May 2012 – Spring Cleaning

Posted on May 11, 2012 by tower_high22

As they say hope springs eternal….and so too does the paperwork around the house. Last week I was featured on a radio show called Money Life with Chuck Jaffe. On the show my segment basically covered spring cleaning….that is of your records and a few other important estate planning tips things that you can do now, and it won’t take too long to accomplish. If you want to listen I have attached a link here.

But if you would just rather read, let me give you some of the key things I covered.

Wills – it’s a good idea to at least review your will every couple of years, this does not have to take too long, and here are the key things to look for:
1. What year was it drafted…if it’s more than 10 years it really needs to redone, but if it’s less than that look for some of the key following items.
2. Who is your executor…do you still know, like and trust him or her.
3. Who is your custodian for the kids….do you still know, like and trust him or her?
4. Are the people you are leaving money too still alive and if so do you still want to leave money to them?
5. Are there any significant changes in your life that call out for a new will, a new spouse, a new child, a new state of residence?
Beneficiary information. This is a real quick one, on all your retirement accounts, annuities and insurance policies you should have designated a beneficiary. Call your advisors & custodians and ask who they have on file…if you want to change it’s just a simple form, and it will only take you a few minutes to complete and return.
Buy a shredder – when you throwing out old papers, statements, bills, etc, don’t just chuck em, shred em.
User names & passwords. Our lives are increasingly moving online. Banks, financial institutions; benefits etc. all require a user name and password. I suggest that you write all these down in a secure place. Probably not best to type them into your computer and leave a file on their that says “passwords” rather write them the old fashioned way with a pen, and then put this piece of paper or small note book in a safe place…just be sure to keep it up to date when you change your passwords. And make sure your spouse knows where to find it.
Bonus tip for reading the blog. I did not get a chance to mention this on the radio, but invest in a good fireproof box to in which to keep your critical documents. These include passport, birth certificate, wills, power of attorney, home deed, and any other important document.

Enjoy the spring; spend a couple of hours on these tasks every few years and you will sleep better knowing your family is taken care of. Until next month.

Peter Lang, AIF®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave
Suite 404
Harrison NY 10528
(o) 914.825.8631 | 914.825.8630
(c) 914.589.5243
(f) 914.777.1751
Plang@hightoweradvisors

Social Security: What Are Your Options?

Posted on April 25, 2012 by tower_high22

Social security has been a staple for the American retiree for as long as it has been enacted. The administration had originally planned for it to be a supplement to normal retirement savings; however, many Americans viewed it as a replacement. Even though the idea of social security is pure, it is adding too much stress to younger generations (especially now since baby boomers are starting to retire).

I wanted to make you aware of the options involved with social security.

1) Taking Benefits Early- The earliest an individual can start taking social security is 62. Studies have shown that most individuals take social security at their earliest age to get the income, but they are usually in better financial shape if they delay receiving benefits. By taking social security early, you will reduce the amount received as displayed in the following chart:

Age	Reduction
62	30%
63	25%
64	20%
65	13.3%
66	6.66%

2) Waiting until Normal Retirement Age- By waiting until 67, individuals will receive the full monthly social security benefit. Taking social security benefits at this age also allows you to continue to work without effecting the benefits received. If you decided to take the benefits early and continue working, the benefits could be reduced.

3) Wait until After Normal Retirement Age- If you have the ability to delay getting social security, the government does reward your patience. By delaying each year until age 70, the government will increase your monthly benefit 3-8% per year of deferral depending on the age of the recipient.

Considerations: Social security checks will NO LONGER be mailed out starting in 2013. They will be transferred electronically to your account by a direct deposit to a bank or credit union. If you do not have an electric transfer set up to your account, please let us know so we can be proactive about this change.

Conclusion: To be completely honest, no one knows what will happen with social security. Will it be there in 20 years? Will it be there in 10? No one knows for sure, but it is always good to have a plan of action for any scenario (Taking early, taking at normal retirement age, or taking it late). Please contact the Social Security Administration for additional options and your tax supervisor regarding your benefits or Strata Wealth Management with general questions regarding social security.

Warm Regards,
Mike

———————————————————————-

Michael Sherman RFA
Associate Wealth Analyst
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Avenue
Suite 404
Harrison NY 10528
(o) 914-825-8637
msherman@hightoweradvisors.com

Strata Wealth Management is a team of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

Strata Wealth Management has obtained all data and other information referenced herein from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this article is provided as general market commentary, it does not constitute investment advice. Strata Wealth Management and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of The Morgia Group, and do not represent those of HighTower Advisors, LLC, or any of its affiliates.. Individuals are urged to consult their tax or legal advisors before establishing a retirement plan and to understand the tax and related consequences of any financial decision made under such plan. 969238-2012.04

Spring 2012 …A Time For Charity

Posted on April 11, 2012 by tower_high22

Last week during the Passover Seder there is a small line that is read that states something like this “Let all who are hungry join us at this time….” To me that small line always reminds me of my commitment to charity towards helping others who are less fortunate. It also reminds me of legacy, and that of the legacy of my clients to whom I also get the privilege to help plan for their legacies.

Generally when one thinks of charity you think of the usual annual appeals for your favorite cause, be it your alma mater, your church or synagogue, a hospital or health related cause, a museum, the arts, poverty relief organizations or anything else that is important to you and your family. Many of you probably also serve on a board, giving your time and expertise. But what about thinking beyond the usual checks that you write annually, what about involving your children, what about something longer term. Let me share a few ideas now and then will continue this next time.

What types of planning vehicles are there that can help sustain your favorite cause longer term, let’s go over a few right now.

1. Charitable Remainder Trust – CRT – this vehicle provides a source of income to the donor or heir for some length of time and then the remainder goes to a charity(s) of the donors choosing. Depending on when it is established and how it is funded there can be substantial tax advantages to the donors. You can fund it with appreciated securities, and thus avoid the capital gains tax, as well as a tax deduction on your taxes. Think of this as the pay me now, pay the charity later.

2. Charitable lead Trust – CLT – this vehicle provides a source of income to the charity now and the donor or heirs later. Depending on when it is established and how it is funded there can be substantial tax advantages to the donors. You can fund it with appreciated securities, and thus avoid the capital gains tax, as well as a tax deduction on your taxes Think of this as the give the charity now, and pay me or my heirs later.

3. Family foundation – this is a more serious undertaking with lots of rules of regulations that have to followed, and really is only for someone who wants to give a substantial amount destined to philanthropy. So we will dive into this one on a later blog.

These are the three big ideas to share for now, but there will be more to follow.

Some final thoughts, as I have said in earlier posts, in estate planning you get to decide who gets your money, your family, your government or your community (charity). It comes down to the legacy you want to leave, and to whom. So think about it, and think about how you can invite others who are hungry to dine with you.

____________________
Peter Lang, AIF®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave
Suite 404
Harrison NY 10528
(o) 914.825.8631 | 914.825.8630
(c) 914.589.5243
(f) 914.777.1751
Plang@hightoweradvisors

Keeping Online Accounts Safe

Posted on April 5, 2012 by tower_high22

Every day the internet plays a bigger role in our lives and this creates many security challenges. It is more important than ever to ensure that computer identity theft does not take place. There were 43 million Americans that had some form of this identity theft last year. The odds of this occurring are ever increasing and taking steps to secure one’s information is critical.

The keywords these days are apps and cloud computing. Apps are simplifying functionality and eliminating individual websites where the end client becomes more captive. Whereas cloud computing is all about getting access to your information outside of your main computer. The information is located on the web and can be accessed from anywhere.

Although the above is in the most simplistic format, I wanted to shed some insight on how quickly things are changing. Information is no longer mostly on your computer but on the web. With this change, one has to have a secure process and plan to makes sure all information is safe and compliant. Our practice has taken some very strict steps in ensuring our clients that their accounts are protected. We have the most up to date firewalls and anti-virus software installed. Perhaps the most important one of all is our ability to communicate with clients whenever any type of transaction is about to take place.

Here are some ideas to reduce computer hacking:

1. Beef up your security- Make sure all computer use in your home or business has the latest firewalls and antivirus software.

2. Keep up-to-date with the latest patches, especially for your business.

3. When typing in your online brokerage account, make sure it starts with “https” instead of “http”. This ensures a secure web page using encryptions.

4. Log on to your account using your computer. If you use a computer other than your own, for example, you won’t know if it contains viruses or spyware. If you do use an outside computer, make sure to delete all temporary internet files and clear all history.

5. Do not respond to request for personal information over the internet with your online accounts. Always contact your advisor if this occurs as we never ask for this type of personal information over email.

6. Personal Passwords- Always use passwords that are difficult to guess. Try using a combination of numbers and letters (both upper and lower case).

7. Wireless Connections- Public Wi-Fi like airport or hotels reduce security.

8. Log out completely- Make sure you click on the “log out” button.

9. Monitor your credit report- Obtaining a free credit report is a must to ensure there are no outstanding activity that you may not be aware of.

As we take steps to make sure all the custodians along with our staff are all aware of all these issues we need for everyone to take the above steps. Please do contact us if you have any questions or concerns regarding your privacy or for additional information.

—————————————————————-

Roman A. Ciosek, AIF®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave
Suite 404
Harrison NY 10528
(o) 914.825.8633 | 914.825.8630
(c) 914.318.8612
(f) 914.777.1751
rciosek@hightoweradvisors.com

The World’s Debt Demarcation Line

Posted on March 28, 2012 by tower_high22

The world has crossed what I call the Debt Demarcation Line.

Rogoff and Reinhart (co-authors of “This Time Is Different”), state that once an individual country crosses the 90% debt/GDP ratio, they begin to experience lower annual growth of approximately 1% and it becomes very hard for that country to reduce its debt/GDP ratio from that point forward. That should concern everyone because by their calculations, we have seen several countries in the developed world already cross that 90% threshold.

It is not only the large number of countries that are classified in this category, it’s the sheer size of many of them that is most frightening. Many of these nations are the some of the biggest economies in world, with the United States, Japan, and Italy on that list. France, Spain, and England are months away from joining their ranks along with the fact that many other smaller nations are not listed here. Throughout history, it is quite unprecedented to have so many nations hit such massive levels of debt/GDP all together during a period of peace-time. To put it more plainly, we don’t have a peripheral European sovereign debt problem, we have a global sovereign debt crises and have just crossed the World’s Debt Demarcation Line!

So what is The World’s Debt Demarcation Line? It is the best description that I can come up with to explain the fact that the world economy has now crossed a debt line in the sand, similar to that of an individual country crossing the 90% threshold, which will result in slower growth. Bill Gross calls it the “New Normal” and others refer to it in other ways, but as most of the largest GDP nations throughout the world individually cross the 90% debt/GDP level, the world economy has indeed crossed over its Debt Demarcation Line as well.

The world’s Central Banks have, at epic levels of desperation, tried to negate the effects of the massive levels of debt with the creation of more liquidity, but as the world’s debt/GDP levels continue to rise rather quickly, they have only managed to kick the can down the road further and allow government policy makers further time to push off making the hard, but necessary decisions. In other words, they have created a false sense of security and have negated any sense of urgency from Washington to straighten things out, so the policy is not only hindering good choices now, but it is borrowing prosperity from our future.

As each country with large debt loads come under the scrutiny of the bond vigilantes in rolling fashion over the coming years (beginning imminently in Europe), we may get more liquidity into the system going forward, but still experience rising debt/GDP levels, only to be dealt with in the future.

Unfortunately for all of us, the global sovereign debt crisis looks much closer to the beginning than it is to its end…

____________________
Steven M. Ayer, CIMA®, AIF®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave
Suite 404
Harrison NY 10528
(o) 914.825.8634 | 914.825.8630
(c) 914.924.4784
(f) 914.777.1751
sayer@hightoweradvisors.com

Author of “Choosing Simplicity” & Radio Show Host of “Global Currency Watch”

Why I Joined HighTower

Posted on March 22, 2012 by tower_high22

Recently there’s been quite a stir around how some Wall Street firms conduct business and whether or not it is always in the best interests of their clients or the firm. This is nothing new. However, it occurs on a much grander scale today. The unfortunate fact is that some of the major Wall Street firms continue with this way of doing business placing firm first, then client, and even reward it! What comes along with this type of culture mentality is a growing frustration from those of us who believe the opposite; client first.

Here at HighTower, we created a business built on a foundation of like minded professionals who place their client’s needs first above anything else and strive to reduce and/or completely eliminate any potential conflicts of interest which may have arisen at any one of our previous firms. I realize that this last statement may come off as a sales pitch but it’s the truth. As one senior advisor told me when I first joined the business, “this business and ultimately your success relies upon one thing; service, service, service!” If we don’t put our clients first and lose their confidence and trust, there will be no business to speak of.

——————————————————

Douglas Messina

Associate Wealth Manager

Strata Wealth Management HighTower Advisors

440 Mamaroneck Ave Suite

404 Harrison NY 10528

(o) 914.825.8638 | 914.825.8630

(f) 914.777.1751

dmessina@hightoweradvisors.com

The Search for Growth and Income in a Subpar Environment

Posted on March 12, 2012 by tower_high22

Asset allocation hasn’t been about just stocks and bonds for quite some time now, but in an environment where US GDP growth is muted, with traditional domestic stocks likely reflecting this with subpar returns over the next few years and a policy response which has given us low income and high risk in traditional bonds, many need to broaden their search for other means of growth and income, so as to at least keep pace with inflation.

This leads us to a fresh look at traditional asset allocation; what we might include to provide us with better risk/reward characteristics to traditional stocks and bonds and how we might more usefully categorize these new and possibly temporary elements.

If we look at all of the asset classes comprising the global capital markets when building an ideal asset allocation, in this new environment we might start with those components that would be considered “core” or instrumental and permanent to the portfolio. These would include traditional large and mid-sized domestic and international stocks of both growth and value. They would also include short, intermediate and long-term US bonds.

Around this “core” portfolio, however, we would tactically blend in “satellite” elements meant to be more opportunistic in the current environment. They would offer diversification and more attractive risk/return patterns than our “core” portfolio. These might be areas such as emerging market equities and debt, global high yield, commodities including precious metals, international small cap equities and domestic convertibles, for instance.

This search for better growth and income would also require us to consider “alternative” asset classes, such as hedge funds, managed futures and private equity. If the current price of full liquidity is low returns, many times some illiquidity can be traded off for better returns.

If we blend these categories together in different ways, we see a pattern of higher growth and income at lower risk than our traditional portfolio – not a bad outcome for broadening your horizon.

____________________________________

Jeffrey G. Sullivan, CIMA®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave
Suite 404
Harrison NY 10528
(o) 914.825.8632 | 914.825.8630
(c) 914.522.3420
(f) 914.777.1751
jsullivan@hightoweradvisors.com

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

Strata Wealth Management has obtained all data and other information referenced herein from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. Strata Wealth Management and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of Strata Wealth Management and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

Are 529 Educational Plans Worth the Time and Money?

Posted on March 6, 2012 by tower_high22

The short answer is definitely yes! In order to fully understand the importance of the 529 plan, one has to understand why these plans were initially created. They originated from the high debt that has been accumulated by students’ that are coming out of college. Here are some important statistics around the cost of education:

1)-Since 1978, the cost of college tuition in the US has gone up over 900 percent.

2)-The average student has accumulated over $25,000 in student loans by graduation day in 2011.

3)-Americans have accumulated almost one trillion dollars in student loan debt, yes a trillion.

This validates that education debt is one of fastest growing thus leading to a significant amount of people defaulting.

Some of these facts were the basis for the creation of the 529 plans. The government has enough unfunded social liabilities and education is an important one that they cannot afford to maintain.

There are many benefits and features to these plans. I would view these plans similar to a Roth IRA. The one distinct difference is that Roth IRA’s have qualifying income limits whereas 529 plans do not. Irrespective of one’s income, contributions can be made. If the money is used for education, the monies come out tax free just like a Roth IRA.

Another benefit, from an estate planning perspective, is once money is put into these plans it is out of your estate. Since 529 plans are considered gifts, you can front-load your contributions for five year periods, meaning you can contribute $30,000 (jointly) in one year, then wait four years before contributing again.

If your child does not attend college, you can change the beneficiary of the plan to another family member or sibling. If the money is never used for education, you can pull it out but there will be a 10% penalty on the earnings. There are also many accredited schools for older individuals which can also qualify for these funds.

Perhaps one of the takeaways from these educational plans is that there are many of them in the marketplace and the landscape may be confusing. In order to simplify the process, an investor needs to understand these plans and more importantly how they fit into your overall financial picture.

Roman A. Ciosek, AIF®
Managing Director
Strata Wealth Management
HighTower Advisors
440 Mamaroneck Ave Suite 404
Harrison NY 10528
(o) 914.825.8633 | 914.825.8630
(c) 914.318.8612
(f) 914.777.1751
rciosek@hightoweradvisors.com

The Strata Group is a team of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

The Strata Group has obtained all data and other information referenced herein from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The Strata Group and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of The Strata Group, and do not represent those of HighTower Advisors, LLC, or any of its affiliates.

Japanese Yen: Be careful what you wish for

Posted on March 2, 2012 by tower_high22

For many years, Japan has struggled against a very strong Yen, given its perceived safe haven status throughout the world. Japan has tried everything to weaken the Yen, even going so far as printing money and running large fiscal deficits to weaken it (and jump-start it’s economy), but nothing has worked, that is, up until now. The combination of the trade deficit (the first in 30 years), dismal fourth quarter GDP results, and additional central bank stimulus have finally caused the Yen to give way to the downside, breaking its 5 year uptrend.

The problem is that, soon, Japan may be longing for the days of a stronger Yen. With a debt to GDP ratio above 200%, wide annual fiscal deficits, a stagnant economy, and dead-lock in government, Japan appears to be on the verge of entering into the global sovereign debt crises shortly. If this occurred, this would mean a much lower currency value, higher bond yields, and thus, an even more frustratingly slow to weak economy. If bond yields begin to rise in Japan, the impact upon the deficits would be catastrophic because of the massive level of debt in the country. This singular event would cause the fiscal deficit to balloon, even if cost cutting measures were enacted and in addition, would cripple the domestic economy.

As we’ve seen in other countries, once the bond vigilantes begin to scrutinize your balance sheet with disbelief, the path for a quick escape becomes sealed and negative growth with a rising debt to GDP becomes reality. Japan is in much worse shape than Greece or any of the other countries that have come under scrutiny, but because most of their debt is mostly financed domestically, it has escaped the credit fears up until this point.

This is about to change because of the trade deficits, lower domestic savings, and a complete inability by the politicians to enact anything that may begin to resolve the debt crisis that they are facing. There will be an upcoming vote to increase the consumption tax in a few weeks and this singular event may just be the yen that broke the camel’s back. Why? Because if they increase the tax, then economic growth will suffer as a result, but if they don’t pass it, they simply have zero political will to deal with their swelling debt. Sound familiar: From Win-Win to Lose-Lose….

____________________

Steven M. Ayer, CIMA®, AIF®

Managing Director

Strata Wealth Management

HighTower Advisors

440 Mamaroneck Ave Suite 404

Harrison NY 10528

(o) 914.825.8634 | 914.825.8630

(f) 914.777.1751

sayer@hightoweradvisors.com

Author of “Choosing Simplicity” & Radio Show Host of “Global Currency Watch”

Next Steps in Estate Planning

Posted on February 27, 2012 by tower_high22

So what are the next steps in estate planning….where do you go from here?

As with any planning process they say to always start with the end in mind. So when it comes to estate planning unlike say building a house the hard part is that you are no longer able to see it. When building a house it may be hard to see the finished product, but with a good architect they should be able to help with some renderings, now done pretty quickly on a computer. You can’t quite render the value of your estate but with aid of a good financial plan you will have a plan for your goals.

Our long term customers have had financial plans for many years. Over those years our customer’s goals as well as financial markets have changed. And by discussing the goals and financial plans with our customers, we strive to help our customers understand the financial markets so they can achieve those goals. So what is the point of saying all this, you have to start somewhere. As a beginning point I would make the following assumptions:

1. Your estimates are just that, and estimate. So while not perfect, it’s probably closer than you think.

2. Get started, as I have said in past postings, doing nothing is not an option. You may think, I am too young to plan, well unfortunately young people die too, just see the news.

3. Unlike certain plans you make your estate plans will need to be reviewed and revised every few years. There is no such thing as an estate plan that never needs updating. So unlike your new dream home, when the foundation is poured it’s pretty tough to change. But changing the siding or the windows is not so tough.

4. To use an analogy I think you should compare your values that are handed down to the foundation in your dream home. Once poured it’s tough to change them. (This sounds like a good topic for a future post.)

So get started with preparing a balance sheet, listing of all your assets and liabilities and who owns them. Give one of us a call and let us help you begin this process. We have a very easy to use template that we are beginning to provide to our clients in our review meetings. If you don’t have one yet, just call us.

Once you get that done, start thinking about who you want to get what, the most important asset would be your children assuming they are under the age of 21 they will need a guardian. Remember the person you feel would be best to bring them up may not be the person you would feel best to handle your assets on their behalf…no reason you can’t split that between multiple parties.

After the kids, I think the rest of the decisions can be easier, that does not mean without complication, and issues, but easier.

More all of this next time I post, until then don’t procrastinate, get started on your planning process.