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Who’s Managing Your Money? Moderated by Carolyn Kling, Kling Partners Presented by: Paul Spitzer, Advanced Practice Advisors Carolyn Taylor, Weatherly.

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Presentation on theme: "Who’s Managing Your Money? Moderated by Carolyn Kling, Kling Partners Presented by: Paul Spitzer, Advanced Practice Advisors Carolyn Taylor, Weatherly."— Presentation transcript:

1 Who’s Managing Your Money? Moderated by Carolyn Kling, Kling Partners Presented by: Paul Spitzer, Advanced Practice Advisors Carolyn Taylor, Weatherly Asset Management Herb Morgan, Efficient Market Advisors Carlee Harmonson, Union Bank 30 th Anniversary Celebration



4 The Del Mar Foundation presents a two-hour panel discussion with local diverse financial professionals who welcome an open audience dialogue. At this session, the goal of the panel is to provide an understanding of related costs associated with investing and how they affect you as an investor. The panelists will define the differences between banks, trust departments, brokerage firms, investment firms, money managers, mutual funds, exchange traded funds, and other fund structures. The panelist will present the differences between the role of a Fiduciary and the ‘suitability standard’ to which many companies adhere. You will learn how Trusts play an important role in asset ownership and the correlation of taxes, management, administration fees and investment performance. Designed to give local residents an opportunity to “ask the experts,” the Del Mar Foundation Legacy Planning Series continues their 30 th Anniversary Educational Series. “Who’s managing your money?”

5 Paul C. Spitzer, Founding Member

6 Carolyn P. Taylor, President

7 Comprehensive Wealth Management Comprehensive wealth managers have the highest level of expertise and fiduciary standards in the industry More than a just money manager or a financial planner Combines portfolio management and financial/estate planning to manage a client’s financial life as efficiently as possible Paying a wealth manager to advise on all aspects of your financial life should save and make money over time Serious money demands serious legal, tax and financial knowledge and creativity

8 Services should be timely, applicable and al la carte catered to your needs.

9 Holistic Wealth Managers- Need to be Dynamic and Individualized Tax Planning Types of taxation: Income vs. capital gains tax Possible offsets Deductions, capital loss carry- forward, business income, etc. Deferral of income- maximizing contributions to retirement, defined benefit, ESOP and other tax- advantaged vehicles Charitable giving Estate Planning Overall gift strategy – fits with Trust documents, taxes and wishes The “alphabet soup” – LLC, FLP, QPRT, CRT Financial Planning Concentrated stock positions Volatility and risk minimization strategies Income strategies – tax preferred, tax deferred, tax-free, and taxable – or blend Hierarchy/use of funds Where to draw from first considering tax and estate implications Asset Management Asset structures and types of holdings appropriate for each Asset location vs. asset allocation Risk mitigation for each type of structure Types of investments within Inflation- protection, income oriented

10 Significant Events – Steps to Take Discuss legal ramifications Review financial strategies Decide how best to minimize taxes Re-evaluate family dynamics, including roles and responsibilities Divide assets (if applicable) – discuss location and fairness Define the many “what if’s” Create a roadmap to optimizing a long-term plan given the change in circumstance Significant events include: divorce, death, remarriage, job loss and health issues.

11 Multigenerational Wealth Introduce the younger generation to the team of advisors Keep topics and specifics general Family Meeting Review relevant legal, tax and investment topics as well as asset allocation Annual Meetings Appoint roles for family and non-family members to gain experience and responsibility Quarterly Meetings Meet individually as well to address specific situations and concerns and interplay of how the larger picture fits within Additional Communication How to help families transition wealth more smoothly from the older to a younger generation:

12 Asset Location and Investments Asset allocation is the number one driver of risk and return. Assets include: equities, real estate, alternatives, raw materials, fixed income and international Asset Allocation Asset location – by type of account and type of structure or purpose Retirement vs. Taxable Accounts LLC, FLP, CRT, Trust (Irrevocable or Living) Asset Location Diversification is key Adding each of the following, as appropriate: covered calls, dividend stocks, non-dollar, low beta, preferred stock Minimizing Volatility & Addressing Risk The goal is to minimize volatility while maximizing after-tax and inflation- adjusted returns.

13 Highlight of Fiscal Cliff Negotiations

14 Links to Learn

15 Herb W. Morgan, President and Chief Investment Officer

16 Costs Matter For decades institutional investors have had a massive cost advantage over retail investors…Not any longer. **M Traditional Mutual Funds Mutual Fund Exp Ratio1.50% Mutual Fund Trading Costs*(Not reported in expense ratio).78% Cap Gains Liability 2.50% “UNWRAPPED” EXPENSE RATIO4.78% Exchange Traded Funds (ETFs) ETF Expense Ratio.20% ETF Internal Trading Costs (Not reported in exp. Ratio).01% Capital Gains Liability**.0% “UNWRAPPED” EXPENSE RATIO.21% Source: “Expense Shifting: An empirical study of cost shifting in the mutual fund industry.” Nicolag Sigelkko, Wharton University 1999 **Most ETFS but not all ETFs do not distribute capital gains due to their unique “in kind” creation and redemption structure

17 Cost Matters $10,158,314 $4,425,000

18 Asset Allocation Decisions Matter Most Cisco was, is and likely always will be a great company. 1999TodayFacto Revenue$12.15B$180.0 B15X Net Income$ 2.10 B$ 40.0 B20 X Market Value$300 B$110.0 B- 2/3 So what is “Asset Allocation”?

19 Institutional Style Asset Allocation Opportunistic 0% to 10% Tactical 15% to 30% Strategic 60% – 80% Art & Skill Monkey Math Courage

20 Carlee Harmonson, Senior Vice President, Regional Director, Trust & Estate Services The Private Bank

21 Trust and Estate Services Trustees administer personalized, tax-sensitive and court-supervised instruments according to sound fiduciary principles. Administration Living trusts Testamentary trusts Charitable trusts Special needs trusts Philanthropic Services Grant administration and investment management of: Foundations Endowments Pooled income funds Estate Settlement Asset preservation Complex administrative and accounting services Preparation and filing of tax returns Comprehensive Management of Specialty Assets Real estate Mineral, oil, and gas interests Closely held business interests Promissory notes IRA rollover trusts Probates Conservatorships Guardianships Wills, trusts, foundations and wealth planning strategies have legal, tax, accounting and other implications. Clients should consult a competent legal or tax adviser.

22 Role of a Trustee A trustee ensures your wealth is managed and distributed in accordance with the wishes outlined in your trust. The trustee should maintain a neutral position and balance the interests of current and future beneficiaries. The trustee must avoid conflicts of interest and self-dealing. The trustee must keep beneficiaries informed of trust activity. As a fiduciary, the trustee is responsible for: Investing assets appropriately and providing accounting and bookkeeping Maintaining a complete inventory of all trust assets Recording all income and principal distributions and receipts Maintaining documents and records Filing annual income tax returns Communicating with and making distributions to beneficiaries throughout the life of the trust and upon termination, if applicable. Investing assets appropriately for generational beneficiaries Accounting and bookkeeping Tax payment and Recordkeeping Communication and distribution to beneficiaries

23 Estate Settlement Services Executing your wishes as directed in your estate plan is complex and may require extensive probate administration, asset management, sub-trust funding, and disbursements to your beneficiaries. Your trustee needs to bring objectivity to settling your estate as planned: Marshalling, investing, and safeguarding assets Handling complex administrative and accounting requirements Preparing and filing tax returns Distributing assets when, how, and to whom you specify

24 Specialty Assets Many trusts contain specialty assets: Real Estate Management Management services for commercial, industrial, residential and agricultural property holdings Mineral, Oil and Gas Interest Unique industry expertise and knowledgeable asset managers Closely Held Business Interest Industry specialists who can manage the complexities of private business interests Loan Management Expertise in loans held in fiduciary accounts

25 Duties of a Trustee STARTING THE TRUSTADMINISTRATION BOOKKEEPING RESPONSIBILITIES INVESTMENT MANGEMENT COORDINATION RESPONSIBILTIES TO BENEFICIARIES TAX PAYMENT AND RECORDKEEPING MAINTAINS NEUTRAL POSITION DISTRIBUTION UPON TERMINATION Reviews Trust Agreement Marshalls the assets Meets with beneficiary and/or grantor to determine investment objectives an d income/principal needs Manages recordkeeping for all assets Completes an inventory of all trust assets – keeps track of all cost basis and acquisitions for tax purposes Arranges for appraisal of trust assets and determines property insurance needs Records all income and principal distributions and receipts Takes care of all transaction activity Collects all income, e.g., dividends, interest payments. Ensures they are reinvested or distributed as established in agreement Draws up investment strategy according to objectives of trust agreement Manages investments according to market circumstances, safety of principal, and income needs Regularly reviews performance and objectives Makes distributions to beneficiary as directed by agreement Supplies detailed statements on a regular basis outlining principal, income, and investment activity Takes care of financial obligations for medical needs, if beneficiary is ill Files annual income tax return and provides information for beneficiary tax return Compiles a record of adjusted cost basis and taxable income Manages investments to allow minimal tax exposure Seeks legal counsel when and if needed Reports actions to an independent auditor Follows terms of trust agreement and avoids conflict of interest Arranges partial or final distribution according to trust agreement Divides the assets of the trust property between beneficiaries Supplies accounting information and tax data

26 DMF Board Director and Founder of Kling Partners, Carolyn Kling will moderate the panel. Ms. Kling provides family office investment services to family enterprises, family offices and private foundations. Applying valuation tools that integrate business succession and family generational planning and modeling for family members, Ms. Kling evaluates investment portfolios to assess risk adjusted performance on an after tax basis, investment policy, structure, asset allocation, management fees and other risk parameters. Ms. Kling collaborates with client advisors, trust and estate planning attorneys, tax strategists and CPAs to ensure a seamless integrated investment plan to meet investment objectives through generations. Ms. Kling has earned the professional designation of AIFA, Accredited Investment Fiduciary Analyst. Paul Spitzer, Founder, Advanced Practice Advisors, LLC Mr. Spitzer has been in the financial business for over 25 years. He specializes in Investment Policy Statement construction by aligning the proper asset allocation strategies to each of his clients’ needs. The majority of Spitzer’s career encompassed two decades at AG Edwards, (later Wachovia) where he initiated and concluded two high-profile IPOs valued at $100M each. He is a Member of the Committee for the Fiduciary Standard in Washington DC and is active in various San Diego charities and professional financial associations. Spitzer earned his BA at Idaho State University. Carolyn P. Taylor, President, Weatherly Asset Management Ms. Taylor, majority owner of the partnership, is personally and professionally committed to providing comprehensive high- quality investment management services. With over 30 years of portfolio management experience, Ms. Taylor offers a wealth of investment expertise to WAM’s clients. Formerly an investment banker at Dean Witter Reynolds, Inc., NY, a portfolio manager at Neuberger & Berman NY, and Payden & Rygel, LA, Ms. Taylor has managed over $1B in assets during her storied career. Additionally, Ms. Taylor is a member of the Chartered Financial Analysts Society of San Diego, the San Diego Foundation’s Investment Committee, the Jewish Community Foundation and the National Association of Professional Women. Ms. Taylor is a Founding Member of the National Advisors Trust Company with assets of $7.7 B. Ms. Taylor received her BS and BA from Stanford University. Herb W. Morgan, CEO & Chief Investment Officer, Efficient Market Advisors, LLC Prior to becoming CEO of Efficient Market Advisors, located in Del Mar, Mr. Morgan held the post of Sr. VP of Advisory at Linsco/Private Ledger Financial Services, Inc., Sr. VP with Dreyfus and Sr. VP with ING Funds. Mr. Morgan is involved with philanthropy in education where he served as the Chair of the Investment Committee on the Foundation Chapter of Theta Chi Fraternity, Inc. Mr. Morgan graduated from UC Santa Cruz with a BA in Economics (Honors). Currently Herb is the President of the Board of Trustees of the San Diego City Employees Retirement System (SDCERS) a $5.5 billion dollar public pension plan. He serves on the SDCERS Investment, Audit, Disability and Business & Governance Committees. Herb has been seen on CNN, CNBS & Fox News. Herb writes an investment column for Forbes. Carlee Harmonson, Sr VP, Reg Dir, Trust & Estate Services The Private Bank, Union Bank Carlee leads a team of specialists in wealth planning, investments, risk management and fiduciary services. Carlee has been with Union Bank since 2002 and is a veteran of the trust business with over twenty-five years’ experience in both Personal Trust and employee Benefit Plants. Carlee is a graduate of UC Davis with a BA in Sociology and holds the professional designation “Certified Retirement Services Professional.”

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