Winter insights q4 2013


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Winter insights q4 2013

  1. 1. WINTER 2014 Message from the Managing Partner Telemus 2014 Global Outlook Equities Fixed Income Fund Spotlight: Advantage Capital Management Telemus Wealth Advisors INSIGHTS Welcome to the next edition of our quarterly newsletter Insights. In these informative pieces you’ll hear from us, and others, regarding the current market environment as well as a variety of investment and financial topics. In this Winter issue you’ll hear from Jim Robinson with his current views of the global economy and markets. Our U.S. equity market commentary is once again from Tim Evnin of Evercore Wealth Management, the sub-advisor of our core equity strategy. On bonds you’ll hear from the municipal bond team at Putnam Investments on how rising bond yields and technical pressures are masking an improvement in state finances. Our Chief Wealth Officer, Andy Bass, will discuss financial planning in a digital world. Lastly you’ll hear from Irvin Schlussel of Advantage Capital Management and manager of the Advantage Capital Fund. After the year we had last year and as we start 2014, one of the things investors need to be reminded of is that the real secret to investment success isn’t to know the future but to be prepared for any contingency. How you prepare for any contingency is by being properly diversified. Diversification is like insurance – you don’t need it until you need it. Being properly diversified requires paying attention to what you own and how it reacts with the other investments in your portfolio. Part of paying attention to what you own is not having too much money invested in illiquid and
  2. 2. 2 | Telemus Capital | Winter 2014 hard to value investments. Correlations between asset classes can change over time, and investors need to remember that how an investment acted when you bought it may not be how it acts now. At Telemus part of our job is to properly diversify our client’s portfolios so they’re able to achieve their long term goals with the lowest risk possible. Another thing investors need to be reminded of is to stick to their long term investment plan. That means not becoming too aggressive when times are good and not getting too conservative when times are bad. Some investors, who feel that they missed out on last year’s stock market rally, may be tempted to abandon their current investment plan and get more invested in stocks. Decisions like that are usually a bad idea and only make achieving your long term goals that much more difficult. We hope that you enjoy this most recent edition of Insights. If you have any questions regarding anything contained herein please contact us. A Message From The Managing Partner Gary Ran Chairman and Partner
  3. 3. Telemus Capital | Winter 2014 | 3 U.S. Overview Economy The domestic economy is starting to show broad- based signs of strength and could be poised for accelerated growth. Most of the recent economic data releases have surprised to the upside: 3rd quarter GDP was revised to 4.1%, automobile sales are back to their pre-Great Recession levels, the unemployment rate continues its steady decline from over 10% in late-2009 to 7% today, consumer confidence is back to pre-financial crisis levels, housing starts have more than doubled in the past four years and the Index of Leading Economic Indicators is pointing higher. Despite the recent bipartisan budget agreement reached in Congress, we remain wary of the pending debt ceiling showdown between the two parties and the potential damage it could do to the economy’s current momentum. However, short of another dysfunctional Washington moment we believe the domestic economy is poised for strong growth in the coming year. Inflation One of the few economic indicators that isn’t pointing higher is the Federal Reserve’s favorite measure of inflation, the Personal Consumption Expenditures Index (PCE). The year-over-year Core PCE Index is barely above 1%, other than the sub-1% level it hit in mid-1998 and again at the end of 2010 it stands at its lowest level in 50 years. The Fed’s minimum target for inflation is 2%. Given the current levels for the Personal Consumption Expenditures Index and most other conventional measures of inflation (Consumer Price Index, Producer Price Index, GDP Deflator), we don’t believe inflation should be a concern any time soon. In fact, the low absolute current readings and the disturbing downward trend Telemus 2014 Global Outlook Provided By Jim Robinson, Robinson Capital Management
  4. 4. 4 | Telemus Capital | Winter 2014 makes us more concerned about deflation than inflation. Interest Rates Based on the Fed’s most recent forecast, short- term interest rates will remain anchored near 0% for the next three years. Longer-term US Treasury yields, which rose over 1% in 2013, will likely continue rising in 2014. Treasury yields are comprised of two components: a “real” interest rate and an inflation expectation. As noted above, at present we are not concerned about the inflation expectation component. We are concerned about the still artificially low “real” interest rate. In 2013 the “real” interest rate rose 1.5% and investors’ inflation expectations actually declined 0.25%. Even with the 1.5% rise in “real” interest rates, we would need to see an additional 2% increase to get back to the historic average “real” interest rate. We believe the Fed’s tapering of its bond buying activities and then ultimately the shrinking of its balance sheet ($4 trillion today compared to never ever having been above $1 trillion prior to the financial crisis) will continue to drive “real” interest rates higher in 2014. Domestic Equity Markets Stock prices follow corporate earnings and we believe the corporate earnings environment remains positive particularly in light of our optimistic outlook for the domestic economy. We also believe stocks will continue to benefit from an overall reallocation from bonds to stocks by investors. Individual investors have been woefully underweighted in stocks since the financial crisis, and institutional pension plans will have a difficult time achieving 8% actuarial rates of return with any investments in investment grade bonds yielding 2.5%. The stock market still offers comparable yields, far more upside, and only slightly more downside than the investment grade taxable bond market. We are approaching the fifth anniversary of this bull market—it is typically at this stage we expect to see price-to- earnings multiple expansion. P/E multiples for the domestic stock market are about 5% below their historic average—it is not uncommon in the late stages of a bull market for those multiples to expand well past their historic averages. We believe the combination of stronger corporate earnings and price-to-earnings multiple expansion could fuel another double-digit return for the domestic stock market in 2014. Domestic Bond Market As noted above, we believe US Treasury bonds are a poor investment today as they still offer historically low yields, little upside and lots of downside risk as investors experienced this past year—theworstyearforthedomesticbondmarket in the past two decades, and only the fourth calendar year in the past forty in which the bond market delivered negative returns. Interestingly, 2013 was the only one of those four negative return years in which the Fed wasn’t pursuing a tight money policy. While we don’t anticipate it happening any time soon, an overheating economy and/or a spike in inflation expectations would likely lead to an even uglier bond market environment. Corporate bonds offer some value in that credit spreads still have some room to narrow further as the economic environment will likely be conducive to bolstering corporate balance sheets. Intermediate investment grade municipal bonds offer fair value, on an after-tax basis, versus taxable corporate bonds. Longer dated tax-exempt bonds, particularly in the lower ratings categories, offer significant value versus their taxable corporate bond brethren on an after tax-basis, and in some cases (10+ year high yield bonds) on a pre-tax basis. Non- traditional fixed income securities such as senior bank loans, convertible bonds and preferred stocks continue to provide the most attractive risk/reward characteristics. International Overview Economy Much of Continental Europe is still recovering from recession but most Eurozone economies are much better today than they were a year ago and the overall trajectory is encouraging. Likewise, the United Kingdom, which was at stall speed a year ago and Japan, which had negative growth a year ago, are both thriving today. The larger emerging market economies (Brazil, Russia, India and China) have seen their growth rates decline in recent years, but in most instances the slowdown appears to be at, or near, a bottom. Inflation As is the case in the United States, we believe that deflation may still be a greater risk than inflation to the overall global economy. There are a number of emerging market economies struggling with elevated inflation rates but they also tend to be the economies with the highest growth rates.
  5. 5. | 5Telemus Capital | Winter 2013 Interest Rates As with the domestic market, we expect global short-term interest rates to remain low. Longer- term interest rates in most major markets are still near historic lows in large part because the “real” interest has been kept artificially low for several years now. We expect those “real” rates to adjust back to historic levels in the coming years which should keep upward pressure on most developed markets’ interest rates. Currencies The dollar actually weakened modestly versus the British Pound and the Euro on the heels of the Fed’s tapering announcement—we see that as a short term anomaly tied to profit taking (buy the rumor and sell the news). To be clear, the Fed’s tapering announcement does nothing to reduce its $4 trillion balance sheet, but it does slow the rate of growth of that balance sheet and it is a move in the right direction toward shrinking it. We expect the dollar to stabilize versus the Pound and Euro and to continue to strengthen versus the Japanese Yen. Natural Resources The three biggest influences on natural resource prices are: growth in demand from the emerging markets, the value of the US Dollar, and the rate of inflation. Specifically, strong growth in the emerging markets, a weak US Dollar and rising inflation would all be good for natural resource prices. Unfortunately, as noted above we see the dollar stabilizing and/or improving versus most major currencies; we see very few signs of inflation; and, we see emerging markets stemming their rate of slowdown in recent years but probably not quite poised to take off just yet. Global Equity Markets Emergingmarketeconomiesslowedmeaningfully in the past 2-3 years, but that decline appears to have bottomed. Not surprisingly, price-to- earnings multiples for emerging market stocks declined more than 10% over that same period. Any stability and/or improvement to earnings, which one would expect if their economic slowdown has indeed bottomed, would make emerging market stocks extremely attractive going forward. Developed international markets are more attractively valued than the domestic market, but we believe P/E multiple expansion will be more significant in the domestic market over the near-term. For the most part we are geographically neutral in our global stock allocations but are poised to increase our emerging market exposures should their recent trend of economic improvement persist. We continue to favor small- and mid-cap stocks over large cap stocks in most developed markets. Global Bond Markets Theglobalbondmarketfacesthesamechallenges as the domestic bond market: artificially low “real” interest rates, and historically low bond yields. Corporate debt in overseas markets has more upside than domestic corporate debt, as the yield spreads have not contracted as much; but, overseas balance sheets are not as transparent nor are they as clean as domestic balance sheets. In addition, an improving US Dollar would not bode well for the total returns of international bonds versus domestic bonds.
  6. 6. 6 | Telemus Capital | Winter 2014 Equities It was a terrific fourth quarter and full year in equity markets most places globally, but the US really led the way. In the fourth quarter, the S&P was up 10.5% and finished the year up 32.4%; up 150% from the lows of 2009. The recent excellent returns have been driven by both multiple expansion and earnings growth. With the market trading a bit above 15X forward earnings as we enter 2014, we do not expect much help from further multiple expansion. Gains from here will likely be driven by earnings growth and this puts the focus on company selection. The Partners’ Account was up 12.3% in the fourth quarter and 42.3% for the full year 2013. For the same time periods, the S&P 500 returned 10.3% and 32.4%, respectively. We made several changes to the portfolio in the last quarter of the year, including swapping Plum Creek Timber Company for Weyerhaeuser. While in similar industries, we believe there is more upside in Weyerhaeuser as the new management continues to restructure and refocus the business. We also purchased CBRE Group, the largest real estate services company in the world. As companies increasingly outsource their corporate real estate services, CBRE should benefit from their global reach and expertise. We also used the strong run-up in Michael Kors stock price to harvest gains. We think the company is well positioned, but the risk reward was no longer favorable and so we exited the position. For the year, our largest contributors to performance were Western Digital, Google, MasterCard and Blackstone. While there were some laggards including Enbridge, YUM and Apple, even these had a positive contribution to returns. The goal for this year is to try not to have a “hangover” from last year, and to make sure there is potential to generate performance again. As mentioned above, we do have some new names, including Weyerhaeuser and CBRE, which have yet to make a real impact on the portfolios. Hopefully they will contribute in 2014. The economy seems to be tracking better and the equity markets, to date, have absorbed “taper talk”. Our sense is that the US continues to be in reasonable shape economically with very exciting growth in energy production and in related and supporting industries. Perhaps premature to talk about a renaissance in manufacturing, but there is more job growth and optimism among small businesses than we have seen in some time. As mentioned though, recent appreciation in the earnings multiple has probably anticipated some of this good news, and absolute gains in the equity market will be driven by earnings growth rather than further multiple expansion. Provided By Timothy Evnin, Portfolio Manager, Evercore Equities The performance results are based upon the returns of a single, fully discretionary account with no material investment restrictions, are reported gross of fees and assumes all dividends and capital gains are reinvested. Gross returns are gross of actual management fees and net of transaction costs. For more information on advisory fees, please refer to Part 2 of Form ADV which is available upon request. The account has been invested in EWM’s core equity strategy since its inception. EWM manages its client portfolios according to each client’s specific investment needs and circumstances. Performance results for individual accounts may vary due to the timing of investments, additions/withdrawals, length of relationship, and size of positions, among other reasons. The S&P 500 is the core equity strategy’s benchmark. You cannot invest directly the in the S&P 500 Index. The S&P 500 is a market-capitalization weighted index that includes the 500 most widely held companies chosen with respect to market size, liquidity and industry. Unlike the S&P 500, EWM may invest in both US and non-US equities and ETFs. Index results assume the re-investment of all dividends and capital gains and do not reflect the impact of transaction costs or management fees. In addition, the representative account’s holdings will differ from the securities that comprise the index. Past performance is no guarantee of future results. All investments involve risk, including loss of principal.
  7. 7. Telemus Capital | Winter 2014 | 7 The future course of the Federal Reserve’s monetary policy pushed many fixed-income investors to the sidelines during the fourth quarter of 2013. How did the municipal bond market perform? Even though interest rates remained range- bound during the quarter, the risk of higher rates weighed on municipal bond prices. The municipal bond market enjoyed a brief rally in October, as lawmakers agreed to extend the U.S. borrowing authority, avoiding a possible debt default. Consequently, municipals outperformed Treasuries during the month, as investors appeared to recognize the asset class’s relative value. Municipal bonds lost ground in November and December, as questions about future Fed monetary policy and isolated credit situations — most notably Detroit’s bankruptcy and Puerto Rico’s credit challenges — distracted investors from the improving underlying fundamentals of this asset class. In the aftermath of the Fed’s surprise decision in September 2013 to hold off setting a timetable for scaling back its stimulative bond-buying program, investors looked to its December meeting for further guidance in the wake of employment gains. At that meeting, the Fed announced that it would gradually end its bondbuying campaign in 2014, starting with the first reduction in January. The central bank also clarified that it would keep short-term interest rates at current levels (near zero) “well past the time when the unemployment rate declines below 6½ percent.” In contrast to the market’s May–June 2013 reaction to the Fed’s first hint of the eventual unwinding of the program, this time there was no sharp sell-off, but interest rates did gradually move higher throughout December. With further clarification of its monetary policy, especially the Fed’s commitment to keep short- term interest rates low as long as “projected inflation continues to run below the committee’s 2 percent longer-run goal,” municipal bonds outperformed Treasuries during the final weeks of the quarter. How are you managing the risk posed by higher interest rates? We expect continued pressure on interest rates and yield spreads as investors adjust their expectations about Fed policy. However, we believe it is unlikely that rates are going to suddenly spike as they did in the spring of 2013. If yields rise more than economic fundamentals seem to warrant, we may view it as an opportunity to add attractively valued securities to the funds. To prepare for this possibility, we slightly increased our cash level in the portfolios during the period. The funds also had a slightly shorter duration, or interest-rate sensitivity, than did their Lipper peer groups. Periods of high volatility, although unpleasant for investors, may offer attractive buying opportunities. Tax-exempt yields, in our opinion, are more attractive now given this past year’s sell-off. In fact, we have not seen yields at this level since 2011. The municipal bond market is exceptionally diverse, comprising small issuers, complex instruments, and an array of market participants with varying return objectives. We believe this market dynamic may present inefficiencies and that our active management and fundamental research will help to unlock these opportunities. Is the default rate in the municipal bond market still low by historic standards? Yes. Through November 2013, bankruptcy filings represented approximately 0.20% of the $3.7 trillion municipal bond market. Furthermore, we do not believe that the default rate will increase meaningfully in 2014. Fixed Income Provided By Thalia Meehan, CFA, Paul M. Drury, CFA, Susan A. McCormack, CFA Portfolio Managers, Putnam Investments
  8. 8. 8 | Telemus Capital | Winter 2014 In our opinion, the significance of defaults and downgrades is the headline risk that emerges from occasional isolated incidents of insolvency. For example, Puerto Rico, a self-governing American territory, was downgraded by Standard & Poor’s this past spring and by Moody’s in 2012. More recently, Fitch put Puerto Rico on negative watch. Puerto Rico’s debt is widely held because of its large issuance and exemption from federal and local taxes, and the considerable negative coverage of its strained economy led to a heavy sell-off. Throughout 2013, Puerto Rico’s government has taken measures in an attempt to mend its credit profile, most notably by introducing proposals for pension reform and raising tax revenues. Despite these reforms, we believe Puerto Rico’s credit is likely to remain pressured due to its struggling economy. Also, the city of Detroit filed for Chapter 9 bankruptcy in July. Although Detroit’s filing, the largest Chapter 9 filing in history, was a large headline event, we continue to believe that Chapter 9 filings remain isolated and don’t expect a large impact on the broader municipal bond market. At the same time, we continue to monitor the legal proceedings because they have the potential to set new precedents that can influence the market. What are credit conditions like at the state level? Given improvements in state budget forecasts, ratings agency Moody’s, after five years of negative ratings, revised its outlook for U.S. states in August to “stable.” Credit quality at the state level remains quite high, with 30 of the 50 states holding either an Aaa or Aa1 rating, the two highest possible ratings. On balance, our outlook is for continued stabilization of states’ economies, given the improvement in employment, economic growth, and consumer confidence data — all of which have contributed to rising tax collections. How did you position Putnam’s municipal bond funds during the period? Weidentifiedwhatweconsideredtobeimproving fundamentals and still-attractive spreads in the market and sought to benefit from them. Revenue credits, which are typically issued by state and local government entities to finance specific revenue-generating projects, have been an overweight position in the portfolios. We have also maintained an overweight exposure to municipal bonds rated A and BBB. While we believed that the budget challenges faced by many municipalities were significant, we were confident that conditions would improve as long as the broader economy did not stall. Our overweight position in essential service revenue bonds was offset by the fund’s underweight positioning in local G.O. [general obligation] bonds — securities issued at the city or county level. In terms of sectors, relative to the funds’ Lipper peer universe, we favored airlines, higher education, utility, and healthcare bonds. Overall, this credit positioning helped the funds’ performance, but some of the funds’ exposure to Puerto Rico bonds was a detractor during the period. The funds’ shorter-duration interest-rate positioning benefited returns as interest rates moved higher. Key takeaways • Municipal bonds posted positive returns in October, but the momentum shifted in November and December despite improving fundamentals and attractive valuations that added to the appeal of the asset class. • We believe that the underlying fundamentals in the municipal bond market are better than they have been in years. Interest-rate volatility and the longer-term prospect of higher rates reinforced our bias toward a shorter-duration stance. • We continue to overweight essential-service revenue bonds as well as the segments of the market rated A and BBB, and to underweight general obligation bonds.
  9. 9. Telemus Capital | Winter 2014 | 9 Putnam Tax Exempt Income Fund (PTAEX) Class A shares (inception 12/31/76) Before sales charge After sales charge Barclays Municipal Bond Index Last quarter 0.20% -3.81% 0.33% 1 year -4.10 -7.93 -2.55 3 years 4.95 3.53 4.83 5 years 6.92 6.05 5.89 10 years 3.86 3.43 4.29 Life of Fund 6.58 6.47 — Total expense ratio: 0.75% Putnam Tax-Free High Yield Fund (PTHAX) Class A shares (inception 9/20/93) Before sales charge After sales charge Barclays Municipal Bond Index Last quarter -0.14% -4.13% 0.33% 1 year -5.41% -9.19 -2.55 3 years 5.75 4.32 4.83 5 years 10.93 10.03 5.89 10 years 4.32 3.90 4.29 Life of Fund 5.99 5.84 6.80 Total expense ratio: 0.80% The views and opinions expressed here are those of the portfolio managers as of December 31, 2013, are subject to change with market conditions, and are not meant as investment advice. Consider these risks before investing: Capital gains, if any, are taxed at the federal and, in most cases, state levels. For some investors, investment income may be subject to the federal alternative minimum tax. Income from federally tax- exempt funds may be subject to state and local taxes. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. The funds may invest significantly in particular segments of the tax-exempt debt market, making them more vulnerable to fluctuations in the values of the securities they hold than more broadly invested funds. Interest the funds receive might be taxable. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the funds. Request a prospectus or summary prospectus from your financial representative or by calling 1-800-225-1581. The prospectus includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Annualized total return performance as of December 31, 2013 Returns for periods less than one year are not annualized. Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. Performance of class A shares after sales charge assumes reinvestment of distributions and does not account for taxes. After-sales-charge returns reflect a maximum 4.00% load. For Putnam Tax-Free High Yield Fund, the life-of-fund performance for class A shares is based on the historical performance of class B shares (inception 9/9/85), adjusted for the applicable sales charge. To obtain the most recent month-end performance, visit The funds’ expense ratios are based on the most recent prospectus and are subject to change. The Barclays Municipal Bond Index is an unmanaged index of long-term fixed-rate investment-grade tax-exempt bonds. It is not possible to invest directly in an index.
  10. 10. Fund Spotlight: Advantage Capital Management Advantage Capital Management, LLC’s objective is to generate excess returns through investment in special situations that have a low correlation with the market. We seek to identify companies that are going through corporate change and take advantage of mispricing that arises from confusion related to that change. We express our viewsthroughacombinationofhedged/arbitrage related positions and outright investments in situations where we have conviction and have done extensive work. The changes we seek to capitalize upon are bankruptcy/reorganization, mergers & acquisitions and various re- capitalizations (tender offers, rights offerings, stock buy backs & secondary issuance. The primary area of corporate change we focus on is bankruptcy or corporate restructuring. We have developed an extensive network in the bankruptcy field that allows us to hone in on the highest return situations. When a company files or fears of a filing hit the market, there are often forced sellers. These sellers are reacting to the uncertainty and holding restrictions of bankrupt securities. At Advantage Capital, we have an in-depth understanding of Chapter 11, and we position ourselves to profit from the opportunities and confusion that it creates. Distress may result from financial (too much debt) or operational (declining industry or poor management) issues. We target positions in good companies that have too much debt, but can thrive with the right capital structure. We take an active role in the Chapter 11 process and have sat on several creditor committees since the founding of our firm. This positioning gives us an informational advantage and allows us to assert our rights as a creditor. Chapter 11 can ultimately be beneficial for a corporation, as many companies have a great core business, but are either mismanaged or simply have too much debt. At Advantage, we view the Chapter 11 reorganization process as a type of “creative destruction.” In a bankruptcy financial, operational and legal professionals work together with the objective of cleaning up a company. The focus is on reorganizing financial liabilities and addressing operational challenges. A company can take advantage of Chapter 11 to shut down unprofitable units and shed itself of above market leases and labor contracts so it can then emerge as a leaner entity. A great example of this is the recent American Airlines restructuring. American was the last of the legacy carriers not to file and Chapter 11 served as a mechanism for the company to become cost competitive and terminate onerous labor contracts. American had labor costs that were significantly in excess of its peers who had already reorganized. At Advantage, we have been involved in the various securities of American and have benefited from the confusion surrounding the American bankruptcy and its recent merger with US Airways. We continue to find high return investments amongst the strategies on which we focus. Companies continually face bankruptcy and undergo corporate change. We believe this will present ongoing opportunity in the years to come. Provided By Irvin Schlussel, Portfolio Manager, Advantage Capital Management 10 | Telemus Capital | Summer 2013
  11. 11. Telemus Capital | Winter 2014 | 11 Telemus Wealth Advisors Is your family prepared for the dreaded late night call saying “Dad/Mom has been taken to the hospital I don’t know what to do”? Sure all the formal documents are in place but when the worst happens are you really prepared? Being prepared goes beyond just having the proper legal documents in place. It is critical to have a well-planned short-term strategy and access to family data. In today’s digital world, technology requires both businesses as well as individuals to have a “continuity plan” to control digital interactions after an illness or death of a principal or family member. What bills need to be paid? How do I gain access to online accounts? Where are critical passwords kept? Where are time sensitive documents such durable power of attorney for medical care? These are just a few issues that arise when there is a medical crisis let alone a loss. How does someone ensure that critical information is available to the proper designees in a sudden and life-altering event, while also ensuring that the privacy of such information is secure and not susceptible to identity theft? The key to a successful life and data transition is a well thought out plan that includes a shared strategy among family members and well understood and documented financial and electronic data access points. With so much data now maintained electronically, access to digital data needs to be secured in a way that designated caregivers can easily and seamlessly act when required. This includes not only financial data but historical family data that is now often kept digitally, and without proper planning can be lost. Family photos, social networking information, genealogy, and other information could be lost forever if it is password restricted. The first step is to identify who your emergency contacts are and who will be in need of critical information. Questions to ask yourself include: Who is your named executor? Who is your medical advocate or holder of your power of attorney? Each will have special needs which if such roles are separated may result in multiple emergency contact lists, depending on the type of emergency. Afterdevelopingyouremergencycontactlists,the next step is to communicate with such contacts to ensure they are aware of how to obtain the required information they will need in the event of an emergency. There a number of companies that offer online data services that are kept in an online “vault” and accessible only by password. In the alternative, detailed memorandums can be maintained that are updated regularly and shared with the appropriate emergency contacts. The key is updating these sources every time passwords or digital service providers are changed. Telemus can assist in developing a data transition plan and help find the best way to communicate and save such information, or direct you to one of numerous technology service providers that can help. The following link is to a web site that is a gateway to a number of different service providers, but you should judge each service provider for yourself from both a security and service capability viewpoint: http://www. Remember that estate planning for many people should no longer be focused only on tax minimization, but rather approached as a life transition event requiring holistic planning and proper execution to ensure a seamless and smooth transition during such life-altering events. By Andrew Bass, CWM, CPA Chief Wealth Officer and Senior Advisor
  12. 12. southfield, michigan two towne square, suite 800 southfield, Michigan 48076 248.827.1800 fax 248.827.1808 ann arbor, michigan 110 Miller avenue, suite 300 ann arbor, Michigan 48104 734.662.1200 fax 734.662.0416 800.827.3519