Alternative Investments and Non-correlated Investments: How

to Use IRA, 401(k),

and other Qualified

Funds

Aubrey Morrow, CFP

Financial Designs, Ltd.

San Diego

Larry Steinberg

The Steinberg Financial Group

Scottsdale, AZ

Neal Greene

Newbridge Securities

Playa Del Rey, CA.

In my 5 minutes, I don’t need to remind anyone that: RETIREMENTS ARE CHANGING

People are retiring later but living even longer People are retiring earlier and living longer Sources of income are changing Retirement investments are changing The 4% Rule No Longer Works for Retirees

These changes have implications for the presence of alternative investments in retirement accounts. The reasons are obvious – the risk is too great of having all retirement assets in traditional cash, stock and bond portfolios

WHAT ARE INSTITUTIONAL INVESTORS SAYING ABOUT PORTFOLIO ASSET ALLOCATION INTO ALTERNATIVES?

• 76% consider the use of alternative investments essential to diversify portfolio risk.

• 25% say they are increasing their allocations to alternative/non-correlated assets

• 91% say that alternatives are key to risk reduction Natixis Global Asset Management survey July 2012

• Institutional investors will increase their allocations to real estate and infrastructure from 5-10% to 25% within the next decade. JP Morgan report

WHAT WE DO AT OUR FIRM

Our firm has always recommend a blend of real estate – generally not to exceed 20% - 25% max in qualified plans – mainly for diversification, income, appreciation potential and not correlated with the traditional stock market.

Investor Profile Questionnaire to determine: Investor Goals, Objectives, Risk & Time Horizon

NON-ACCREDITED 70% - 80% Fee-Based Assets Under Management20% - 30% Mix of REITs and Business Development Companies

ACCREDITED60% - 70% Fee-Based Globally Diversified Assets Under Management20% - 30% Mix of REITs and Business Development Companies10% - 20% Reg. D Private Real Estate Equity and Debt (Bond Substitute) and Oil and Gas Royalties - Energy Linked Income Annuity like investments

For Current Retirement Income

“A new Money For Life Strategy Creates Guaranteed Income and Growth Potential”

Featured in Kiplinger Personal Finance Bottom Line Magazine

Income for Life Model software from www.Wealth2k.com

RR RESPONSIBILITIES1. Due diligence

a. Beyond that of broker dealerb. Issues unique to qualified plans

2. Product selection

a. Importance of diversificationb. Cash flow (yield) to satisfy RMD’s (older clients)

3. Monitoring

a. Reports from sponsorb. Analysis by Broker Dealer

c. Communication by the RR

Unrelated Business Taxable Income

1. Corporate rates & NOW (deductions are allowed ) 2. Debt financed property (any time during the taxable year)

3. Not required to be direct nor recourse (acquisition or improvement ) 4. Total TAXABLE income x (average acquisition indebtedness / adjusted basis).

5. At sale, use the highest average indebtedness within the preceding 12 months before the sale.