Cla august 2007


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Cla august 2007

  1. 1. Fi n a n c e Ma t t e r s A Financial Services Corporation 9300 Wade Boulevard Suite 125 Frisco, Texas 75035 Keeping you in touch 1.888.404.6848 with your financial futureAugust 2007 Telemarketing FraudWhen you send money to people you do not know personally or give personal or financial information to unknown call-ers, you increase your chances of becoming a victim of telemarketing fraud.Warning signs -- what a caller may tell you• "You must act now or the offer wont be good."• "Youve won a free gift, vacation, or prize." But you have to pay for "postage and handling" or other charges.• "You must send money, give a credit card or bank account number, or have a check picked up by courier."• "You dont need to check out the company with anyone."• "You dont need any written information about their company or their references."• "You cant afford to miss this high-profit, no-risk offer."If you hear these--or similar--"lines" from a telephone salesperson, just say "no thank you," and hang up the phone.Some Tips to Avoid Telemarketing Fraud Its very difficult to get your money back if youve been cheated over thephone. Before you buy anything by telephone, remember:• Dont buy from an unfamiliar company. Legitimate businesses understand that you want more information about their company and are happy to comply.• Always ask for and wait until you receive written material about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, beware -- not everything writ- ten down is true.• Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, or other watchdog groups. Unfortunately, not all bad businesses can be identified through these organizations.• Obtain a salespersons name, business identity, phone number, street address, mailing address, and business license number before you transact business. Some con artists give out false information. Verify the accuracy of these items.• Before you give money to a charity or make an investment, find out what percentage of the money is paid in commis- sions and what percentage actually goes to the charity or investment.• Before you send money, ask yourself a simple question. "What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?"• You must not be asked to pay in advance for services. Pay services only after they are delivered.• Some con artists will send a messenger to your home to pick up money, claiming it is part of their service to you. In reality, they are taking your money without leaving any trace of who they are or where they can be reached.• Always take your time making a decision. Legitimate companies wont pre ssure you to make a snap decision.• Dont pay for a "free prize." If a caller tells you the payment is for taxes, he or she is violating federal law.• Before you receive your next sales pitch, decide what your limits are -- the kinds of financial information you will and wont give out on the telephone.• Its never rude to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor.• Never respond to an offer you dont understand thoroughly.• Never send money or give out personal information such as credit card numbers and expiration dates, bank account numbers, dates of birth, or social security numbers to unfamiliar companies or unknown persons.• Your personal information is often brokered to telemarketers through third parties.• If you have information about a fraud report it to state, local, or federal law enforcement agencies.Excerpt from the Federal Bureau of Investigation Website (
  2. 2. The Retirement Account Rescue Model™ Solution!The Retirement Account Rescue Model™ (RAR™) is a simple and understandable financial strategy with four importantand powerful objectives:1. Eliminate market risk. To ensure successful implementation, the RAR™ model is best served by moving retire- ment assets into a financial vehicle that will not lose value due to market fluctuations. A stable base allows this plan- ning strategy to reach its full potential. Consider using a Fixed Indexed Annuity (FIA) to accomplish this objec- tive. This means the retirement account would purchase a FIA. A FIA is a fixed annuity that links your interest cred- its to the performance of an external market index without exposing your principal or past interest credits to market risk.2. Control the impact of future taxes on your retirement assets. By strategically liquidating retirement accounts now, you can accurately predict your income tax exposure today. This reduces the "crystal ball of taxation" risk. Will taxes be LOWER in the future? Will taxes be HIGHER in the future? We know exactly what they are to- day. Getting out of the tax game today may make the most sense for your client based on his/her personal situation and their goals for the future.3. Capture the benefits of tax-smart premature distributions. By properly following Section 72(t) distribution rules, withdrawals can be made from an existing retirement account without exposure to the 10% penalty! The Fixed In- dexed Annuity purchased must be issued by an insurance company that is equipped to properly administer 72(t) dis- tributions. Otherwise, the client could be faced with administrative charges or worse yet, the dreaded 10% pre-59 ½ distribution penalty on the money withdrawn.4. Replace income tax burdens with income tax-free benefits. The 72(t) distributions are utilized, after taxes, to pur- chase a specially designed life insurance plan created to generate a maximum future income benefit. By following the prescribed guidelines, clients can access their accumulating cash value in the future on an income tax free basis.Consider using an Indexed Universal Life (IUL) Policy. Like the FIA, an IUL generates interest credits linked to theperformance of an external market index. Principal and past interest credits are always protected. A number of theseIULs have been designed specifically to take advantage of this future income approach.Lets look at an example of how this would work for a 53-year old male non-smoker with a Retirement Account value of$100,000 averaging a 5% annual growth. His goal is to develop an attractive income stream at age 70.1. The Retirement Account is transferred to an FIA with an insurance company capable of administering the 72(t) distri- butions without penalty. This would create annual withdrawals for the next six years of $6,912.50.2. Assuming a 19.18% state and federal tax impact, these distributions would have an after tax value of approximately $5,586.00. Each year, this premium amount would be used to purchase/fund the life insurance policy. The IUL would be carefully designed to receive $5,586 per year for exactly six years. The death benefit created is $112,355.3. At age 70 ½, two things happen: a. The Retirement Account begins making required distributions. Again, assuming the FIA averaged a 5% annual return, the account balance would be $132,941. The first required minimum distribution would be $4,851. Each year, the required distributions would increase based on the remaining life expectancy of the Retirement Account owner. Each distribution will be exposed to state and federal income taxes. b. The IUL has achieved a projected cash value of approximately $87,114. The owner begins accessing $9,703 each year income tax free through a policy loan provision.By age 100, the Retirement Account would have distributed a total of $301,967 in taxable distributions to theowner. The account balance at that time would be $54,051 again assuming a 5% average return.During this same period, the IUL would have distributed $291,090 in tax free loans! In addition, this plan at age 100would have a residual death benefit for the beneficiaries in excess of $224,000; also income tax free!In summary, we have utilized a 53 year olds $100,000 Retirement Account (without making additional contributions) toaccomplish the following:By age 100 the Retirement Account owner has made taxable minimum distributions totaling $301, 967.00 from his FixedIndexed Annuity with the 5% assumed growth rate. He has also taken $291,090.00 in tax free loans from the IndexedUniversal Life policy. And, again at age 100, he still has a balance of $54,051.00 in his Retirement Account and the taxfree residual death benefit from the Indexed Universal Life policy is $224,000! Incredible but true!The Retirement Account Rescue Model™ can be an amazing tool for the right customer. Working together, we canhelp you design this case to make the most of the opportunity. Give us a call at 888-404-6848.
  3. 3. Surprising Reasons Why We Gain Weight As We Age By Stephen Gullo, PhDI never had a weight problem, but thanks to two pregnan- Stephen puts poultry and pork on his “B” list. They havecies and being in my 40s, I scrupulously need to watch more saturated fat than white fish and no heart-healthywhat I eat now. “There’s no question that the rules of eat- fish oils. Red meat, too, is okay but only change as we age, but weight gain does not have to beinevitable,” New York City diet doctor Stephen Gullo, Eat Lots of vegetables. Fiber kills appetite, and low-PhD, told me recently in response to my complaints. starch vegetables, such as spinach and broccoli, allow“Decreased metabolic efficiency is inevitable. If a 40- “volume eaters” – people who are not satisfied until thatyear-old were to eat the same foods as he/she did in high have consumed a large amount of food – to eat more with-school, he would burn fewer calories - and the rest would out gaining stored as fat.” High-sugar fruits, such as grapes and watermelon, aren’tI was surprised when Stephen told me that many elements as good because they increase insulin levels and actuallyof lifestyle beyond what you eat and how much exercise make it harder to lose weight. He recommends no moreyou get play a major role in all this. Midlife factors that than two fruits a day for women over age 40.cause us to gain weight……. Minimize intake of white bread, white rice and pasta.Marriage. Single people tend to make time for the gym. Limit white bread to the occasional sandwich, rice to one-Married folks tend to be home more and are more likely to half cup and pasta to two ounces. Whole grains are al-eat mindlessly – for example, nibbling in front of the TV ways preferable.or while cooking and cleaning up meals (a dangerous habit Drink lots of water, especially cold water. HydrationI developed after becoming a mother). Some take on their improves metabolic efficiency, and the cold forces thepartners’ poor eating and drinking habits. body to burn more calories.Stress increases blood levels of the hormone cortisol, Stephen observes that appetite expands in direct propor-which may in turn increase the appetite and cause the tion to the amount of food available. So…..body to store excess calories as fat. Dish out portions in the kitchen.Sleep deprivation can lead to a hormonal imbalance thatstimulates appetite during the day. Don’t stock up on cheese and nuts – they are high in fat, and people tend to eat more than they should.Pregnancy and menopause trigger hormonal changesthat may cause the body to gain weight and reduce meta- Stay away from all-you-can-eat buffets.bolic efficiency. Beware of too much variety. If you have five kinds ofWe all know the solution: Eat wisely. Stephen’s recom- cookies at hand, you may be tempted to sample everymended diet, detailed in his book The Thin Command- kind.ments Diet: The 10 No-Fail Strategies for PermanentWeight Loss, optimizes the body’s ability to burn calories. Stay active. Exercise – climbing stairs, walking, dancing,He recommends…… etc. – is a powerful tool to lessen the effects of again. But remember, exercising good judgment about what to eat isConsume foods rich in low-fat protein, such as low-fat the most powerful exercise of all.dairy, egg-white omelets and “white” fish and shellfish –shrimp, flounder, snapper, etc. Salmon has health benefitsbut is slightly higher in calories. He suggests taking 1,000milligrams (mg) of fish oil daily to enhance the body’sability to burn calories. CLA Client Testimonials If you are pleased with the service you have received from CLA, whether from a field representative, home office personnel or just a nice experience you had in general we would love to hear from you! Two ways to provide this valuable feedback: 1) Online by internet: (You can attach a digital photo!) 2) Telephone (800) 609-9006 x.2355
  4. 4. Bonds might catch you by surpriseWhen it comes to protecting your assets, aren’t federal extraordinarily stable averaging 54% less volatility com-government bonds and municipal bonds a safe way to go? pared to the last 27 years. When interest rates beginCan’t we count on these entities to make their payments? climbing, expect bond prices to react.Absolutely! Government bonds are a dependable way to There is one other “surprise” bonds pull on investors.receive predictable income payments. However, there is Many people overlook the tax exposure created by inter-more to a bond that the interest payment. When you pur- est they are earning each year even if they are not usingchase a bond, you have linked your cash value to the in- this income for ordinary living expenses. This includes aterest rate you purchased. Later, if you need to sell the “sneaky” tax on Social Security benefits. Even Municipalbond for additional access to your principal, you will be Bonds interest counts toward a “threshold income” calcu-selling the bond based on interest rates available at that lation that erodes your Social Security benefits.time. In other words, if you own a 4% bond and the go-ing interest rate is 6% when you want to sell, you will If you are not using the interest you receive from yourneed to drop the price in order to attract a buyer. Bond bonds as income, you may benefit from another approach.traders call this selling at a discount. You may want to consider a tax-deferred fixed annuity.These “discounts” can be fairly significant as pointed out Individuals with threshold income of $34K or couplesby the Vanguard Group, one of the worlds leading bond with earnings of $44K may see an increased tax burden.managers. “Many investors looking for safety and higher Under current rules, up to 85% of Social Security benefitsreturns might falsely assume bonds are riskless invest- can be taxed. One way to reduce your threshold incomements, not realizing that even a modest increase in inter- is to take advantage of tax-deferred growth inside of aest rates would take a serious bite out of fixed income fixed annuity. The tax deferred build up in an Annuityvalues.” is not counted in the threshold income formula.Vanguard realizes the folly of many investors who do not This is a huge advantage for folks wanting to keep all ofunderstand that they can lose principal if interest rates their Social Security benefits. A fixed annuity can alsohead higher. Vanguard has rightfully warned investors in help you avoid that pesky bond volatility. In most fixedthe past, “…the value of a long-term bond fund might annuities, the insurance company guarantees your princi- pal and past credited interest allowing you to enjoy truefall 20% if rates went up just two percentage points.” growth without exposure to your principal. You can alsoIt would be wise to ask yourself, “Do I think interest rates access funds without cost or exposure throug h a variety ofwill be higher in the future than they are today?” Since free withdrawal options, income strategies and specialthe middle of 1982, bond yields have been steadily declin- and appear to have hit bottom in 2003. Since thattime, interest rates on the 10-year treasury have fluctuated Call today for our FREE Social Security Tax Work-in between 4.50% and 5.10%. Higher interest rates in sheet (888-404-6848)the future may be a reality. This tool will help you demonstrate the value of tax deferredThe Chicago Board of Trade (CBOT) measures the vola- growth.tility in price fluctuation of bonds each year. Over the last27 years, bond prices have averaged annual swings of10.6%. During the last two years, bond prices have been PRE-SORTED STANDARD A U.S. POSTAGE PAID DALLAS, TX A Financial Services Corporation PERMIT NO. 3998 9300 Wade Boulevard, Suite 125 Frisco, Texas 75035