4.23.2014



Why transfers fail: It's a family thing

4.23.2014

Wednesday, April 23, 2014

by Susan Kay, Vice President, Business Development Consultant

James Gandolfini, the American actor best known for his role as Tony in the hit series The Sopranos, died less than a year ago, but sadly, he may wind up most remembered for something other than his award-winning acting career.

Instead, he might be remembered for leaving behind his $70 million estate with no estate plan in place.

Consider the results, and what they mean for advisors and their clients:
  • The whole world has access to his estate information because the estate will go through probate, which becomes public information.
  • He left behind a 14-year-old son and a six-month-old daughter without updating any of his legal documents. Instead, everything was left to another child, based on previous estate planning directives, likely done long before his younger children were born.
Could this situation cause any fighting, or even persistent tension, among these siblings later in life? Of course it could.

Why do transfers of family estates fail? Because the heirs fight over issues that they consider to be unfair. They are left all too often advocating for their position based on emotion, fighting over out-of-date documentation and one-time conversations about what mom or dad wanted.

To avoid these situations, talk to your clients about putting their wishes for their estate in writing. Having legal documents in place ahead of time will help to ensure harmony in your clients' families for the next generation.

Related resources:




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4.18.2014



Market commentary roundup

4.18.2014

Friday, April 18, 2014

Catch up on the latest market commentary from MFS



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4.17.2014



I'm the Taxman

4.17.2014

Thursday, April 17, 2014

by Doug Orton, Vice President, Business Development

Why do some expenses dominate our thoughts and planning and some just fade into the background? I was at dinner with a couple of financial advisors, and we started talking about college funding and how difficult it is for even affluent families to pay for school.

As the conversation turned to taxes,1 I had an epiphany.

Many affluent families pay more in income taxes than they do in tuition for a high-end college, and they pay it every year, without question. But sadly most of us spend very little time thinking about our tax bill.

I blame withholding. The money comes out before we ever see it and we adjust our lifestyle to fit our take home pay. This is fine while we're working, but what happens when we retire?

Adverse tax changes have the same impact on a retiree as a market correction, a dividend cut or falling bonds. Spendable income goes down or real wealth is lost. How many clients or prospects have asked you about tax risk? How do I protect my income and portfolio from tax changes?

One option to consider is tax diversification. Building a retirement portfolio that can realize different types of income depending on the client's tax situation. The MFS flyer "Take Control of Taxes in Retirement" can help you explain the concept to a client and diagnose whether the he or she has a tax concentrated portfolio.

1Sadly, this could describe a good number of my dinner conversations. Luckily, after discussing taxes we had a debate about which Beatles album is the best. The correct answer is Revolver.

Related resources:


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4.16.2014



It's April 16: do you know what day it is?

4.16.2014

Wednesday, April 16, 2014

by Vicky Schroebel, Director of Business Development

Congratulations! You made it through another tax season, and today is a day to celebrate.

But wait. It's also a critical day for outbound calls to clients. Why?

April 16 is National Health Care Decisions Day. And as a family financial advisor, it's a day to remind clients whose children or grandchildren turn 18 this year to put a health care directive and proxy in place. Why is this important?

The day that child turns 18 is the first day mom and dad won't get medical information or make any medical decisions when the child ends up in the hospital.

How else to use this information?
  • Add "medical directive" to your Client Review Agenda checklist for this year. Ask clients if they, their parents and any adult children have these documents in place.
  • Call clients before a child's/grandchild's eighteenth birthday and introduce the idea. Tell them to share the information with other parents.
  • If you have adult children or parents still living: do they have the documents in place?
  • If you belong to social networks where you have found it awkward to prospect, use this idea to illustrate what you do.

Your clients' greatest asset isn't their growing brokerage account, it's their child. Help protect the family's emotional well-being by suggesting these forms get completed and signed so care can be given when care is needed.

Give yourself and your clients another reason to celebrate today by taking care of this timely and often overlooked step.

Related resources:

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4.08.2014



Recession babies and the good old days

4.08.2014

Tuesday, April 08, 2014

by Doug Orton, Vice President, Business Development

Remember when investing was fun and easy? For me, it was the late 1990s. Anything I bought went up, and I started to dream of an early retirement.

Of course the "Tech Wreck" brought me back to reality, but those good old days made a lasting impression on me. I'm a pretty optimistic investor and I am somewhat surprised when we have a down year. Many baby boomers I talk to have similar experiences. Whether it is the great bull market of the 1980s or the hectic run-up of the late 1990s, we always have "the good old days" to look back on. In our surveys, we are starting to see that the older generations are beginning to inch back towards their old investing attitudes.



Now let's consider millennials, or investors under age 34, often referred to as Generation Y.

The oldest millennials were graduating high school about the time the Internet bubble burst. Then the financial crisis hit about the time they would start investing in their 401(k) plans. So millennials have no good old days. It's not surprising that they are still skeptical about investing and hold less equity than their grandparents.1

The real question now is whether or not their skepticism is permanent — a secular change associated with this age group — or part of a longer than usual cyclical view that improves with time for this generation.

1The Millennials' grandparents are members of either the Silent or GI Generations. Millennials on average hold about 10% less equity than the average for GI/Silents.

Related resources:
  • Get more perspective from Doug in a recent blog post and video segment on investors' attitudes and behaviors not matching up.
  • Read William Finnegan's recent blog post about the relative lack of comfort investors have shown when it comes to investing following the Great Recession.
  • Read more about the latest results from the Investing Sentiment Insights survey. Find out about millennial investors, overall sentiment and perceptions of investment risk in active and passive investments.
  • Check out the blog post from Michael Roberge, MFS President and Chief Investment Officer, regarding the importance of a long-term time horizon.
  • View "Lengthening the Time Horizon," a short video in which Mike discusses the benefits of a long-term approach to investing.


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