Absolute Return Solutions

Minimize Taxes

• In most cases, it is imperative to reduce or eliminate taxes on income and dividends that clients are not spending.
• Assets are typically reallocated to give better control of taxes back to our clients.
• Retirement plans have historically been one of the greatest sources of tax surprises to our clients. We proactively manage client tax liabilities to reduce this problem.
• In fact, there are times when we encourage our clients to draw money out of retirement plans sooner than is typical.
• It’s not about how much money you have on the day you retire, it’s about the capability of having enough income for the rest of your life, and then distributing assets to your beneficiaries with the least amount of tax and legal interference.

LIQUIDITY

• In our planning we make sure that clients have access to plenty of cash in case of emergency expenditures.
• We also make sure that the liquid cash is working hard to get good returns.

RISK

• When new clients some in to the office for planning we ask why so much of their assets are “at risk” in the market. Many say that it is what they have been doing for 40 years; “It is just what we do”. Nobody told them that the rules of investing had changed from accumulation to distribution when they took that last paycheck.
• It makes no sense to us to have retirees risk all of the money that they have worked SO hard to accumulate. Last year, 2008, hurt many retirees since they had SO much money at risk. Most tell us that they are uncomfortable with the amount of exposure they have in the stock market. But, what else is there? Our planning seeks to use other tools that provide growth and can considerably reduce the overall risk of the client portfolio.
• Stocks are not the only risk to a retiree. Interest rate risk looms very, very large right now for retirees in bond funds. Rates have been trending lower since 1982. Now interest rates are close to zero. If interest rates were to go up there would be resulting principle loss that could be substantial.

Enhance Income

• When you have all of the income you need, it is amazing how many other “Bad” things just go away.
• Knowing how much income your portfolio can reasonably generate is more than just projecting a return and hoping it works. Unlike many traditional planning techniques, we break out your assets into manageable “Buckets” to give you better control.
• Retirement plans have historically been one of the greatest sources of tax surprises to our clients. We proactively manage client tax liabilities to reduce this problem.
• Whatever strategy you employ…It is usually best to avoid drawing assets from fluctuating market type accounts. This strategy could cause a substantial loss of assets and income during down markets, faster than most of us realize.
• Remember that in many cases, income from your retirement plans is reduced by up to 30% when it comes to you, and by as much as 70% when you pass it to your heirs.

Income for Life

• We have never met a person who knew how much income they could draw from their assets over their lifetime. That is the planning we do. Once we know what that number is we try to make sure that it is enough to cover expenses and add inflation adjustments.
• Distribution planning is the foundation of our retirement planning. If people take too much income they will run out of money. If they take too little they have compromised their lifestyle.
• Once we know what level of income is appropriate we can objectively look to see what, if any, risk they need to take on the rest of their assets. Sometimes we are able to let our clients know that they have enough assets that they do not need to take ANY market risk if they do not want to.
• Jim has a great saying: “If you retire and your income is set for life, a lot of bad things go away”. There is tremendous peace of mind to know that your assets will provide an income stream for the rest of your life.