1. Presents
FINANCIAL
CHALLENGES
7/1/2012 1

2. CLIENTS
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3. GOALS
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4. MONEY
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5. Intro
Intro

6. MORE GOALS THAN MONEY
More Goals
MOST PEOPLE HAVE …
Multiple Goals
Limited Amount of Money

7. MORE GOALS THAN MONEY
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8. MORE GOALS THAN MONEY
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9. MORE GOALS THAN MONEY
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10. MORE GOALS THAN MONEY
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11. MORE GOALS THAN MONEY
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12. MORE GOALS THAN MONEY
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13. MORE GOALS THAN MONEY
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14. MORE GOALS THAN MONEY
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15. MORE GOALS THAN MONEY
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16. TAXES
If Tax Deferred or Tax
Deductible (IRA/403b, etc.)
Taxes are Delayed, But Still
Impact Your Investments!
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17. TAXES
Taxes Make A Difference

18. TAXES
Taxes Impact Rate of Return
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19. ACTIVE MONEY MANAGEMENT
The process of using security analysis
in an attempt to obtain returns higher
than those offered by the market
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20. ACTIVE MONEY MANAGEMENT
More Risk To Break Even With The Market
An active manager must outperform an index
by the total of the additional costs of
90 – 250 BP (1) just to match its performance!
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21. ACTIVE MONEY MANAGEMENT
Active Management Facts
• S&P 500 outperformed active large-cap
funds by 2/3rds.
• S&P MidCap 400 outperformed active
mid-cap funds by 75%.
• S&P SmallCap 600 outperformed active
small-cap funds by 63%.
“Most Active Funds Continue to Trail Index Performance”. US News, 2011.
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22. ACTIVE MONEY MANAGEMENT
Active Money Management vs. Passive
(CAPTURE THE MARKET)
Exchange Traded Funds are a form of indexing and represent PASSIVE MANAGEMENT
● Don’t attempt to beat the market with selective stock picks
● Don’t attempt to time the market
PASSIVE EQUITY PASSIVE
INDEX FUNDS ADVANTAGE
Large Cap Growth 5.17% 4.00% 1.17%
Mid Cap Growth 8.52% 5.91% 2.61%
Small Cap Growth 6.26% 4.81% 1.45%
Source: Standard & Poor’s, CRSP. Periods ending June 30, 2011
Fixed Income OUTPERFORMED 1-5% PER ANNUM
FOR INVESTMENT GRADE BOND FUNDS
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23. INFLATION
Inflation
Inflation is the
increase in the cost
of living

24. INFLATION
How Much Has The Cost of Living Increased?
COST IN COST IN
1913 -- $1,000 2011 -- $22,870.81
1950 -- $1,000 2011 -- $9,395.06
Source: Consumer Price Index Data 1913 - 2011
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25. INFLATION
Inflation and Investments
TIME INFLATION RATE
From 1945 -- 2010 3.93%
From 1950 – 2010 3.64%
Future ?
YOUR INVESTMENTS SHRINK
BY THE RATE OF INFLATION
Source: Historical Inflation Rates: 1914 - 2011
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26. INAPPROPRIATE SOLUTIONS
Inappropriate
• Don’t coordinate with your situation
• Amount of investment not right for goal
• Incorrect product type
• Aren’t based on an objective and detailed financial
analysis of your personal values
• “Pre-asset allocation” decisions balancing your assets
and savings with your goals haven’t been made
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27. INAPPROPRIATE SOLUTIONS
Inappropriate Solutions
• Have high expenses and fees
• ALL possible strategies aren’t evaluated
and implemented
• Limited or NO flexibility
• Have surrender penalties that limit your ability
to improve your financial options
• Provide limited or NO service
• Aren’t compatible to your risk tolerance
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28. RISK
Risk
Types of Risk
• Investment Risk
• Insurance Related Risk
•Life
•Health
•Disability
•Long Term Care
•Property and Casualty

29. RISK
Little Knowledge of Direct Relationship
Between Risk and Return
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30. RISK
Volatility and Price Fluctuation Not Understood
RESULTING IN PANIC!
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31. RISK
Lack of Diversification and
Inappropriate Asset Allocation

32. RISK
Insurance Related Risk
• How much capital is needed
• How long capital is needed
• How will the capital need
change over time?
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33. CONFLICTING RECOMMENDATIONS
Sales Person Bias
Conflicts
SECURITIES REGISTERED SPECIALISTS INSURANCE AGENTS
REPS SELL… SELL… SELL…
• Mutual Funds • Retirement • Life Insurance
• Variable Annuities • College Planning - Fixed/Variable
• Stocks • IRA, 401k, 403b (TSA) • Annuities
• Bonds • Annuities - Fixed/Variable/Equity
• General Inv Products • Mutual Funds
• Long Term Care Indexed
• Long Term Care
• Disability
• Health
• Property & Casualty

34. CONFLICTING RECOMMENDATIONS
Television – Radio “Personalities”
• Broad General Information
• May Be Misleading
• Not Specific To Your Personal Situation and Values
• No Effective Way to Challenge Statements They Make
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35. CHANGE
Change
Changes That YOU CHOOSE To Make
• A Goal (Change or Eliminate)
• Amount of Investments & Savings
• Specific Investment & Savings Solutions
• Time Horizon
• Employment / Career
• Life Style
• Risk Management Decisions (Investment & Insurance)

36. CHANGE
Changes Where You May Have
LITTLE OR NO CHOICE
• Tax Laws
• Income (Loss or Gain)
• Job Loss
• Economic
• Health

37. EXPENSES & FEES
All Investments Have Expenses & Fees
Expenses
NON DISCLOSED
PARTIALLY DISCLOSED
FULL DISCLOSURE

38. EXPENSES & FEES
Non Disclosed
• CDs
• Fixed Annuities

39. EXPENSES & FEES
Partially Disclosed
• Mutual Funds
• Variable Annuities
DISCLOSED NON-DISCLOSED
Expense Ratio Trading Cost
Sales Related Bid-Asked Spread
Commission Market Impact
Potential Embedded
Capital Gains

40. EXPENSES & FEES
Full Disclosure
• Exchange Traded Funds

41. EXPENSES & FEES
Mutual Funds and Variable Annuities
Expenses & Fees Comparison
ANNUAL EXPENSES MUTUAL FUNDS VARIABLE ANNUITIES ETFs
EXPENSE RATIO 1.45% (1) .88% (1) Avg .20%
COMMISSIONS (TRANSACTIONS) 1.44% (2) .45% (2) .10% - .30%
BID-ASKED SPREAD .40% (3) .40% (3) N/A (5)
MARKET IMPACT .40% (3) .40% (3) N/A (6)
DISTRIBUTION EXPENSE (LOAD) 1.50% (3) 1.35% (4) .50% - .95% (7)
TOTAL 4.99% 3.48 .80% - 1.45%
TOTAL (NO LOAD) 2.70% PLUS .80% - 1.45%
POTENTIAL SURRENDER FEES
AVG. 7% (reduced over time)
Source:
1. MorningStar 2009. Average Expense Equity Funds. Higher cost for Small Cap International, etc..
2. “Scale Effects in Mutual Fund Performance: The Role of Trading Costs” 2007.
3. “How Much Does That Annuity Really Cost” Charles Stanley.
4. This is an average of the Industry average range of 1.25% - 1.45%.
5. Bid-asked spread N/A utilizing window trades
6. Market Impact not applicable based on size of
an individual’s buy or sell order
7. Based on size account

42. THE CLIENT
The Client FACTS
Annual Personal Savings Rate
• December 1, 1981 – 11.4% ----- December 1, 2011 – 4.0%
• 43% of American workers have less than $10,000 in savings
• 70% of someone’s retirement funds need to come from
Personal Savings!
Source:
(1) Department of Commerce: Bureau of Economic Analysis
(2) Sutton, Chavon. “Most Americans are Still Unprepared for Retirement”
http://money.cnn.com/2010/03/09/PF/RETIREMENT_CONFIDENCE/index.htm , March 2010

43. THE CLIENT
FACTS
20 Years – 1991 - 2010
Source: Dalbar, Inc. Quantitative Analysis of Investor Behavior Study, 2011 Update.

44. THE CLIENT
FACTS
What Does it Mean in Actual Dollars?
20 Years – 1991-2010
Gain on $100,000 After Inflation (3.00%/yr)
Source: Dalbar, Inc. Quantitative Analysis of Investor Behavior Study, 2011 Update.

45. THE CLIENT
FACTS
Average Investor Mutual Fund Holding Period
3.27 YEARS
Source: Dalbar, Inc. Quantitative Analysis of Investor Behavior Study, 2011 Update.

46. THE CLIENT
Other Obstacles
or Why It’s Hard To Do It Yourself
• Try to Beat the Market
• Don’t Begin Investing Soon Enough
• Procrastination
• Risk/Reward Principle Isn’t Understood and They Panic
• Confusing Information and Overload

47. THE CLIENT
Other Obstacles
or Why It’s Hard To Do It Yourself
• Don’t Diversify Correctly
• Don’t Seek Appropriate Help
• Don’t Have or Take the Necessary Time
• Finances Unorganized
• No Written Plan with Specific Goals
• Limited Understanding and Knowledge of
Financial Matter

48. Disclosures
For Investment Professional Use Only
Although the statements of fact and data in this presentation have been obtained from,
and are based upon, sources believed to be reliable, SW CARES does not guarantee
their accuracy, and any such information may be incomplete or condensed.
Information contained in this presentation does not involve the rendering of
personalized investment advice, but is limited to the dissemination of general
information on products and services. A professional advisor should be consulted
before implementing any of the options presented. Information presented in this
presentation should not be construed as an offer to buy or sell, or a solicitation of any
offer to buy or sell the securities mentioned herein. All opinions included in this
presentation constitute the judgment of SW CARES as of the date of this report and
are subject to change without notice.
Copyright © Someone Who CARES 2012. All rights reserved. 7/1/2012.