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Don't miss this month's timely story ideas, direct dial phone numbers, and E-mail addresses of these accessible experts! • A
Portfolio of Small- and Mid-Cap Mutual Funds
May Be Poised to Fly • Managing
Your Rollover Assets at Retirement. • "Any
Fool Can Get Out of the Markets, But It Takes a Wise Man to Get
In" (Aristotle, 332 BCE, written in the original Greek, not
widely translated) • Don't
Leave Vendor Tools on the Table! Sales Technology and Webcasts
can Help You Turn Small Business Clients into a 401(k) Annuity
Income Stream A Portfolio of Small- and Mid-Cap Mutual Funds May Be Poised to Fly A number of investment managers believe that the U.S. economy is coming out of its doldrums -- that this is an opportunity that justifies more emphasis on mid-cap and small-cap sectors. An aggressive fund of funds is a particularly useful investment if you believe that we are in the early stages of economic recovery which reverberates more in small- to mid-cap sectors where the companies are more sensitive and more leveraged to the economic cycles. A portfolio of mutual funds -- a fund of funds -- is particularly well positioned to move with the changing dynamics, because such a fund can change weighting, as necessary, as different segments of the economy change. Fund of fund managers can offer a true portfolio, not a narrow sector, limited by individual equity purchases. Each of the underlying funds must focus on its prospectus- determined style, whether or not it is in favor in the marketplace. Fund of fund managers will weight their allocations, moving to the best underlying fund for the sectors that are performing best.
Wayne Grzecki, Esq., is portfolio manager of New Century Aggressive Portfolio, one of the New Century Portfolios, a family of specialized mutual funds offering a unique, effective option -- actively managed portfolios of mutual funds with marketwise diversification, superior performance histories and reduced risk in balanced, small cap, aggressive and international sectors. www.newcenturyportfolios.com To contact Mr. Grzecki, call Ellen Bruno, Weston Financial, Wellesley, Mass. 781-235-7055 x 145.
Selected Hybrids or Balanced Funds Could Be the Best Bet Investors are
jittery. It's hard to know which way to jump when investing in
a volatile market. Several hybrid funds have been knocking the
socks off their hybrid competitors as well as funds with a pure
value play. To be fair,
value funds such as the Clipper Fund (62% equities to 38% cash
with a growth objective) have returned10.94%. Other value funds
such as Ameristock (90/10% split between equities and cash with
an equity income objective) and Selected American (97% U.S. and
Non-U.S. stock,/3% cash with a growth and income objective) have
returned -0.61 and -10.83 respectively. Jane King, Fairfield Financial Advisors, Wellesley, Mass. 781-431-1119 or 1-800-486-4845 is a small fee-only advisory and investment management firm that provides sound, well-reasoned counsel to individuals, families and business owners. She consults on estate and retirement planning and has more than $75 million in assets under management. She has been named to the Worth Magazine list of the top financial advisors in the country every year since it began. jking@fairfieldfinadvisors.com. Managing Your Rollover Assets at Retirement. It's very clear that rollover assets pose significant challenges for any employee, both executives and "rank and file", as well as, business owners planning to retire. Two key questions are:
Michael
T. Hengehold, CPA, MST, PFS, Hengehold Capital Mgmt.877-598-5120 Creative, Legal Strategies Are Available for Stock Heavy 401(k)s When You Retire Traditional advice for wealthy executives retiring at 55-years-old with large amounts of company stock inside 401(k)s has been to roll the assets over to an IRA, and either keep the stock, or now motivated to diversify, sell the stock without taxation and pursue an investment strategy in a new portfolio.. Distributions would be taken, when required, to support the executives' lifestyle and those assets would taxed at about 40% at the time of distribution. An alternative plan uses tax law that allows an executive to bifurcate, or split the 401(k) assets. That portion of the 401(k) in company stock contributed by the employer can be taken out and taxed at its value when it was contributed (its basis). Assume a $35 stock will be taxed at distribution the usual 40% but at the reduced fair market value of $5 per share. The tax hit is only $2 per share. Now the executive own the shares outright. If the executive sells to diversify, he can get a long term capital gains tax rate on the spread between $5 cost basis and $35 market value. At a $30 share at 20% long term capital gains tax rate, he will pay $6 per share to sell. That leaves $27 to use to diversify his portfolio. A spread sheet should be used to compare the two strategies and see which one most benefits the executive. If the shares are not sold, but contributed immediately to a charitable foundation set up by the executive, he, as foundation trustee, can sell the shares the next day and avoid the $6 tax per share upon sale. The foundation benefits from the $33 per share contribution and pays an annuity to the executive, which usually represents 5 to 7% of the value of the stock that went into the foundation. The foundation's work, through due diligence required to make grants to worthy organizations, can become the focus of multi-generational interest in philanthropy. Children, parents, and grandparents working together as a unit, can develop attitudes and values toward proper stewardship of wealth. Philip
J. Toffel, Jr., Esq., WestonFinancial 617-571-4255
"Any Fool Can Get Out of the Markets, But It Takes a Wise Man to Get In" (Aristotle, 332 B.C.E.,written in the original Greek, not widely translated) The world of commerce has changed very little. Many people today have left technology investments, made a move into bonds, only to give back bond gains because interest rates are rising. The prognosticators say nothing is really good, nothing is really bad. Wall Street says invest now. Others say we are still highly overvalued. How do you avoid the Las Vegas gambling syndrome? One of the less adventurous ways of handling uncertainty is dollar cost averaging (DCA). You will never make as much and you will never lose as much. With DCA, investors commit to investing a certain amount into a diversified portfolio on a periodic basis. That way the investor is never investing all of their money at either the top or the bottom of a market cycle, thus avoiding the gamble. The discipline is on the part of the investor to add to their investments regularly despite what is going on in the market. The problem is never making the decision to get out of the market, the problem is daring to get back in. Aristotle was a very wise man. Henry I. Montgomery, CFP -- Planners Financial Services, Inc., 952-835-9000. Minneapolis, Minnesota. Registered investment adviser and subsidiary company Montgomery Investment Management, specialize in the management of no-load mutual fund portfolios for individuals and retirement plans designed to protect capital by reducing risk. pfshim@usinternet.com www.plannersfinancialservices.com.
Don't Wait Until It's Too Late To Discuss Money With Your Husband As a wife, you must understand what your husband has for assets and where it is located. As a partner, you are in a relationship involving love and finances. You have a need and a right to know what is in the family portfolio. Usually, reluctance on the part of your spouse may be a control issue. Work around it. If your husband keeps the records at the office, encourage him to bring them home and discuss them with you. Your reasons are compelling. You face a bleak retirement if he has not attended to a retirement saving strategy. Discovering at 65 years-old that he could never set aside any money or make any plans for supplementing Social Security is unacceptable and you will be 50% responsible for the pain that will cause. What if he dies unexpectedly. You would have no idea where the assets were or how to get at them. What if he has made no plans for you and the children should he die suddenly. You must help him make those plans. With the high rate of divorce in this country, it is crucial to know where assets are located so that a financially equitable settlement can be made that protects you and your children. Dee
Lee, CFP, Harvard (Mass.) Financial Educators 978-456-3778 Beware the Great Mutual Fund Merge The mutual fund giant, Putnam Investments, recently announced that it will "slash" its lineup of retail mutual funds by 17%, merging or closing 11 funds to streamline a "bewildering array" of similar funds and improve a lackluster investment performance. On the heels of the announcement, FleetBoston Financial Corporation disclosed that it would merge or close 14, or more than 10%, of the funds in its mutual fund business. Fund industry analysts at Morningstar, Inc., the consumer watchdog for mutual fund performance, say that firms often merge or shutter funds to erase poor performance records by effectively retiring the funds. Following the past two years of woeful stock market performance, investors should be prepared to see more fund funerals in the coming months. What does this activity mean for the individual investor? An enhanced level of due diligence-to identify affected mutual funds in their portfolios, to review the details of the proposed merger including the management team, performance track record, and expense profile of the newly merged fund, and to determine whether the new fund's investment objective continues to align with the investor's asset allocation strategy. Absent this due diligence, investors may fall victim to style and performance drift. Paula
Chauncey, CFA, Managing Partner of Être, LLC, 617-818-5514,
Alternatives to Long-Term Care Insurance: Life Settlements It's a fact that fewer than 10% of seniors have long term care insurance to fund their in-home, assisted living or nursing costs. The other 90% have two choices:
Marilee
Driscoll is under contract to write the first mass-market long
term care planning book to be published by a major brand: "The
Complete Idiot's Guide to Long Term Care Planning" will
be published this fall by Alpha Books, a division of Macmillan
USA. She is President of the Long Term Care Learning Institute,
Plymouth, Mass., speaks to national audiences (both consumer
and financial services) on retirement planning and long term
care. She also provides technical long term care training to
financial advisors & accountants. She is the author of "Seminar
Secrets: How to market to baby boomers & their parents," and
speaks to financial professionals on marketing through seminars.
Don't Leave
Vendor Tools on the Table! Brokers need to differentiate themselves to capture 401(k) accounts with small business clients. That differentiation comes from their selling style, honed from experience and education. In addition, check out the technology and web-based sales support systems before deciding who your investment partner will be. The industry has seen a dramatic increase in types of sales materials offered online by vendors of investment products has raised the bar on the kinds of sales assistance a broker can find from large insurance and investment companies. These firms spend multi-millions every year on technology that enhances the distribution of information and ideas to attract the brokers who will sell their products. Brokers and independent advisors need to investigate these tools, try them out, see how they fit, and build a business plan that uses every advantage they can get. Here are a few categories to look for in technology driven advantages from vendors with a special Web site for brokers: 1. Prospecting
-- support from regional marketing directors, accessibility Kendall Kay, Chief Strategy Officer, Manulife Financial Group Pensions, directs brokers to http://www.my401ksales.com, for his firm's online access to detailed information to build 401(k) business. Manulife was the #1 choice of plan sponsors winning more plans in 2000 than any other company. In addition, Manulife won the "Best of Show in the Life Communicator's Association Awards 2001 for their 401(k) enrollment kit. Contact Catharine Bufalino, Manulife U.S. at 617-854-4342 to reach Kay
Advisors can Save Money on Advent with EAInvest. Advent and its alliance partner, EAInvest, have teamed up to deliver advisors a new way to make Advent solutions even more affordable. EAInvest's subsidiary, EAInvest Securities, is a custodial firm and broker-dealer dedicated to serving independent financial advisors exclusively. Now, through Advent's partnership, when advisors custody assets with EAInvest Securities, they can offset any of their Advent-related software costs including annual maintenance fees. Advisors can see for themselves how much Advent and EAInvest can help them you save. Click on http://www.eainvest.com/corp/advent_calc.jsp. Advisors who enter information into the calculator will instantly get an estimate of the discount they are eligible for by custodying their clients' assets with EAInvest Securities. This information will be kept confidential and will not be released to any third parties. EAInvest subsidiary EAInvest Securities, Inc., is a broker/dealer dedicated exclusively to independent financial advisors. For further information, contact Jamie Hammond at jamie@eainvest.com, or call him at 415-932-1856. EAInvest Securities, Inc., Member NASD/SIPC
Use Third Party Information to Attract Prospects Client Relationship
Management (CRM) is essential if an advisor is to regularly identify
and sign top quality clients - to move suspects to prospects and
prospects to clients. The average advisor celebrates the random
referral, but has no consistent way to approach prospects. There
are two ingredients to a proper CRM -- third party information
and scheduled mail, e-mail, and phone contact more than eight times. It is proven that the best prospects become clients after eight contacts. A cache of pre-written letters supporting the need for professional financial advice is part of a good CRM system. You never know the prospect's mood when your material hits their desk. The first through seven contacts may get there on a bad day for the prospect to concentrate on the message. Use pre-written material or third party endorsements to persistently reinforce contact with prospects up to eight times. Look to your professional organizations to support your prospecting. The International Association of Registered Financial Consultants (IARFC) supports prospecting with a brochure on ethics and two brochures on "Why You Need a Professional Financial Advisor". In addition, the Text Library System, containing documents to cover nearly every aspect of a financial practice including client relationship management, is a reduced-cost benefit of membership in the IARFC. For additional information: 800 532 9060 or www.iarfc.org
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