Client Letters

Managing Your Finances Is About to Get Easier

Raymond James Investor Access will soon be upgraded to bring you enhanced levels of convenience and choice for the everyday management of your finances.

Our enhanced platform will offer new and improved methods of viewing your account information, making it easy to manage your personal information, check account balances and monitor portfolio performance. Key enhancements to Investor Access include:

• Improved site layout and simple navigation,
• A statement summary page listing all your holdings,
• The ability to easily sort and filter information in your accounts, and
• Enhanced document delivery options, including paperless delivery of your statements, trade confirmations and shareholder information.

As you visit Investor Access during the next few weeks, be on the lookout for alerts on the Login screen so you’ll know when the new system is coming. Allow yourself a little extra time the first time you visit Investor Access after the new version is launched – you’ll need to complete a brief account-conversion process to take advantage of our enhanced security features.

Feel free to contact us if you’d like to discuss the ways in which Investor Access will simplify your life. If you do not yet have your account set up on Investor Access, please let us know so we can set up your on-line access. We would be happy to walk you through using the various tools and resources available through this service.

Financial Planning–Helping You See the Big Picture

Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.

That's where financial planning comes in. Financial planning is a process that can help you reach your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.

Why is financial planning important?

A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you'll be better able to focus on your goals and understand what it will take to reach them.

One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related--for example, how saving for your children's college education might impact your ability to save for retirement. Then you can use the information you've gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you'll have the peace of mind that comes from knowing that your financial life is on track.

The financial planning process.

Creating and implementing a comprehensive financial plan generally involves working with financial professionals t

• Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
• Establish and prioritize financial goals and time frames for achieving these goals
• Implement strategies that address your current financial weaknesses and build on your financial strengths
• Choose specific products and services that are tailored to meet your financial objectives
• Monitor your plan, making adjustments as your goals, time frames, or circumstances change

Some members of the team.

The financial planning process can involve a number of professionals.

Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.

Accountants or tax attorneys provide advice on federal and state tax issues.

Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.

Insurance professionals evaluate insurance needs and recommend appropriate products and strategies.

Investment advisors provide advice about investment options and asset allocation, and can help you plan a strategy to manage your investment portfolio.

The most important member of the team, however, is you. Your needs and objectives drive the team, and once you've carefully considered any recommendations, all decisions lie in your hands.

Why can't I do it myself?

You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas. A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.

Staying on track

The financial planning process doesn't end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it's up-to-date. It's also possible that you'll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:

• Your goals or time horizons change
• You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
• You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
• Your income or expenses substantially increase or decrease
• Your portfolio hasn't performed as expected
• You're affected by changes to the economy or tax laws

Don’t Let Uncertainty Derail Your Retirement Income

Market uncertainty rises every time the Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) takes off on a volatile ride. Investors wonder if we’re facing a downturn or bear market. I know some clients are worried, afraid that if they don’t sell now they’ll lose more money; yet if they do sell, they might miss a rebound. The only certain thing about volatile markets is that they are uncertain.

Fortunately, there is now a way to remain invested in equities while protecting the future income on an existing retirement portfolio. By simply shifting some assets into a variable annuity with a living benefit, such as a Guaranteed Minimum Withdrawal Benefit (GMWB), you can assure yourself retirement income from a known minimum investment – and the amount may be at least twice the amount of your investment.

When you add a GMWB to a variable annuity, the provider tracks a separate “income account” along side your regular account. The income account is guaranteed to grow at a rate of 5% to 7% per annum for at least 10 years (no withdrawals allowed ), and it can be tapped to provide a lifetime income equal to 5% of its value at the time the income begins. Generally, you have to be at least 59½ to receive lifetime income.

The graph above how this concept can work in an extremely poor market. Although the account value shows virtually no growth over the decade shown, its income account grew at 7% per year. In any year, you have the option of receiving 5% of the income account balance for life.

However, only the account value is available for lump sum withdrawal, and withdrawals over the 5% allowed by the GMWB will negatively impact the benefit.

Of course, such a low return over almost 10 years is very unlikely. But suppose this concept was put to the test in a period similar to 1997 – 2006, based on the performance of the S&P 500? There were strong gains initially, then a three-year bear market followed by four strong years. You may have seen little progress overall during this 10 year period. But look at the graph below to see how the “income account” works along with the regular account to capture gains during the up years while still growing in the down years.

From 1997 to 1999, the regular account grows faster than 7% per year. Therefore, the insurance company increases the “income account” to match the regular account. Each time the “income account” increases (the industry calls it a “step up”), the insurance company compounds the 7% on the basis of this higher amount, so any market gains are captured. When the market goes south, as it did from 2000 to 2002, the “income account” continues to grow at 7%. Although the market recovered nicely from 2003 through 2006, you can see the regular account is still well below the income account. At this point you can 1) choose to receive the annuity account value, 2) begin to receive 5% income, or 3) allow both accounts to continue to grow (you should be aware that some products will stop compounding the 7% after 10 years).

As you can appreciate, these annuities have a certain amount of complexity. But if you are interested in using one to help you have an income stream in retirement, don’t hesitate to call us.

Sincerely,
The Carr Team

14385 Walsingham Rd
Suite B
Largo, FL 33774
Phone: 727-593-5400
Fax: 727-593-5444
Toll-Free: 800-804-7181
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Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability.

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