National Association of Investors Corporation
Encyclopedia
National Association of Investors Corporation (NAIC), also known as BetterInvesting, is a Michigan
-based 501(c)(3) non-profit organization (a not-for-profit organization prior to 1998) whose aim is to teach individuals how to become successful long-term investors. The NAIC is an umbrella organization with around 13,000 member investment clubs, and approximately 120,000 individual members. Membership has been in a steady decline since a peak of well over 400,000 in 1999.
NAIC is the legal name of the organization. Its member magazine is called BetterInvesting, and it became the branded name of the association in 2004. NAIC/BetterInvesting is headquartered in Madison Heights, MI, a suburb of Detroit. The organization was founded in 1951 when five investment clubs formed the national association. Its mission is to educate individuals on the benefits of long-term investing in common stocks. With the popularity of 401(k)s and other defined contribution retirement plans, programs on investing in both stock and bond mutual funds were added.
The organization stresses four principles for successful, long-term investing. The last principle was added and emphasize in the 1980s and '90s. These principles are: 1) invest regularly, regardless of market conditions; 2) re-invest all earnings; 3) invest in growth companies (and growth mutual funds); and 4) diversify to reduce risk. The heart of the NAIC approach to investing is the third principle -- investing in growth companies. The primary tool to evaluate common stocks is a two-page form with a semi-log graph on the front called the Stock Selection Guide (SSG). The SSG dates to the founding of the organization and was created by George A. Nicholson.
In the 1990s, NAIC started analyzing mutual funds when more of its members requested information on how to select the best mutual funds for their self-directed retirement accounts. The form to analyze mutual funds uses the same concepts as the SSG but without the semi-log graph.
Many members join because they were exposed to NAIC though their investment club. In fact, the original name of NAIC meant National Association of Investment Clubs. Currently one can join NAIC as an individual, whether or not one is a member of an investment club.
NAIC is run by a trust that is governed by a Board of Trustees
. This trust appoints a board of directors for the organization. Members of the Board of Trustees also serve on the Board of Directors. In 2007, this organizational structure was revised and the trust was eliminated. The Board of Directors hires the CEO and approves all management promotions. NAIC/BetterInvesting is served by a group of 1,500 volunteers in approximately 90 chapters across the US. The volunteers in the chapters are the principal instructors of the NAIC/BetterInvesting philosophy. The volunteers are represented by another board, the National Investors Association Advisory Board. This board reports to the Board of Directors of the organization. The NIA Board is currently chaired by Larry Reno. It was recently announced that the NIA Board would be dissolved and replaced with a Better Investing Volunteer Advisory Board. This new board, initially consisting of eight directors, eight associate directors and 15 national volunteers, will be active in the fall of 2007; however, it is scheduled to meet during the National Convention in June '07.
From 2004-2006, the organization was the subject of an inquiry by the Senate Committee on Finance
on not-for-profit organizations. NAIC was one of a half a dozen not-for-profits singled-out by the Senate Finance Committee. The Committee wrapped up this inquiry in the summer of 2006, referring the organization to both the Internal Revenue Service
(IRS) and the Securities and Exchange Commission (SEC). The Senate Finance Committee implied that the organization may have violated its tax-exempt status. CNBC
also aired a report about NAIC/BetterInvesting based on allegations of excessive executive compensation. The organization was involved in two lawsuits with former members of its board of Trustees (also members of the Board of Directors) who claimed the Trustees failed in their fiduciary responsibility. The Michigan courts ruled, in part, against one former member and both cases were settled. The Michigan Attorney General, which governs not-for-profit organizations in Michigan, agreed with the settlement. The Michigan Attorney General, as of December 2006, has not ruled on this matter. The Internal Revenue Service and Securities and Exchange Commission have yet to respond to the Senate Finance Committee's letters.
As a result of the recent problems with the organization, many local and national volunteers have resigned from BetterInvesting. The main complaint centered on the lack of confidence in the CEO at the time, Richard A. Holthaus, who retired June 30, 2007, and/or the Board of Trustees; others have implied that there are corrupt practices among the upper management of the organization and the Board of Trustees has not acted in the best interest of its members. Hugh McManus, who chaired the National Investors Association Advisory Board, resigned in protest in July 2005 when the lead outside trustee, Ken Lightcap, publicly insulted NAIC volunteers. A second national volunteer board called the Computer Group Advisory Board, with responsibility for integrating computers and the NAIC philosophy, resigned en masse (24 of the 27 members) in September 2006 because of their dissatisfaction with the direction the organization was heading. This board was dissolved and its popular national education program, Compufest, suspended.
On January 31, 2007, the Wall Street Journal printed, and many regional papers reprinted an article on the problems facing the organization. Kenneth R. Lightcap, the lead outside trustee of the organization, was quoted criticizing those volunteers that were dissatisfied with the management. He claimed that the "inmates cannot run the asylum"; he also suggested that those volunteers who are unhappy should find another organization. Three days later, Mr. Lightcap resigned from the organization, noting that he felt his views were out of sync with a number of the volunteer aspects of the organization.
Membership in the organization has fallen from a high of over 400,000 in 1999 to official estimates of approximately 105,000 in summer of 2007.
Subsequent to the retirement of Mr. Holthaus and the resignation of Mr. Lightcap, change ensued at NAIC. The organizational structure has been simplified with the termination of the trust, leaving the nonprofit corporation run by a Board of Directors. Subsequent to Mr. Lightcap's resignation, seven new directors have been added to the board. New directors have come from the member/volunteer community and people who came in contact with the organization while previously employed at places like Value Line and The Securities and Exchange Commission. In addition, directors with no previous affiliation, but having non-profit experience, have been added.
Finally, several members previously affiliated with the Computer Group Advisory Board, as well as Hugh McManus, have agreed to or are actively assisting the organization itself or other volunteers rebuilding the community.
Recently, BetterInvesting has hired a charismatic new CEO, Kamie Zaracki, who started employment in February 2009. Under the guidance of the NAIC Board of Directors and the new CEO, BetterInvesting is exploring new ways to serve its membership in a changing environment.
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
-based 501(c)(3) non-profit organization (a not-for-profit organization prior to 1998) whose aim is to teach individuals how to become successful long-term investors. The NAIC is an umbrella organization with around 13,000 member investment clubs, and approximately 120,000 individual members. Membership has been in a steady decline since a peak of well over 400,000 in 1999.
NAIC is the legal name of the organization. Its member magazine is called BetterInvesting, and it became the branded name of the association in 2004. NAIC/BetterInvesting is headquartered in Madison Heights, MI, a suburb of Detroit. The organization was founded in 1951 when five investment clubs formed the national association. Its mission is to educate individuals on the benefits of long-term investing in common stocks. With the popularity of 401(k)s and other defined contribution retirement plans, programs on investing in both stock and bond mutual funds were added.
The organization stresses four principles for successful, long-term investing. The last principle was added and emphasize in the 1980s and '90s. These principles are: 1) invest regularly, regardless of market conditions; 2) re-invest all earnings; 3) invest in growth companies (and growth mutual funds); and 4) diversify to reduce risk. The heart of the NAIC approach to investing is the third principle -- investing in growth companies. The primary tool to evaluate common stocks is a two-page form with a semi-log graph on the front called the Stock Selection Guide (SSG). The SSG dates to the founding of the organization and was created by George A. Nicholson.
In the 1990s, NAIC started analyzing mutual funds when more of its members requested information on how to select the best mutual funds for their self-directed retirement accounts. The form to analyze mutual funds uses the same concepts as the SSG but without the semi-log graph.
Many members join because they were exposed to NAIC though their investment club. In fact, the original name of NAIC meant National Association of Investment Clubs. Currently one can join NAIC as an individual, whether or not one is a member of an investment club.
NAIC is run by a trust that is governed by a Board of Trustees
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
. This trust appoints a board of directors for the organization. Members of the Board of Trustees also serve on the Board of Directors. In 2007, this organizational structure was revised and the trust was eliminated. The Board of Directors hires the CEO and approves all management promotions. NAIC/BetterInvesting is served by a group of 1,500 volunteers in approximately 90 chapters across the US. The volunteers in the chapters are the principal instructors of the NAIC/BetterInvesting philosophy. The volunteers are represented by another board, the National Investors Association Advisory Board. This board reports to the Board of Directors of the organization. The NIA Board is currently chaired by Larry Reno. It was recently announced that the NIA Board would be dissolved and replaced with a Better Investing Volunteer Advisory Board. This new board, initially consisting of eight directors, eight associate directors and 15 national volunteers, will be active in the fall of 2007; however, it is scheduled to meet during the National Convention in June '07.
From 2004-2006, the organization was the subject of an inquiry by the Senate Committee on Finance
United States Senate Committee on Finance
The U.S. Senate Committee on Finance is a standing committee of the United States Senate. The Committee concerns itself with matters relating to taxation and other revenue measures generally, and those relating to the insular possessions; bonded debt of the United States; customs, collection...
on not-for-profit organizations. NAIC was one of a half a dozen not-for-profits singled-out by the Senate Finance Committee. The Committee wrapped up this inquiry in the summer of 2006, referring the organization to both the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
(IRS) and the Securities and Exchange Commission (SEC). The Senate Finance Committee implied that the organization may have violated its tax-exempt status. CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
also aired a report about NAIC/BetterInvesting based on allegations of excessive executive compensation. The organization was involved in two lawsuits with former members of its board of Trustees (also members of the Board of Directors) who claimed the Trustees failed in their fiduciary responsibility. The Michigan courts ruled, in part, against one former member and both cases were settled. The Michigan Attorney General, which governs not-for-profit organizations in Michigan, agreed with the settlement. The Michigan Attorney General, as of December 2006, has not ruled on this matter. The Internal Revenue Service and Securities and Exchange Commission have yet to respond to the Senate Finance Committee's letters.
As a result of the recent problems with the organization, many local and national volunteers have resigned from BetterInvesting. The main complaint centered on the lack of confidence in the CEO at the time, Richard A. Holthaus, who retired June 30, 2007, and/or the Board of Trustees; others have implied that there are corrupt practices among the upper management of the organization and the Board of Trustees has not acted in the best interest of its members. Hugh McManus, who chaired the National Investors Association Advisory Board, resigned in protest in July 2005 when the lead outside trustee, Ken Lightcap, publicly insulted NAIC volunteers. A second national volunteer board called the Computer Group Advisory Board, with responsibility for integrating computers and the NAIC philosophy, resigned en masse (24 of the 27 members) in September 2006 because of their dissatisfaction with the direction the organization was heading. This board was dissolved and its popular national education program, Compufest, suspended.
On January 31, 2007, the Wall Street Journal printed, and many regional papers reprinted an article on the problems facing the organization. Kenneth R. Lightcap, the lead outside trustee of the organization, was quoted criticizing those volunteers that were dissatisfied with the management. He claimed that the "inmates cannot run the asylum"; he also suggested that those volunteers who are unhappy should find another organization. Three days later, Mr. Lightcap resigned from the organization, noting that he felt his views were out of sync with a number of the volunteer aspects of the organization.
Membership in the organization has fallen from a high of over 400,000 in 1999 to official estimates of approximately 105,000 in summer of 2007.
Subsequent to the retirement of Mr. Holthaus and the resignation of Mr. Lightcap, change ensued at NAIC. The organizational structure has been simplified with the termination of the trust, leaving the nonprofit corporation run by a Board of Directors. Subsequent to Mr. Lightcap's resignation, seven new directors have been added to the board. New directors have come from the member/volunteer community and people who came in contact with the organization while previously employed at places like Value Line and The Securities and Exchange Commission. In addition, directors with no previous affiliation, but having non-profit experience, have been added.
Finally, several members previously affiliated with the Computer Group Advisory Board, as well as Hugh McManus, have agreed to or are actively assisting the organization itself or other volunteers rebuilding the community.
Recently, BetterInvesting has hired a charismatic new CEO, Kamie Zaracki, who started employment in February 2009. Under the guidance of the NAIC Board of Directors and the new CEO, BetterInvesting is exploring new ways to serve its membership in a changing environment.
External links
- NAIC BetterInvesting website - Website run by the NAIC.