

I understood what they meant. The market was down, headlines were negative, and portfolios were lower than they had been not long before. But the comment also stuck with me, because it says something important about how many investors now experience even normal market volatility.

That reaction is understandable. We’ve had a long stretch in which weakness has often been brief and rebounds have come quickly. In that kind of environment, even a modest decline can start to feel like something bigger is happening.

This year is a good example. The S&P 500 hit all-time highs near the end of January. By the end of March, it was down about 5% and roughly 7.5% off those highs.

To me, the bigger issue is not the pullback itself. It is that a normal pullback is now often interpreted as something abnormal. And that can create a lot of unnecessary anxiety for investors.

Pullbacks are common

History suggests these pullbacks are not unusual. Since 1980, the S&P 500 has declined by 5% or more in 93% of calendar years and by 10% or more in 48% of calendar years. Over that same span, the market’s average intrayear decline has been about 14%, while the average calendar-year return has been about 13.3%.

In other words, volatility is not an exception to long-term investing. It is part of the experience.

That’s why I have a hard time describing a 5% decline, or a market that is a few percentage points off its all-time highs, as truly a “bad” month.

Uncomfortable? Sure.

Pleasant? Not really.

Unusual? Not at all.

A 5% pullback is not a market malfunction. Market volatility is more like the weather: always changing, sometimes uncomfortable, but a normal part of the environment investors live in.

Elevated valuations raise the stakes

What makes the current setup more interesting to me is not the pullback itself. It’s that investors are dealing with that pullback while valuations are still elevated.

As of April 17, FactSet reported that the S&P 500’s forward 12-month price-to-earnings ratio was 20.9, above both its five-year average of 19.9 and its 10-year average of 18.9. At the same time, the cyclically adjusted price-to-earnings ratio stood at 40.44, far above most of its long-term history.

That does not mean the market has to fall tomorrow. Valuation is not a great short-term timing tool. Expensive markets can stay expensive for a long time. But valuations still matter.

They matter because they can shape expectations and influence how much disappointment the market can absorb. When starting valuations are elevated, the margin for error gets smaller.

A richly valued market doesn’t need panic to decline. It may only need some combination of slower earnings growth, sticky inflation, higher rates, or fading enthusiasm. That kind of drift is when complacency becomes the real risk.

Recent market experience can be misleading

One of the more dangerous beliefs investors can develop is that every dip will recover quickly, and therefore every dip should be bought immediately. Sometimes that works. In fact, recent market experience has probably reinforced that mindset.

But recent experience is not the same thing as long-term market history.

A 5% decline can remain a 5% decline. It can also turn into a 10% correction. Since 1980, 10% drawdowns have happened in nearly half of all calendar years. Investors should not be shocked by drawdowns. They should be prepared for them.

To me, that is the bigger message right now. Investors don’t need to panic or abandon equities, but they should take an honest look at their own personalities and behavioral tendencies to ensure they are equipped to handle drawdowns.

They should also be careful not to confuse a relatively calm recent past with the way markets always work. A mild pullback is not necessarily a signal to take drastic action. But it also should not be dismissed with the assumption that markets will immediately recover.

A disciplined process can keep investors grounded

Now is a good time to think about three things.

First, are your expectations realistic? If valuations are elevated, future returns may still be positive, but they could be harder earned and less forgiving.

Second, is your portfolio sized for your actual risk tolerance? Not the version that shows up when markets are calm, headlines are quiet, and every dip seems to recover in a matter of days. It is easy to feel aggressive when volatility is short-lived. It is much harder when the decline lasts longer or goes deeper than expected.

Third, do you have a process? A real one. A systematic one. Not a feeling or a reaction to the latest headline. Do you have a process for rebalancing, managing risk, and staying disciplined when discomfort shows up?

This is where quantitative managers like Flexible Plan Investments can complement a traditional passive portfolio. Systematic, rules-based strategies can add diversification and help investors manage risk across different market environments.

Investor complacency does not always show up as outright euphoria. Sometimes it shows up as impatience. Sometimes it shows up as surprise that markets can actually go down. And sometimes it shows up as the belief that anything short of a straight line higher counts as a terrible month.

But markets do not move in a straight line, and they never have.

A 5% pullback is not a crisis. In many years, it is barely scratching the surface of what normal looks like. So if investors are going to navigate today’s market well, especially with valuations still rich, they may need to be a little less confident that every dip will be bought and a little more respectful of the fact that volatility is still the price of admission to the equity market.

Cybersecurity in wealth management: Geopolitics and AI redefine risk

Tue, 14 Apr 2026 03:36:00 GMT

By David Wismer

As geopolitical tensions in the Middle East heighten global uncertainty, wealth management firms and financial advisers are being reminded that modern conflict rarely stays confined to one region or one form of engagement.

The World Economic Forum and CISA (Cybersecurity and Infrastructure Security Agency) have warned over the past year that geopolitical instability and conflict are reshaping the cyber threat landscape, creating more complex and unpredictable conditions for organizations. That includes the threat of both opportunistic attacks and “coordinated, geopolitically driven operations.”

For firms entrusted with sensitive client data, financial assets, and ongoing complex digital operations, that makes cybersecurity more than a technology concern or compliance task—it is a critical pillar of business resilience and client trust.

Cybersecurity concerns in wealth management are evolving rapidly

While cybersecurity has made headlines this year, it is hardly a new issue for industry professionals. Advances in artificial intelligence over the past decade—and especially the past few years—have raised the stakes for all industry participants.

“The ever-changing cyber threat landscape means each year is unprecedented in nature, with threat actors leveraging every available tool to disrupt operations and undermine trust in the financial sector,” says Teresa Walsh, FS-ISAC’s Chief Intelligence Officer and Managing Director, EMEA.

As an upcoming article in Proactive Advisor Magazine notes, “68% of asset managers and 62% of wealth managers surveyed by Milwaukee-based consulting and accounting firm Wipfli said cybersecurity is a major concern for their businesses in 2026—the third consecutive year it has ranked as a top priority in the firm’s annual survey.

“‘We’re living in a digital world,’ said Robert Zondag, a partner at Wipfli, in the firm’s report. ‘For most firms, the place where business gets done is now online. Client relationships extend across digital channels, from onboarding and portfolio reviews to secure document sharing and communication. Even if client relationships are human and personal, every interaction, transaction and record is captured in a digital environment.’

“Artificial intelligence is amplifying cybersecurity risk through social engineering, using AI-generated audio and video deepfakes, fake IDs, and other fabricated documents, added Matt Sabo, a director at Wipfli, in the report. While most wealth management firms have implemented cybersecurity measures, threats constantly evolve, leaving many firms facing ‘protocol fatigue.’

“‘People know what they should be doing, but the constant vigilance can wear them down,’ Sabo said. ‘The challenge is maintaining discipline and focus, not just on the perimeter, but at the edges where cyber events are most likely to occur.’”

TOP CONCERNS FOR WEALTH MANAGEMENT FIRMS OVER THE NEXT 12 MONTHS

A look at Flexible Plan Investments’ philosophy on cybersecurity

Jeffrey Ingalsbe is the CIO and chief information security officer for Flexible Plan Investments (FPI). He has decades of experience as an information technology (IT) and cybersecurity leader within the automotive, academic, and financial-services industries. Jeff is responsible for overseeing the company’s IT strategy and leads the firm’s efforts to address risk by developing and deploying policies, processes, and technologies, and by engaging employees and business partners in sound cybersecurity practices.

I recently asked Jeff to discuss his broad philosophy regarding cybersecurity best practices in a short Q&A.

Q: How do you define the mission of a cybersecurity program?

JI: At its core, cybersecurity is about protecting three things: confidentiality, integrity, and availability. That means safeguarding sensitive client information, ensuring data remains accurate and unchanged unless it is supposed to change, and keeping systems available for the people who rely on them.

Q: How can advisers and their firms address fundamental cybersecurity concerns?

JI: One of the biggest issues for advisers is that cybersecurity becomes urgent only after something has already gone wrong, whether that is fraud, malware, or a compromised device. My advice is to proactively use all of the expertise available to you, keep software and operating systems updated, install endpoint protection on every device, and continually improve your ability to recognize phishing attempts. I will always make myself available to the financial advisers we work with should they have any questions or concerns.

Q: Why is phishing such a major concern right now?

JI: Artificial intelligence (AI) has made phishing much more convincing. A few years ago, bad grammar, formatting, or obvious inconsistencies often gave fraudulent emails away. Today, many phishing emails look polished and professional, which means both technology and user awareness matter more than ever.

Q: Is AI helping defenders as much as it is helping attackers?

JI: Yes. AI is enhancing both sides. Many of today’s cybersecurity tools, including endpoint protection and network monitoring systems, use AI to improve detection and response capabilities. In practice, firms benefit from that advancement through the security platforms they deploy.

Q: What role does employee training play in cybersecurity?

JI: Training is essential. At FPI, employees complete annual interactive cybersecurity training and testing, and phishing simulations run throughout the year. When someone fails a phishing test, they receive additional training that must be completed successfully. Cybersecurity is not a one-time exercise; it requires constant reinforcement. The goal is to build good workplace practices, not just check a compliance box.

Q: How do you measure success in cybersecurity?

JI: Success is not simply the absence of a breach. A firm could avoid an incident by luck. Real success is doing everything reasonable and within your power to prepare for the attacks that will inevitably come. It is about readiness, discipline, training, and our entire firm taking its responsibility seriously every day.

***

Jeff’s replies reinforce an important message for financial advisers and their clients shared with Proactive Advisor Magazine by a successful wealth manager and advisory-firm consultant.

He says, “In my opinion, cybersecurity is as much about people and habits as it is about technology. The strongest defenses come from good systems combined with informed clients—and a culture where it’s OK to slow things down and ask questions.”

Knowing when to make a portfolio change

Mon, 06 Apr 2026 18:42:20 GMT

by Jerry Wagner

Decisions. We make them every day—some small, others far more consequential. When it comes to investing, one decision seems to come up again and again: When should you make a portfolio change?

Many decisions come down to choosing between alternatives. But another category tends to matter more over time.

The first type is tactical. It is often reactive. It may involve logic, but emotions are usually at the center: “This just feels right.” “I like the look of this one.” “I’m feeling bad, and this makes me feel better.”

The other category is strategic. These decisions are more deliberate. You develop a plan, put it in place, and evaluate the results over time.

But even the best plans are not meant to remain unchanged. As President Dwight D. Eisenhower (also a five-star general) said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Planning matters—but it also requires flexibility.

So when should we change our plans?

Think about the everyday services we use—cell phones, streaming platforms, or mobile plans. When do we switch?

Usually, the answer is simple: when they stop working.

With a cell phone, the signs are clear. The screen cracks. The battery won’t hold a charge. The camera degrades. Storage runs out. At some point, it no longer meets your needs.

Those are clear, objective signals.

When it comes to your portfolio, the decision is not so straightforward. It is much harder to determine whether it is truly “not working” or simply going through a difficult period.

As with other decisions, there are both tactical and strategic elements at play.

The temptation to make a tactical change

When markets fall day after day, many investors who say they follow a buy-and-hold approach begin to reconsider. Diversification is often cited as a risk-management tool, but as the losses mount, even the most committed passive investors may conclude, “Enough is enough.” That often leads to a shift from growth-oriented investments to a more conservative, defensive posture.

This is exactly the type of emotional reaction that can be of concern in tactical decision-making. Studies have shown that investors often exit equities at the worst possible time. During the 2008 decline, for example, the market bottom coincided with the highest level of mutual fund outflows from stock funds.

Selling also creates a second challenge: deciding when to get back in. That decision is just as susceptible to emotion. After experiencing significant losses, many investors hesitate to reinvest, even as markets recover. Some wait years, missing much of the rebound before they feel comfortable returning to equities.

Is it time for a strategic change?

After experiencing multiple 50%-plus market declines this century, many investors began to look for a different approach. They turned to active asset managers like Flexible Plan Investments (FPI). We use dynamic risk management to determine when portfolio changes may be appropriate and implement them systematically.

Choosing a dynamic risk manager is a strategic decision grounded in experience and market history. It reflects a shift away from emotional, reactive decision-making and the constant pressure to “do something,” and toward a more disciplined, quantitative approach managed by a professional third party.

That does not mean the urge to make a tactical change disappears when losses occur. Those reactions are natural. But in this case, it is often best to stick to the plan. With a structured process in place, the impulse to change can be easier to manage. We also provide investors and their advisers with tools to help evaluate whether acting on those impulses makes sense.

How we help you “stick to the plan”

When investors see losses in their FPI account, the first step should be to talk with their adviser. A review of the portfolio may show that the strategies are already positioned defensively, with greater allocations to cash or even to inverse fund positions.

Actively managed investment strategies not only include sell methodologies based on historically tested processes, but they can also be programmed to buy back into the equity market when conditions improve—without the need for emotionally driven decisions.

Investors who abandon these strategies lose that discipline. They may move to cash at the wrong time and struggle to reinvest when opportunities return. In effect, they are trying to “market time” the tactical manager and reintroduce emotion into the process. When you have chosen a professional to make tactical decisions, it is generally best to stay with the original strategic plan.

How do you know if your portfolio still meets your needs?

If tactical decision-making is not helpful when working with a third-party dynamic risk manager, when is the right time to make a change? How do you know if your strategy is no longer meeting your needs?

Start by clearly defining those needs. Market declines can shift how investors think about risk and what feels appropriate for their portfolio.

One practical step is to revisit your suitability questionnaire. Your original responses may have reflected a very different market environment—perhaps one marked by steady gains and new highs.

Completing the questionnaire again can help determine whether your risk tolerance has changed. If so, it may make sense to adjust the overall aggressiveness of your portfolio.

Ultimately, the key is to evaluate performance over the long term and across full market cycles. Is the portfolio still aligned with your objectives, even if it is going through a period of weaker performance?

How do you know if a strategy isn’t working?

For many years, I struggled with how to answer that question in a quantitative way.

Then in 2007, we introduced our OnTarget Monitor, which models the expected performance of strategies and portfolios over a defined time horizon. This made it possible to create a personal benchmark for each investor.

That benchmark can then be compared with actual performance over time. Investors can view this comparison on the OnTarget Investing website, in their account statements, and through their adviser’s My Business Analyzer tool.

The OnTarget Monitor uses a color-coded system. If performance (shown by the solid black line) falls into the red zone, it may indicate that a strategy is not meeting expectations and could warrant a review. However, during broad market declines, being “in the red” may simply reflect overall market conditions rather than a breakdown in the strategy.

If your account falls into the red zone, it is important to discuss it with your financial adviser. We cannot change your allocation decisions unless you and your adviser submit a strategy change.

If performance remains within the other zones, there is typically no need for immediate action—you can continue to follow the plan.

In the end, it’s usually best to stay the course

Napoleon Hill, the author of the bestseller “Think and Grow Rich,” once said, “Within every adversity lies the seed of an equal or greater benefit.”

Changes in strategy may create new opportunities as market conditions evolve. But before making a change, it is important to ensure that your portfolio still reflects your suitability and that the strategy in question is no longer working as intended. After all, some seeds take longer to grow than we’d like.

In the end, staying the course and allowing FPI to continue managing the account with its existing strategies may be the best decision of all.

Lessons from the playing field: What sports can teach investors

Tue, 31 Mar 2026 03:24:00 GMT

By David Wismer

With everything going on in our personal and professional lives—and the constant flow of news—sports fandom can offer a welcome respite.

We are in a time of year when sports offer a rich smorgasbord of options—something for everyone. The Final Four of March Madness is just days away. A new MLB season has begun. Top pro basketball and hockey teams are preparing for playoffs. The Masters tournament will kick off golf’s majors season. The NFL draft arrives in late April. And let’s not forget high school and college spring sports seasons, as well as this summer’s highly anticipated World Cup, which will be hosted in North America. (Apologies if I haven’t mentioned your favorite sport!)

I recently listened to an interview with Jerry Seinfeld, a huge New York Mets fan, who said sports are essentially a “closed system,” often immune to what is going on in the outside world. But he also noted that sports fandom can “reveal the undercurrents of one’s life,” including whether people tend to approach things positively or negatively.

Sports can provide valuable insights for any endeavor that requires focus and discipline. That’s especially true for those who have actively participated in sports at any level, but I believe it is equally true for fans. The same skills that help athletes and teams succeed—resilience, strategic thinking, and the ability to adjust to changing conditions—are also critical in navigating the financial markets.

What sports can teach us

You can find numerous articles from noted psychologists that outline the many attributes sports can help us develop, including mental toughness, accountability, leadership, socialization, and empathy.

I especially like psychologist Carol Dweck’s concept of a “growth mindset,” which suggests that success and failure are not the end in themselves—they are both part of the learning curve.

A blog post from the Association for Applied Sports Psychology explains, “Growth mindset is a mental schema that has the power to influence our thoughts, decisions, and behaviors. The positive implications are many. … A growth mindset allows athletes to ‘embrace learning, [as well as] welcome challenges, mistakes, and feedback.’”

Says another blogger, “Here’s something I remind myself often: losing doesn’t mean you’re a failure. It means you’re trying. The greats have all stumbled—Michael Jordan, Serena Williams, you name it. The trick is learning from the fall instead of fearing it. …

“You don’t have to be an athlete to feel it. Maybe you played a little in school, or maybe you’ve just cheered from the bleachers. Either way, sports leave an imprint. They shape how we face challenges, how we work with others, and how we grow.”

Using the language of sports to frame investment perspectives

Many financial advisers have told Proactive Advisor Magazine they use sports analogies to help explain important investment concepts to their clients.

These often come from football, baseball, and basketball, but some advisers draw inspiration from individual sports—even bowling! A common theme, especially from football, is how “defense is often more important than offense.”

One Texas-based adviser says he tells clients that investing “is very much like a football game—and you know we are real football fans here in Texas. You have to go through four quarters to find out who wins the game. Anybody—even the best teams—can be behind at halftime, or after the first or third quarter, but that’s not the point. The point is that the full investment cycle is a bull and a bear market and everything in between. Only after you get through those two [parts of the cycle] can you determine how effective you were in your investment process.”

I also like the perspective from a financial adviser who had a stellar baseball career, making it to the professional minor leagues:

“Athletics taught me a lot of great life lessons: the importance of preparation, how you must work consistently toward your goals over time, and why it is necessary to set long-term objectives that will move you toward achieving what is most important to you. …

“One analogy I use relates to how I form a working relationship with clients and, in turn, with my trusted outside resources. I tell the client they are like the owner of a professional sports team. It is their hard-earned money and, ultimately, they have the authority and the responsibility to make the decisions.

“But they have hired me as their general manager and head coach. It is my job to do everything in my power to put together a sound plan of action and to assemble the highest-quality coordinators, assistant coaches, and players to help their team achieve consistent success. For example, I conduct an extensive evaluation and selection process of third-party money managers on behalf of my clients. I will recommend the use of those that fit the investment needs for a specific client. I think this simple analogy of assembling a great team makes a lot of sense to people.”

Having the right “team” for an investment portfolio

The concept of building a strong, balanced team also applies to sound portfolio construction.

Many advisers have talked about using a combination of actively managed strategies that are meant to work together (with different performance characteristics) as a cohesive portfolio over full market cycles.

Jerry Wagner, president of Flexible Plan Investments (FPI), has often written about this same aspect of diversification. He explains, “If every strategy in a portfolio is going up or down at the same time, there is a high probability that the portfolio is not properly diversified.”

He expanded on FPI’s philosophy in an interview with The Wealth Advisor:

“‘My theory has always been that there are no silver bullets, some single strategy that works for everybody all the time,’ Wagner says. ‘Instead, you have to have multiple strategies in a portfolio. You have to have adaptive strategies.’

“That adaptability is hard-coded into how the firm builds its models. ‘We created all of our strategies so that they can evolve over time and take in new information, readjust themselves and go forward again,’ Wagner notes.

***

For both sports fans and investors, it’s easy to get caught up in the emotions of day-to-day action. But in the end, it’s a long season for both. What matters most is having a trusted and capable team in place to help reach the ultimate goal.