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Beauport Financial Times | PDF VersionInside This Issue: Bear Market Advice | Retirement… What’s Your Number? | 10 Best Stress BustersWelcome back… our spring edition of the BFTimes offers timely insights and advice so let’s get to it. Lessons learned? In recent years we have become all too accustomed to this sobering refrain applying it to the housing bubble… government oversight… in questioning the accountability of some of the country’s most influential financial in stitutions along with other high profile calamities. One of the media’s feature stories, among their daily reporting on financial turbulence, is particularly disturbing as well-connected individual investors, prestigious organizations, venerable charities and institutions all lost their way and their fortunes. The spotlight finally fell on Bernard Madoff who over the years did the unimaginable… malevolently orchestrating a $50 billion (and still counting) Ponzi scheme, the heights of which – the personal and institutional destruction – must never happen again. Investors captivated by Madoff’s charm and pledge of extraordinary returns rushed to partake in his deviously administered brand of financial Kool-Aid. Our chorus of voices now ask, “How could such knowledgeable, savvy people and institutions get caught up in this black hole?” We are not talking about the gullible or uninformed… no, they are very smart people. Here, a big helping of ego, emotion, and greed camouflaged their defense mechanisms. These victims ignored their intuitive sense, their judgment, and business acumen, and bought into a masterful illusion. And while Mr. Ponzi might feel upstaged by this new century criminal in waiting, we ask ourselves… what lessons have we learned about greed, power, common sense and judgment? You wrote that Lessons practiced. There are several factors that individual investors should take into consideration when investing. First, they should focus on tracking where their money is going. The saying, “trust but verify,” also applies to your money. Therefore, follow your money. You wrote that check or made a wire transfer and it goes to what and where? The Madoff money went into an account that he controlled. Wrong, big red flag! The money should always go into an independent third-party custodial account. The custodian must know where the money is invested; send you a confirmation and also, a monthly statement. The financial advisor should never touch the money. The advisor can only direct the custodian to invest in approved investments with your permission. Second, investors should know whether the Securities Investor Protection Corporation (SIPC) will provide the funds for those who have lost more than $500,000. SIPC acts as a trustee or works with an independent court-appointed trustee in a missing assetrecover funds. Some Madoff investments may be covered by the SIPC provided that they are valid claims. But, what about amounts over $500,000? Recovered funds are used to pay investors whose claims exceed SIPC’s protection limit of $500,000. Schwab has taken As our custodian, Schwab has taken all appropriate actions and more to give clients peace of mind about the security of their accounts, and is in full compliance with the SEC’s customer protection rule. SIPC protects customers of SIPC-members like Schwab against a firm’s financial failure. In addition, Schwab provides clients with an extra level of additional brokerage insurance through Lloyd’s of London. This “excess SIPC” protection of securities and cash is provided up to an aggregate of $600 million. While the desirable tenets of capitalism are at the heart of the American dream, we find ourselves in a time with an unusually high number of high profile examples of greed, incompetence, irresponsible lending and borrowing… all in the pursuit of the good life. The ability and freedom to innovate, be entrepreneurial, and enjoy the fruits of success are at the very core of our democratic and capitalist society. Also at the core, as our forefathers saw it, is the responsibility to embrace a moral compass. Much of the country has come to the realization that our nation’s moral compass has been eroding. As I expect you know, this has been a most challenging time in managing your portfolio. The metaphor – walking through a minefield – clearly fits the experience. And as we have discussed, we cannot control or time the market. However, we are working hard to control the risk in your portfolios relative to the market. Our goal is to keep each of you fully aware of the status of your portfolio, and will provide perform ance reports as requested. We always welcome your calls and the opportunity to discuss our guidance in serving you. As we enter the second quarter of 2009, I am starting my 25th year in the financial service industry with a deep desire to build in many more years in your service. To add to this benchmark I have recently learned, for an unprecedented fourth consecutive year, Valmark Securities has named (me) Investment Professional of the Year from among 105 independent, affiliated financial service firms in 26 states. However, the most rewarding and important aspect our business is our individual relationship with you… with all of our clients. We couldn’t ask for a more interesting, diverse and engaging group of people to call our valued clients and friends. While there isn’t room to name everyone, here’s just a sampling of the things you have contributed to:
Ours is a very personal, relationship business with you that is magnified in challenging times like these. We are thankful for the opportunity to work with you, to earn your trust and confidence in our advisory approach. Everyday we will apply the full extent of our resources to work to preserve your wealth and to have your portfolios best positioned for the inevitable turnaround. The following thoughts in “Bear Market Advice” are meant to remind us that even in tough times there are upside opportunities. In a bear market, fear often reigns supreme. Checks and balances are “turned off” and the system for evaluating investments can become skewed. Fear may be a great motivator, but it is not our wisest ally. In the years following prior bear markets, the economy came back stronger and more vibrant1 as markets typically turn around before the economy. We are creating a new economy that may be greener, more efficient, and more productive than at any point in our history with important and timely innovations expected from the automobile, energy and technology sectors of corporate America. So, what can you do? First, rationally evaluate your own financial situation. If you are worried that you might lose your job or that your business might not survive the crisis, consider taking a more defensive posture. Changing your investment strategy now could have disastrous consequences, especially if we are not all the way through these treacherous waters. If you are motivated to act, consider how you might be able to earn more or spend less in the short term. Refinancing your home at a lower interest rate can make sense once you run the numbers, as does reviewing your entire family budget with your values and priorities in mind. We can help you think through different strategies, ones that can make sense for you. We are creating a new Second, look for the opportunities. When people are fearful, they often miss opportunities, even those that are ripe for the picking. Work to keep your stress levels down and your fear in check so you can spot relevant opportunities, and be prepared to act on them. If you have wanted to move to a more luxurious home, the sagging real estate market may make your dream home affordable, even if you have to sell your current home at a discount. Retailers and auto dealers are offering very attractive incentives to creditworthy buyers. Business owners may find attractive new partners; eager, highly qualified new employees, cut-rate inventory sales, or other opportunities that will benefit from the crisis. Warren Buffett’s comment is relevant, “The time to be fearful is when others are greedy and the time to be greedy is when others are fearful.” We look forward to working with you to advantage favorable market conditions as they are presented for our consideration. Now, at this moment, we turn to the new season and hope you are enjoying the signs of spring’s renewal and more. On behalf of Serena, Jon, Phyllis and Kevin, Managing Partners David S. McKechnie, CLU and Derek J. Reed, CFP® Retirement… What’s Your Number?Do you have one?By Derek J. Reed, CFP®
Retirement from a David and i consistently have income planning discussions with pre-retirees who ask us…“How much do you think I will I need at age XX?” or…“Will I be able to live comfortably on $$ per month given my current allocation?” Accordingly, we have made a sizable investment in time and resources through our financial planning technology, in combination with our years of experience, to formulate custom responses providing direction to address these thorny questions. It is reassuring to see how much more confident retirees are in the planning process when they have a pension and/or annuity income to rely on throughout retirement. This factor is underscored by a National Survey on Retirement, confirming that retirees who have either a pension or an annuity are more than twice as likely as those with neither to say that their retirement is much better than they would have expected1. Clearly, reliable streams of income from a pension, social security or an annuity provider creates greater For those planning discussions where the retirement pension or annuity piece is absent, we target income strategies with a specific portion of the investment portfolio. This can be designed with a dividend strategy for monthly income as well as utilizing a guaranteed income rider on an annuity investment. Retirement from a financial planning perspective conjures up a list of essential considerations such as… sufficient life coverage, long term health care, estate planning, income distribution, tax considerations, wealth management, etc. First, start with an income plan. This step will help identify the type of investment products that are best suited to generate your income stream. We look forward to working with you to help make your transition from work to financial independence a seamless and confident initiative. No one can predict your precise future financial needs, especially at this time, but we can plan for it reliably with a well designed investment strategy that is flexible, adjusting to your needs for income going forward. 1 MetLife Mature Market Institute Beauport Financial News
Kevin Bilenchi: In Focus
As an Investment Associate, Kevin’s primary responsibility is to coordinate the daily operation and maintenance of investment portfolios for the firm’s investment department in an administrative capacity. In this capacity, he works closely with the entire Beauport team and with Valmark Securities, Beauport’s broker-dealer. Kevin has been aggressively adding to and refining his skills at the firm since joining us over 6 months ago. While many of you have met or talked with Kevin relative to things financial, the opportunity to learn about his interests away from the job reveals his wide-ranging pursuits with a decided bias to the culinary world. Favorite sports team / Born and raised in Michigan… Lions, Tigers, Pistons, Red Wings and the Michigan State Spartans!… what would you expect? Beauport: To the Good TimesThe 10 Best Stress Busters… just in time!From Whole Living body + soul magazine and Martha Stewart… very timely advice and initiatives to deal with and reduce our stress levels… talk about timely content. Here’s help to banish stress or at least manage it with these following natural solutions: Mind + BodyA steady mind-body practice like meditation, yoga, and tai chi can bring balance to your life. They can slow your heart rate & relax certain muscles, and such activities can offset the effects of your body’s overly activated stress response if practiced regularly. The next step is to research, select the best fit & schedule it into your weekly regimen. Grab the iPod and GoPhysically active people feel less anxious and depressed. Ideally, we should spend 30 minutes exercising five times a week, says Alice Domar, Ph.D., founder Eat Fewer Cookies, Sip More Tea
Fine-Tune Your Juggling Act“What causes us stress is multitasking while doing things that give us pleasure. Infuse your home and work environments with the same sense of time management,” notes Joan Borysenko, Ph.D., psychologist/author of Inner Peace for Busy People. “Messy spaces can cause stress, it’s important to throw out or file every day.” Just Say No“With our to-do lists constantly expanding, it’s small moments of respite that most restores our energy,” says Domar. “Make a rule for yourself that you won’t ever say yes immediately when someone asks you to do something,” advises Borysenko. “If you can’t say no right away, then just say maybe.” Know Thyself
Herbs that Do MoreStrengthen your body’s ability to handle stress with a class of herbs called adaptogens. They keep everyday pressure from wreaking havoc on your immune system. Dubbed the “king adaptogen,” Siberian ginseng has been shown to normalize blood pressure & blood-sugar levels. “Hide the Laptop”“Starting and ending the day in stillness is essential to stress reduction, so it’s absolutely critical not to jump into email during either of those times,” says Borysenko. A little nature therapy can ease the stress of too much computer time…for example, taking a walk or a jog & these activities can also boost your mood & energy. Seek Out Sound Therapy
Paint a Picture – or Go Bowling“It’s incredibly stress-reducing to work on a project that takes your focus away from your own thoughts and worries,” says Borysenko. “Some people’s creative expression is their bowling league… what’s important is doing something that brings you enjoyment. Source: www.wholeliving.com/stress-relief The Second Quarter…
- David & Derek We welcome your questions about these “tax reminders” and any other financial requirements you may have. |
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Planning for your retirement and ultimately choosing when to retire are financial decisions of increasing importance, especially given our evolving and turbulent economic environment. Most people’s retirement assets have been substantially reduced during this protracted economic downturn, and for people in the workplace the need to extend their employment to recoup assets is now a very real consideration. With this and other timely considerations in mind, we begin by asking clients at what age they are planning to retire, and to assess how much of their current income they will need to fund it. The thought of living solely on the income of your accumulated assets can be intimidating, especially if you have active plans for your retirement years. The addition of a pension or social security, while easing some of the concern, is seldom a sufficient replacement of your working income.
Kevin has passed his Series 7 (General Securities Representative Exam) in March, and has obtained his Series 7 license, the most comprehensive securities license allowing him to communicate with client-investors in an administrative capacity. In addition, Kevin will be attending ValMark’s School of Excellence Conference in late April. This annual conference, in its 9th year, is for the exclusive benefit of ValMark member offices with the goal to equip attendees with the most up-to-date tools and knowledge to adapt to and advantage the emerging, new financial landscape.
We hope you are finding the electronic editions of the Beauport Weekly Bulletin interesting, informative, and a source that may spark your interest to learn more about a topic given their brief but concentrated content. We are interested in learning what you think of the Bulletin. Our goal is to regularly bring you relevant and useful information about diverse, timely financial subjects, along with the opportunity for an ongoing discussion with you… welcoming your questions and comments.
Refined carbs (baked goods) can elevate your cortisol levels. Increasing your intake of omega-3 fatty acids may help keep this stress hormone in check. Include eggs, whole-grain cereals, and broccoli, or take a B-complex supplement. Cutting back on caffeine is key, and if you’re a coffee drinker opt for green or black tea.
Finding quiet time isn’t a luxury; it’s essential for protecting your health. “It’s important to know what works for you,” says Jane Sullivan-Durand, M.D., family physician at the Center for Integrative Medicine in Concord, New Hampshire. For many of us, however, hanging out with close pals is good medicine for stress.
A number of studies show that listening to music, especially classical, may help you unwind. Though less melodic, therapeutic CDs of “binaural beats” also show promise as a means of calming the mind & body.