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Why Its A Good Time To Challenge Your Advisor

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Investment planning is now very different to the past as the world economies will be growing at much slower pace

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Why Its A Good Time To Challenge Your Advisor

  1. 1. Why it’s a good time to challenge your advisor Amir Homayoun Rafizadeh, MBA Kruse Asset Management Private Business Advisor also known as “wadvisor” How to reduce income tax's How to reduce estate tax liability Items not covered by Your current advisor Reducing your income tax’s Finding a good investment advisor Reducing your estate tax’s Chicago financial advisor 10 rules for 2010 6 questions to ask your advisor Mutual funds Tax deferral
  2. 2. Disclosures : Past performance does not guarantee future results . The following material is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument. The information here should also not be used or relied upon for legal, tax and investment advice. Please consult your attorney, tax advisor or financial advisor for further consultation. The views discussed here may not be appropriate for all investors. Please conduct your own due diligence and research . Any forecasts and charts contained here are for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation . Opinions, estimates, forecasts and any other statements or financial forecasts/market commentary are based on current conditions and are subject to change without notice.
  3. 3. Let’s discuss <ul><li>How to destroy wealth </li></ul><ul><li>Quick class on wealth recovery (after loss) </li></ul><ul><li>10 new rules for 2010 </li></ul><ul><li>Coming to a presentation near you soon </li></ul><ul><li>Areas of greatest risk </li></ul><ul><li>Areas of greatest potential </li></ul><ul><li>Contact </li></ul>
  4. 4. “ Let me show you how easy it is to destroy wealth – on paper for now”
  5. 5. Wealth Destruction Scenario’s -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Scenario4 Scenario5 Scenario6 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. -50.0% -70.0% -40.0% -10.0% -20.0% -34.0% Portfolio Loss
  6. 6. “ Ask yourself What does it take to get back to even if you lose some money?”
  7. 7. “ If your financial advisor cant answer this basic question you should think about this long and hard”
  8. 8. “ And the right answer is......”
  9. 9. 11% return for a 10% loss 11.1% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  10. 10. 25% return for a 20% loss 11.1% 25.0% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0 % -34.0%
  11. 11. 51% return from a 34% loss 11.1% 25.0% 51.5% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  12. 12. 66% return for a 40% loss 11.1% 66.7% 25.0% 51.5% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Scenario4 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  13. 13. 100% return for a 50% loss 11.1% 66.7% 25.0% 100.0% 51.5% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Scenario4 Scenario5 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  14. 14. No one should face this…. 11.1% 66.7% 25.0% 100.0% 51.5% 233.3% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Scenario4 Scenario5 Scenario6 Source: wadvisor. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  15. 15. “ You get the picture, wealth destruction is bad, but getting back to even is hell of a task”
  16. 16. “ The other take away: if you thought a 20% gain will get you back to even after a 20% loss, think again!”
  17. 17. “ Here is another interesting dynamic”
  18. 18. Pick one line, blue or pink? Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Strategy1 Strategy2
  19. 19. “ Without further information this is pretty hard to tell what's what”
  20. 20. Let’s add vertical axis - %’s -40% -30% -20% -10% 0% 10% 20% 30% Strategy1 Strategy2 Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s.
  21. 21. Horizontal axis, 2000-08 time frame -40% -30% -20% -10% 0% 10% 20% 30% Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. 2000 2001 2002 2003 2004 2005 2006 2007 2008 Strategy1 Strategy2
  22. 22. Blue line: DJIA performance -40% -30% -20% -10% 0% 10% 20% 30% Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. DJIA represents Dow Jones Industrial Average For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. -6% -7% -17% 25% 3% -1% 16% -34% 6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Strategy1 Strategy2
  23. 23. Pink line hypothetical balanced fixed income portfolio -40% -30% -20% -10% 0% 10% 20% 30% Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. Balanced portfolio disclosure in appendix . For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. 6% 10% 7% 10% 10% 6% 4% 5% -1% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Strategy1 Strategy2
  24. 24. “ Ok ,now you have more information”
  25. 25. Pick one line: blue or pink? -40% -30% -20% -10% 0% 10% 20% 30% Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. Balanced portfolio disclosure in appendix . For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. -6% -7% -17% 25% 3% -1% 16% -34% 6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Strategy1 Strategy2 6% 10% 7% 10% 10% 6% 4% 5% -1%
  26. 26. “ Want to be really clear, this is not about performance”
  27. 27. “ Instead, focus on the slope of the line and fluctuations”
  28. 28. Both lines without numbers again -40% -30% -20% -10% 0% 10% 20% 30% Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. Balanced portfolio disclosure in appendix . For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. 2000 2001 2002 2003 2004 2005 2006 2007 2008 Strategy1 Strategy2
  29. 29. “ Most of you should have picked the pink line”
  30. 30. “ If you picked the blue line, you: 1)Are under 25 years of age 2) Enjoy staying up at night 3) Like roller coasters 4) Have not lost any serious money yet 5) Are out of your mind “
  31. 31. “ Ok, let’s put some serious money to work and pretend its year 2000 again”
  32. 32. “ Let’s start with $100,000 in both the blue line (DJIA performance) and pink line (Hypothetical balanced fixed income portfolio)” DJIA represents Dow Jones Industrial Average Balanced portfolio disclosure in appendix .
  33. 33. Now which line? $100k $94k $87k $72k $90k $93k $92k $107k $113k $75k $100k $110k $117k $129k $142k $150k $156k $164k $174k $172k $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. Balanced portfolio disclosure in appendix . For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Strategy1 Strategy2
  34. 34. “ You started with $100k in 2000 and at the end of 2008 (8 years later) you could be down to $75k”
  35. 35. Why blue line? $94k $87k $72k $90k $93k $92k $107k $113k $75k $100k $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -34% Started Finished Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Strategy1 Strategy2
  36. 36. Lets get back to Scenario3 11.1% 66.7% 25.0% 100.0% 51.5% 233.3% -90.0% -40.0% 10.0% 60.0% 110.0% 160.0% 210.0% 260.0% Scenario1 Scenario2 Scenario3 Scenario4 Scenario5 Scenario6 Source: wadvisor and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s. Portfolio Loss Return required to get back -50.0% -70.0% -40.0% -10.0% -20.0% -34.0%
  37. 37. “ What if I am 65 years (and older) and time is not on my side?”
  38. 38. “ How am I going to get my 2008 portfolio back?”
  39. 39. No of years needed to get back 51.5% 23.1% 14.9% 10.9% 8.7% 7.2% 6.1% 5.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 1 2 3 4 5 6 7 8 Return required to get back to a hypothetical $1M portfolio from the 2008 DJIA -34% decline Source: wadvisor and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s.
  40. 40. “ The 10 new rules for 2010” Source: wadvisor
  41. 41. “ Rule number 1: Never destroy wealth or lose money” Source: wadvisor
  42. 42. “ Rule number 2: Fees matter” Source: wadvisor
  43. 43. “ Rule number 3: Security selection is more important than ever before” Source: wadvisor
  44. 44. “ Rule number 4: Advisor selection is even more important than ever before” Source: wadvisor
  45. 45. “ Rule number 5: Avoid expensive investments at all costs” Source: wadvisor
  46. 46. “ Rule number 6: Liquidity and access to your money matters” Source: wadvisor
  47. 47. “ Rule number 7: Its what's you keep and not what you make” Source: wadvisor
  48. 48. “ Rule number 8: If a strategy or a security takes more than 10 minutes to explain, stay away from it” Source: wadvisor
  49. 49. “ Rule number 9: Search for managers that produce alpha otherwise an index would do” Source: wadvisor
  50. 50. “ Rule number 10: This is your money so ask as many questions as you like and take the time to understand what you are getting ” Source: wadvisor
  51. 51. “ Now let me leave you with one last question”
  52. 52. “ What should your investment strategy look like going forward?”
  53. 53. “ Coming to a presentation near you soon”
  54. 54. “ Ways to double or triple your business without hiring any new employees” Source: wadvisor
  55. 55. “ Ways to reduce your annual investment expenses by 0.5-1%” Source: wadvisor
  56. 56. “ Inflation vs. deflation” Source: wadvisor
  57. 57. “ The importance of cash flow planning” Source: wadvisor
  58. 58. “ Advantages/Disadvantages of tax deferral or tax write-off techniques” Source: wadvisor
  59. 59. “ Individual bond vs. a bond mutual fund” Source: wadvisor
  60. 60. “ Make sure your company name is visible on Google” Source: wadvisor
  61. 61. “ 10 basic tips on building your LinkedIn profile” Source: wadvisor
  62. 62. “ Business exit strategies ” Source: wadvisor
  63. 63. “ 2010 investing and beyond ” Source: wadvisor
  64. 64. Areas of Greatest Risk Are there any holes in my planning? Am I going to reach my goals and objectives? Will I have cash flow problems? 1 2 3 4 5 6 Can I reduce income tax's? How do I reduce estate tax liability? Do my documents match my intentions? Source: InKnowVision, LLC
  65. 65. Areas of Greatest Potential Protecting wealth during lifetime Controlling the spending of tax dollars 1 2 3 4 5 Creating more wealth Leaving more of my wealth to my family Supporting the causes that are important to me and my family Source: InKnowVision, LLC
  66. 66. “ I like to sleep comfortably at night knowing I did the right thing for my clients”
  67. 67. Contact <ul><li>“ Its what you keep not what you make“ </li></ul><ul><li>Amir Homayoun Rafizadeh, MBA </li></ul><ul><li>Private Business Advisor </li></ul><ul><li>Kruse Asset Management – www.kruseassetmanagement.com </li></ul><ul><li>[email_address] </li></ul><ul><li>http://www.linkedin.com/in/wadvisor </li></ul><ul><li>http://twitter.com/wadvisor </li></ul><ul><li>http://www.youtube.com/user/wadvisor </li></ul><ul><li>http://wadvisor.blogspot.com/ </li></ul><ul><li>http://www.slideshare.net/wadvisor </li></ul><ul><li>http://www.google.com/profiles/wadvisor </li></ul><ul><li>Co-Founder of National Business Owner Advisory Council (NBOAC) </li></ul><ul><li>www.nboac.com </li></ul>
  68. 68. Disclosures : Past performance does not guarantee future results . The following material is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument. The information here should also not be used or relied upon for legal, tax and investment advice. Please consult your attorney, tax advisor or financial advisor for further consultation. The views discussed here may not be appropriate for all investors. Please conduct your own due diligence and research . Any forecasts and charts contained here are for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation . Opinions, estimates, forecasts and any other statements or financial forecasts/market commentary are based on current conditions and are subject to change without notice. We believe the information contained in this presentation are obtained from sources that are reliable.
  69. 69. Supplemental Informational Sources : JP Morgan Asset Management - www.jpmorgan.com InKnowVision LLC - www.inknowvision.com Standard and Poor's - www.standardandpoors.com WSJ – http://online.wsj.com Barron's - http://online.barrons.com Crestmont Research - www.crestmontresearch.com Barclays Capital - www.barcap.com US Treasury - www.ustreas.gov Federal Reserve – www.federalreserve.gov Census Bureau - www.census.gov Morning Star - www.morningstar.com Schwab Institutional - www.schwabinstitutional.com Nuveen Investments - www.cefconnect.com Kruse Asset Management – www.kruseassetmanagement.com National Business Owner Advisory Council – www.nboac.com
  70. 70. Balanced portfolio disclosures : Fixed income index returns are represented by Barclays Capital US Aggregate Index, Fixed rate MBS, Muni Bond Index, Emerging market index, Corporate high yield index, Barclays capital real TIPS, Barclays capital US Treasury 10% in MBS (Mortgage backed Securities), 20% in corporate, 15% in Municipals, 10% in emerging market debt, 10% in high yield, 25% in treasuries, and 10% in TIPS Balanced portfolio assumes annual rebalancing . Past performance does not guarantee future results. Any forecasts and charts contained here are for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation Source: wadvisor, JP Morgan Asset Management, Crestmont Research, and Barclays Capital. For illustrative purposes only. Past performance is not indicative of future returns. Data as of 08/30/2009. Data does not incorporate fees, expenses and tax’s.
  71. 71. Helping Business Owners Succeed
  72. 72. Its what you keep not what you make Ethics Expertise Education

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