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Personal Chief Financial Officer (CFO) Job Description

Basic Function: The personal chief financial officer is accountable for the administrative, financial, and risk management operations of the client to include the development of a financial and operational strategy. The PCFO is responsible for ongoing development and monitoring of advice designed to preserve and grow wealth, along with the accurate reporting of financial results.

Principal accountability's are:


    • Assist in formulating the client's future direction and supporting tactical initiatives
    • Monitor and direct the implementation of strategic plans
    • Develop and coordinate financial and tax strategies
    • Manage the capital request and budgeting processes
    • Develop performance measures that support the client's strategic direction


    • Participate in key decisions as a member of the client’s advisory team
    • Maintain in-depth relations with all members of the client’s advisory team
    • Help manage any third parties to which functions have been outsourced
    • Implement best practices with respect to wealth management
    • Oversee employee benefit plans, with particular emphasis on maximizing a cost-effective benefits package

Risk Management

    • Understand and mitigate key elements of the client's risk profile
    • Monitor all open legal issues involving the client, and changes to the legal environment that might affect the client
    • Construct and monitor reliable control systems through the client’s personal financial website
    • Evaluate and Maintain appropriate insurance coverage on the client

Funding & Investing

    • Monitor cash balances and cash flow forecasts
    • Assist with arranging for debt and equity financing
    • Advice on the appropriate allocation of investable funds based on the client’s risk tolerance.
    • Help select and monitor investment managers for the client 

Third Parties

    • Manage and participate in interactions with the outside expertise
    • Represent the clients in evaluation of and negotiation with advisors
    • Take ownership of the process of engaging other advisors for the client
    • Follow up to ensure implementation is occurring with advice provided by third parties

Desired Qualifications

    • CFP
    • Minimum 5 years working with clients in the financial services industry
    • Additional Qualifications:
    • Attention to Detail
    • Willing to collaborating with those with expertise in certain areas
    • Open to helping implement creative ideas



Bryant Alumni Bulletin: Athletes Helping Athletes

bryantpic   November 13 – Bulldog Connection
Bryant alumnus and former lacrosse player Tim Duffany ’06 networks with current student-athletes as part of the Bulldog Connection program that brings former athletes to campus to mentor current athletes. If you are a former varsity athlete, plan to join us for the spring program on April 6, 2013.
Legendary American football coach Vince Lombardi said, “Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.” 

No one knows better than Bryant’s student- and alumni-athletes how true this is. The and annual Bulldog Connection – a networking event for student- and alumni-athletes – on November 3 began with a panel discussion in  the morning, followed by networking opportunities, and a victorious Bulldog football game. 

Highlighting the event were a dozen outstanding alumni who shared their amazing career experiences and tips for the future with about 60 student-athletes. Alumni working at such prestigious organizations as the Boston Celtics and Amica Insurance gave valuable advice about strategizing professional careers  following graduation.

“Experience is a great teacher and second to having one’s own experience, is to hear from others who have been down that path before,” says Tim Duffany ’06, CFP®, founding partner of Single Point Partners, a boutique advisory firm in Boston. “As a collegiate student-athlete there are so many experiences, habits, and traits that can be leveraged to launch and develop one’s professional career, but one critical challenge is to harness these and communicate them as one’s personal brand. This event helps to guide student-athletes on the path to do so.” 

Want to be a part of this year’s Bulldog Connection? Save the date of April 6, and be part of the Bryant team. Registration can be accessed at or contact the Alumni Office for more information.

Boston Business Journal - On the Move

Check out Single Point's Tim Duffany and Shaun Erickson in this weeks edition of the Boston Business Journal.


The Fiscal Cliff: A Primer

So You Think You Want to Invest In...

Stocks? Bonds? Commodities? How about putting your money into something a bit more fun.
By: Charles Passy

A vintage Harley. An 18-carat Patek Philippe watch. A guitar once owned by the legendary Les Paul.

Now that's diversifying a portfolio.

With stocks and bonds prone to big swings lately, many investors are devoting a corner of their portfolio to art, antiques and other rarities. For these buyers, such items aren't just a hedge against the shocks of the larger market—they also offer some relief from the head-spinning complexity of many more "regular" investments.

It's "the purest form of market—simple supply and demand," says Chris Ivy, a director with Heritage Auctions.

Granted, collecting things—be it European paintings from the 19th century or Japanese tin toys from the 1950s—is not new. Now, though, more people are buying with one eye on possible returns. In a study of collectors after the 2008 crash, 74% said investment potential was driving their buying decisions, says ACE Private Risk Services.

Oh, and one other thing: These investments can be a lot of fun.

till, collecting poses any number of risks and challenges. For starters, the market may be much harder to track, and considerations like storage and insurance can play an important role. And, of course, there's the question of what to buy.

With that in mind, we've developed a guide to a handful of investment categories. Consider it a starting point for building your own potential treasure trove.

Why they're hot: Americans of the "Easy Rider" generation have a built-in fascination with bikes. Motorcycles are also a lot easier to store than cars, and from a restoration and maintenance perspective, they're "less complicated to work on," says Dan Tsuchiya, business-development director of eBay Inc.'s EBAY -1.84% eBay Motors.

What to keep in mind: First, collectors have to decide if they're buying bikes they may also want to ride. Wear and tear can potentially lower a bike's value, and your whole investment can get wiped out in a crash—literally.

As for what to buy, certain brands, especially in their early incarnations, remain benchmarks. "No bike more defines the class than the early Harleys and pre-war BMWs and Vincents," says investment strategist and bike aficionado Keith Fitz-Gerald. Buffs note that the market is also embracing sport models from the '70s, '80s and even '90s, particularly as younger collectors come aboard.

Prices vary widely depending on the make, model and condition, or degree of restoration. For instance, has listings for Harleys ranging from $3,500 for a 1953 model to $45,000 for a 1948 one. Collectors say Motorcycle Classics magazine is also a good source for market and pricing info.

The big score: So much for those Harleys. One of the most expensive bikes ever to sell at auction was a 1929 Brough Superior model. The English-made motorcycle, which originally cost around $275, went for about $458,000 in 2010.

Why they're hot: Watches aren't just for keeping time. They're increasingly about showcasing status. Another key factor: Watches are almost an international currency unto themselves. A sought-after Rolex with the proper paperwork "can be taken to any major city in Russia, South America, India and now China and turned directly into cash," says Edward Faber, a watch dealer with New York's Aaron Faber Gallery.

What to keep in mind: Watches are all about the brand, with Rolex and Patek Philippe being two of the most prized, say the experts. After you've settled on a brand, focus on models with a degree of rarity and with noteworthy features—often referred to as "complications"—such as alarms and wind indicators.

Also look at factors such as condition and provenance: "The closer you get to original with all available elements, including original boxes, packaging and paperwork, the more the watch will be worth," says Doug Gamble, a partner with Watch Auction HQ in Portland, Ore. He adds that collectors should be on the lookout for fakes—either the whole watch or a main part of it.

The beginning tier of investment-grade watches runs about $500 to $3,000, says Mr. Faber, and includes American brands such as Hamilton and European ones such as Omega. The next tier runs to around $10,000 and includes entry-level Rolex and Patek Philippe models, he says.

But prices can soar much higher. The "Paul Newman Daytona," a style of Rolex that earned the moniker because it was favored by the late actor, can sell for more than $50,000, while a Patek Philippe "World Time" model fetches as much as $1 million. (For more info, the pros suggest the annual "Complete Price Guide to Watches.")

The big score: A $1 million timepiece? That's practically a bargain compared with a pocket watch that Patek Philippe created nearly 80 years ago for financier Henry Graves Jr. Made from 18-carat yellow gold and loaded with unusual features, the watch sold at auction in 1999 for $11 million.

Why they're hot: Stamps have never gone out of fashion, even though the market has declined since its late-'80s peak. In the past few years, the category has caught on with a new wave of enthusiasts from overseas, especially Asia.

What to keep in mind: By virtue of their global reach, stamps are a very broad category. So experts say it pays for investors to focus on a particular area, be it country, region or topic, such as celebrities. Another hot subcategory: error stamps, like the "Inverted Jenny" stamp with an upside-down airplane.

Condition is key, says Patrick van der Vorst, a former auction professional who founded "The quality requirements of collectors mean the standards are higher than ever before. Stamps in premium condition have increased in value. Those in average or fine condition have not."

It also pays to pay heed to scarcity. For instance, as popular as the 19th-century British "Penny Black" stamp may be, "its perceived rarity is a myth," says Kylie Whitehead, spokeswoman for British dealer Paul Fraser Collectibles, noting that some 68 million were printed.

As for pricing, some experts say you should expect to pay at least $2,500 apiece for investment-grade stamps, but others thinks good investments can be had for around $500. Stamps are also that rare collectible that has an index—actually, more than one. Stanley Gibbons Group SGI.LN -4.76% PLC, a British stamp dealer/auction house, maintains at least five.

The big score: Talk about a costly error. The Swedish "Treskilling Yellow" stamp, which dates from the mid-19th century, is the only known 3-skilling stamp from that printing in that color. In 1996, it went for $2.3 million at auction.

Why they're hot: In an era when everybody is famous for at least 15 minutes, autograph collecting has become a way of capturing our obsession with all things celebrity-related. It's also a field where supply and demand can suddenly shift. A recent case in point is Neil Armstrong: An autographed picture of the astronaut climbed in price by as much as 100%—to $10,000—after his death in August.

What to keep in mind: Autographs are fairly transparent; the more famous the name, the greater the demand for the signature. "The most valuable autographs are from the iconic figures of the 20th century who will be remembered for many decades to come," says Ms. Whitehead of Paul Fraser Collectibles. High on the list: Marilyn Monroe, Elvis Presley, John F. Kennedy and, yes, Neil Armstrong.

Rarity counts, too. Mr. Armstrong, for example, shied away from celebrity, which increased the value of his autograph. Other factors, according to the experts, include the item that's been autographed and authentication.

With pricing, a good source for tracking is the Paul Fraser Collectibles PFC40 Autograph Index, which charts the "40 most regularly traded autographs." Indexed celebrities and famous figures include everyone from Muhammad Ali (whose autograph is up nearly 400% to about $1,900 since 2000) to Mr. 15 Minutes himself, Andy Warhol (up nearly 1,000% to about $3,100 over the past 12 years).

The big score: As famous names go, Abraham Lincoln never goes out of fashion. One of the world's most prized autographs is a signed letter from 1864 in which the president responds to a group of Massachusetts schoolchildren about the need to end slavery. It went for $3.4 million at a 2008 auction.

Why they're hot: As the Baby Boomers come of age, they're turning into quite the consummate collectors. And nothing speaks to their generation like the great guitars of the era. While Mr. van der Vorst of believes the guitar market has cooled somewhat since the "feeding-frenzy mentality there was before 2007," other experts say the popularity of the music from the '50s to the '70s ensures the instruments will remain popular, too.

What to keep in mind: Collectors don't have to look much beyond the preferred guitars of their favorite musicians and bands to know what names are worthy of owning. "Eric Clapton used a Stratocaster, Led Zeppelin a Les Paul," says David Kalt, owner of Chicago Music Exchange, a guitar store in the Windy City. Stratocaster is part of the Fender brand, and Les Paul is part of Gibson.

As with cars, the year and specific model are also key: 1957 is a key year for Stratocasters, for example. And anything made in limited quantities naturally has greater potential for price increases. Mr. Kalt points to the Les Paul 1958-60 Sunburst model—just 1,800 exist and they can command prices anywhere from $150,000 to $400,000.

"Provenance also contributes to the overall value," says Chris Ullrich, a guitar-maker and guitar consultant to Winston Art Group, an art appraisal and advisory firm. He points to a recent auction of guitars owned by the late Les Paul—a Fender that was part of his estate went for $216,000, for example.

Still, investment-worthy guitars can be found for much less than that. In the $2,500 to $5,000 range, Mr. Kalt points to the 1965 Jazzmaster Sunburst, which has been embraced by musicians from Elvis Costello to Kurt Cobain, and the 1967 Gibson ES 330. The next step up, he says, are midmarket models in the $10,000 to $20,000 range.

If you want to track prices, Vintage Guitar magazine maintains an index of 42 popular models; the magazine also publishes an annual price guide.

No matter what the price, Mr. Kalt says, "you always want to buy guitars in excellent or good condition with all original parts. Modifications or refinished bodies can dramatically impact the price and resale value."

And, as important as buying the right guitar may be, the real issue for collectors is often storage: If the instruments aren't kept in the ideal humidity-controlled environment, they can easily deteriorate.

The big score: Eric Clapton built what he considered the perfect guitar using pieces from three different Stratocasters. The instrument, which was dubbed "Blackie" because of its black finish, became his signature guitar. It sold at auction for nearly $1 million in 2004.

Why it's hot: The pop-culture sensibility and relative "newness" of photography—at least compared to painting and sculpture—makes the medium appealing to a younger market, says Daile Kaplan, vice president and director of photographs at Swann Auction Galleries. "There's a marked increase of 35-year-old and under buyers bidding at auction," she says.

What to keep in mind: Auction prices for some high-end pieces have soared over $1 million—a fact that's giving the category a boost. But top-notch work can often be had for less than $100,000—and sometimes much, much lower.

"One can find Irving Penn for under $10,000 and Helmut Newton for $2,000," says Elizabeth von Habsburg, managing director of Winston Art Group. For price info, experts recommend such sites as PRC.FR -5.66% and

Look for blue-chip works by legendary artists like Edward S. Curtis, Ansel Adams and Alfred Stieglitz. "Contemporary figures like Sally Mann, Nan Goldin, Cindy Sherman, Andreas Gursky and Thomas Ruff are also prized," Ms. Kaplan says.

Also concentrate on how many prints were made of a given photograph—and look for signed and numbered releases, while avoiding posthumous ones.

Collectors also need to be prepared to deal with storage issues: As tempting as it may be to put photographs on display, for instance, exposure to sunlight can affect their longevity.

The big score: A picture, they say, is worth a thousand words—but in one case it was also worth $4.3 million. That's what a buyer plunked down at a 2011 auction for Mr. Gursky's "Rhein II."

Mr. Passy is a staff reporter with The Wall Street Journal Digital Network in New York. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

The Readers Weigh In: Collecting With Investment Goals
Do you invest in collectibles? Here's a sampling of reader comments from a poll:

I've been collecting stamps since I was really young in the late 1960s. Still enjoy it, but it seems to be a dying art. Now all U.S. stamps are forever, plus way too many stamps are issued each year. I think I'll cut off my collection at a certain year. You lose money on new issues.
--Dave Clark

Paintings, Victrolas, sheets of stamps, Stickley furniture and mid-century modern houses.
--Jenifer Feldman

Silver coins from around the world.
--David Sams

I've been collecting rare and high-end art books for a few years now. I believe they are a wonderful investment.
--Molly Mossey

Ancient artifacts from 3000 BC to about 500 AD primarily Egyptian, Greek, Roman and Etruscan. Each object contains its own little history lesson. It is amazing to hold a 2,000-year-old glass vessel and recognize that you are just a temporary custodian. Antiquities seem to appreciate steadily but without the bubbles of other area of the art market.
--John A.

Why Your Family Should Talk About Money More Often


Carl Richards is a certified financial planner in Park City, Utah, and is the director of investor education at BAM Advisor Services. His book, “The Behavior Gap,” was published this year. His sketches are archived on the Bucks blog.

It’s no secret we’re uncomfortable talking about money. Talking about money often ends in arguments about money. So we avoid it, and that leads to all sorts of problems.

The discomfort is often at its worst with those we love the most: family. When was the last time you discussed money in any meaningful way with your kids (or your parents)?

For most of us, we probably haven’t sat down and had even the most basic of conversations about what money may mean to our family. If you own a business or have significant investments or other assets, at some point these money issues will have an impact on your family, even if it’s only a question of inheritance.

Learning to talk about money in a way that’s productive is important, and you may not even need to divulge your income or net worth to succeed. For wealthier families, however, it may be part of the discussion. Last week, Paul Sullivan outlined several examples of how unprepared some heirs felt when they received an inheritance. No one had talked to them or explained what was coming.

Jason Franklin, now 32, said he received a call from his grandfather’s secretary asking if he wanted to serve on the board of the family foundation. He was 21 at the time, and up until that point, he said he thought his parents were just affluent professionals like his friends’ parents. The invitation prompted questions.

“If your family has enough money to create a family foundation, that means you have to ask about issues of wealth,” said Mr. Franklin, who works for a philanthropic consultancy.
This may seem like a great problem to have, but it’s a problem just the same. I’ve written before about a friend who was determined that his kids wouldn’t felt entitled. From an early age, he met every request his kids made to buy something with, “We can’t afford that.” One evening when his oldest was a teenager, my friend’s son came to him concerned and said, “Dad, between homeless and Bill Gates…where are we?”

My friend realized that he had not communicated his intention clearly. He had avoided having discussions about money because, like most of us, he didn’t know how.

If you don’t take the time to talk about money, how will your family understand money’s real value? Have you talked to your kids about the relationship between hard work and money? Have you talked about the financial sacrifices, delayed gratification and the need for financial discipline? Have you talked to your kids about the only way to buy happiness?

You owe it to yourself and your family to get past the uncomfortable part and talk about the role of money in your family. Getting it out in the open can go a long way towards avoiding problems later.



Prepare for the New Investment Tax


Prepare for the New Investment Tax
The Supreme Court's health-care ruling means the 3.8% surtax on investment income is for real. We answer your questions.

It really is happening.

Until this week, investors were waiting to see what the Supreme Court would do about the 3.8 percentage-point surtax on investment income, part of President Obama's health-care overhaul. The Internal Revenue Service hasn't yet released guidance on the new tax.

So when the court affirmed the law on Thursday, investors--and tax advisers--started scrambling.

The new tax, which Congress passed in 2010, affects the net investment income of most joint filers with adjusted gross income of more than $250,000 ($200,000 for single filers). Starting on Jan. 1, 2013, the tax rates on long-term capital gains and dividends for these earners will jump from their current historic low of 15% to 18.8%, assuming Congress extends the current law.

If, on the other hand, Congress allows the tax rates set in 2001 and 2003 to expire on Dec. 31--an unlikely scenario, according to many experts--the top rate on capital gains will rise to 23.8% and the top rate on dividends will nearly triple, to 43.4%.

Whatever the fate of the 2001-03 tax rates, advisers are telling clients to start making moves to minimize the new levy.

Beatrice Mitchell of Sperry Mitchell in New York, a broker of middle-market businesses, says she expects that entrepreneurs looking to sell companies will hurry to do so this year and forgo installment sales, in order to avoid paying the 3.8% surtax.

"Business sellers haven't been paying attention to this tax, but now they are," she says, adding that one client, the head of a 2,000-employee firm, "is in shock."

The new levy's ramifications extend far beyond the end of the year, however, and will be a game changer for many taxpayers. In the future, affluent investors will need to manage both their adjusted gross income and their investment income in order to minimize this tax, says CPA Dave Kautter of American University's Kogod Tax Center.

Many will likely seek more shelter in assets and structures where the tax doesn't apply. Municipal-bond income is doubly blessed because it doesn't raise adjusted gross income and isn't subject to the 3.8% tax, notes Jonathan Horn, an accountant in New York.

"This [3.8%] tax alone makes accelerating investment income into 2012 profitable for many taxpayers," says Robert Gordon of Twenty-First Securities, a tax-strategy firm in New York.

Also attractive for the same reasons: Roth individual retirement accounts, which differ from regular IRAs in that withdrawals are tax-free. "I'm telling my clients who have been considering converting from a regular IRA to a Roth IRA, 'Do it now,'" Mr. Horn says.

Others will turn to traditional defined-benefit pension plans. Older taxpayers who are eligible to set up such a plan for themselves--for example, because they have income from a business--can take large deductions that reduce their adjusted gross income. Payouts from such plans aren't subject to the 3.8% tax, although they do swell income in a way that could help trigger the tax on other investment income.

Here are answers to some basic questions about the tax. For more detail, consult a tax professional--but give it a few weeks so that he or she can get fully up to speed:

How does the 3.8% tax on investment income work?

It applies to most joint filers with adjusted gross income above $250,000 and single filers with adjusted gross income above $200,000.

Adjusted gross income is the number at the bottom of the front page of form 1040; it includes interest, dividends, capital gains, wages and retirement income plus results from partnerships and small businesses, but it doesn't include subtractions for itemized deductions such as mortgage interest and charitable gifts, or personal exemptions.

The new levy is complex, but in effect it is a flat tax on investment income above the $250,000/$200,000 threshold. Note that while the tax applies only to investment income above the threshold, other income--such as wages or Social Security--can raise adjusted gross income, making investment income more vulnerable to the tax. (See the examples below.)

How is "investment income" defined?

Absent guidance from the IRS, experts believe the tax applies to dividends; rents; royalties; interest, except municipal-bond interest; short- and long-term capital gains; the taxable portion of annuity payments; income from the sale of a principal home above the $250,000/$500,000 exclusion; a net gain from the sale of a second home; and passive income from real estate and investments in which a taxpayer doesn't materially participate, such as a partnership.

The tax doesn't include payouts from a regular or Roth IRA, 401(k) plan or pension; Social Security income; or annuities that are part of a retirement plan. Also not included are life-insurance proceeds; municipal-bond interest; veterans' benefits; Schedule C income from businesses; or income from a business on which you are paying self-employment tax, such as a Subchapter S firm or a partnership.

What are some examples of when the tax would and wouldn't apply?

Example 1: A married couple filing jointly has $400,000 of adjusted gross income--$240,000 of wages plus $160,000 of investment income composed of interest, dividends and net gains from the sale of raw land. Because they have $150,000 of investment income above the $250,000 threshold, they would owe an extra 3.8% of that amount, or $5,700, in tax.

Example 2: A retired couple filing jointly has no wages but does have taxable IRA payouts of $100,000, plus pension and Social Security payments totaling $60,000. They also have dividends and taxable interest of $40,000, plus $40,000 from the sale of two investments. They owe nothing, because their income is below the $250,000 threshold.

Example 3: A single taxpayer earns $60,000 of wages but nets a windfall of $180,000 from the sale of a long-held investment. Because she has $40,000 of investment income above $200,000, she owes $1,520 of extra tax.

Example 4: A single taxpayer has income of $220,000, but all of it comes from Social Security benefits and pension and regular IRA payouts. None of the income is subject to the 3.8% tax.

How would the 3.8% tax apply to the sale of a principal residence?

It would apply if the net gain on the sale exceeds the $500,000 exclusion for joint filers ($250,000 for singles) and the taxpayer's income also exceeds the adjusted gross income threshold.

For instance, suppose a couple bought a residence long ago for $100,000 in a high-cost city such as New York or San Francisco. In 2013, when they have wages of $100,000, they sell the home for $1.5 million. After subtracting the $100,000 cost of the home and the $500,000 exclusion, they have investment income of $900,000. That plus their wages puts them $750,000 over the $250,000 AGI limit, and they would owe $28,500 in extra tax.

If, however, a single person bought a house many years ago for $50,000 and sells it for $350,000 next year, after subtracting the $50,000 cost and the $250,000 exclusion, the investment income is $50,000. If this taxpayer has $150,000 or less of other income, no extra tax will be owed. But if he earns $150,000 of wages and has $20,000 of dividends and interest, then he would owe extra tax on $20,000, or $760.

What happens if a taxpayer has adjusted gross income above the threshold that is then reduced by a large itemized deduction--such as for medical expenses or a charitable gift?

The tax still applies.

For instance, an elderly taxpayer has adjusted gross income of $225,000 from interest, dividends, pension, taxable IRA payouts and Social Security, including $25,000 in interest and dividends. A combination of charitable gifts and deductible medical expenses nearly wipes out the taxpayer's taxable income. Still, the taxpayer would owe 3.8% tax on the $25,000 above $200,000, or $950.

Does the 3.8% tax apply to trusts and estates?

Yes, according to Kogod's Mr. Kautter. The tax applies to net investment income of more than about $12,000 that isn't paid out to heirs or beneficiaries.

Doesn't the health-care law also have an extra payroll tax for higher earners?

Yes, and it is historic because it adds a progressive element to what has always been a flat tax. The change raises the Medicare tax by 0.9% (from 1.45% to 2.35%) on wages and self-employment income above $250,000 ($200,000, single). Unlike Social Security taxes, the Medicare tax is uncapped. The new levy has no deductible component for self-employed taxpayers.

For example, each partner in a married couple earns $150,000. Currently, each owes 1.45% of Medicare tax--$2,175--and their employers owe a matching amount. In 2013, the couple will owe another 0.9% on $50,000, or $450. The employer isn't responsible for withholding it.

Got all that? The new rules present big challenges for taxpayers. But if you start thinking about them now, at least you can minimize the damage.


Article can be found here.


BNY Mellon Wealth Management: Investment Update May/June 2012

Progress Report

Report card time in our family generally finds the students appropriately rewarded for their efforts, so it causes minimal anxiety. Progress reports, on the other hand, can sometimes draw attention to areas of study that might need a bit more attention—a “lost” homework assignment to be turned in, or a make- up quiz to be taken. At times even more interesting to the parents can be the comments attending the scores. “A pleasure to have in class,” for instance. Hmmm. Really? How different from earlier this morning. Perhaps this teacher hit the wrong button or maybe was thinking of a different pupil? Likewise for investors, before a final report card is issued it may be helpful to conduct a progress report on markets, economies and other factors influencing market performance. 

Performs Under Pressure

This comment could apply to the U.S. economy. Despite the challenges of deleveraging and global growth headwinds, the U.S. consumer has fared much better than feared. Small business sentiment has improved moderately as credit access has increased. While employment remains far below normal levels, it has picked up over the last few quarters. Housing appears to be bottoming (likely a lengthy process) and manufacturing is showing areas of strength. Gasoline’s recent price retreat from its highs should also benefit confidence and spending.

Taken together, these strengths appear to be more than can be explained solely by a mild winter. While we believe that U.S. growth is in better shape than investors give credit, aggregate growth has not yet risen to a level sufficient to be immune from Europe’s emanating growth threats. To change investors’ assessment, more progress must be made.

Learns From Mistakes

U.S. politicians appear not to have heeded the lessons of past mistakes, or perhaps the lure of reelection is just too strong. After last year’s deficit and debt ceiling debacle, the fact that we are even contemplating a repeat with the upcoming Fiscal Cliff—Fed Chairman Bernanke’s term for the expiration of prior tax credits, new taxes and automatic, sequester-required spending cuts—is ludicrous. Immediately after the elections, changes likely will be made to avoid the worst case outcome of the very large hit to GDP growth these measures would deliver.

Even if the Fiscal Cliff is averted, failure to address the obvious risk to the economy prior to the last possible moment could add interim volatility. As witnessed last year, investors may lack confidence that appropriate changes will take place and may act in advance on the concern that the very large changes in taxes on dividends and capital gains could go into effect. Lack of clarity on what will take place at year end also is unlikely to bolster business confidence.

Uses Time Wisely

Policy actions in Europe and from other global central banks in late 2011 engendered a welcome respite from a growing liquidity crisis. This bought policy makers time to begin to enact necessary structural reforms, notably in the area of government spending. Unfortunately, rather than taking steps to improve competitiveness, the focus was on private sector austerity. Heaped on top of already weakening economies with high unemployment, the fact that this approach has proved unpopular with voters and has not been conducive to reelection should not be shocking.

After seeing the fate of thwarted Austerians, the new crop of leaders claim they want growth. The problem is that growth is an outcome or a by-product, not simply a choice. A nation can't create growth by fiat. Throwing more money obtained with more debt at the same failing institutions and programs will not facilitate growth. Someone has to foot the bill. It appears increasingly unlikely that bond markets will continue to be willing participants.

Communicates Clearly

The Federal Reserve has taken great pains to increase the transparency of its decision making. This is a good thing in theory and perhaps in comparison to past practices, where often the goal seemed to be to achieve as much obtuseness as possible. Chairman Bernanke's predecessor was said to have stated, "If I seem unduly clear to you, you must have misunderstood what I said." In practice, achieving transparency is easier said than done.

The Fed has instituted post-meeting press conferences to accompany its Committee's policy statements. In addition, it now publishes, on a quarterly basis, the expected path of interest rates expressed by each individual Fed official (without labeling them by name). This creates another challenge, as individual members' forecasts may differ from the central Committee's final statement. This challenge was reinforced by Chairman Bernanke's recent statement that the forecasts of the various members are only inputs into a broader process. So, while guidance is especially important as rates are already as low as they can go, room apparently remains for continued improvement in the communication process.

When the Report Card Comes

Ultimately, report cards are mailed and final grades received. At that point, it becomes clear whether or not the student has heeded the prior progress report. Today's assessment of global economies, markets, policy makers and politicians indicates that the pupil needs to buckle down, make decisions that will be unpopular for one's social life, and focus on the issues at hand while time still remains to improve current scores.

Not all is lost. Markets grade on a curve. In many cases, current challenges and concerns already are reflected in valuations. While we face ample headwinds and obstacles, potential for improvement exists. Very low current yields in many fixed income areas reflect fears surrounding growth or the potential for a return to a crisis environment. Meanwhile, equity valuations are reasonable. While far from assured, if indicators of U.S. economic growth such as employment and GDP improve, or if policy makers avoid the repeat of acting like the playground bully when it comes time to address the year-end Fiscal Cliff, investors might reward this behavior with higher multiples.

Until positive steps are clearly evident, equity markets likely will be more volatile and range bound. While Europe remains a daunting test, the U.S.—compared to many other places in the world—at least shows promise. Nevertheless, progress needs to be made before investors reward the student with a better grade.

Christopher Sheldon

Article can be found here.


BNY Mellon’s John Flahive’s perspective on Bond Investing in a Rising Rate Environment

Survivor's Guide Checklist

This financial checklist is in no way meant to be legal recommendations and is intended to get you started on tying up loose ends related to a loved one’s passing. A couple of things to note:

1.    Since each estate is unique, your own legal and accounting professionals should guide you through the overall process.

2.    If you are a Trustee, the estate planning documents will give you immediate access to funds possibly needed for funeral and other expenses related to the death of the individual.

3.    If you are a named executor, you will have to wait for court appointment for access to funds but you should be able to retrieve the individual’s original will from his/her safe deposit box.

WITHIN THE FIRST FEW DAYS –Take your time. Recognize that you are going through a grieving process. Do not be rushed into any decisions. At the immediate time of death, there is nothing that needs to happen from a legal standpoint. You can spend your time dealing with the doctors, funeral homes and immediate family members. Get yourself through this time and process. After that, your next step will be to:

1.    ____Locate any health care powers of attorney, advance health care directives, funeral and burial instructions, etc. and review them for possible instructions about disposal of the body and funeral arrangements.

2.    ____ Locate any papers relating to prearranged funeral services or pre-purchased burial plots.

3.    ____If your loved one has served in the U.S. Military, check the website and search for information on Military Honors available at burial such as US Flag and Military Representative.

4.    ____ Check with the decedent’s banks to see if they have any safe deposit boxes.

5.    ____ Locate the original copy of the will or trust, if there is one.

6.    ____ Locate all the legal and financial documents that pertain to the deceased person’s assets such as deeds, vehicle titles, stocks, bonds and insurance policies.

7.    ____ Locate and secure important personal documents such as driver’s license, social security card, passport, birth certificate, divorce decree, legal separation agreement, marriage license, military separation papers, citizenship and retirement documents.

8.    ____ Maintain a detailed list of all expenses relating to the final care and/or death of the decedent. You will probably be able to obtain reimbursement for these expenses from the decedent’s estate or trust, and some of these expenses will be deductible for estate tax or income tax purposes.

9.    ____Contact the deceased person’s financial planner, CPA and estate planning attorney. They each need to know and will each have a role in helping you. The attorney will prepare any documents necessary to confirm the authority of the successor trustee of the trust. This will give the trustee access to assets within the trust to cover costs of the funeral and/or other related expenses.

10.  ____Request a minimum of five (5) death certificates from the funeral home. Most life insurance policies and related assets require an original certificate with the claim form.

WITHIN THE FOLLOWING WEEK - The deceased’s financial planner will often help with the following.

1.    ____Contact the insurance agent or agency handling each life insurance policy and request death benefit claim forms. If the deceased had a financial planner they will often do this for you. Note that most insurers will usually cut a check relatively quickly following the death of a loved one.

NOTE: Do not feel compelled to invest this money immediately. Most insurance companies will let you keep the proceeds from a life insurance policy in an interest bearing cash account until you have a plan for investing it. If you know your loved one had a life insurance policy but you cannot find it, contact the American Council of Life Insurers (, which offers guidance in tracing missing policies.

2.    _____Notify all other insurance carriers i.e., health, long term care, umbrella, disability, accidental death, travel, vehicle, homeowners or renter’s insurance.

3.    ____Get a list of all the beneficiaries of the insurance policies with their age, relationship to deceased and their current address and phone number.

4.    ____Contact the deceased’s current and past employer to see if any retirement plans or life insurance policies are in place and request the necessary claim forms.

NOTE: Many companies make every attempt to help the families of their employees after a death. They may cut you a check right away for wages owed, vacation pay, sick pay, and life insurance benefits. If the death was the result of an accident on company time, there may also be accidental death and dismemberment benefits.

5.    _____Gather all of the decedent’s bills and expenses that are coming due, bank and brokerage statements, and last year’s tax return.

6.    _____Locate and organize notes regarding assets and liabilities, such as Promissory Notes, Loans, Business Interests, Patents, and Royalties.

7.    ____ Check with banks and credit card companies to see if there was additional life insurance connected with the decedent’s accounts.

8.    ____ Contact all of the financial institutions that hold any assets of the deceased. Tell them you need the date of death values on each asset in each account. Ask them to send you a copy of this information. Note the name of the individual assisting you.

9.    ____ Locate and secure any items mentioned in a governing document, will or trust or documents of title.


1.    ____ Process Life Insurance Claims

2.    ____ Apply for Social Security Benefits at 800.772.1213 (and/or the Veteran’s office at 916.731.7300 if applicable) and inform them of the death of the individual. Otherwise you will be required to pay back any monies that are overpaid to the decedent. Many times the funeral home will have notified Social Security; confirm this with them.

3.    ____ Close credit card accounts and destroy credit cards.

4.    ____ Notify banks and brokerage firms and remove the deceased’s name from any joint accounts.

5.    _____Meet with the deceased’s financial planner or yours, as appropriate, to develop a long-term investment plan for the estate assets, including any life insurance benefits to be received.



_____ Gather the legal documents (deeds, promissory notes, deeds of trust, loan or real estate documents), estate planning documents (such as wills and trusts), all current and/or past due bills, statements, claims forms, etc., and set up an initial meeting with the financial planner, and the estate planning attorney to identify what needs to be done and coordinate who will do it.

Some of the tasks that will need to be addressed include the following:

·         Lodge the original will with the court in the county of his/her domicile (legal residence).

·         See an attorney to determine whether a petition for probate of the will must be filed.

·         Begin to prepare for filing the estate tax return (Form 706). Some of the forms and documents you have been collecting will be needed by your CPA or attorney to document date of death calculations for that return.

·         Your attorney or CPA can assist you with finalizing and understanding any legal documents and/or forms that you have received.

·         The financial planner and estate attorney can also assist you with funding the trusts (if applicable) and with making distributions to any beneficiaries.

·         The financial planner and CPA can help you make IRA and pension plan election decisions.

A couple of things to consider:

1.    If applicable, contact a human resources (HR) representative of the decedent’s employer for help with retirement plans. A surviving spouse will be able to roll over money from the deceased spouse’s retirement plan into his or her own IRA. In most cases, that will make sense, but if you are considerably younger than your spouse you may want to keep the assets in your spouse’s retirement plan. That may allow you to tap into those assets at a younger age without penalty.

2.    Make sure you have sufficient cash on hand. One of the biggest concerns immediately following a death in the family is making sure the survivors have enough cash to meet their current expenses as well as funeral costs. You may want to take part of your life insurance proceeds or other death benefits and increase your cash reserves. Try to have at least six months’ worth of living expenses covered in a money market or other very accessible account. This will help ensure that you are not too rushed into making other major financial decisions right away.

3.    Consider creating a lasting memorial. One of the most healing experiences for survivors is to find a way to honor the people they have lost. Whether it’s through a brick paver in a memorial walkway, a scholarship in the name of your loved one at his or her alma mater, or a donation to a favorite charity, creating a tangible remembrance is an important part of paying tribute to those who have blessed our lives.

4.    If you wonder if you could benefit from any type of bereavement counseling or other support, you probably could. Please feel free to ask your financial professional for a list of community resources. Don’t overlook the vital role your church, synagogue or mosque may play in providing spiritual and social support for you and the family involved.

5.    For many, particularly those who are not the chief financial decision maker in the household, professional financial counseling may be a comfort. Be sure to carefully screen financial advisers before you agree to work with them.