|
Don't miss this month's timely story ideas, direct dial phone numbers, and E-mail addresses of these accessible experts! • An Alternative Investment Strategy Hedges a Portfolio in Volatile Times. • Analysis
of an Executive's Net Worth at Mid-life Allows Resolution of Multi-Generational
Excess Asset Issues with Reasonable Certainty that Decisions will
not Compromise the Executive's Retirement Income. • Silver, Gold, Platinum or Dross: What Will Your Retirement Be? • Consumers are Driving the Trend to Have Long Term Care Policies Cover Care They Can Receive From Families and Friends. • Corporate
America Works to Improve Financial Education Worldwide Through
Innovative Junior Achievement International Programs (JAINTL). • Top
Six Reasons to Change Broker/Dealers. An Alternative Investment Strategy Hedges a Portfolio in Volatile Times. A mutual fund
focused on alternative investment strategies offers individual
investors the benefits formerly available only to institutional
investors. This type of investment has relatively consistent returns
with low correlations to the equity and bond markets and before
were made available through so-called hedge funds, private investment
portfolios with limited liquidity available to only 100 investors
who could meet very large minimum investment requirements. Now
these strategies are available for investors who see the merit
in an underlying fund strategy to include strategies such as merger
arbitrage, convertible arbitrage, asset allocation and equity market
neutral funds. In addition, natural resources and real estate investments
may be used to diversify portfolios. The goal is for funds such
as the New Century Alternative Strategies Portfolio to improve
the risk-adjusted performance of the portfolio as a whole. Wayne Grzecki, Esq., is portfolio manager of the New Century Alternative Strategies Portfolio, a mutual fund which is an actively-managed portfolio of mutual funds, whose underlying strategies include merger arbitrage, convertible arbitrage, equity market neutral, long/short positions, distressed securities and asset allocation. www.newcenturyportfolios.com To contact Mr. Grzecki, call Ellen Bruno, Weston Financial, Wellesley, Mass. 781-235-7055 x 145.
Analysis of an Executive's Net Worth at Mid-life Allows Resolution of Multi-generational Excess Asset Issues with Reasonable Certainty that Decisions will not Compromise the Executive's Retirement Income. Most executives believe they will never use all of their accumulated assets before they die. Yet many executives are reluctant to do a present value analysis of their assets that will be used over their lifetime. Such an analysis can, however, determine definitively whether an executive has enough for the retirement he or she envisioned and how much in excess assets will be available to children and grandchildren. Early wealth analysis can and should use conservative numbers that take into account uncertainties. Suggestions would also be made on turning variable expenses into fixed expenses. The following would be part of the analysis: 1. Dealing with
Uncle Sam's tax realities. Should an executive keep assets at risk
in the equity market if he is likely to lose 50% of those assets
to the government in the form of estate taxes. Rather, he can structure
the estate in such a way that the reward from the risk of equity
investments goes to the family. Philip
J. Toffel, Jr., Esq., WestonFinancial 617-571-4255
In the interests of family unity, choose one child for power of attorney when you do your estate planning. In order for this child to maintain relationships with other siblings, make certain that you discuss your decisions with each child alone as well. Make an effort in a straightforward and honest way to explain the reasoning behind your decisions. Your decisions should not be a mystery that, after your death, pits siblings against one another. Keep in mind, this is a matter between you, your spouse, and your children, not between you, your child, and their spouse. How a child interprets your decision to a spouse is their decision. It is your choice to make a direct gift to one or several children and to put away assets in a trust for a child who has a handicap, whether that be physical, mental, or lifestyle. Equitability is the issue, not equality. How you determine the when and under what circumstances the beneficiaries will receive assets from your estate must be customized to your expectation of the particular child's ability to handle money. 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. Silver, Gold, Platinum or Dross: What Will Your Retirement Be? A new retirement study was released this week by the market research firm Harris Interactive and the aging guru Ken Dychtwald. The upshot: the biggest factor to life satisfaction in retirement = preparedness. No surprise, right? But dig a little deeper into how "preparedness" is defined and the study reveals two factors as paramount: 1. length of time spent in planning, and 2. diversification of assets (our old friend asset allocation; refer to December 2001 Trends, "Are you Spending 90% of Your Time for 10% of Your Portfolio's Return?"). Regarding asset diversification, the study found that those who were most satisfied with the quality of their retirement, and the capital foundation underlying it, were the ones who had put money into a range of investment vehicles including individual retirement accounts, company-sponsored retirement plans, mutual funds, stocks and, to a lesser degree, bonds and real estate (for a fuller discussion of study findings, refer to the April 30, 2002 edition of The Wall Street Journal article entitled "What Does Retirement Hold?"). In contrast, study participants who were least satisfied in retirement, the so-called "sick and tired's" had essentially allowed their capital to lie fallow. The takeaway? You are in control of the decisions that will inform the quality of your retirement experience and that control begins now. So don't delay. Start building a diversified investment foundation-the quality of your retirement experience depends upon it. Paula Chauncey, CFA, Managing Partner of Être, LLC, 617-818-5514, Headquartered in Boston, Mass., works with individuals and their closely held businesses, to develop and execute wealth-building strategies. Pchauncey@msn.com.
Consumers are Driving the Trend to Have Long Term Care Policies Cover Care They Can Receive From Families and Friends. The LTC industry has highlighted an acute shortage of care givers. Nursing home and home health care industries indicate cannot hire enough people to meet demand. The situation is worsening as fewer people choose health care as a career. Consumers want their LTC policies to cover informal care giving - care by unlicensed care givers and family. A problem arises because almost no policies cover this care. Insurance companies think it is too difficult to track validity of claims and care received. The new Federal government's LTC policy being offered to 20 million members of the "Federal family," includes a benefit for informal care giving. Demand is expected to drive growth in the informal care benefit by family and friends, but it may increase costs of the policies because it is easier to collect benefits. But on the other hand, informal caregivers would be reimbursed less than nursing home care. Informal care benefits will keep the consumer out of a facility longer, but the insurance company will be paying claims sooner. The concern from industry watchers is that priced properly, these policies will be less affordable than policies we see to date. 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. mdriscoll@marileedriscoll.com 508-830-9975 or toll free at 866-627-4533
Corporate America Works to Improve Financial Education Worldwide Through Innovative Junior Achievement International Programs (JAINTL). ATLANTA, GA. -- Large multi-national corporations and foundations, including The Marmon Group, Hewlett-Packard, American Express, CitiGroup, the John Templeton Foundation and the J.B. Fuqua Foundation, are backing Junior Achievement International programs to support stronger financial education around the world, a strategy for building networks among young business people from vastly different cultures and countries. . "Junior Achievement International's philosophy has always been to empower its Member Nations to take charge and manage quality business education programs for their young people. American corporations have stepped up to support the development of programs that can impact young people throughout the world," says Paul Ostergard, President, CEO and Member of the Board of Directors of Junior Achievement International. Two examples include the Marmon Group Global Trade Institute (MGGTI) and the Hewlett-Packard Global Business Challenge (HPGBC). The MGGTI sponsored by the Marmon Group sponsors a Chicago-based institute for more than 100 of the top business students from around the world currently involved in Junior Achievement International Programs. MGGTI invites high achieving students from 100 nations with JAI programs to learn extensively about entrepreneurs, international business, global economics, business ethics, and management practices. This year's program will be held at the prestigious Illinois Institute of Technology June 19 - June 25. In 1996, Hewlett-Packard Company recognized that Junior Achievement International had a global reach and inspired entrepreneurial attitudes in young people worldwide. HP's sole support since then of the web-based Hewlett-Packard Global Business Challenge (HPGBC) makes it possible for 1190 students from 61 countries to compete in an economic business simulation. Each week, each country's teams plus multinational cyber teams from different countries receive by e-mail and the web, a variety of publications (choosing from English, French, Spanish, Japanese, and Slovak) reporting information that requires economic, industry, and competitive analysis, taking into account both research & development, operations and finance data. The teams work to solve the business challenges and post team answers on the Web. A face-to-face runoff of the top eight teams is held in a world-class city each year. This year's program will be in San Diego in August. Missy Negri, Vice President of Development, Junior Achievement International, missy@jaintl.org, 404-257-4622. Junior Achievement is the world's oldest, largest and fastest-growing nonprofit economic education organization. JA operates in thousands of communities across the U.S. through a network of 156 offices. Junior Achievement International (http://www.jaintl.org) is responsible for developing and serving JA programs in 112 countries. Over 5.5 million young people participate annually in JA programs around the world from Albania to Zimbabwe.
Whether you Know It or Not, You are the Primary Financial Educator for Your Children. Young children will mirror your behavior about money. Certainly they are very young these days when they pick up on the importance and power of money. Aggressive marketers want your very young teens to guy their products. To teach your children coping skills around money, here are a few tips: • Take your children shopping and practice price comparison, use and value of coupons, and the value of name brands versus generic groceries. Do blind taste testings if your children swear the more expensive brand has to be the best. • Buy your children a small bank, preferably a transparent plastic or glass one so they can see it get full as they add coins. Then help them set a purchase goal when the coins reach a critical mass. • When they are old enough to read numbers, set up a bank account and teach them about the power of compounding interest. • Set up an allowance, making sure your childrens' allowance is not the highest or the lowest. Make it clear what your expectations are in return for the cash allowance. • Later, have them budget the spending money they need for school lunches, bus fare, dues, and church offerings. Many parents find it useful to discuss cash needs with their children on Sunday, and to have correct change that fits into appropriately marked sections of a budget box to carry them through the week. • Introduce older teens to credit cards. If you don't, banks will. If your children have a true understanding of credit, they are less likely to mire themselves in debt before they graduate from college as is often the case these days. Dee Lee, CFP, Harvard (Mass.) Financial Educators 978-456-3778 dee@deelee.net -- speaks to employee groups on financial planning and 401(k) planning. She is the author of "The Complete Idiot's Guide to 401(k) Plans," "Let's Talk Money," "Financial Freedom," that focuses on the different financial decisions women must make as wife, mother, daughter, or partner, and co-author of a new book "The Complete Idiot's Guide to Retiring Early," www.deelee.net. Top Six Reasons to Change Broker/Dealers. Nothing happens outside a relationship, and when choosing a relationship with a broker / dealer, financial advisors should look for innovation and added value. Many offerings from broker/dealers look the same. Find a B/D that offers innovation in six key areas: * Streamlined Efficiency. Efficiency comes from demonstrated high service levels -- essential to save advisors time, energy and money. Look for a broker/dealer who has streamlined paperwork and provides Web-based document management . Make certain that the B/D's client service personnel understand the issues and can solve problems on the spot. * Competitive Product Line. A competitive product line makes it possible for financial advisors to serve the multiple needs of the high net worth market. * Training on New Products and Services. Training on new products and services, such as managed accounts, can make the difference between clients perceiving the advisor as a player, or as a run-of-the-mill advisor . * Administrative Software. Sophisticated portfolio management software such as Advent are available at affordable prices under certain circumstances through arrangement with some broker/dealers. * Proprietary Asset Allocation Software.Kick the tires and seriously compare the software. All asset allocation software is not alike. Find a broker/dealer who offers powerful but user-friendly software, preferably free . Use an asset allocation package that differentiates you in front of clients. * Commitment to a advisor -focused service, not retail-focused service. Broker/Dealers with a dual focus on both advisors and consumers can be in a conflict of interest when it comes to how their resources are spent. Look for a B/D committed to advisors, a B/D putting all of its assets into meeting the needs of brokers. EAInvest is the back office home for the independent financial advisor. Subsidiary EAInvest Securities is a broker/dealer offering, exclusively to independent advisors, custodian services and brokerage products. EAInvest is committed to hassle-free service and features Advent Software at reduced costs (see http://www.eainvest.com/corp/advent_calc.jsp\. For further information, contact Jamie Hammond at 415-932-1856 jamie@eainvest.com, or call him at. EAInvest Securities, Inc., Member NASD/SIPC
In Search of Purity in Compensation. There is more attention given by the media to issues of compensation and potential conflict of interest for financial professionals than the issue deserves. Not that there aren't crooks in the financial services profession -- there certainly are. But every financial advisor is not a crook and there is no method of compensation that is without conflict. Every advisor has conflicts of interest by some definition of that term. • The "fee-only" advisor is conflicted when evaluating how many assets should be added or removed from a portfolio account subject to a percentage-based fee that the advisor is receiving. • The hourly "fee-only" advisor is conflicted when counting the hours and deciding whether to bill for the research and reading necessary to solve a client problem. • The "fee and commission" based advisor has a conflict between the objectivity of the advice paid for by a fee and the subsequent recommendation of products subject to commission. • The "commission only" advisor is conflicted by preparing a significant analysis that could lead to the selection of a course of action that makes a larger sale or one with higher commission percentage. The use of term "conflict" implies forces that collide with serious impact and negative results to someone, presumably the client. However, most financial professionals recognize that whatever is in the long term interest and betterment of the client is also in the advisor's best interest. When an advisor over-sells the customer, this will cause cash flow problems or the need to ultimately correct the event - and the client will recognize the error. When the advisor sells an inferior product that may have a higher commission rate, it is likely the client will eventually have this pointed out by another professional. The result in both cases is the termination of the client relationship. Every client gives a financial advisor four value opportunities: the trailing revenue on business already sold (or invoiced), future sales and/or fee income, referrals to potential clients, and the incredibly negative impacts when disillusion sets in. A client that becomes disenchanted can damage the advisor's reputation, cause havoc in the relationship. The best way to avoid losing a client is to take very careful and ethical care of their needs from day one. Compensation is NOT the issue, client service is. Ed
Morrow, Chairman of The International Association of Registered
Financial Consultants (IARFC), welcomes discussion or debate
on this topic either in print or in person. Contact him at 513-424-1656
|