Larimer Square Group at Morgan Stanley

Transcription

1 Larimer Square Group at Morgan Stanley

2 Pictured left to right: William Ott(Financial Advisor), Carter Dammen(Financial Advisor), Megan Wangler(Sr. Registered Associate) 1550 Market St Suite 600 Denver, CO /MAIN /TOLLFREE /FAX

3 our mission By combining the experience and skills of the Larimer Square Group at Morgan Stanley, we deliver tailored investment strategies designed to help you manage and preserve your wealth. We believe each client relationship begins with a careful consideration of your short- and long-term objectives. Together, we will explore your aspirations and the life you envision. We will work with you to translate your goals into a specific investment objective and personalized investment strategy. And then, drawing on the team s experience and perspective informed by the insight and resources of one of the world s largest financial firmswe will structure a portfolio for you, executing and refining that strategy to help bring you closer to your definition of investment success. The Larimer Square Group focuses completely on your objectives so you can spend your time on the things that matter most to you. our vision The Larimer Square Group at Morgan Stanley places high value on relationships. We form our relationships with you based on integrity, accountability and understanding. We endeavor to build equally meaningful relationships with your future generations. Our goals are to know you and your family well by learning the things that you value, while adapting the vast resources of Morgan Stanley to support your financial needs.

4 Meet the Professionals Carter K Dammen Senior Investment Management Consultant Senior Vice President- Financial Advisor William M Ott Senior investment Management Consultant Senior Vice President- Financial Advisor Megan M Wangler Senior Registered Associate Carter joined Morgan Stanley, successor to Shearson Lehman Brothers, in Prior to joining the firm, Carter spent three years with the Bank of America Mortgage Securities Division. He has extensive experience in providing families sophisticated advice and strategic guidance to help them capitalize on opportunities to preserve, grow, and transfer their wealth. Carter received a degree in Economics and Business from the university of Minnesota in In 1995 he completed the CFP Professional Education Program at the College for Financial Planning. In 2012 and 2013 Carter was recognized as one of Denver s Best Personal Five Star Wealth Managers as published by 5280 Magazine. When he is not involved in the activities of his three children, Carter's interests include snow and water skiing, mountain biking, and fly fishing. Carter is a board member on NFL Player Zane Beadles Foundation. He is also active with Brent s Place.org and the Denver Area Council of the Boy Scouts of America when he is an Eagle Boy Scout. Bill has been with Morgan Stanley since Bill holds a Bachelor s degree from Willamette University and a Master of Business Administration degree from United States International University. He avidly pursues continuing education through numerous courses and seminars. Bill has earned the CERTIFIED FINANCIAL PLANNER (CFP ) designation in February 2005, and in 2009 was awarded the CRPC, Chartered Retirement Planning Counselor by the College for Financial Planning. This background gives Bill the educational foundation and professional experience to help you facilitate your investment planning. Bill served two and a half tours of duty in Southeast Asia as a Naval Officer. His interests include snow skiing, cycling, and traveling as well as reading for enjoyment and professional research. He holds a first degree black belt in Kung Fu. Megan Wangler s career began with Morgan Stanley and its predecessor firms back in 2006 in Chicago, IL. Megan holds a bachelor of Science degree in Psychology from Loyola University Chicago where she graduated summa cum laude. In Chicago, Megan was a key asset to her branch for training and development due to her extensive knowledge of financial products and systems. Megan s experience makes her a valuable asset to our team and the service we bring to our clients. Megan and her husband relocated to the Denver area in early 2013 to take advantage of all of the outdoor activities Colorado has to offer. In her free time Megan enjoys spending time with her family and introducing her young daughter to all of the adventures of Colorful Colorado.

5 Before our team offers specific advice, however, we must understand who you are and what you want your wealth to accomplish. Working with you, we will complete a four step process: 1 Setting your financial objectives We will begin our relationship by listening-discussing a range of topics related to your financial needs and investment objectives: long term life goals and expectations, possible major purchases, and legacy and charitable goals, if you have them. We will discuss your current financial resources, your time horizon for various goals, your tolerance for risk- even how your liabilities are structured. If you own a business, we also might discuss you current banking and cash management needs. 2 Developing your wealth management stagey 3 Implementing your strategy Based on your input, our advice will likely help address income and retirement planning, asset protection, investment management, strategic borrowing, wealth transfer and business succession. Of course, your plan will include an asset allocation strategy designed to help achieve your financial goals in light of your risk tolerance and investment time horizon. After we have discussed and refined your strategy, the team works closely with you to bring the elements to life. Should we decide together that outside money managers are appropriate for you, we will draw on in-depth research and analysis to help you select from the hundreds of investment management firms available to you. If you prefer to invest in individual securities, we can help identify specific stocks, bonds and other securities that may be suitable for your portfolio. Whatever approach we decide on, the team will help you keep your strategy on track. 4 Reviewing your performance You will receive a quarterly review that outlines your portfolio s performance, helping you track progress toward your objectives. Moreover, when your personal situation or market conditions change significantly, we can suggest appropriate adjustments to your portfolio to help it remain aligned with your goals.

6 Introducing Consulting Group Founded in 1973, Morgan Stanley s Consulting Group provides a wide range of investment consulting advice and services to both private individuals and institutional investors. Utilizing Consulting Group, your Financial Advisor can develop and implement investment strategies personalized to suit your specific needs. The next several pages highlights the features and benefits of Morgan Stanley s Consulting Group. Source: Introducing the Consulting Group, March 2016

7 Consulting Group Industry Leader in Advisory Solutions 40+ year History of Delivering Investment Advisory Solutions Resources. Ability to leverage the firm s Global Investment Committee to integrate asset allocation and thought leadership into advisory programs Size. Our size and industry status provide us with exceptional access to investment management firms throughout the industry including favorable fees. Access. Our position gives us access to primary decision makers and business leaders at each firm. Leadership. We are among the first to market in many investment advisory platforms, research and products. Dedication to Client Service. A focus on client needs including reporting and implementation. #1 in Investment Advisory Assets Under Management Comprehensive Process for Manager Analysis A Dedicated team of 200 professional focused on advisory solutions; 30 focused on international and external manager research: Source: Global Investment Manager Analysis May 2015

8 Consulting Group Industry Leader in Advisory Solutions Constant Focus. The investment manager universe is large and complex. We narrow down a list of 14,000 investment options to 1,100 strategies Monitored/year. Experience. We use a manager search, selection and monitoring process developed over 40+ years and refined as necessary. Comprehensive Review. Our analysis of managers can Span up to 40 hours or more and includes Multiple touch points with the firm under review. Rigorous Analysis of Factors and Attributes for Each Manager. We divide this into three broad categories: 1. Investment process/characteristics 2. Business, and 3. Operations & Compliance Comprehensive review of Managers. On-site and detailed meetings with business, trading, operations and compliance. Deconstruction of Investment Process. We focus on which strategies have proven, consistent and repeatable processes with the ability to outperform in various market environments. Continuous Monitoring and Oversight. Ongoing monitoring of managers on our investment advisory platform, to keep objectives and performance within guidelines. Communication and Reporting. Depending on the type of program a client is in, we may provide Investors with ongoing analysis of each Investment strategy on our investment advisory Platform through written research reports and quarterly performance updates. Proprietary Research. A patented manager research model that is focused on manager outperformance relative to industry benchmarks. In-Depth Performance Analysis. Our goal is to find High conviction strategies with the ability to Outperform over a full market cycle.

9 Consulting Group Portfolio Advisory Services PAS Portfolio Allocation Series Leveraging the resources of Morgan Stanley Wealth Management Portfolio Advisory Services Investment Manager Due Diligence Strategic and tactical asset allocation advice leveraged from various sources including MSWM Global Investment Committee(GIC). Manager Research and due diligence leveraged from MSWM Investment Advisor Research (IAR). Model Portfolio Construction provided by Portfolio Advisory Services(PAS). Strategic and Tactical Asset Allocation Advice

10 Consulting Group Portfolio Advisory Services PAS Portfolio Allocation Series Investment Process PAS Portfolio Allocation Series Model Portfolios are constructed with the same process that Portfolio Advisory Services uses to create all the Firm Discretionary Program portfolios. Systematically test actual weights vs. strategic benchmark Establish strategic framework Opportunistically over/underweight asset classes Examine variations in: Portfolio level risk Strategy Managers Morgan Stanley Custom Investment Outsourcing Realize where active risks are taken Spend active risk efficiently Express views by allocating to high conviction strategies

11 Consulting Group Portfolio Advisory Services PAS Portfolio Allocation Series Investment Philosophy Action should be taken through discipline, not emotion. Managing total portfolio risk is essential to achieving long-tem objectives Actively managing asset allocation, portfolio composition and manager selection can potentially enhance returns Active risk budgeting can enhance the potential value derived from hiring investment managers Blending active and passive investments can potentially help improve investment results, manage costs and refine the management of active risk Morgan Stanley Custom Investment Outsourcing

12 Consulting Group Portfolio Advisory Services PAS Portfolio Allocation Series Investment Manager Sourcing and Selection PAS implements an investment manager selection process that leverages multiple professional teams to determine Mutual Funds and Exchange Traded Funds appropriate for PAS Portfolio Allocation Series Model portfolios. Manager Universe Initial quantitative, qualitative and operational due diligence performed by manager research 1,200+ investment products Traditional and alternative investment strategies Separately managed accounts (SMAs), mutual funds, ETFs MLPs, hedge funds, private equity, HFOF, real estate, commodities, etc. Filter for Asset Class and Investment Style Quantitative Filter Peer universe analysis Rolling period returnsbased style analysis MPT statistics Holdings-based attribution Risk-based analysis Qualitative Test People Organizational structure Competitive advantage Philosophy Process & strategy Performance behavior Working List Presents Tactical Opportunity Best Fit Complements Other Holdings Contribution to Overall Portfolio Risk Expresses Thematic View Morgan Stanley Custom Investment Outsourcing

13 After-Tax Return and Tax Alpha There are several ways to defer tax payments on gains and potentially increase your investment period return. Due to compounding effects of asset appreciation, the longer you defer the realization of those gains, the greater your after-tax return will be, since your assets will continue to grow from a potentially larger value each an every year: The less you send to Uncle Sam, the greater the amount your investment return base will be each year. A 10% return on $1 in year 1 is $.10 cents; the following year, that same 10% return would equal $.11 cents and so on. Paying out less whilst keeping more money invested and growing will result in higher after-tax returns over time. We must also account for the different tax treatments of short-term and long-term gains. Consider a hypothetical $1,000,000 investment portfolio that returns 7% annualized over a five-year period. Should those gains be realized every year on a short tem basis at 35A% tax rate, your ending period value of the account would be $1,249,166 (or 4.55% annualized, after tax). If that same portfolio were to defer all of the gains until the end of the five-year period at the long-term cap gains tax rate of 20%, the value would be $1,322,041 (or 5.7% annualized, after tax). That s a $72,875 difference or a 7.3% additional cumulative return over the five-year investment period. The previous example illustrates the point that after-tax returns can vary greatly depending on how tax efficient a portfolio is, all else being equal. The after-tax return is ultimately the actual economic benefit derived from the investment. Realizing gains will negatively impact after-tax returns and mitigating the deleterious effects of those gains is a form of tax alpha. Tax alpha is an industry term that is used to describe the additional return achieved through pursuing tax efficient strategies. Tax Management of Your Investments: Passive vs. Active Tax Management refers to the actions that can be taken to offset, prevent or delay realized gains that occur through the normal course of trading an investment portfolio. While taxes are secondary to an account s performance and hence should not be the main driver of investment decisions, there are minimally disruptive ways to mitigate the tax impact. They are generally employed to pursue more efficient and better after-tax results. The most commonly used practice is to pursue tax loss harvesting at year end. The ritual is as traditional as Thanksgiving dinner and the first client conversations with financial advisors usually start around the same time. This passive approach can be effective in reducing the realized gains of a portfolio in certain years but since it is dependent on the date at which the individual chooses to pursue the harvest, it may not be optimal. The 4 th quarter is typically strong in the equity markets and losses may not be readily available for capitalization. An active tax management approach, one that is integrated in the daily trading decisions of a portfolio is designed to enhance the tax efficiency of a managed account. This can be done through the adoption of passive or active tax management techniques which include 1. Tax Loss Harvesting: (Passive/Active), 2. Investment Product Selection: (Active), 3. Tax Aware Trading: (Active).

14 After-Tax Return and Tax Alpha Tax Loss Harvesting: (Passive/Active) Discussed on the previous page, this is the act of selling positions at a loss to offset realized gains in a portfolio. This is typically done, passively, to offset gains at the end of the year. It can be an active tool as well, if losses are pursued to offset gains more frequently throughout the year. The market tends to fluctuate greatly and valuable losses that may be taken to offset gains may appear throughout the year, not only at the end. Investment Product Selection: (Active) An investor can attempt to reduce the expected realized gains in an investment portfolio by selecting tax efficient vehicles or tax efficient managers. Selecting managers or investment products that trade infrequently or are more tax friendly investment vehicles (i.e., low turnover mutual funds, muni bonds, separately managed accounts, ETFs, etc.) can be used flexibly and offer greater tax efficiency. The more actively traded the investment product, the more likely it is to experience short-term gains at the much higher ordinary income tax rate. Tax-Aware Trading : (Active)Tax aware trading will typically ensure a portfolio s trading activity is in compliance with the IRS wash sale rule, where a taxpayer cannot recognize a loss on an investment if it was purchased within 30 days of the sale (before or after sale date). It is also the practice of tax efficient lot selection when partially selling a security. Tax management Services for Select UMA Morgan Stanley s Unified Managed Account program offers Tax Management services for our clients managed account portfolios. The program s open architecture and maximum flexibility allows for different investment types to be combined in one account. These include separate account managers, ETFs and mutual funds. The Private Portfolio Group, as the overlay portfolio manager, has created a unique and proprietary Tax Management service that can be added to eligible, taxable UMA accounts seeking tax efficient portfolio management. It is designed to be respectful to the integrity of the target investment strategy while pursuing active Tax Management techniques to help reduce the burden of cap gain taxes. Dispersions can occur, should there be legacy positions with significant gains to be managed and are required to be held due to sensitivity. Even in these cases, we are always working toward the desired allocation in a tax efficient manner. The service includes working closely with financial advisors, their clients and their clients tax advisors in determining a viable tax efficient investment solution that suits their individual needs. In conclusion, taxes are and will become a more important consideration for investors in the months and years to come. It has been an arduous path to achieving investment gains and it takes a smart approach to maximize what you will ultimately keep. Tax Management of your managed account need not be a once a year consideration and services such as Morgan Stanley s Unified Managed Account Tax Management services can be added as a yearlong solution.

15 Although the statements of fact and date in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results. Cerulli Associates, 1Q 2016 Summary. Cerulli Associates data are based on data submitted by firms participating in Cerulli s survey. Morgan Stanley Wealth Management was ranked No. 1 in terms of assets under management out of the firms listed in the industry for the quarter with respect to Top Managed Account Program Sponsors Across All Industry Segments. This category includes separate account consultant programs, mutual fund advisory programs, ETF advisory programs, rep as portfolio manager programs, rep as advisor programs and unified managed account programs. Separate account consultant programs are programs in which asset managers manage investors assets in discretionary separate accounts. Mutual fund advisory programs and ETF advisory programs are discretionary and nondiscretionary programs designed to systematically allocate investors assets across a wide range of mutual funds or ETFs. Rep as portfolio manager programs are discretionary programs in which advice is an essential element; planning is undertaken or advice is treated as a separate service from brokerage. Rep as advisor programs are nondiscretionary programs where the advisor has not been given discretion by the client and must obtain approval each time a change is made to the account or its investments. Unified managed accounts are vehicle-neutral platforms that simplify the delivery of multiple investment vehicles, such as separate accounts, mutual funds, exchangetraded funds and individual securities through their integration within a single environment. Rankings are subject to change. Some historical figures may be revised due to newly identified programs, firm restatements, etc. A client may elect Tax Management Services for the account by notifying their Financial Advisor, and indicate what Maximum Tax or Realized Capital Gain Instruction is desired for the account, if any. The Tax Management Services Terms and Conditions attached to the Morgan Stanley Smith Barney LLC Select UMA ADV brochure as Exhibit A will govern Tax Management Services in the account. Review the Morgan Stanley Smith Barney LLC Select UMA ADV brochure carefully with your tax advisor. Tax Management Services are not available for all accounts or clients and may adversely impact account performance. Tax Management Services do not constitute tax advice or a complete tax-sensitive investment management program. There is no guarantee that Tax Management Services will produce the desired tax results.the sole purpose of this material is to inform, and it in no way is intended to be an offer or solicitation to purchase or sell any security, other investment or service, or to attract any funds or deposits. Investments mentioned may not be suitable for all clients. Any product discussed herein may be purchased only after a client has carefully reviewed the offering memorandum and executed the subscription documents. Morgan Stanley Wealth Management has not considered the actual or desired investment objectives, goals, strategies, guidelines, or factual circumstances of any investor in any fund(s). Before making any investment, each investor should carefully consider the risks associated with the investment, as discussed in the applicable offering memorandum, and make a determination based upon their own particular circumstances, that the investment is consistent with their investment objectives and risk tolerance. Alternative investments often are speculative and include a high degree of risk. Investors could lose all or a substantial amount of their investment. Alternative investments are suitable only for eligible, long-term investors who are willing to forgo liquidity and put capital at risk for an indefinite period of time. They may be highly illiquid and can engage in leverage and other speculative practices that may increase the volatility and risk of loss. Alternative Investments typically have higher fees than traditional investments. Investors should carefully review and consider potential risks before investing. Past performance is no guarantee of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. Alternative investments involve complex tax structures, tax inefficient investing, and delays in distributing important tax information. Individual funds have specific risks related to their investment programs that will vary from fund to fund. Clients should consult their own tax and legal advisors as Morgan Stanley Wealth Management does not provide tax or legal advice. Interests in alternative investment products are offered pursuant to the terms of the applicable offering memorandum, are distributed by Morgan Stanley Smith Barney LLC and certain of its affiliates, and (1) are not FDIC-insured, (2) are not deposits or other obligations of Morgan Stanley or any of its affiliates, (3) are not guaranteed by Morgan Stanley and its affiliates, and (4) involve investment risks, including possible loss of principal. Morgan Stanley Smith Barney LLC is a registered broker-dealer, not a bank. Actual results may vary and past performance is no guarantee of future results. Asset Allocation does not guarantee a profit or protect against a loss in a declining financial market. Five Star Professional, as a third party research firm, identified pre-qualified award candidates based on industry data and contacted all identified broker dealers, Registered Investment Advisor firms and FINRA-registered representatives to gather wealth manager nominations. Self-nominations are not accepted. Award candidates are then evaluated against 10 objective eligibility and evaluation criteria associated with wealth managers who must have a minimum of five years experience as an investment adviser representative or other accepted credentials, client retention rates, client assets administered, firm review and a favorable regulatory and complaint history as defined by Five Star. Five Star Professional determines the final list of Five Star Wealth Manager Award winners. The Award does not evaluate the quality of services furnished to clients and it is possible that the recipient may have received unfavorable ratings from those surveyed. Five Star Professional collected the information for this Award through surveys it conducted. CRC /16

16 Wealth managers and/or their firms do not pay a fee to be considered or placed on the final list of Five Star Wealth Managers. The Five Star award is not indicative of the wealth manager's future performance. Wealth managers may or may not use discretion in their practice and therefore may not manage their clients assets. The inclusion of a wealth manager on the list should not be construed as an endorsement of the wealth manager by Five Star Professional. Working with a Five Star Wealth Manager or any wealth manager is no guarantee as to future investment success, nor is there any guarantee that the selected wealth managers will be awarded this accomplishment by Five Star Professional in the future. For more information on the Five Star award and the research/selection methodology, go to fivestarprofessional.com. This material does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies and or investments discussed in this material may not be suitable for all investors. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment strategy will depend on an investors individual circumstances and objectives. Morgan Stanley Smith Barney LLC ( Morgan Stanley ), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. Morgan Stanley Smith Barney LLC is a registered Broker/Dealer, Member SIPC, and not a bank. Where appropriate, Morgan Stanley Smith Barney LLC has entered into arrangements with banks and other third parties to assist in offering certain banking related products and services. Investment, insurance and annuity products offered through Morgan Stanley Smith Barney LLC are: NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED NOT A BANK DEPOSIT NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY 2016 Morgan Stanley Smith Barney LLC. Member SIPC. Consulting Group is a business of Morgan Stanley Smith Barney LLC. CRC /16 CA Insurance license # 0C11682 CA Insurance license # 0K07536