Community Association Reserve Management

Transcription

1 Community Association Reserve Management The Hart Group at Morgan Stanley Theodore G. Hart Patrick S. Renzi Julia Myers M. Spencer Crane III Senior Vice President Financial Advisor Wealth Management Financial Advisor Financial Advisor Registered Associate P: E: P: E: P: E: P: E: UPDATED 05/15/2017

2 Our Team Theodore G. Hart Senior Vice President, Financial Advisor Mr. Hart began his career with Dean Witter in His clientele includes foundations, endowments, municipalities, associations and high net worth individuals. Mr. Hart was a founding member of Morgan Stanley's ESOP Transaction Services Group (ETSG) in Mr. Hart has focused his work on helping associations develop Investment Policy Statements and managing assets effectively and efficiently. He is a member of Community Associations Institute (CAI). Mr. Hart holds a B.A. in Economics from the University of Maryland and lives in Chevy Chase, Md. with his wife Cindy and two children. Patrick S. Renzi Financial Advisor Patrick joined the team in February of He focuses on new business development and assessing cash flow needs. A Boston native, Patrick is a graduate of Boston University with a B.A. in Economics, and currently lives in Washington, DC. M. Spencer Crane III Registered Associate Spencer has been with Morgan Stanley since 2015, and joined the team in February He is the first point of contact, handling all client operations, including opening new accounts and requesting funds. He is from New Orleans, LA and graduated from LSU. Julia H. Myers Financial Advisor Julia has been with Morgan Stanley since She manages client relationships, and provides financial planning services. She graduated from the University of Maryland with a B.A. in Psychology, and is from Baltimore, MD. 2

3 Experience Mr. Hart has over 20 years experience in managing the reserves of Homeowner s Associations The team currently works with over 210 Associations in Washington DC, Maryland, and Virginia as of May 2017 The team works with over 25 regional property managers Reserve sizes range from $150,000 - $10,000,000+ The team attends different association monthly board meetings almost every week Select number of financial advisory groups specialize in reserve management for Homeowner s Associations 3

4 Three Needs of Reserve Accounts 1. Guaranteed Funds FDIC Insurance Covers banks Certificates of Deposit Most bank issued CDs are insured by the FDIC, an independent agency of the U.S. Government, up to a maximum amount of $250,000 (including principal and interest) for all deposits held in the same insurable capacity (e.g. individual account, joint account) per CD depository. 4

5 Three Needs of Reserve Accounts 2. Liquidity Proper Planning Use of the reserve study and property manager s knowledge of the cash flow, there should be no need to liquidate a CD before maturity Secondary Market Due to unforeseen circumstances (snow removal, roof collapse, etc.), and funds are needed, there is NO 90 day interest penalty assessed on a CD, the CDs are sold at market value on the secondary market. The market value may be less or more than your original investment Funds Transfer Automatic link established between operating and reserve accounts for quick and easy movement of funds 5

6 Three Needs of Reserve Accounts 3. Maximized Return Adopting a strategy and discipline Use specialist for reserve management Aggregate reserve accounts and reporting Investment Policy Statement 6

7 CDs at Morgan Stanley The Brokered CD Program at Morgan Stanley. Competitive Rates: CD rates offered throughout the program are generally competitive with CD rates offered by banks, thrifts, and other brokerage firms. FDIC Insurance: CDs are insured by the FDIC, an independent agency of the U.S. Government, up to a maximum amount of $250,000 (including principal and interest) for all deposits held in the same insurable capacity (e.g. individual account, joint account) per CD depository. For more information visit the FDIC website at Variety of Issuers: Over 300 FDIC-member CD issuers participate in our program. The variety of issuers available through our program provides for one-stop CD shopping. Therefore, if you have more than $250,000 to invest in CD s, it is no longer necessary to maintain accounts at multiple banks in order to avoid exceeding FDIC insurance limits. As a result, all of your CD investments can be viewed on a single Morgan Stanley statement. Variety of Structures: Our program offers a wide array of CD structures to choose from, including non-callable fixed coupon, callable and callable step-rate CDs to help investors meet their short-, intermediate-, and long-term investment needs. 7

8 Fixed Income Strategy CD Ladder Fixed Income Strategy Unpredictable interest rates affect short-term securities Do not rely on short-term investing, maturing principal is exposed to interest rate changes and reinvestment risk Seeks to increase your portfolio s potential return and reduce your exposure to reinvestment risk while maintaining liquidity, adopt a diversified portfolio of bonds/cds with different maturity dates Blending investments with a variety of maturity dates provides the advantage of the liquid aspects of shorter term securities while attaining the higher yields available through longer term securities 3-5 year CD ladder based on yield curve and analysis of reserve study 8

9 Our Process Investment Steps Gather Information: Reserve Study Review Condominium Documents : By-Laws Investment Policy Statement Open and fund account, initial build out of investments with approval from board Communication with board and property manager for on-going review of investments CDs do not rollover once they mature, authorization is needed for any re-investment of funds Coordinate financial record keeping with the Managing Agent and Auditor to assure the timely inclusions of the schedule of investments and interest earnings in the Managing Agent s monthly statement Supply such information as needed to the auditing firm employed to help prepare the annual audit report 9 9

10 Account Documents New Account Form Authorized Signer Resolution Funds Transfer Form Articles of Incorporation/By-Laws 10

11 Disclosure The investments listed may not be suitable for all investors. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment will depend upon an investor's individual circumstances and objectives. CDs are insured by the FDIC, an independent agency of the U.S. Government, up to a maximum of $250,000 (including principal and accrued interest) for all deposits held in the same insurable capacity (e.g. individual account, joint account, IRA etc.) per CD depository. Investors are responsible for monitoring the total amount held with each CD depository. All deposits at a single depository held in the same insurable capacity will be aggregated for the purposes of the applicable FDIC insurance limit, including deposits (such as bank accounts) maintained directly with the depository and CDs of the depository. For more information visit the FDIC website at 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 Wealth Management 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 or strategy will depend on an investor's individual circumstances and objectives. Morgan Stanley Smith Barney LLC. Member SIPC INVESTMENT PRODUCTS: NOT FDIC INSURED NOT BANK GUARANTEED MAY LOSE VALUE 11