How to make the most of what i have?

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How to make the most of what i have?

  1. 1. Putting My Mother‟s Wisdom to Work: Planning to Provide for Myself, My Family and My Community September 29, 2012©2012 Union Bank, NA Member FDIC
  2. 2. Session 2: HOW TO MAKE THE MOST OF WHAT I HAVE1|
  3. 3. Panelists Sharon Uyeda Fong, CFP (Moderator) – Vice President and Senior Private Banker, The Private Bank Christiane Boyd – Portfolio Manager, HighMark Capital Management Teresa Tabel, CFP – Vice President and Wealth Strategist, The Private Bank Carlee Harmonson – Senior Vice President and Regional Director – Trust and Estate Services, The Private Bank Linda Spuck, CTFA – Vice President and Trust Officer, The Private Bank2|
  4. 4. Investment Strategy • What should your asset allocation be? • How much risk can you tolerate? • What is your investment time horizon?3|
  5. 5. Sample Objective: Income and Growth The dual goals of the Income and Growth objective are to seek current income and moderate capital appreciation. A major portion of the assets is committed to income producing securities. Strategic Ranges Optimized Portfolio Cash 4.8% Large Cap Value Equity 30-50% Equity High Yield Fixed Large Cap Core 7.5% Fixed Income 45-65% Large Cap Core 8.4% 6.7% 8.4% Large Cap Cash 0-20% Large Cap Value 7.5% International Fixed Growth 3.3% Tactical Allocation Large Cap Growth 3.3% 1.5% Mid Cap Equity 34.6% Mid Cap Value 1.2% Value 1.2% Fixed Income 45.1% Mid Cap Growth 0.7% Mid Cap Growth Alternatives 15.5% Small Cap Value 2.8% Small Cap 0.7% Cash 4.8% Small Cap Growth 1.8% Interm-Term Fixed Value 2.8% International Equity 4.5% 20.2% Small Cap Emerging Markets Equity 4.4% Growth 1.8% Equity Sub-Total 34.6% International Alternatives 15.5% Equity 4.5% Fixed Income Emerging Markets Short-Term Fixed 16.6% Equity 4.4% Interm-Term Fixed 20.2% Short-Term Fixed Alternatives International Fixed 1.5% 16.6% 15.5% High Yield Fixed 6.7% Fixed Income Sub-Total 45.1% Cash 4.8% Total 100% The above information is for illustrative purposes only, and is not intended to provide investment recommendations as to which securities to buy or sell, or when to buy or sell securities. The Sample Portfolio is hypothetical, and actual client‟s portfolio construction4 | may vary depending on the client‟s investment needs, objectives and restrictions. Asset allocation range under each investment objective may also vary depending on the prevailing market conditions.
  6. 6. Strategic Asset Allocation Efficient Frontier 1. Optimize your current portfolio (match your return expectations with risk level) High 2. Increase your return potential through tactical asset allocation 3. Maximize risk/reward ratio through disciplined investment selection Expected Model Return Investment Selection Aggressive Tactical Asset Allocation Capital Growth Optimal Strategic Policy Appreciation Balanced Balanced Income Enhance return potential; Income & Growth maintain risk level Investment Objectives Fixed Income Maintain return potential; Equity Cash Income reduce risk level Income 0-35% 40-100% 0-60% Income & Growth 30-50% 45-65% 0-20% Balanced Income 40-60% 35-55% 0-20% Balanced 50-70% 25-45% 0-20% Capital Appreciation 65-85% 10-30% 0-20% Low Aggressive Growth 80-100% 0-20% 0-20% Low Expected Model Risk (Standard Deviation) High5|
  7. 7. Interpret: Risk Assessment Your strategic asset allocation policy should form the foundation of your portfolio and will impact long-term returns. Rolling 10-Year Market Returns Investment Objective: Last 20 years (ending 3/31/2012) Aggressive Growth Capital Appreciation Balanced Balanced Income Income & Growth Income Lowest Return Average Return Highest Return The rolling market returns for each investment objective presented above are hypothetical portfolios only shown for illustrative purposes and no actual trades have been placed. They are not intended to provide investment recommendations. Returns do not reflect the impact that material economic and market factors might have had on portfolio managers‟ investment decision making if the portfolio manager were actually managing client‟s assets. Individual account management and portfolio construction will vary depending on each client‟s investment needs, objectives and restrictions. Returns calculated are based on6| blended benchmarks, as described on the „Disclosure Page‟ of this presentation, and do not reflect the deduction of taxes or fees, but reflect the reinvestment of dividends and other earnings. These returns are no indication of future results. Please see the Disclosure page for more information.
  8. 8. Interpret: Risk Assessment In pursuit of your long-term goals, you should be willing to accept 1-year fluctuations in the value of your portfolio. Rolling 1-Year Market Returns Last 20 years (ending 3/31/2012) Investment Objective: Aggressive Growth Capital Appreciation Balanced Balanced Income Income & Growth Income Lowest Return Average Return Highest Return The rolling market returns for each investment objective presented above are hypothetical portfolios only shown for illustrative purposes and no actual trades have been placed. They are not intended to provide investment recommendations. Returns do not reflect the impact that material economic and market factors might have had on portfolio managers‟ investment decision making if the portfolio manager were actually managing client‟s assets. Individual account management and portfolio construction will vary depending on each client‟s investment needs, objectives and restrictions. Returns calculated are based on blended benchmarks, as described on the „Disclosure Page‟ of this presentation, and do not reflect the deduction of taxes or fees, but reflect the reinvestment7| of dividends and other earnings. These returns are no indication of future results. Please see the Disclosure page for more information.
  9. 9. Gifting to an Individual There are three common reasons clients provide gifts to individuals during their lifetime. Provide funds for the education of children and Reason 1 grandchildren. Reduce the value of one‟s personal estate Reason 2 during life, resulting in lower estate tax liability after death. Facilitate financial maturity and influence Reason 3 monetary decision-making of younger generations8|
  10. 10. Gifting Basics • $13,000 per year from an individual to an individual – gift tax free. • $26,000 per year from a married couple to an individual- gift tax free. In addition to $13,000 per year / per individual, these additional gifts are excluded from gift tax: – unlimited amounts between U.S. citizen spouses – unlimited amounts for any individual‟s tuition paid directly to a qualified educational institution – unlimited amounts for any individual‟s qualified medical expenses paid directly to the medical provider • All appreciation after the gift accrues to the donee, not the donor‟s estate. • Gifted assets received by an individual retain the original cost basis of the donor; whereas assets transferred after death receive a “step-up” in cost basis. Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax9| advisor.
  11. 11. When is the Right Time to Give • Preparing children to receive gifts of money • It‟s not about the amount • Communicate your expectation about the gifts you give • Compound interest-why it is so important • Start with savings then a checking account • What about an investment club with your children/grandchildren? • Success depends on time, patience and vision10 |
  12. 12. When is the Right Time to Give • Preparing adults to receive gifts of money • Building a multi-generational legacy or immediate life style changes • • Communicate your expectation about the gifts you give • A new home • College or higher education • The start of a new business • Reserve fund for your family and the generations after • Endow your family for the future11 |
  13. 13. Gifting to Charitable Beneficiaries There are common personal, estate and income tax reasons clients provide gifts to charitable beneficiaries during their lifetime. Personal Considerations Estate and Tax Considerations • Creating a personal or family • Estate or income tax deduction legacy • Increasing the amount passing to one‟s • Perpetuation of beliefs, values and heirs ideals • Avoiding or delaying payment of capital • Desire to spread good fortune to gains tax others • Religious and spiritual • Increasing personal after-tax cash flow commitment Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax12 | advisor.
  14. 14. Common Charitable Gifting Vehicles • Outright Gifts • Cash • Securities • Bequests • Private Family Foundations • Donor Advised Funds • Charitable Gift Annuities Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax13 | advisor. `
  15. 15. Common Charitable Gifting Vehicles • Outright Gifts (Cash or Securities) • Bequests • Private Family Foundations/Donor Advised Funds • Charitable Gift Annuities Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or tax14 | advisor. `
  16. 16. How The Private Bank Can Help • Wealth planning to help our clients evaluate their circumstances, prioritize objectives, develop appropriate strategies and define implementation timelines. • Corporate trustee services to properly administer trusts and ensure wishes are carried out, including estate settlement, philanthropic services and management of special assets such as real estate, mineral, oil and gas interests, closely held business interests and loan management. • Investment Management to manage liquid assets, including disciplined asset allocation, customized portfolio construction, and a dedicated Senior Portfolio Manager. • Partnership with estate planning attorneys and accountants. Wills, trusts, foundations, and wealth-planning strategies have legal, tax, accounting, and other implications. Clients should consult a legal or15 | tax advisor.
  17. 17. Your Questions?16 |
  18. 18. DisclosuresHighMark Capital Management, Inc. (HighMark), an SEC-registered investment adviser, is a wholly owned subsidiary of Union Bank, N.A. (Union Bank). HighMark manages institutionalseparate account portfolios for a wide variety of for-profit and nonprofit organizations, public agencies, public and private retirement plans, and personal trusts of all sizes. It also serves asinvestment adviser for mutual funds, common trust funds, and collective investment trusts and also sub-advises certain of Union Bank‟s collective funds. Union Bank, a subsidiary ofUnionBanCal Corporation, provides certain services to HighMark and is compensated for these services. Past performance does not guarantee future results. Individual account managementand construction will vary depending on each clients investment needs and objectives. Investments employing HighMark strategies are NOT insured by the FDIC or by any otherFederal Government Agency, are NOT Bank deposits, are NOT guaranteed by the Bank or any Bank affiliate, and MAY lose value, including possible loss of principal.Some information provided herein was obtained from third party sources deemed to be reliable; HighMark and its affiliates make no representations or warranties with respect to the timeliness,accuracy, or completeness of the information provided. Any information provided is subject to change without notice.10-Year and 1-Year Rolling Returns represent HighMark‟s HCA Strategic Policy blended benchmarks:Income: 17% S&P 500, 2% MSCI EAFE, 1% Russell 2000, 35% BC Aggregate, 35% BC 1-3Yr Govt/Cred, 10% Citigroup 3 Month T-BillIncome and Growth: 34% S&P 500, 4% MSCI EAFE, 2% Russell 2000, 55% BC Aggregate, 5% Citigroup 3 Month T-BillBalanced Income: 43% S&P 500, 5% MSCI EAFE, 2% Russell 2000, 45% BC Aggregate, 5% Citigroup 3 Month T-Bill (Inception Date is April 1, 2005)Balanced: 51% S&P 500, 6% MSCI EAFE, 3% Russell 2000, 35% BC Aggregate, 5% Citigroup 3 Month T-BillCapital Appreciation: 64% S&P 500, 8% MSCI EAFE, 3% Russell 2000, 20% BC Aggregate, 5% Citigroup 3 Month T-BillAggressive Growth: 77% S&P 500, 9% MSCI EAFE, 4% Russell 2000, 5% BC Aggregate, 5% Citigroup 3 Month T-BillBlended benchmarks represent HighMarks strategic allocations between equity, fixed income, and cash and are rebalanced monthly. Benchmark returns do not reflect the deduction ofadvisory fees, custody fees, transaction costs, or other expenses of investing. An investor cannot invest directly in an index. The unmanaged S&P 500 Index is generally representative of theperformance of large companies in the U.S. stock market. The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measuredeveloped market equity performance, excluding the U.S. & Cananda. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, whichrepresents approximately 8% of the total market capitalization of the Russell 3000 Index. The unmanaged Barclays Capital (BC) U.S. Aggregate Bond Index is generally representative of theU.S. taxable bond market as a whole. The unmanaged BC 1-3 Year U.S. Government/Credit Index is a subset of the BC U.S. Government/Credit Index with maturities ranging from 1-3 years.The unmanaged Citigroup 3-month T-bill Index tracks the yield of the 3-month U.S. Treasury bill. Total returns assume the reinvestment of dividends and other earnings. Results for periodsgreater than one year are annualized.Each strategy represented as a Sample Portfolio is a hypothetical portfolio only and does not reflect actual investment decisions or recommendations. It does not reflect the liquidity constraintsof actual fund investing or the impact that material economic and market factors may have on an investment adviser‟s decision-making. Investors cannot invest in the Sample Portfolio andactual investment results may differ materially. The Sample Portfolio does not reflect the deduction of advisory fees, brokerage, commissions, or any other actual client expenses, which wouldreduce investor returns. Advisory fees are described in Form ADV, Part 2A and are available upon request.A portfolio‟s Expected Return (comprised of capital appreciation and income/dividends) is calculated in two steps:(1) The expected return of each asset class in a given portfolio is determined through a combination of examining historical rates of return with expected returns. Historical rates of return(analyzed over a number of years) are provided by Morningstar/Ibbotson Associates. Expected rates of return are developed by HighMark‟s Asset Allocation Committee, which incorporates afive to seven year forecast for market returns, the asset class‟ beta, and a risk-free rate (generally, the T-Bill rate). Returns do not reflect the reinvestment of dividends, distributions, and otherearnings. (2) The expected return for the overall portfolio is derived by taking the weighted average of each respective asset class‟ expected return.Expected returns generated are before taxes and any fees. The Standard Deviation for an asset class represents its possible divergence of the actual return for an asset class from itsExpected Return. It measures the potential magnitude of any positive overperformance or negative underperformance of an asset class from its Expected Return.© HighMark Capital Management, Inc. 2012. All rights reserved.17 |

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