TOUCHSTONE FINANCIAL PLANNING OBSERVATIONS & INDUSTRY NEWS

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1 Featuring: Michael A. Dubis, CFP, President Date: November 2004 Happy Election Day! What a day to send out my newsletter. Hopefully this will get to you before the exit polls do so you can actually read something enjoyable and entertaining rather than something that will likely raise your blood pressure. To make your life even more entertaining, give this brain-teaser a try feel free to send me your answer: 1) One 2) Thirteen 3) Thirty-One Q: Which number is MOST different from all the others and WHY? Next Month, I ll give everyone the answer. Be sure to read the Dalbar study summary about why working with a competent financial advisor is tremendously valuable in your financial life quite fascinating. Also, I have been admitted to the Paladin Registry of Trusted Advisors, which is quite an honor. Learn more below and enjoy I m off to vote! Quote(s) of the Month: There is nothing new in the markets, only the history you haven t read. Larry Swedroe. Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. Charles Dickens David Copperfield Interesting Statistics: 24% of annual returns lost to taxes by some shareholders of taxable equity mutual funds that are not tax-managed appropriately. (Lipper 45% of annual returns lost to taxes by some shareholders of taxable fixed income mutual funds that are not tax-managed appropriately. (Lipper) 1 : The number of ATM machines for every 284 American households. There is even 1 ATM at the McMurdo Station on Antarctica! (Fortune) TOUCHSTONE FINANCIAL, LLC 1

2 Planning Points & News around the Industry: Behavior Management a Study done by Dalbar, Inc: Your own behavior poses the biggest risk to your portfolio s performance, according to a study conducted by Dalbar, Inc., a financial market research firm. The study, which measured the money flow in mutual funds from 1994 to 2002, found that the average investor earns less than the rate of inflation on their investments (see Table 1). Chasing yesterday s hot performers, market timing and reduced holding times were the main reasons for poor returns, according to Dalbar. The study s results suggest that a person holding a simple index fund and doing nothing during the same time period would have easily beaten the vast majority of investors. Clients already know that at Touchstone Financial we help you stay focused on the long term. We do not flip in and out of investments based on short term market fluctuations or based on what sectors may be hot or cold next month. We don t waste our time chasing yesterday s hot money manager and we hold our mutual funds for the long term. If Touchstone Financial did nothing else but help you reinforce good investor behavior we would easily add exponentially more value than our fees. If good behavior can add over 5-10% annually to your returns, it makes a lot of sense to work with a competent professional who can guide you through the tough times. Table 1. Market Chasing Mutual Fund Investors Earn Less than Inflation Time period January 1984 December 2002 Average Investor Return 2.57% Standard & Poor s % Inflation 3.14% Diversified Index Portfolio 13.50% SOURCE: Dalbar Web link of the Month/Article of the Month Article Link: House of Games: Wall Street is in the Manufacturing Business, not the Objective Advice Business Dan Wheeler. The article written to professionals like myself is an ideal reminder to investors alike of who is and who is not working in your best interest and provides a basic history of why brokerage firms have become who they are today. TOUCHSTONE FINANCIAL, LLC 2

3 TSF Current Events: NOTE: Year End Tax Planning is priority right now. Your accountant s busiest time is February April, mine is now through December. In The News October 2004 NAPFA Midwest Regional Conference: As most of you already know, I was a guest speaker at the National Association of Personal Financial Advisors Midwest Conference last month. I spoke to an audience on best practices for marketing and client relations. The presentation was so successful that I have already been invited back to speak on the same topic and to lead another presentation on overall best practices for fee-only financial advisors. I owe this success & recognition to the clients of Touchstone Financial and am forever grateful for your ongoing trust and consideration. October 2004 Michael Dubis admitted to the Paladin Registry of Trusted Financial Advisors: Last month, I was admitted to the Paladin Registry ( a new service for investors offered by consumer advocate, Jack Waymire, the author of "Who's Watching Your Money? The 17 Paladin Principles for Selecting a Financial Advisor" (Wiley, 2003). Paladin Investor Resources provides awareness, education, information, tools, and services to investors who rely on advisors to achieve their financial goals. Advisors must meet very strict standards to be approved for admission, namely in the areas of Integrity, Education, Experience, Advanced Planning Expertise, and Fee-Only Compensation. I m very grateful to be included in this select group of top advisors. October 2004 Milwaukee Journal Sentinel: The October 10 Avrum Lank Business article highlights year-end tax planning issues to consider. I was interviewed and quoted on year-end portfolio tax planning and how tax-loss harvesting, where you sell funds with losses in the portfolio and replace them with similar asset classes, can offer value in your tax planning without losing interest in that asset class. September 2004 Bob Veres Inside Information: I was interviewed and quoted in Inside Information. An industry newsletter for serious financial advisors created by Bob Veres, who is considered one of the financial planning industry s most influential people and has been called the conscience of the planning profession. I shared my thoughts of how to service clients best by focusing on serving a small number of select clients excellently and how that focus and commitment to excellence is incorporated in the successful development of my business. Speaking Schedule: November 13 th, I will be speaking here in Madison for the Wisconsin Women s Business Initiative program on personal finance. December 8 th, I will be speaking to another Women s business organization on advanced investment & portfolio management strategies. March 16, 2005, I will be speaking to the American Association of Individual Investors on a favorite topic of mine: How Wall Street and the Media are not looking out for your best TOUCHSTONE FINANCIAL, LLC 3

4 interest. Clients and friends of clients will be invited to attend this presentation here in Madison. Watch for an invitation early next year. About Touchstone Financial, LLC: Touchstone Financial, LLC is a fee-only comprehensive financial planning and investment firm. I provide objective, unbiased, client-specific advice, focused on goal attainment and risk management, while keeping decisions and costs in your control at all times. Touchstone provides our clients with comprehensive and project specific financial planning services such as cash flow, tax, insurance, investment, financial independence, and estate planning services. I do not discriminate clients based on income or size of investment accounts. I believe it is not the size of your assets today that determines your needs, but rather what your goals are for the future and what you will need to get there. I am centrally located here in Madison, Wisconsin and I work with clients throughout the region, by leveraging the use of technology to make communication easy and productive, while being very flexible to your busy schedule. Mission Statement: For You, the Client: I strive to have a positive impact on the quality of my clients lives each and every day. Through excellence in financial planning, I will help clients discover their values and identify their specific goals, help them maintain control of their financial resources, create financial simplicity, and preserve their legacy, with the ultimate goal of financial peace of mind. For the Firm: I wish this business to be a place of creativity and excellence. The purpose of Touchstone Financial is to enrich the lives of our clients and ourselves through the positive experiences I have with our clients and our community. I have a goal to be profitable, in order for me to practice what I preach; create value for ourselves and our future employees; and provide clients and community with the security of knowing that I will be here for them and their families for as long as they need me. Contact Us If this topic interests you, feel free to contact Touchstone Financial to discuss how this may be applicable to yours or someone you know current or future financial situation. TOUCHSTONE FINANCIAL, LLC 4

5 Or, if you are not currently a client, we invite you to learn more about how Touchstone Financial can become a trusted advisor in your financial life by contacting us at (608) or via at info@touchstoneplanning.com. Note: SUBSCRIBE: If you feel this information or Touchstone Financial's Monthly Newsletter would be beneficial to any of your family, friends, or acquaintances, feel free to contact Touchstone Financial and inquire about subscription. UNSUBSCRIBE: If you feel you received this message/newsletter in error and wish to no longer receive this type of from Touchstone Financial in the future, please reply directly to this that you wish to be removed from this mailing list. Disclaimers: Touchstone Financial does not guarantee the relevancy, appropriateness, or accuracy of any outside information or links. The information in this is based on data gathered from what are believed to be reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for investment or financial planning decisions. It should also not be construed as advice meeting the particular investment or financial planning needs of any investor or reader of this material. Any reference to outside information is for your convenience only and should be treated prudently. Contact Touchstone Financial directly with any questions you may have or for consultation. Touchstone Financial, LLC. is a Wisconsin Registered Investment Advisory firm. We do not render or offer to render personalized investment advice or financial planning advice through this medium. This medium is limited to providing you with general information on our services and provides a way for you to contact us. Advice can only be rendered after all of the following conditions are met: 1. Delivery of a disclosure statement by advisor to client 2. Execution of an Investment Advisory and / or Financial Planning agreement between advisor and client. 3. Initial payment of the planning fee or investment advisory fee by client to advisor 4. Advisor may transact business only in states in which it is registered, or in which it is exempted from registration. All references that might be made to an investment or portfolio's performance are based on historical data and one should not assume that this performance will continue in the future. TOUCHSTONE FINANCIAL, LLC 5