UNDERSTANDING THE PERSONAL INVESTOR PROFILE

The Personal Investor Profile (PIP) is designed as a tool to assist an investor in narrowing down the field of suitable investment portfolios. The PIP is comprised of fifteen questions, which are separated into three categories with an overall weighting of 23% for general information, 27% for investor expectations, and 50% for risk tolerance. One of the most important pieces of information an investor can share is what amount of portfolio decline they can experience and remain comfortable, hence the highest weighting to the risk tolerance category. The following information is important to get the most out of the PIP.

The PIP should be completed as if the investor was placing 100% of their investable capital into a single investment program. We believe the responses will then more accurately reflect the investor's feelings toward growth, income and safety with their "serious" capital. We understand, however, that many investors desire multiple programs to reach their investment objectives. If this is the case, careful attention should be placed on each program, on a weighted basis, to assure that the characteristics of the overall portfolio is within the investor's tolerance to handle volatility (specifically downside volatility). The investment professionals at Bell Capital Management can assist you in this area.

When the PIP has been completed and a profile score tabulated, it is critical to determine if there are any inconsistencies among the investor's responses. The reliability of the PIP results is only as good as the consistency of the investor's responses. On the reverse side of this page is a PIP Matrix to review for the investor's consistency. If the matrix reveals any inconsistencies, the next step should be to educate the investor on each point. Additionally, Bell Capital Management has written an article to accompany the PIP titled Appreciating Risk II that might be helpful for the less experienced investor to read before completing the PIP.

When selecting an investment portfolio, the scoring system on the last page of the PIP narrows the field of recommended portfolios down to a few choices. Remember, these choices represent one portfolio recommendation. Our experience, however, has been that many investors desire more than one portfolio type; one type of portfolio for their serious capital and another type of portfolio for their more venturous capital. The investment professionals at Bell Capital Management can assist you in determining the appropriate blend of portfolios based on the PIP results.

PERSONAL INVESTOR PROFILE (PIP) MATRIX

There are four primary questions from the PIP that have the potential to create inconsistencies between the investor's responses. The four questions that fall into this category are E1, R1, R2 and R4.

PIP Matrix Instructions: On the investor's PIP locate question E1. If the investor's response to E1 was the first choice shown, refer to E1.a on the vertical axis of the PIP Matrix. The second and third choice to E1 would be E1.b and E1.c respectively). Next, follow across to the choices for questions R1, R2 and R4. If the investor answered with an R1.a, R2.a or R4.a response, an inconsistency exists and is shown with a red box with "NO" inside. The inconsistent combination(s) should be noted on the PIP. Follow the same procedure for the remaining three questions. This process will become easier once it has been repeated several times.