8 minute read
In 1859, gold was discovered in Colorado.
Consumed by gold fever, R.U. Darby and his uncle had the same obsession that drove countless people to risk everything they had in pursuit of riches. But unlike many prospectors, they had a reason for excitement.
After weeks of back-breaking search for gold, they finally discovered a gold vein. But it was not just any vein. It was one of the richest in Colorado. They quickly staked their claim.
The uncle sold everything he owned, and Darby left college. They borrowed money and together, they purchased the machinery needed to bring the gold to the surface. Their first car of ore confirmed they had one of the richest mines in Colorado. In fact, a few more cars of gold would pay off all their debts from buying the machinery and even start turning a profit
Their dreams were coming true.
Then something unexpected happened.
The vein disappeared.
They drilled on, desperately searching for where the vein had gone. Day after day, they drilled but found nothing. The once promising mine now seemed to drain them of both energy and hope. After a year of drilling without success, their dream died.
"We are done," the uncle said. "No more.
They sold the machinery to a junk dealer for cents on the dollar and took the train back home east, defeated by debt and crushed dreams.
But the story does not end there.
The junk dealer who bought the machinery consulted a mining expert who studied the mine and the drilling patterns. The expert made a startling discovery. The gold vein continued just THREE FEET from where Darby and his uncle had stopped drilling.
The junk dealer resumed drilling and extracted millions of dollars worth of gold from where Darby had quit.
The Financial Advisor Parallel
What does this century-and-a-half story told by Napoleon Hill in his book, “Think and Grow Rich,” have to do with financial advisors in 2025?
Everything.
Many financial advisors today stand exactly where Darby stood. They are just three feet from transforming their practice and discovering their own gold mine of sustainable, predictable income.
The traditional mutual fund commission model has served many advisors well for decades. Since March 9, 2009, the concept of ‘buy and hold’ has made clients money in a generally upmarket with historically short pullbacks.
Of course, preceding this period was what many call the lost decade for equities with a negative return for 10 years.
Now, before you stop reading and think this is another article on why to convert these individual funds to advisors, you need to read on.
Three Feet From Financial Advisory Gold
Converting from a transaction-based to a fee-based practice represents an untapped gold vein for many financial advisors today. Just like R.U. Darby, you stand merely three feet away from this opportunity.
This opportunity extends far beyond basic valuation metrics. Yes, commission-based practices typically cap at 1 times revenue while advisory practices command 2½ to 3 times revenue, potentially reaching 4 times revenue for exceptional operations(1).
Yet, the true advantage isn’t just in the numbers. In today’s rapidly changing financial markets, the ability to remain nimble and tactical is more crucial than ever.
Strategic Management with Tactical Overlay
Dunham's Asset Allocation Program stands among the few that blend strategic management with tactical overlay capabilities. Our quarterly analysis drives portfolio adjustments based on forward-looking market projections.
Markets, however, do not politely wait for quarterly reviews before making significant moves. They move, sometimes drastically, at any time. This is what drives our tactical overlay strategy, DunhamDC, which is designed to "Buy Fear and Sell Greed."
Introducing DunhamDC
This sophisticated algorithm operates without emotional interference. It systematically:
- Reduces equity exposure at market peaks
- Increases exposure during market declines
- Continuously purchases equities at lower prices
- Sells positions as markets rise, capturing gains
This approach places equity risk at market bottoms rather than market tops, where financial damage may prove most severe.
The strategy removes destructive emotional decision-making from the investment process and helps position client portfolios for long-term success.
Your Unrealized Gold Mine
From a revenue perspective, many financial advisors are just three feet away from exponential growth.
When you eventually sell your practice, the purchaser, much like the junk dealer who bought Darby's equipment, will hire experts similar to Dunham Regional Directors and our Business Development Team. They will mine the gold you have established through years of client relationships and business development.
The critical question becomes why not extract this gold yourself?
The Time for Action Is Now
R.U. Darby walked away just three feet from gold, but he did not let that mistake define him.
Determined never to give up again, he channeled his lesson into a new pursuit - becoming one of Prudential’s top insurance salespeople in the early 1900s.
This time, he understood that success is not just about striking gold – it is about persevering until you do.
The Real Question: Will You Stop or Keep Digging?
Right now, you may be just three feet away from transforming your financial advisory practice.
The question is: Will you seize the opportunity, or let someone else uncover the value you have spent years building?
Contact us at 858-964-0555 to schedule a strategy session and let us help you be the one who reaps the rewards.
Do not walk away from your gold mine. Dig deeper.
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Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance.
Past performance may not be indicative of future results. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. There may be economic times when all investments are unfavorable and depreciate in value.
DunhamDC (“DunhamDC”) is a proprietary algorithm of Dunham & Associates Investment Counsel, Inc. (“Dunham”) that seeks to mitigate sequence risk, which poses a threat to an investor's returns due to the timing of withdrawals. The algorithm employs what Dunham considers to be a pragmatic strategy, generally making incremental increases to the equity allocation when global stock market prices decrease and decreasing it when global stock prices increase. The U.S. variant of DunhamDC generally increases equity exposure as domestic stock prices decrease and reduces equity exposure when domestic stock prices increase. This approach is objective, unemotional, and systematic. Rebalancing is initiated based on the investment criteria set forth in the investors application and is further influenced by the DunhamDC algorithm.
Due to the large deviation in equity to fixed income ratio at any given time, investor participating in DunhamDC understands that a large deviation in equity to fixed income ratio can have significant implications for the risk and return profile of the account. Accordingly, during periods of strong market growth the account may underperform accounts that do not have the DunhamDC feature. Conversely, during periods of strong market declines, the account may also be underperforming, as the account continues to decline, due to the higher exposure in equities. Similarly, if the fixed income investments underperform the equity investments, it is possible that the accounts using the DunhamDC feature may underperform accounts that do not have the DunhamDC feature, even though they may have adjusted the exposure to equity investment before a decline. Therefore, the investor must be willing to accept the highest risk tolerance and investment objective the account can range for the selected strategy. Please see the Account Application for the various ranges.
DunhamDC uses an unemotional, objective, systematic approach. The algorithm does not use complex formulas and is designed to create a consistent process with limited assumptions based on historical data.
DunhamDC may make frequent purchases and redemptions at times which may result in a taxable event in the account and may cause undesired tax-related consequences.
Trade signals for DunhamDC are received at the end of each trading day with the implementation of the trades not occurring until the next business day, which means that there is a one-day lag that may result in adverse prices.
DunhamDC operates within predefined parameters and rules, some or all of which may not be available to review. While this approach can reduce emotional biases and enhance consistency, it may limit adaptability to changing market conditions, economic considerations, or unforeseen events. Extreme conditions may require deviations from the program’s prescribed approach, and such adaptability may be challenging to incorporate. The DunhamDC algorithm is programmed based on specific criteria and rules, it may not capture certain qualitative or contextual factors that can impact investment decisions or movement in the markets. Beyond the initial assumptions used to develop the algorithm, it lacks other inputs or considerations that human judgement and discretion may be necessary to evaluate. DunhamDC may utilize historical data, statistical analysis, and predefined rules. It does not make any predictions and may add to certain investments before they perform poorly or may divest from other investments before they perform well. Dunham makes no predictions, representations, or warranties as to the future performance of any account.
Accounts invested in DunhamDC are subject to a quarterly rebalance to its target allocation at the time based on DunhamDC in addition to the signals provided by DunhamDC at any given time.
Dunham makes no representation that the program will meet its intended objective. Market conditions and factors that influence investment outcomes are subject to change, and no program can fully account for all variables and events. The program requires making investment decisions based on factors and conditions that are beyond the Account Owner’s and Dunham’s control.
DunhamDC is NOT A GUARANTEE against market loss or declines in the value of the account or a timing strategy. Investor may lose money.
Asset allocation models are subject to general market risk and risks related to economic conditions.
DunhamDC has a limited track record, with an inception date of November 30, 2022.
DunhamDC US has a limited history, with an inception date of July 1, 2024.
For more information - please view DunhamInsights.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.