|
Don't miss this month's timely story ideas, direct dial phone numbers, and E-mail addresses of these accessible experts! INVESTMENTS AND WEALTH MANAGEMENT • Look for Real Estate Investment Consultants Whose Expertise can Increase Your Real Estate Investment Portfolio Returns. • A Generation-skipping or Dynasty Trust Functions as a Family Bank -- and the Family Retains Complete Control. • Disbursement Planning is Key to Retirement Security. • Sell When It's Tough to Sell -- Buy When it is Tough to Buy. • Non-Traditional Couples Must Seek Financial Advice Before Marriage, Rather than After. • Should Long-term Care Insurance Policyholders Jump Ship When Their Insurer Exits the Market? • Disenchanted Wirehouse Brokers Have New Options Short of Going Independent. • PMFM,
Inc.’s 401k Toolbox Helps Intermediaries and Plan Providers
Retain Assets When Employees Retire or Leave the Company. • Media: Sign Up for Free Subscription to In-Depth, Financial Education Resources.
Look for Real Estate Investment Consultants Whose Expertise can Increase Your Real Estate Investment Portfolio Returns. Proper mortgage financing strategies are a key element in determining whether an investor earns an 8-10% rate of return or a 15-20% rate of return on their real estate investments. Look for a mortgage consultant with experience in providing real estate investment advice. This consultant can assist you in maximizing your return on investment. To illustrate the impact that mortgage choices can have on a real estate investor's rate of return, consider the following scenario that compares the effect of a 15-year mortgage at 40% loan-to-value (LTV) and the effect on the portfolio of an interest-only ARM at 80% LTV:
Gibran Nicholas is the President and founder of Nicholas & Co. Mortgage Planning Solutions, a mortgage lender and broker based in Ann Arbor, MI. He has developed the ARM Planner™ Marketing Kit and online workshops to better assist mortgage originators in increasing their profitability with real estate investors and financial advisors. Go to http://www.ARMPlanner.com; Phone: 888-608-9800 A Generation-skipping or Dynasty Trust Functions as a Family Bank -- and the Family Retains Complete Control. A family bank, that is, a generation-skipping trust or dynasty trust overseen by a team of investment and estate planning experts is an excellent and much less well known alternative to a commercial bank's private banking division. The family bank or dynasty trust gives your family great flexibility and the protections of a trust without the over-controlling and inflexible regulations that limit a trust at a commercial bank. The dynasty trust, like most trusts, can reduce or eliminate taxes, avoid capital gains taxes, bypass probate (ensuring your privacy) and can enhance charitable deductions. But only the dynasty trust can provide long-term tax avoidance, family access, asset protection, and total control from generation to generation. A family bank allows you, while you are alive, to access all of your assets. You can spend them, or give them away. When you die, part or all of your estate is left in the dynasty trust, and thereafter, your beneficiaries can own assets in your dynasty trust which functions as a family bank. Your family could borrow from it without jeopardizing any of its assets. Family beneficiaries can also put their own assets in the family bank, up to $1 million per person, and reap all the benefits of the dynasty trust to protect their own wealth. Expenses, such as travel, food, schooling, or clothing can come from the family bank. The goal, of course, is to leave as much in the trust as possible so it is protected, but if family members' income or investments are not sufficient to pay personal expenses, they can elect to distribute principal and draw income as needed. A dynasty trust is not a magic wand; creating it, monitoring its value, and maintaining it require experts who are trustworthy in both senses of the word. In addition to the family bank, selected financial advisory practices provide clients with a family financial office staffed with skilled estate planning attorneys, financial planners, and tax accountants. The purpose of the family financial office is to provide ongoing, comprehensive care to the client and client's family for all issues affecting their financial lives, providing continuity from one generation to the next. Once the beneficiaries gain control of the dynasty trust, they have professionals who can interpret the details and help the next generation to fully understand their role, responsibilities and how the resources (assets) can be available to them. Pearson Financial Services, Dennis, MA, is the author of "The Million Dollar Gift: Dynasty Trusts. Why Leave Your Assets Any Other Way", written for his clients, their families, and his own family. He offers a fully integrated wealth management process, incorporating investment, retirement, financial and estate planning specialists under one roof, serving clients as their family's office, designing and implementing strategies to protect and distribute their wealth and highly appreciated property. Seth Pearson, CFP 800-385-7925 Disbursement Portfolio Planning is Key to Retirement Security. The great news is you've accumulated the capital, in the form of your investment portfolio, to live the golden dream, liberated from the need for a monthly paycheck. Now you can move forward … into retirement, on to that which you’ve always wanted to try in the work world, or even into that trip around the world. You're all set to take flight. Or are you? Disbursement planning - that is, how you will position your accumulated capital during retirement, is critical. It is a major event to move from an income-producing work life to relying principally upon your portfolio as the generator of your paycheck. This transition brings a very different basket of risks, coupled with decidedly higher stakes if you do the wrong thing. Before you embrace your golden moment, you must undertake the planning required to successfully transition from an accumulation portfolio to a disbursement portfolio. Developing a firm understanding of the differences is part of your retirement planning. An accumulation portfolio, one designed to maximize capital growth, as opposed to a disbursement portfolio, one designed to balance income generation, capital growth, and capital preservation, imply markedly different investment strategies and, by extension, markedly different asset allocation decisions. In the first instance, you are packing your portfolio with higher return (and higher risk) opportunities, while in the second instance, you are securing a predictable level of wealth from your portfolio today while minimizing the probability of a shortfall in your nest egg tomorrow. Here are some action steps to consider:
1) inflation risk, the risk that inflation will erode
your purchasing power over time; Paula Chauncey, CFA, Managing Partner, être
llc, 617-716-0257 works with individuals, and their closely held
businesses, to develop and execute wealth-building strategies.
pchauncey@etrellc.com. Sell When It's Tough to Sell -- Buy When it is Tough to Buy. There are negative indicators for the economy ahead. You can include higher inflation, wage pressure, interest rates going too high too fast, the War in Iraq, and the Presidential election. Every time you look at the market, you are going to see negatives. If you don't see negatives, then the market is at a peak of a bubble. Investing always involves risk. Smart investing should involve an advisor who works continually to contain your risk, though avoiding all risk is not possible. Smart investing involves asset class diversification, economic sector diversification and individual security diversification. Long-term wealth is created by investing in good businesses with good managers. Look to your financial advisor to do this homework for you, to manage that balance, to sell when it is tough to sell and to buy when it is tough to buy. That's what you pay them for. Donald L. McCoy, J.D., CMFC -- 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. Non-Traditional Couples Must Seek Financial Advice Before Marriage, Rather than After. There are important issues that face same-sex couples and unmarried straight couples as the State of Massachusetts grapples with changes around allowing same-sex couples to marry. Here is a list of issues you may want to discuss with your financial advisor. * There are now discrepancies between state tax filing and Federal filings. Advisors specializing in non-traditional couples are telling married same-sex couples to affix an affidavit to their federal forms stating that they are married in Mass., so there can be no question of fraudulent Federal filing as singles. * Check the status of your health care coverage. Non-Mass-based corporations are denying same-sex Mass. couples coverage if the corporation is self-insuring. * There may be a need for a pre-nuptial, and it cannot be done after marriage in Mass. * Record keeping becomes even more essential and has been a weak spot for many couples in the past, particularly regarding income and mortgage payments. * Once married, a carefully written will originally drawn up for unmarried partners, may be null and void, throwing estate planning out of kilter. * Domestic partnership pension options for non-traditional couples must be carefully monitored, as some companies which offered beneficiary status for partners, may remove that option unless partners are married. Each issue speaks to taking responsibility for your own finances. Get the help you need to learn what you must do to live and die the way you choose. Susan Burns, CFP®, Principal of Snug Harbor Financial Planning, Inc. in Marshfield, MA, provides creative solutions to complex financial problems for women business owners and lesbians through long-term comprehensive financial planning relationships. She can be reached at 781-834-4099 or snughbrfin@aol.com. Should Long-term Care Insurance Policyholders Jump Ship When Their Insurer Exits the Market? You just found out that the company that you bought your long-term care insurance (LTCI) has announced that they are exiting the market. That is, they have stopped writing LTC insurance. Should you be concerned? Yes. Should you jump ship? Maybe. Here’s what this expert worries about: A company which is not marketing LTCI may be more likely to increase premiums on existing clients. Many insurance agents won’t recommend a company to their clients if the company has a premium rate increase in their history. Consumers who know that a particular insurer has raised rates are often reluctant to buy coverage from that company. Therefore, the pressure to avoid premium rate increases is intense on a company that is marketing LTCI. Once a company no longer markets LTCI, the fear is that insurers who were gun-shy about rate increases will, instead. let loose their rate-increase cannons. Inconclusive evidence to back this theory was demonstrated recently when UNUM announced they were pursuing a rate increase on existing policyholders, then reversed their decision in response to agent outcry. On the other hand, several years ago Travelers insurance both got out of the LTCI business and sold their book of LTC policies to GE (now a separate entity called Genworth). Travelers policyholders have NOT had a rate increase, perhaps, because one of GE/Genworth’s primary marketing messages has been that they have never raised premiums. CNA policyholders learned their LTC insurer had stopped writing LTCI policies, and their rates have not yet been raised. And many insurers who are actively marketing LTCI have hit policyholders with rate increases. When you find out that your insurance company has stopped selling LTC insurance take a reality check:
Marilee Driscoll, President, Long Term Care Learning Institute, 508) 641-9393, Plymouth, Mass., www.ltc123.com, author of "The Complete Idiot's Guide to Long Term Care Planning," is the nation's leading consumer authority on strategies to pay for long term care. She is President of the Long Term Care Learning Institute Disenchanted Wirehouse Brokers Have New Options Short of Going Independent. Every broker fantasizes about going independent and becoming a business owner, but most are not willing to take on the complexities of running their own business. Fortunately, the landscape in the brokerage industry has changed over the last two years. Before, unhappy wirehouse brokers felt that the only options were to move to another wirehouse or go independent. Now there are many options short of full independence and each option offers different levels of autonomy. Some wirehouse brokers investigate regional or boutique firms, generally smaller and more flexible, with ready access to top management and higher payouts. Market forces have created additional, newer options that offer greater independence. For instance, the "Profit Formula" option, developed by Wachovia, offers quasi-independence without having to handle the administrative hassles of human resources, payroll, and technology. In this model, the broker can work in an existing Wachovia private client office, but pays a concomitant share of the overhead expenses, such as rent and office support. In return, he receives a much higher payout. Raymond James offers a similar program where a broker is called an "Independent Employee". In both cases, the brokers are still W-2 employees (not 1099 contract employees) of the firm, and still have branch management support, but generally run their own show. Experts predict that other, acceptable alternatives to wirehouses are in the works to meet the increasing demands for more autonomy from brokers who don't want the demands of business ownership. The new alternatives, for many brokers, better fit into their quality of lifestyle and provide the professional environment that meets their clients' expectations. Mindy Diamond is President of Diamond Consultants, Chester, New Jersey, a search firm specializing in recruiting wirehouse and regional firm brokers with trailing 12-month’s production between $200,000 and $5 million. Her firm assists these financial consultants in evaluating opportunities in the industry and introduces them to other wirehouses, regional firms, banks, or independent broker-dealers. Mindy can be reached at 908-879-1002, or mdiamond@diamondrecruiter.com. PMFM, Inc.’s 401k Toolbox
Helps Intermediaries and Plan Providers Retain Assets When
Employees Retire or Leave the Company. PMFM was first to market with a “Manage-it-for-Me” discretionary management option for 401(k) plan participants through their 401k Toolbox service. When introducing 401k Toolbox with a new or takeover plan where the participants are required to make an investment decision, “Manage-it-for-Me” has been chosen by more than 50% of participants. Their service includes web based advice and phone services provided by traditional investment advice providers, but goes the extra step to provide group and individual meetings. These meetings are conducted by the intermediary, 401k Toolbox professionals, or the plan provider. According to Tim McCabe, Vice President of Marketing, 401k Toolbox’s utilization statistics have shown that participants overwhelmingly prefer investment advice provided face-to-face. The 401k Toolbox experience shows that discretionary management has become a key factor in allowing the intermediary or plan provider to maintain control of assets when participants leave their employers. When the participant hires a discretionary manager, they have effectively outsourced the investment decisions to that manager. If the investment manager does a credible job while the assets are in the plan, the participant is much more likely to continue that relationship when they leave the company or retire. 401k Toolbox has proven success in capturing rollover assets through their relationship with Delta Airlines employees. During the eight years 401k Toolbox has been managing Delta 401(k) accounts, nearly 90% of their 401k management clients have hired them for their rollover. 401k Toolbox’s combination of high touch investment advice, discretionary management and a seamless rollover program has allowed intermediaries and plan providers to continue their relationships with plan participants even after they leave their employers. * 401k Toolbox, a product of PMFM, Inc., is distributed direct to large plan sponsors and offered as the exclusive investment advice/managed account choice in strategic partnerships with Lincoln National, Alliance Benefit Group, Ingham Group, and ABN-AMRO Retirement Plan Services. PMFM, Inc. manages a total of primary and sub-advised assets of over $650 million, in more than 40 states. The firm has increased its assets under management by nearly 40% each of the last two years. Tim McCabe manages the marketing and distribution of 401k Toolbox. Principals are Tim Chapman and Don Beasley, near Athens, Georgia. Jud Doherty, CFA, manages the marketing and distribution of 401k Toolbox, a service that provides discretionary management as part of its advice product. PMFM, Inc has been named 2004 Advice Provider of the Year by Defined Contribution News, a national trade publication covering the defined contribution industry. 401kToolbox won over Schwab and Financial Engines. Tim McCabe, 800-222-7636, tmccabe@401ktoolbox.com, www.401ktoolbox.com ABN AMRO Retirement Plan Services
is Now Offering Third Party Investment Management to Individual
Participants in their 401(k) Plans. ABN AMRO Retirement Plan Services is now offering its 401(k) plan sponsors the ability to allow participants to opt for professional management of their 401(k) assets. This employee option is available as a new generation
tool for employers. It was brought to market by 401k Toolbox, an
independent advice provider located near Athens, Georgia. 401k
Toolbox was developed as a service to employers who want to provide
investment expertise to their employees. Mikohn Gaming and Southland
Industries both ABN AMRO “Study after study shows that very little happens outside a face-to-face relationship when it comes to making financial decisions,” says Mark Metz, Director of Sales and Marketing of ABN AMRO Retirement Plan Services. “Trying to produce ever better educational materials is not the only answer to encouraging employees to save more. We are pleased to offer a “Manage It For Me” solution to this problem which puts the participant in relationship with an independent professional financial manager if they so choose,” says Metz. PMFM, Inc., the creators of 401k Toolbox, was the first company to come to market with a third party investment management tool for individuals in a corporate plan. In the field of 401(k) advice/guidance, PMFM, Inc.is a company with a long history of preserving client assets and significantly raises the bar in the 401(k) industry. ABN AMRO by offering 401k Toolbox, makes the following choices available to its participants: 1. SMART Portfolios, offers participants predetermined
asset allocation options, and direct investments to the core funds
of their plan. By using core funds, plan sponsors leverage their
due diligence process while providing a simple execution for participants
to achieve appropriate risk, return and diversification characteristics
of their plan assets with no increase in fund fees. PMFM, Inc. (Personal Mutual Fund Management) manages primary and sub-advised assets of nearly $650 million in more than 40 states. The firm has increased its assets under management by nearly 40% in the last year. Principals are Tim Chapman and Don Beasley. Tim McCabe manages the marketing and distribution of 401k Toolbox. The 401k Toolbox allows employees to determine what level of assistance they need with their investment management goals. The advice component began as a successful newsletter offering investment advice to Delta Airlines pilots and employees on managing their corporate 401(k) accounts. After successfully offering their services directly to participants for eight years, 401k Toolbox now offers services directly to plan sponsors who are beginning to recognize that such a service may decrease their fiduciary liability, rather than increase it. ABN AMRO Asset Management has a long and enviable history in investment management in the U.S. since 1887, and currently manages over $4 billion in retirement plan assets. Formerly known as Chicago Trust, ABN AMRO Retirement Plan Services has managed retirement assets since 1947 and has been active in the defined contribution business for 21 years. The firm serves corporate clients and their retirement plan participants on a national basis as a turnkey “boutique” provider of a complete array of 401(k) services to the middle-market plan sponsors with $10 million and up. The firm's commitment to leadership in the retirement plan market is unwavering. Continual improvements in investment products, relationship management, and technological advancements benefit plan participants and simplify the administration of each plan. For further information:
|