Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
Monday mtb ft laud retirement 9 13 2010 (2)
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Monday mtb ft laud retirement 9 13 2010 (2)

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  • Good [ afternoon/evening ]. Welcome to this Wells Fargo Advisors “Investment Strategies for Today’s Retirees” workshop. I’m [name], and I am a financial advisor with Wells Fargo Advisors. Today we’ll focus on strategies for enhancing your income potential in retirement.
  • Wells Fargo Advisors is a separate, non-bank subsidiary of Wells Fargo & Company, one of the nation’s largest and strongest financial institutions. Wells Fargo & Company has had a reputation for strength, integrity and client satisfaction since its founding in 1852. Named to Fortune magazine’s 2009 list of the “World’s Most Admired Companies,” Wells Fargo & Company is known and respected for its responsible stewardship of its clients’ assets. For five consecutive years, from 2005-2009, Wells Fargo also ranked among Barron’s “Top 25 Most Respected Public Companies.”
  • Wells Fargo Advisors is third-largest investment firm in the United States. Represented by nearly 15,000 Financial Advisors in 5,000 U.S. locations, it was born out of Wells Fargo & Company’s acquisition of Wachovia Corporation. Wachovia Securities, LLC, which traces its roots to 1879, grew over the years by combining with some of the industry’s most respected regional and national firms, including the 2007 acquisition of A.G. Edwards, Inc. Throughout their histories, Wells Fargo Advisors’ predecessors were known for exceptional service based on trust and knowledge and for corporate cultures that put client needs above all else.
  • I’m going to show you how your portfolio can work for you during your retirement. After all, you saved and sacrificed to build your portfolio over the years; now it’s time for your portfolio to work for you. In the first part of the presentation, we’ll be taking a quiz about investing in retirement. The quiz is designed to show that investing in retirement is as important as investing for retirement. With today’s relatively low interest rates, generating retirement income is not as simple as stashing your life savings in Treasury bonds or CDs and living off the interest.
  • One reason many retirees find it difficult to live on interest payments alone is because interest rates are not hyperinflated as they were in the 1970s and 1980s. Bond yields tend to have long secular moves punctuated by sharp cyclical corrections. After falling to record low levels, yields have started to increase as investors worry about deficits, inflation and the recovery. Treasuries are guaranteed by the full faith and credit of the U.S. government for the timely payment of interest and principal if held to maturity. *Past performance is not guarantee of future results.
  • This issue brings us to our first quiz question. What are your priorities in retirement? There is no one right answer to this question. Each of you will likely rank your answers a little differently. Let’s take a minute for you to rank your priorities.
  • I’ve taken the liberty to rank these priorities hypothetically. Your priorities may be very different, and that’s OK too. But I want to make the point that forever preserving principal is typically fairly low on the priority list — even though retirees are concerned about running out of money. In this workshop, we’ll show you how retirees can take advantage of both their principal and interest and dividend payments.
  • As a retiree, your investment and financial concerns are 180 degrees different than they were when you were struggling up the career ladder, earning a paycheck and raising a family. If you’re like many of the retirees I talk with, your main concern is outliving your savings.
  • Another common concern for retirees is not being able to keep up with the rising cost of living. Although you’ve probably always understood the concept of inflation, let’s be honest: Did you really worry that much about it when you had a regular paycheck coming in? Even modest annual pay increases probably kept pace with inflation, so your income rose as the cost of living rose. But when your portfolio must provide your everyday income, inflation is a very real enemy to your retirement lifestyle.
  • Even moderate inflation gradually steals your purchasing power. The question here asks if prices rise at 3% each year — which is about the historical average — how long will it take for the cost of living to double?
  • If you selected “24 years” at 3%, you’re right! And if inflation rises at 5%, it will take just 14 years for prices to double. FA Note: Inflation measured by the consumer price index. Source: Ibbotson® stocks, bonds, bills and inflation, 1926-2009.
  • Now let’s move on to the nine mistakes investors make with their retirement nest eggs. Inflation can affect your retirement savings and lifestyle during retirement, which brings us to mistake number one. Many investors fail to consider just how inflation can impede them from achieving their retirement goals. During the next 20 to 30 years, the cost of living will likely double or even triple. As the chart shows, if prices rise 4% each year, $1 today will equal just 44 cents 20 years from now. Let me give you another example.
  • Mistake number seven: Many people underestimate the time they will spend in retirement. Life expectancies continue to rise in the United States. Quality medical care and a growing health consciousness have caused many Americans to live well into their 90s. As you can see, 65-year-old Americans can expect to live an additional 20 years. That means quite a bit of time spent in retirement. In fact, the time you spend in retirement may equal or even exceed your working years. That’s why it’s so important to consider your life expectancy when planning for a retirement that may last 20 to 30 years.  
  • People are living longer today. They’re healthier, more active and better-cared-for medically. This is all good, but with many retirees, their biggest concern will be whether they’ll outlive their assets. If you’re 50 years old today, you’re likely to live beyond 80. And with the fastest-growing segment of the population now older than 65, the sooner you start developing ways to build up your retirement assets to supplement Social Security and pension payments, the better your chances of avoiding financial hardship down the road.
  • I want to mention one last concern before moving on. Many retirees are extremely fearful of the possibility of nursing home or medical expenses wiping out their life savings. This is one reason you, like other retirees, may be afraid to tap into your principal. And with just cause.
  • I’m going to show you how your portfolio can work for you during your retirement. After all, you saved and sacrificed to build your portfolio over the years; now it’s time for your portfolio to work for you. In the first part of the presentation, we’ll be taking a quiz about investing in retirement. The quiz is designed to show that investing in retirement is as important as investing for retirement. With today’s relatively low interest rates, generating retirement income is not as simple as stashing your life savings in Treasury bonds or CDs and living off the interest.
  • Mistake number five: Some investors have unrealistic expectations about their investments. They believe when the market is down, they should sit on the sidelines until it rallies. If the market is up, they wait for a correction to buy at bargain rates. These tactics seldom work. When building assets for retirement, you need to stay focused on your long-term goals. Savvy investors stay in the market. This chart reflects returns for the S&P 500 during a 20-year period and shows that if you had invested in the market the whole time, you would have averaged 8.2% annual return over 5,044 trading days of the market. What happened if you missed the market’s 10 best days? You can see that your return would have been 4.5% annually. And if you missed the best 40 days of the market, you would have had a negative return. It’s not market timing, but time in the market that can bring about long-term success. It’s important to base your long-term investment planning around realistic return expectations. Keep in mind that there will be up and down years. Successful investors, however, develop the discipline and patience to shrug off market fluctuations.
  • Mistake number two is not having a proper asset allocation. Asset allocation is the combination of asset classes — such as stocks, bonds and cash — in a portfolio and their proportion to one another. It builds a balanced portfolio with appropriate diversification across asset classes. Proper asset allocation can help reduce volatility and can help you get the most of your return potential.
  • Now that we understand the major concerns, let’s again focus on your priorities and making your retirement income and investment portfolio work for you. At Wells Fargo Advisors we take a total portfolio approach to your investments. This means that we help you develop a mix of investments suited to meet your current and long-term needs. This mix will potentially help your assets grow to meet your income needs now and in the future while keeping your risk tolerance in mind. Finding the right balance is a difficult task, but being familiar with the roles that certain investments – namely stocks and bonds – play in your portfolio can help you achieve your goals.
  • Your asset allocation will vary depending on your objectives and how close you are to retirement. Here’s a hypothetical example: Ron and Sharon are in their early 50s and considering early retirement. While spending more years in retirement has obvious advantages, it presents challenges to ensure they’ll have enough retirement investments to provide the income they’ll need for a longer time period. One approach Ron and Sharon may want to consider is to use a growth and income allocation such as the hypothetical one shown here. With this as a starting point, they can work with a financial advisor to develop a unique allocation that’s suitable for them. Of course, if Ron and Sharon were just starting out or already retired, they would need to begin with a different allocation. The bottom line is that your asset allocation can be an important key to working toward your retirement goals. You need to give it a great deal of thought, and be sure to update it whenever your situation changes due to a birth, death, marriage, divorce, etc.
  • Don’t let the stock market’s volatility turn you away from stock investing. History has shown that stocks lead other investments and outpace inflation over the long term. If you’re 65 and expect to live another 10 to 20 years, that makes you a long-term investor, and you may want to consider investing in stocks. I’m not saying put all of your money in stocks. Instead, you’ll want to carefully choose your stocks for a portion of your portfolio — perhaps looking for companies with dividend-paying stocks and the potential for price appreciation. Keep in mind that past performance is no guarantee of future results. Dividends are not guaranteed and are subject to change or elimination. Of course while stocks offer long-term growth potential, they may fluctuate more and provide less current income than other investments. The return and principal value of an investment in stocks fluctuates with changes in market conditions. Upon redemption, it may be worth more or less than the original investment. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns.
  • FA note: The next slide contains important information we must disclose about this slide. Whenever you show this slide, you must also show the next. If you print out this slide for a client or prospect, you must attach the next. I’ve mentioned this previously, but I cannot stress enough the need to think long-term when you invest in the stock market. Volatility is part of stock investing. The more you understand the market, historical returns and volatility, the better prepared you can be to invest. This chart shows the historic volatility ranges of various investments for different holding periods. The longer the holding period, the less risk you have of losing your invested principal, and the less important short-term volatility becomes. As this chart shows, in any given year, with small-cap stocks your gains could have been approximately 150% but your losses could approach 60%. With large-cap stocks, you could have had much less volatility. But the longer you held them, the less risk you might have taken on because your investments had the potential to “level out” and perform as intended. Given a 20-year holding period in this example, all asset classes produced positive returns. Keep in mind, however, that past performance is no guarantee of future results. Holding your positions for the long term can be a challenge. Logically, most investors can accept the fact that markets rise and fall, but emotionally, few people can actually ride those waves. Successful investors, however, develop the discipline and patience to shrug off market fluctuations.
  • This hypothetical model portfolio may help investors who are looking for long-term growth plus income. For example, perhaps your employer pension plan and Social Security payments are enough to cover your expenses right now. However, in five or 10 years you may need to supplement those payments with your other investments. As a long-term investor needing to keep up with inflation, the asset allocation you choose will be a very important component of your overall investment plan. It is very important for me to point out that this is a completely hypothetical sample asset allocation. Since each investor’s situation is unique, you need to review your specific investment objectives, risk tolerance and liquidity need with your Financial Advisor before a suitable strategy and allocation can be selected.
  • A point I want to emphasize again is how crucial stocks can be to income investors. Longer life expectancies and inflation make the growth potential of stocks a near necessity in most portfolios. You can see that even in this hypothetical income model portfolio, 17% is allocated to stocks (U.S. stocks and non-U.S. stocks.) It’s critical you know exactly what your priorities are in retirement and how you would rank them. I must mention that stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investment. Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns.
  • FA Note: Each attendee must receive a copy of this sheet (order code 0000582502) This chart helps demonstrate the value of having an asset allocation strategy. If you study it, you’ll see how difficult it is to predict what will perform well from year to year. That’s why it makes sense to have a diversified portfolio. Let’s take government and corporate bonds for example because they tend to be popular investments for retirees. Although they’re considered a relatively stable investment, you can see they’ve been all over the board as far as their performance against other alternatives. In 1994, ’96 and ’99, they were among the worst performers. Now look at 2000 to 2002 where they were one of the best. But in 2003, ’04, ’06 and ’07 they were back near the bottom. Obviously this isn’t a scientific analysis, and I invite you to take the time to give this chart a closer look. I think you’ll see that being retired doesn’t change the importance of asset allocation to your investment strategy. Please remember that all investments carry some level of risk, including the potential loss of principal invested. Asset allocation does not guarantee against loss and it cannot eliminate the risk of fluctuating prices and uncertain returns. It is a method used to help manage investment risk.
  • Most people miscalculate how much money they will spend during retirement, which brings us to mistake number four. They think that because they won’t have the expense of traveling to and from work every day, they will spend less. But they fail to consider the leisure-related activities they will want to enjoy during retirement — such as dining out and vacations. That costs money. In fact, many new retirees spend as much in retirement as they did before. Will you have enough money to meet your needs?  
  • Even though stocks may have a role in your portfolio, don’t forget the importance of bonds. There are probably as many strategies for bond investing as for stock investing. You can adopt a basic strategy that diversifies your portfolio and helps reduce your risk no matter what the financial markets are doing. Today, I’d like to discuss one simple strategy — bond ladders — but you should remember that there are many others.
  • FA Note: This is the first slide in a three-slide build. To build a ladder, you buy bonds maturing in each of the next few years.
  • Building a bond ladder can be an excellent strategy for uncertain times. The chance to reinvest is the key to the strategy. If you use a ladder, you don’t have to worry about timing the market or if you’re getting into the market at the wrong time. As each bond matures, you get to reinvest at new market rates. Sometimes you’ll reinvest at higher rates, sometimes at lower rates. But no matter which way rates move, you’ll be able to take advantage of market opportunities. Yields and market values will fluctuate if the bonds are sold before maturity. Bonds are subject to market risk and, if sold prior to maturity, may be worth less than their original cost. I’ve given you a lot of information, and now you may be wondering where to begin. The first thing we must do is schedule a time to meet and discuss your particular situation. At Wells Fargo Advisors, we understand that every investor is unique, and I won’t waste your time with cookie-cutter solutions. Working together, we will develop a customized retirement plan designed to suit you.
  • We spoke earlier of tax-deferred investments, and that’s where investors make another common mistake. They mismanage or neglect their tax-deferred assets. It may not be a good idea to withdraw from your annuities and IRAs — or any other tax-deferred investments — as soon as you reach age 59½. Remember that you could live a long time in retirement, so you want your savings to sustain you during your possible 20- to 30-year retirement. Consider spending from your taxable investments first to give your tax-deferred investments more opportunity to accumulate. You many also want to consider the benefits of a Roth IRA. Distributions from a Roth IRA can potentially provide tax-free income.
  • To recap, the nine big investor mistakes in saving for retirement are: Forgetting about the effects of inflation Not having a proper asset allocation for your portfolio Underestimating taxes Underestimating your spending during retirement Having unrealistic investment expectations Relying solely on the investment returns of your portfolio Underestimating the time you will spend in retirement Mismanaging tax-deferred assets Failing to plan for unexpected health care expenses If you have made any of these investment mistakes, you are not alone. But you don’t have to let these common mistakes keep you from planning for your retirement. I can help you work toward your retirement goals.
  • Sound retirement planning is key. Remember, retirement planning boils down to identifying what you have, what you need and how to get there.
  • Having an Envision investment plan, which I can create with your help, is a great way to avoid making mistakes with your retirement savings. Unlike other retirement planning tools, Envision uses historical market data and sophisticated statistical modeling to develop a plan to help you work toward your unique financial goals. One of the great things about Envision is it’s flexibility. Let’s say we meet and create your plan on the assumption that you’ll retire at age 65 and a year from now you decide you’d rather retire at age 60. I can make that change and let you know immediately what, if any, adjustments you’ll need to make to your plan to make early retirement possible. The same is true for any change in your life, such as the birth of a child or a grandchild whom you’d like to help send to college. For more information, please take a few minutes to read the Envision brochure I brought with me today. FA note: Have copies of the “Envision: Clarify and Realize Your Life Goals” brochure (order no. 0000583704) available for attendees.
  • You may be thinking that what we’ve discussed is interesting, but you really want to know what you can do today to get your portfolio on the road to recovery. Although I understand where you’re coming from, I can’t answer that question because each of you faces a different situation that calls for its own unique solution. As a result, the best thing you can do now is to see me after we’re through to schedule an appointment so we can get together and I can get the information I need to help you. Having said all that, let me give you some guidelines to consider. Based on what I’ve already said, none of this should be surprising. If you’re middle-aged, saving for retirement and heavily invested in stocks, your best bet may be to just ride out this situation. As we discussed, stocks have historically provided the best returns over the long run. Although we may determine that some adjustments to your portfolio are necessary, concentrating on stocks may be your best course of action. Again, I remind you that past performance is no guarantee of future results. If you plan to retire in five to 10 years, we may determine that it’s time for you to start shifting your allocation to more stable investments, such as bonds. Of course, the further the away you are from retiring, the more time you have to act. If you’re in retirement, you should consider moving into income-producing investments — again, such as bonds — if you haven’t already done so. However, we may also want to consider dividend-paying stocks, which can provide both income and growth potential.
  • This presentation is designed to provide accurate and authoritative information regarding the subject matter covered. You should understand that Wells Fargo Advisors does not render legal, accounting or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that may have tax consequences. Wells Fargo Advisors’ view is that investment decisions should be based on investment merit, not solely on tax considerations. However, the effects of taxes are a critical factor in achieving a desired after-tax return on your investment. The information provided is based on internal and external sources that are considered reliable; however, the accuracy of the information is not guaranteed. You should direct specific questions on taxes as they relate to your situation to your tax advisor. Please note: This material has been prepared for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each investor’s situation is unique you need to review your specific investment objectives, risk tolerance and liquidity needs with your financial professional(s) before a suitable investment strategy can be selected.
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