plan for your future, focus on today
TRANSCRIPT
Plan for Your Future. Focus on Today.SM
Planning for Your Financial Future
Dino KallenekosUBS Financial Services1285 Avenue of the AmericasNew York, NY [email protected]/team/kmfinancialgroup
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Important information about our financial planning servicesAs a firm providing wealth management services to clients in the U.S., we offer both investment advisory programs and brokerage services. Each of these services is separate and distinct, differ in material ways and are governed by different laws and separate contracts.
We make financial planning services available to you in our capacity as an investment adviser. The financial planning engagement terminates when the plan is delivered to you. It is important to note that the financial planning engagement does not alter or modify in any way the nature of your UBS accounts, your rights and our obligations relating to these accounts or the terms and conditions of any UBS account agreement in effect during or after the financial planning service. Should you decide to implement any aspect of your financial plan with us, we will act as either a broker-dealer or an investment adviser, depending on the investment product or service that you select. For more information on the distinctions between our brokerage and investment advisory services , please speak with your Financial Advisor or visit our website at www.ubs.com/workingwithus.com
Wealth Management services in the United States are provided by UBS Financial Services, Inc., a registered broker/dealer offering securities, trading, brokerage and related products and services.
Neither UBS Financial Services nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.
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UBS Financial Services does not give tax or legal advice. You should consult with your attorney or tax advisor regarding your specific situation. Attorneys in the UBS Financial Services Attorney Network are independent and unaffiliated with UBS Financial Services Inc.
Overview of Wealth Management at UBS
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Wealth management at UBS
At UBS, we offer a customized approach to wealth management, built on a personal relationship and shaped by an understanding of your needs and aspirations. To help manage your wealth, we harness the advisory and investment capabilities of the world’s largest wealth management firm on your behalf.
It all begins with a relationship. A relationship we call “You and Us”.
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UBS Overview: The power of a global firmThere are many ways we can work together given our size, resources and experience.
History• 140-year tradition serving individuals and families in
Europe and the United States • You benefit from our deeply rooted culture of client
service and personal attention
Scope• Presence in more than 50
countries• You gain access to markets,
currencies and investment opportunities around the world
Size• World’s largest wealth manager• You benefit from the best ideas of 600 analysts throughout
the world conducting research tailored to individual investors
Financial strength• Strong credit ratings of
AA+ from Standard & Poor’s and Aa1 from Moody’s
• You have the peace of mind that comes from knowing we hold ourselves accountable to the highest standards, and you benefit from our ability to offer competitive rates
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UBS Overview: Our commitment to our clients We do not take lightly the confidence and trust you’ve placed in us. Our commitment to you is excellence, every day.
Offering investment excellence Best Overall Brokerage for
combined Equity Research and Sales
Source: Asiamoney 2006
World’s Best Global Emerging Markets Equity House
Source: Euromoney, January 2007
Clients benefit from our institutional-quality transaction capabilities that give them broad market access and efficient execution
Providing best-in-class research #1 All-Europe Research Team #1 Latin America Research Team #1 All-Asia Research Team #1 Emerging-EMEA (Europe,
Mideast, Africa) Research TeamSource: Institutional Investor, 2006
UBS draws from the ideas of experts who rely on our top research capabilities
Serving your needs Best Global Private Bank World’s Best Private Bank Best at Relationship ManagementSource: Euromoney, January 2007
UBS maintains a firm-wide commitment to private banking in order to serve the needs of our clients
1 Private Bank 1 Research 1 Brokerage
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UBS Overview: Our focus is you
What’s really important to you? At UBS, that’s where our conversation begins. Helping you find those answers is what the relationship between you and us is all about.
Because the better we understand how you envision your future, the better we can help you shape it.
Financial Planning at UBS
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Source: National Center for Health Statistics, life expectancy for males and females aged 65, 2006. College Board, 2006-2007 Trends in College Pricing.
Why plan for the future? A 65-year-old person today will likely live beyond age 85.
The average person needs to save for a retirement lasting 20 years or more.
At a 3% inflation rate, your income requirement doubles every 24 years.
The average cost of a four-year private college today is almost $132,000.
College costs have historically increased by 5 – 7% annually.
Meeting your goals can only be accomplished through a disciplined savings and investment approach.
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The importance of financial planningEffective financial planning can help you define your priorities and address them strategically.
Will I be able to afford to retire?
Will I outlive my assets?
What strategies should I consider for funding my children’s education?
How can I increase the amount of my estate that goes to my heirs?
What happens if I become disabled?
If I were to die unexpectedly, would my family be well provided for?
Is my investment strategy in line with my risk tolerance and is it appropriate for my goals?
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Understanding your financial prioritiesWhat is important to you? At UBS, that’s where our conversation begins.
Helping you find those answers is what the relationship between you and us is all about.
What are your financial priorities?
Fund education for children or grandchildren
Save for a major expenditure or investment
Seek financial security
Plan for a comfortable retirement
Maximize employee or executive compensation plans
Build liquidity
Align portfolio objectives with a changing lifestyle
Preserve assets and income in the event of disability, long-term care or death
Manage retirement funds (appreciation and distribution)
Manage taxes Improve cash flow Business continuation
Create your legacy Manage estate taxes Gifting during lifetime Testamentary
transfers to beneficiaries
Transfer business interests
Plan strategic philanthropy
Wealth accumulation Wealth preservation and risk control
Wealth transfer
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Major financial planning concerns
Retirement Planning
Education Funding
Estate Planning Strategies
Asset Allocation
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Americans are living longer in retirement . . .
Prob
abili
ty
100%
75%
50%
25%
10095908580757065
78 81 86
85 88 91
91 93 96
Probable life span of a person age 65
Age
MaleFemaleAt least one spouse
Source: Annuity 2000 Mortality Tables
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. . . and we want to maintain our standard of living
What impact will your retirement lifestyle have on your income needs?
Generally costs more during retirement
Generally costs less during retirement
How much will you need for the retirement you envision?
Travel Health care Leisure/hobbies
Commuting Work-related expenses Housing costs
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Rising costs have to be consideredOver the past 10 years general inflation has been 2.2%, but some costs for retirees have doubled—or risen higher
Inflation Rates Since 1996–2005 for Americans ages 65+
HealthcareDrugs (Prescription and nonprescription)
Property taxes
Transportation
4.3%5.2%
4.4% 4.2%
Source: Bureau of Labor Statistics Note: CAGR from 1996 through August 2005
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Much of retirement funding will come from you
Source: 1 Social Security Administration2 Economic Policy Institute, “Retirement Insecurity,” September
2006
Social Securityas a percentage of
retirement income1
Householdswith defined
benefit pensions2
Householdswith defined
contribution plans2
(401(k), 403(b), 457)
Today1983
65%
40%
22%
40%
19%
55%
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Assumptions: Based on $4,000 annual contributions. Jack begins saving at 25 and then stops at age 35. Jill begins at 35 and continues to age 60. Both earn 7%. Example does not take charges, taxes, commissions, fees or expenses into consideration.
The power of saving earlyMeeting the retirement planning challenge
Jack
Jill
$320,950
$270,705
25 30 35 40 45 50 55 60
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Assumptions: $4,000 annual contributions for 25 years at 7% annual interest and 30% tax rate.*
* Example does not take charges, commissions, fees or expenses into consideration.
Use time to your advantageThe power of tax-deferred savings
$197,525$219,495
$270,705
Taxable Account Tax-Deferred Account
Before Taxes
After Taxes
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Defining your retirement vision
Allocating assets
Making investments
Organizing retirement plans
Thinking about transitioning your investment strategy
Generating income
Protecting principal
Outpacing inflation
Where are you along the path to retirement?
Building wealth Preparing for retirement
Managing retirement income and expenses
Living in retirement
5–10 years from retirement
More than 10 years from retirement
Moving towards retirement
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Goals such as lifelong dreams, vacation homes, legacy to grandchildren and charitable giving
What is your vision for retirement?
Life-enhancing pursuits such as travel, entertainment and favorite hobbies
Focus on three groups of goals
Truly essential needs such as housing, health insurance and basic living expenses
Wants
Needs
Wishes
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Determine your retirement needs through financial planning
Step 1: Define your retirement vision
Step 2: Itemize potential expenses
Step 4: Analyze current financial situation
Step 3: Identify your assets and income
Step 6: Adjust strategy to pursue your vision
Step 5: Uncover possible shortfalls
FinancialPlanning
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Major financial planning concerns
Retirement Planning
Education Funding
Estate Planning Strategies
Asset Allocation
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Meeting the education funding challenge
When will your children attend college?
What type of school will your children attend?
Will you pre-fund the cost or pay out of current income?
Define your parameters
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College Board, “Trends in College Pricing” 2006-2007 and a projected 6% inflation.Total costs include tuition, room and board. Public costs are for an in-state resident student.
The education funding challengeProjected Annual Cost of College
$17,124
$36,524
$30,367
$40,638
$54,383
$86,678
$12,796
$22,916
Current 2007
5 Yrs 2012
10 Yrs 2017
18 Yrs 2025
PublicPrivate
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Child’s Current Age13 5 Infant
PrivateUniversity
4-Year Cost $177,775 $283,347 $379,182
Required Monthly Savings
$2,092 $942 $742
PublicUniversity
4-Year Cost $74,911 $119,396 $159,779
Required Monthly Savings
$882 $397 $313
Projected Cost of a 4-Year Education
Source: College Board 2006-2007 data with 6% school cost inflation and 7% investment rate of return projections.
The education funding challenge
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The education funding challenge
529 Plans
Coverdell Education Savings Accounts
UGMA/UTMA
2503 (b) and 2503 c Trusts
Which strategy makes sense for you?
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Major financial planning concerns
Retirement Planning
Education Funding
Estate Planning Strategies
Asset Allocation
Sustaining your life’s achievements An estate plan can give you the comfort of knowing that the people you care about will be provided for and that your estate will be managed according to your wishes. We spend time with you to understand your needs and concerns and support you in making key financial decisions.
Whom do you want to inherit your assets?
Who should succeed you as owner of your business?
What is your potential estate tax liability—and how will you fund it?
Who do you most trust to manage your affairs if you become unable to do so?
What kind of trust structures should you consider for your family?
If you wish to sell assets, what is the best way to structure a sale to minimize the tax impact?
Through an understanding of your preferences, we can work with your other professional advisors and together identify potential estate planning strategies.
UBS Financial Advisors are not estate planners. None of UBS Financial Services Inc., UBS Trust Company, N.A., or their respective employees or affiliates provide tax or legal advice. You must consult your tax and legal advisors regarding your particular situation.
Business Creating a succession plan
Evaluating the possible sale of the business
Taxes Determining the funding
of estate tax obligations Optimizing your estate
plan’s tax strategy
Philanthropy Determining which charities
to support Exploring various charitable vehicles
or trust structures Considering a family foundation
Family Conveying your values to the next
generation Determining how much money
beneficiaries receive, and when Accommodating special-needs
individuals in your family What really matters to you?
Considering the important issues Proper estate planning can help you preserve wealth, reduce taxation and ensure that your assets are appropriately administered, managed and distributed according to your wishes.
UBS Financial Advisors are not estate planners. None of UBS Financial Services Inc., UBS Trust Company, N.A., or their respective employees or affiliates provide tax or legal advice. You must consult your tax and legal advisors regarding your particular situation.
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Major financial planning concerns
Retirement Planning
Education Funding
Estate Planning Strategies
Asset Allocation
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Financial planning and asset allocation analysis
Enables you to keep a long-term investment perspective
Gives you a perspective on risk and required return
Gives you the incentive to start investing early
Illustrates the benefits of tax deferral
Financial Planning:
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Managing investment risk through asset allocationHow much emphasis you should place on... Stocks for growth Bonds for income Cash reserves for safety and liquidity
Will depend in part on your... Tolerance for risk Time horizon for reaching financial goals
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Keep a long-term perspective The longer you have before you reach your investment
goal (for example, retirement), the more risk you may be willing to withstand, giving you:— The ability to ride out the ups and downs of more volatile
investments.
Whether you are 30 years from retirement or currently retired, a diversified portfolio should be considered.
Proportions of stocks to bonds and cash should change as you get older
Summary
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Summary
Envision your retirement by focusing on your needs, wants and wishes
Address the education funding challenge by identifying your expectations
Create an estate planning strategy that values your life’s achievements, considers what’s most important to you and helps you share with future generations*
Let’s work together to help you pursue your vision
*Neither UBS Financial Services Inc. nor its employees provide tax or legal advice. You must consult with your tax and/or legal advisors regarding your personal circumstances.