Dialogues Wealth Management

Transcription

1 Dialogues WEALTH STRATEGIES FOR DISCUSSION Our definition of wealth management is understanding you better and gaining deeper insight into your and your family's needs, goals and values. By looking at your whole financial picture, We can help you develop sound investment strategies. Let's continue working together to optimize your portfolio potential. COURTESY OF THE VK GROUP 720 S. Atherton St. Ste 101 State College, PA Phone: Fax: Tollfree: BRUCE E. VINION Vice President Financial Advisor Portfolio Manager MARVA L. KING, CRPC Financial Advisor SECOND QUARTER 2011 Looking Beyond Short-Term Volatility Whether you get your news from the papers, television or the Internet, you know how quickly the financial markets can change. Some days are euphoric (a key economic report may bolster consumer confidence or a company reports better-than-expected earnings for the quarter, igniting market indexes). Other days, however, aren t as sunny and some of them may be downright unnerving. So what are some of the possibilities when an inevitable downturn occurs in the market? An important piece of advice to keep in mind during a market slide is one you ve no doubt heard before: Do not overreact. Even though your instincts may be telling you to try to protect your investments by switching to a more conservative approach or to liquidate your positions in hopes of buying them back at lower prices when the worst is over (an approach known as timing the market), it s important to keep your emotions in check and your eyes on the long-term horizon. History tells us that over the long run the stock market can be quite resilient. From wars to natural disasters to economic meltdowns, the market has seen it all and over time has shown remarkable capacity to bounce back. While it s not always easy to maintain long-term perspective, overreacting to events as they unfold may compound the damage and you may end up selling at the bottom or missing part or all of a subsequent market recovery. To help protect against short-term volatility and the anxiety it may create, together, we can help develop a diversified investment plan that reflects your long-term goals and tolerance for risk. By reviewing the investment plan on a periodic basis, we can try to alter it as needs change. Our primary focus is ensuring that your wealth continues to work hard for you day in and day out. Past performance is no guarantee of future results. Diversification does not ensure against loss. Morgan Stanley Smith Barney LLC. Member SIPC

2 DIALOGUES//2 NOW Is the Time for an Annuity Review Over time, your financial needs and future plans can change, and this is especially true during times of economic uncertainty or prolonged market volatility. In fact, many investors have either had to delay retirement or modify their retirement lifestyle to reflect their changing circumstances. According to a recent study conducted by the Employee Benefit Research Institute (EBRI), among the wealthiest quartile of Americans, 13% are in danger of churning through their savings within 20 years of retirement. 1 If you own an annuity, you may already be well positioned to receive a guaranteed income stream, but it is still important to review your contract annually to help ensure that the annuity s features and benefits remain competitive and are still in line with your goals. If you want to know how important an annuity review is, consider the following three scenarios: 2 WHERE THERE S A WILL, THERE S A WAY? NOT ALWAYS Angela is Dave's second wife. They wisely wrote new wills after their wedding, but Dave overlooked reviewing his annuity beneficiaries. He assumed that his new will 1 Even the Wealthy Can t Count on their Retirement Years Being Golden, by Walter Hamilton, Los Angeles Time Online, July 13, Hypothetical examples. Any resemblance to real clients at Morgan Stanley Smith Barney is purely coincidental. An annuity review can help ensure that you leave your assets to the people you intend. made it clear that Angela should get the proceeds from all of his investments. It wasn t until Dave died suddenly that Angela learned that Connie, Dave s first wife, was still the beneficiary on the annuity. Dave s will did not supersede the annuity contract, even though it seemed clear that Dave wanted Angela to receive his assets. In the end, Connie received the proceeds from the contract. WHEN PLANS CHANGE, PORTFOLIOS SHOULD TOO Wendy, 63, purchased a variable annuity when she was 55. At the time, she had intended to retire at 65 but that was before the market downturn in Wendy had a living benefit that allowed her to lock in any gains in her annuity contract, but since she was invested in a conservative portfolio in-line with her risk tolerance, the gains were modest. Since 2008, Wendy has revised her retirement age to 68 and updated her risk tolerance to a moderate aggressive allocation in hopes of maximizing her retirement savings. She recently changed Financial Advisors, and it was Wendy s new Financial Advisor who, while conducting an annuity review, discovered that the underlying investments in her variable annuity did not reflect her new level of risk tolerance. Wendy has since modified her annuity portfolio for a more aggressive model which is in-line with her new investment objectives. THERE S NO SUCH THING AS A SMALL CHANGE James has been a successful corporate attorney for the past 35 years. He recently took an early retirement package from his firm two years earlier than his planned retirement date. A week later, James received a call from his Financial Advisor offering him a complimentary review of his two variable annuity contracts. His first inclination was to decline the offer, since An annuity review can help ensure that your contract accurately reflects your goals.

3 NOW IS THE TIME FOR ANNUITY REVIEW DIALOGUES//3 he had received an annuity review the year prior and he didn t think anything significant had changed to warrant a review. Besides, his severance package was substantial enough to last two years, so he wouldn t have to alter his current retirement strategy. James called his Financial Advisor to decline the offer. During their conversation, James mentioned that he had some new health concerns that could potentially be expensive in the future. His Financial Advisor told him about several options, including long-term care An annuity review can help uncover new wealth planning needs. insurance, 3 which James had never heard of before. He immediately scheduled a meeting with his Financial Advisor to review his variable annuity contracts, as well as the options they had discussed on the phone. 3 Long-term care insurance is medically underwritten and insurability is subject to the insurance company's underwriting requirements. If you own an annuity, we can evaluate your annuity s features including the rating of the insurance company, the performance of the contract, liquidity and living benefit and death benefit options to ensure that your contract is still in-line with your investment objectives and retirement goals. Call us today and request a complimentary annuity review. For clients whose account is carried by Morgan Stanley Smith Barney LLC, insurance products are offered in conjunction with Morgan Stanley Insurance Services, Inc. For clients whose account is carried by Citigroup Global Markets Inc., Morgan Stanley Smith Barney LLC offers insurance products in conjunction with SBHU Life Agency, Inc. Variable annuities are sold by prospectus. Investors should carefully read the prospectus which includes information on the investment objectives, risks, charges and expenses along with other information before investing. To obtain a prospectus, please contact your Financial Advisor. Please read the prospectus carefully before investing. Living benefits are optional and are available for an additional cost. When evaluating a living benefit there are several key factors that must be considered such as: cost, investment limitations, holding period, liquidity, withdrawals and the client's age and risk tolerance. The cost for these optional living benefits typically ranges from 0.40% to 1.50% annually. You should review and discuss all of these general points with your clients before they invest. Variable annuities are long-term investments designed for retirement purposes and may be subject to market fluctuations, investment risk, and possible loss of principal. All guarantees are based on the financial strength and claims-paying ability of the issuing insurance company. Exchanging annuities may result in surrender charges and a new surrender charge period. New surrender charges may be imposed with a new contract; and the new contract may be subject to additional insurance and investment related fees as well as increased risk. Taxable distributions (and certain deemed distributions) are subject to ordinary income tax and, if taken prior to age 59 1 ¼2, may be subject to a 10% federal income tax penalty. Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Smith Barney Financial Advisors do not provide tax or legal advice. Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters Morgan Stanley Smith Barney LLC. Member SIPC.

4 DIALOGUES//4 Prevent Clutter (and Save a Tree or Two) with E-Delivery Whether you re running a business, raising children or pursuing a new venture (or doing all of these things and more), your life is busy enough without having to spend extra time each day sorting through an unruly pile of mail at home. While there s not much we can do about retail catalogs or coupons from your local grocer, we can help you minimize your mail clutter through our E-Delivery service. With E-Delivery, you can cut down on the amount of paper being sent to you by receiving all your monthly statements, trade confirmations, prospectuses, proxies, 1099 forms and year-end summaries online at smithbarney.com. All of these documents can then be viewed at your convenience, 24/7. Stop all the paper, or just some of it. What s more, E-Delivery reduces paper production and helps lower water consumption, greenhouse gases and solid waste. Delivering statements electronically instead of by postal mail also reduces gas consumption and carbon monoxide emissions so your home mailbox won t be the only thing with a little more breathing room. HERE S A QUICK OVERVIEW OF HOW E-DELIVERY WORKS:» You are notified by when your statements are ready for online viewing.» You can view your statements in a safe and secure online environment.» You can discontinue delivery of your paper statements by mail (year-end summaries will continue to be mailed unless you choose to also receive these by E-Delivery). So, whether you re motivated by clutter or climate change (or both), sign up for E-Delivery today. For more information on how to enroll, talk to us or call the Online Client Service Center at Morgan Stanley Smith Barney LLC and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor. Investments and services offered through Morgan Stanley Smith Barney LLC. Member SIPC Morgan Stanley Smith Barney LLC. Member SIPC.

5 Action Response Cards For PROOF purposes only. Actual card is 1/2 wider than image below. Come to Morgan Stanley Smith Barney. As Financial Advisors at Morgan Stanley Smith Barney, we try to strive to deliver the breadth of advice that your wealth deserves. Please tell us what services most closely match your needs. With your permission, we will contact you with the information you indicate below. PLANNING GUIDANCE Financial Planning Retirement Planning Estate Planning Education Planning Tax Management Risk Management Asset Allocation Business Succession Planning Philanthropic Giving Banking Services Strategic Borrowing Personal Trust Services INVESTMENT SERVICES Annuities Equities Mutual Funds Unit Investment Trusts Government/Agency Securities Corporate Bonds Municipal Bonds Certificates of Deposit 529 Plans Life Insurance/Long Term Care Daily Cash Management Professional Money Management Managed Futures Stock Options Alternative Investments International Investing I understand that, by completing the information below, I am authorizing Morgan Stanley Smith Barney, directly or through its agents, affiliates and marketing partners, to contact me with information and offers about products and services that might interest me. By signing and dating below, I acknowledge that I am authorized to receive calls at this telephone number, and my authorization is given freely and is not a part of or contingent upon any agreement with Morgan Stanley Smith Barney. I acknowledge that I may receive calls even if my telephone number is listed on the National Do Not Call Registry or a similar do-not-call list. NAME ADDRESS HOME, BUSINESS OR CELL PHONE BEST TIME TO CALL: AM PM CITY/STATE/ZIP YOUR SIGNATURE DATE Morgan Stanley Smith Barney LLC and its affiliates do not provide tax or legal advice. To the extent that this material or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Any such taxpayer should seek advice based on the taxpayer s particular circumstances from an independent tax advisor. Morgan Stanley Smith Barney offers a wide array of brokerage and advisory services to its clients, each of which may create a different type of relationship with different obligations to you. Please contact us to understand these differences. The investments listed may not be suitable for all investors. Morgan Stanley Smith Barney recommends that investors independently evaluate particular investments, and to seek the advice of a financial advisor Morgan Stanley Smith Barney LLC.Member SIPC / THE VK GROUP at Morgan Stanley Smith Barney 720 S. Atherton St. Ste 101 State College, PA TELEPHONE: TOLL-FREE: FACSIMILE: marva.l.king@mssb.com