National Association of Investors Corporation

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The 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 that had around 4,000 member investment clubs and approximately 40,000 individual members at the end of 2015.[1] Membership has been in a steady decline since a peak of well over 400,000 in 1999.[2]

Many members join because they were exposed to NAIC though their investment clubs. 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 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, education regarding stock and bond mutual funds was added.

Depending on their membership level, members have access to online tools for determining whether a stock is that of a quality growth company and is selling at a price that will provide sufficient potential return, educational webinars, First Cut stock studies contributed by the BetterInvesting community, digital and print editions of BetterInvesting Magazine, local chapter support, and other products and services.

Investment Principles[edit]

The organization stresses four principles for successful, long-term investing. The last principle was added and emphasized 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. The SSG displays a company's 10-year sales and earnings per share history, pre-tax profit margins and return on equity; five-year annual high and low price-earnings ratios and other important information meant to answer two questions: Is this a well-managed company? Is the stock selling at a reasonable price?[3]

The SSG is an aid to help investors make their own judgments about a company's future prospects for growth. The guide provides a way to organize and analyze a company's financial history so that investors can determine its investment suitability for themselves. The SSG relies on fundamental data (information from a company's operations such as earnings and sales) rather than on technical analysis (information about the stock's price movements and trading volume) to determine whether a stock might be a good investment choice.

Stock Study Tools[edit]

In the latter part of the 1980s, an active Computer Group (later renamed the "Computer Advisory Board") commenced to introduce computers into the stock study process. A variety of software products were introduced by a number of volunteers to automate the Stock Selection Guide. In 1991, the Investors Toolkit was commissioned by NAIC's leadership to be its official stock analysis software and, in its 6th iteration, continues to be its most popular desktop software. In 2005, Take $tock, another desktop software product, was adapted as a Web-based stock analysis product and continues to be used actively today.[4]

More recently BetterInvesting introduced its own online stock tools, which in 2016 comprised CoreSSG, a program primarily for those with less experience in investing that walks the user step by step through the SSG; SSGPlus, which has advanced functionality and is mainly for those with more experience with the SSG and with investing; and the Stock Comparison Guide, for comparing the fundamentals of two or more stocks.

In the 1990s, NAIC started provided education concerning mutual funds when more of its members requested information on how to select the best mutual funds for their self-directed retirement accounts. Much like the SSG had been developed as a means to implement NAIC concepts in the analysis of individual companies, new forms were created to analyze mutual funds.

Organizational Leadership[edit]

NAIC was governed by a board of trustees until 2007, when the trust was eliminated and replaced with a board of directors that must have from five to 16 people. The officers are chairman, president-CEO, secretary and treasurer. The board's standing committees are Executive, Governance, Nomination and Audit-Finance. The board of directors hires and evaluates the performance of the CEO and approves all management promotions. NAIC/BetterInvesting is served by a group of volunteers in chapters across the United States. The volunteers in the chapters are the principal instructors of the NAIC/BetterInvesting philosophy and methods. The volunteers are represented by the BetterInvesting Volunteer Advisory Board, which reports to the organization's board of directors of the organization.[5]

Inquiry by Senate Finance Committee[edit]

From 2004 to 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. There are no reports indicating whether the Internal Revenue Service or Securities and Exchange Commission responded 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[6] 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 45,000[7] in September 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.

The current CEO of BetterInvesting is Kamie Zaracki, who started employment in February 2009.

See also[edit]


  1. ^ NAIC website
  2. ^ Strategic Plan
  3. ^ "Explaining the BetterInvesting Philosophy," Adam Ritt
  4. ^ Thomas E. O'Hara, Taking Control of your Financial Future, 1995, Irwin Professional Publishing, 59
  5. ^ Background Document
  6. ^ Peeved members of investing club turn on leaders
  7. ^ NAIC/Better-Investing Media Kit

External links[edit]