UW - Madison Retirement Association

Transcription

1 UW - Madison Retirement Association Your Guide to Wealth Management Services April 19, 2005 Presented by: Kelli Glynn Jill Sommers Kevin Pomarnke

2 Welcome!

3 M&I Team Your Team of Professional Advisors Jill Sommers, Officer, Financial Advisor Jill joined M&I in 1996 and works as a Financial Advisor for a number of M&I offices in the Madison area. Her responsibilities include meeting with clients to do full reviews for client s complete financial picture and helping her clients achieve their financial goals. Jill earned her bachelor of business administration degree in finance for the University of Wisconsin Whitewater. She also has attained her Series 7 and 63 licenses and her Life and Health Insurance Licenses. Kevin A. Pomarnke, CTFA TM, Assistant Vice President, Trust Services Kevin joined M&I in 1995 and is currently responsible for working with personal trust clients in the administration and investment of personal trust accounts. Kevin received a bachelor degree economics from the University of Wisconsin - Madison and a master of business administration from Edgewood College. Professionally, he is a graduate of the National Trust School and National Graduate Trust School I and II programs at Northwestern University and the University of Chicago. He holds his NASD securities license. Kevin earned the Certified Trust and Financial Advisor (CTFA ) designation. He has also attended seminars relating to trust services, estate planning, and investments. Kelli J. Glynn, Officer, Portfolio Management Kelli joined M&I in 1996 and spent six years as an Investment Advisor with M&I in Milwaukee before transferring to Madison as a Portfolio Manager. Her responsibilities involve providing investment advice and financial planning services for individuals and businesses, including nonprofit organizations. Prior to joining M&I, she served as a financial advisor at FIMCO and First Securities in Milwaukee. Kelli earned a bachelor of business administration degree in finance from the University of Wisconsin - Whitewater.

4 Overview What is Wealth Management and who is it for? What different types of advisors are there and how do I pay for advice? What type of a process can I expect? What, specifically, is involved in the investment process? How do I get started if I want to meet with an advisor?

5 Wealth Management What is Wealth Management? A coordinated team of financial professionals focused on achieving a client s objectives in a consultative manner.

6 Wealth Management Your Wealth Management Advisor will assemble a team of experts who will work together to create solutions tailored to your unique needs. Client Wealth Management Consultant Provides comprehensive financial and goal planning Private Banker Coordinates your personal banking and lending needs Portfolio Manager Develops your overall investment strategy Responsible for day-to-day investment management of your assets Trust Administrator Ensures terms and provisions of your trust are properly implemented Collects and distributes income Coordinates tax preparation Other Specialists Tax consultants Real estate management specialists Personal care coordinators Mortgage specialists

7 Wealth Management Alternative Investments Hedge Funds Private Equity Real Estate Private Banking Credit Cash Management Checking and Savings Accts Mortgages Asset Management Individualized Portfolios Concentrated Stock Strategies Multi-Manager Accounts Client Trust & Estate Planning Estate Plan Development Trust and Will Consultation Fiduciary Management Personal Care Services Tax Preparation & Planning Portfolio Tax Management Stock Option Exercise Low Basis Stock Techniques Financial Planning Asset Allocation Cash Flow Analysis Retirement Education Planning Risk Management Life Insurance Long-Term Care Annuities

8 Wealth Management Who is Wealth Management for?

9 Wealth Management What about everyone else?

10 Wealth Management Advisors - What should I be looking for? Training/Certifications Commission or Fee-Based Philosophy Service and Contact Expectations Referrals

11 Wealth Management What will I need to bring? Statements (Bank, Investment, Benefits) Tax Returns Will/Trust Documents Insurance/Annuity Policies

12 Financial Planning Process Goals Ensure Comfortable Retirement Funding an Education Protect Against Estate Taxes Leave a Legacy Philanthropy Wealth Preservation Financial Growth Premature Death Protection Business Succession

13 Financial Planning Process Together, we will set objectives that reflect your goals through identifying your risk/return requirements. Liquidity Time Horizon Risk Tolerance Client Objectives Return Expectations Cash Flow Needs Tax Sensitivity

14 Financial Planning Process Protection Strategies Long Term Care Insurance Hybrid Insurance

15 Financial Planning Process Legacy Planning 1 2 3

16 Financial Planning Process Our Part Develop Plan Recommendations and Implementation Review, Monitor and Adjust

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18 Investment Process Written Investment Objective Statement Developing a clear investment objective statement helps our clients have a sound understanding of why the portfolio was constructed as it was and how it should perform in any market environment. Objective Sample Investment Objectives and Guidelines The objective of the portfolio is current income and minimum growth of capital. This is achieved by investing in a diversified portfolio of equity and fixed income securities. The portfolio seeks to maximize potential total return consistent with minimizing overall volatility in the context of these guidelines. The total return for the individual investment styles will be compared to their appropriate index or the appropriate Lipper Peer Group. Asset Mix Allocation Min/Max Target Cash 0-10% 0% Fixed Income 30-50% 40% Equities 50-70% 60% Acceptable Investments This section specifies the money market, fixed income, and equity securities that could be utilized in the portfolio. Diversification This section outlines the maximum market value certain securities may represent within the portfolio at the time of purchase.

19 Investment Process Use of Investments Mutual Funds - Inside/Outside Individual Stocks/Bonds Application of Special Strategies

20 Investment Process Conservative Income Strategies Bonds Immediate Annuities High Dividend Income Strategy

21 M&I High Dividend Income Strategy Philosophy Our investment objectives are Competitive long-term returns Reduced volatility Dividends are the guide to both objectives We accomplish our objectives with a unique, quantitative, value-oriented approach Conditions To Consider Dividend yield moving closer to the long-term average of 3%. The U.S. population s two oldest groups will grow by more than double the average of the total population. The aging U.S. population should continue to drive a demand imbalance for dividend-paying stocks. Historically, companies paying dividends have generated higher relative returns. Tax rates on dividends near historic low.

22 M&I High Dividend Income Strategy Process 500 Stocks S&P 500 Dividend Screen: Identify the highest yielding securities (upper 20% of S&P 500 by market capitalization) Rebalance twice per year on January 1 and July 1 Between rebalance dates, adjust the index daily for S&P 500 composition changes Stocks High Dividend Income Benchmark Quantitative Analysis: Sort all benchmark stocks by industry Rank securities in each industry by quantitative factors which emphasize quality characteristics Portfolio optimized by: Maintaining neutral industry weights Overweighting top ranked quality stocks Underweighting low ranked quality stocks Stocks High Dividend Income Portfolio The S&P 500 is an unmanaged index of common stocks in industrial, transportation, financial and public utility sectors. Actual investments cannot be made in an index.

23 Investment Process Portfolio Example #1 Mid 70 s, single Income $85,000 $300,000 other assets Cash $62,000 Fixed Income U.S. Treasuries $20,000 Individual Municipal Bonds $150,000 CDs $87,000 $257,000 Equities Preferred Stock $11,000 4 Bank Stocks $52,000 5 Energy Stocks $64,000 Large Cap Stock Fund $92,000 Mid Cap Stock Fund $7,000 Small Cap Stock Fund $8,000 $234,000 $553,000

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27 Investment Process Portfolio Example #2 Couple in their 70 s Entering assisted living $65,000 pension and social security $1,000,000 in assets 75% in company stock with low-basis 25% fixed income Husband passed away in 2004

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35 Investment Process Ongoing Reporting and Reviews Examples

36 Investment Process I. Market Value Summary Date Mr. and Mrs. Client Account #XX-XXXX-XX-X 2004 Market Value Beginning Market Value 1/1/04 $490, Additions/Withdrawals (X,XXX) Fees (X,XXX) Adjusted Beginning Market Value $425, Ending Market Value 8/31/04 $437, II. Asset Allocation Objective: Growth (70% Equities, 30% Fixed Income)

37 Investment Process III. Portfolio Performance Category One Year Ten Year Trailing 9/1/03-8/31/04 9/1/94-8/31/04 Cash 0.76% 4.16% Fixed Income 4.87% 8.70% Equities 14.65% 24.88% Overall 11.88% 13.02% Benchmark Return * 9.54% 9.58% IV. Relative Benchmarks Index One Year Ten Year Trailing 9/1/03-8/31/04 9/1/94-8/31/04 S&P % 10.69% Russell % 9.33% EAFE 22.64% 3.42% Lehman Intermediate Gov t/credit 5.07% 6.98% Bond Index * Portfolio Benchmark is comprised of 70% S&P 500 Index and 30% Lehman Intermediate Gov t/credit Bond Index

38 Wealth Management How do I begin? What do I need? Who do I talk to? Goals/Objectives Statements Taxes Will/Trust Documents

39 Summary Important Points

40 Summary Questions

41 Summary Evaluations

42 Thank You!!