sgroi summer 2016 6
TRANSCRIPT
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#25
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1422
471
6-67
4-67
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or 8
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-671
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x: 7
16-6
74-6
822
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w.sg
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sgro
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.
Fin
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Rou
ndup
. . .
Sgroi Financial, LLC, is an independent, comprehensive financial planning firm. For more information on Sgroi Financial’s Lawley partnership, Cadaret, Grant & Co., Inc. or any investment, retirement planning, college plan-ning or individual or group insurance question, please contact Sgroi Financial, LLC 965 Union Road, West Sen-eca, New York 14224; telephone 716-674-6700 or 800-989-6710, fax 716-674-6822, go to their website at www.sgroifinancial.com, or e-mail [email protected]. Securities offered through Cadaret, Grant & Co., Inc., Member - FINRA/SIPC - Sgroi Financial, LLC & Cadaret, Grant are separate entities.
I n our last newsletter, we discussed the alarming
statistics related to Long Term Care and how to plan for protecting your legacy with Long Term Care Insurance. Statistics are a nice way to bring rising problems to light. Numbers do not lie and can help us make choices for our life and our families by taking the emotional component out of important decisions. Another issue plaguing our aging population and looming in the future for younger adults is the avail-ability and complexity of Medicare. Navigating the murky waters of healthcare and knowing what Medi-care can do for you can be a daunting task. Taking care of your health needs into retirement are an important part of your financial plan.
Here are some quick facts that help illustrate how impactful knowledge about your heathcare/Medicare benefits can be:• In research from Fidelity Viewpoints in 2014, retiree healthcare cost is estimated at $220,000 (based on retirement age of 65 and
living up to 85 years)• Your initial enrollment in Medicare is time sensitive – the Initial Enrollment Period (IEP) is your first chance to enroll in Medicare. It’s the three months before your 65th birthday month, the month of your birthday, and the three months after your birthday month• Even if you are still working and covered by
insurance through your employer, you may still benefit by enrolling in Medicare Part B • Only 52% of retirees have reviewed their healthcare needs over the last 12 months• Only 59% of retirees have saved specifically for healthcare needs with their financial advisor• Data from more than 412,000 Medicare bene- ficiaries showed that seniors overspent by approximately $368 on Part D premiums and prescription drugs (US World News Reports, October 2012)
Medicare is an excellent way to help prepare for the inevitable cost of aging. Educating yourself on your personal healthcare needs and how Medicare will accommodate your plan is imperative to protecting your health and your wealth. Our team has the resources to help you determine how to develop a strategy that will satisfy your unique position and help you remain financially healthy into retirement.
John G. Clouden
Medicare:Navigating the murky waters of healthcare
INVESTMENTS ANNUITIES ESTATE PLANNING IRA’S 401K PLANS 403(b) PLANS ROLLOVERS INSURANCE
the SGROI FINANCIAL
N E W S L E T T E R
Taking care of your health needs into
retirement are an important part of your
financial plan.
? Subm
it yo
ur a
nsw
er to
: pr
omo@
sgro
ifina
ncia
l.com
for a
cha
nce
to w
in.
Win
ners
will
be
draw
n at
rand
om a
nd g
iven
a g
ift
certi
ficat
e to
Ebe
neez
er A
le H
ouse
.
The
Qua
rter
ly Q
uest
ion
S groi Financial, an independent, compre-
hensive financial planning firm, and Lawley, a Top 100 Independent Agency specializing in insurance, employee benefits and risk management, have entered into a beneficial strategic partnership to further enhance their clients’ well-being.
Historically, Sgroi Financial has provided both life insurance and long term care insurance as part of their clients’ healthy financial portfolio. This partnership of seasoned professionals adds addi-tional tools and resources to both organizations to offer a wider range of resources, like personal insurance, employee bene- fits and financial planning.
“By combining comp- rehensive finance with comprehensive insurance, clients of Sgroi Financial and Lawley will have access to a host of financial prod-ucts and services. We’re pleased to bring this new partnership and offerings to our clients,” said Paul Dreher, Personal Insurance Director, Lawley.
“We’re very excited about building a relationship with Lawley. The benefits to our clients are substantial,” said Pat Sgroi, President, Sgroi
Financial. “We’ve been looking for an established, reputable firm that not only talks the talk, but walks the walk. On so many levels, Lawley fits the bill.”
The two WNY-headquar-tered entities share many similar corporate character-istics and values. Both have been recognized as top players in their fields, have family roots, and are deeply committed to the communi-ties they serve. About LawleyLawley is a privately-owned, independent regional insur-ance firm specializing in property, casualty and per-sonal insurance, employee benefits and risk manage-ment consulting and ranked among the 100 Largest Insurance Brokers in the
U.S., according to Business Insurance magazine.
For over 60 years, Lawley’s team of more than 350 associates have devel-oped customized property, casualty, surety and ben-efits insurance programs for businesses and municipali-ties of all sizes along with personalized protection for individuals and their families. Lawley is consis-tently recognized as one of the Best Places to Work by Buffalo Business First.
Headquartered in Buffalo, NY, Lawley has branch offices across New York in Amherst, Batavia, Elmsford, Fredonia, Melville and Rochester along with Darien, CT and Florham Park, NJ. To find out more, visit lawleylnsurance.com.
Sgroi Financial and Lawley Form Partnership to Enhance Client Benefits
W A Personal Insurance Consultant for over 35 years, Lori works closely with each client to secure and maintain proper pro-tection for their personal assets and family
security. She serves as a trusted adviser and an Insurance Educator taking the time to get to know you and your needs. Lori is frequently on site here at Sgroi and is available to review your insurance needs when you come in for your next visit with your Advisor. Look for Lori’s contributions to our fu-ture newsletters, where she will provide insight on important insurance topics for our clients, such as The Importance of Proper Protection for You and Your Family, Umbrella Liability Protection-Why do I need this?, Current Claim Trends, New Features Available to name a few. Lori is always available for any personal insurance question you may have.
Lori Kuzan
TR
IVIA
TIM
E
Who
is y
our
f
avor
ite p
ast
Uni
ted
Stat
es
P
RESI
DENT
?
Patrick Sgroi, President
If you have been follow-ing our market updates
in the past, you’ve noticed a common theme: our goal to invest according to market trends, not events. Recent market movements have largely been driven by geo-political factors, which are inherently less predictable than researched fundamentals. Future mac-ro concerns are: continuing volatility internationally as more direction is observed from the EU regarding the BREXIT vote, the US elec-tions, unexpected changes in the price of oil, and the Federal Reserve and other Central Banks’ policy moves. The main driver of growth domestically has been the
healthy household sector: cheap prices at the pump and wage inflation picking up have encouraged con-sumer spending. The Fed’s easy money policy (low rates) have helped boost fixed income (bond) gains. Internationally, emerging markets have benefitted year to date from strength-ening commodity prices and should continue to as they have favorable long term growth prospects. Our team remains bull-ish on the overall market.
Despite headlines, we don’t think a recession is in our near future. When the S&P 500 reaches “all-time highs,” we are cautious in our growth estimates. Parts of the market are reaching “fair value,” while others continue to have growth opportunities, depending on these macro factors. Considering where we are in a “typical market cycle,” we see opportunities in sectors that are historically less reliant on increased global growth such as healthcare and consumer goods. A well diverisifed portfolio should provide a level of protection in the event of unexpected volatility.
Thanks for Your Support
Summer M. McKellar
It has been a while since our last newsletter. I know you all understand why – and thank you very much for the
outpouring of support and kind words over the past few difficult months.
We talk about it all the time – Sgroi Financial is a family. We were built by my dad in 1971 on the principle of treat-ing clients like family; planning for them with care and consideration as if handling our own legacy. Throughout the years, our “family” has grown tremendously, but our philosophy remains true in every aspect of our business.
Defining moments in a family come through experiencing great triumphs and great loss together, both of which we have seen in the past few years. Our clients and staff have always celebrated each other’s successes with sincerity and kindness.
Conversely and like a solid family, we have weathered some tough times with the same sentiment. Through the Great Recession in 2008, we were able to guide our clients through a turbulent market with confidence in the financial choices we made together. When Joe retired in 2014, our team collaborated to streamline the transition of clients. Our clients made the change easily, knowing we had Joe’s values ingrained in our planning for their future investments.
We recently suffered a great loss, one that took an emotional toll on everyone in this family. When my brother, Jeff, passed away, I heard from so many of you offering condolences and support. Our team at Sgroi pulled together to fill the many impor-tant rolls my brother held in our firm. The transition could have been more difficult, but the foundation of trust we have fostered for so many years helped keep our team moving forward as we maintained “business as usual.”
I wanted to recognize and thank our clients and our extended family for the sup-port that has helped us remain strong for over 45 years. It is always our pleasure to help you plan and protect the financial future of your family.
This article is the second in our series on the myths related to Business Succes-sion Planning.
Our first myth was “There will be plenty
of time to plan later.” The next myth is “The fairest thing to do is split the busi-ness evenly amongst my children.” On the surface this may appear to be the best path. It would be nice if the business could be split evenly between the next generation, with everyone seeing eye to eye on impor tant decisions and ultimately getting along. This is not typical and you must be especially wary if you are already seeing discontent in the family.
There have certainly been situations where an even split has worked out but those are in the minority. In most cases you should identify one person who will “call the shots.” When choosing this individual, objectively review the candidates in terms of their
interest, performance in their current position, judgment, potential and leadership ability. There’s still a place for the rest of the family in the business. Simply, there is one person ultimately in charge.
There will also be in-stances where one or more of your children choose not to work in the business. So they aren’t contribut-ing to the business, but they are well aware that the business may have significant value and will likely look at the busi-ness as a source of a future inheritance. In those cases you need to design a strat-egy whereby they will get a windfall from another
source: perhaps the family home, money from an investment portfolio or proceeds from life insur-ance. Either way, it is best to have this planned out in advance. The last thing you want to have is a lawsuit among family members.
These are difficult deci-sions and every situation is unique. You should con-sult a team of profession-als who have experience in succession planning to help with these difficult decisions. At Sgroi Finan-cial we bring the neces-sary resources to the table to help you navigate the process. It’s your life. We can help.
When an owner of an IRA reaches 70 ½, the
government mandates a withdrawal must be taken from the IRA based on the life expectancy of that person during the year and each subsequent year. The percentage increases each year using a standardized table. This withdrawal requirement is referred to as a Required Minimum Distri-bution (RMD). The amount of the RMD is based on the value of the IRA on Decem- ber 31 of the previous year and the life expectancy table. Another consideration many of our clients know is that distributions from your IRA are taxable and a failure to take the distribu-tion results in a 50% penalty of the RMD paid to the IRS. This raises the question: If you are in a situation where you have enough income from a pension or retire-ment distribution, why take money from your IRA and get taxed on the unneces-sary additional income? Unfortunately, there is no way around the RMD, but there is a benevolent solu-tion. The Pension Protec-tion Act of 2006 (made permanent by the Protect Americans from Tax Hikes (PATH) Act at the end of 2015) allows taxpayers age 70 ½ years or older to make tax-free charitable donations directly from their IRAs. The act allows IRA owners to send their RMDs directly to a charity and those dona-tions are 100% excluded from income for that year as long as the distributions are under $100,000. The word “directly” is very important because the IRA owner
Urmas M. LupkinJohn G. Clouden
Succession Planning and Your BusinessSetting Up for SuccessCharitable Donations from your
IRA Distribution–A Tax Free Contribution
PART 2
years. For taxpayers who contribute at this level, the IRA charitable contribution offers an opportunity to make a contribution that is not limited by AGI. It is important to note that the gift does not have to be limited to one charity nor does the IRA owner have to send 100% of their RMD to a charity to get the tax break. If you are currently making charitable donations to a qualified charity(ies) and you are 70 ½ or older, it may be in your best interest to come in and talk to us about how to better structure your charitable contributions in order to be as tax efficient as possible. It is important to note, this act does not allow you to make direct dona-tions to a private founda-tion, donor-advised fund, or supporting organization. Additionally, the gift cannot be made in exchange for a charitable gift annuity or to a charitable remainder trust, and you cannot receive any gift or financial benefit from making the donation.
Market Analysis . . .
During the second
quarter, we had another
well respected firm analyze our man- aged portfolios. Al- though confident in our investment process and reseach team, it is beneficial to occasion-ally get an unbiased second opinion. The team that reviewed our portfolios is made up of Chartered Financial Analysts (CFA), a widely respected and recog-nized investment man-agement designation.
During this analysis, they reviewed our port-
folios compared to cus-tom benchmarks with relative allocations and exposures. They looked at several metrics including risk adjusted return profiles, fees and expenses, historical performance, portfolio diversification between asset classes and geo- graphically, as well as stress tested to estimate how they would react in different markets.
After the analysis was complete, they reported our portfolios are constructed in a well diversified manner and taking into consid-eration the challenges
in today’s market, we are providing our clients with a portfolio that maintains a reasonable level of risk while still providing opportunites for appreciation. Small portfolio suggestions were made to decrease our correlation to the stock market in case of a correction; changes that we proactively made, that you may have recently noticed.
This analysis recon-firmed our confidence in our investment pro- cess. The goal was to provide consistent re- turns in sound products, for a reasonable fee.
TIM’s
Corner Vol. 6 Number 1 SUMMER 2016
The Sgroi Financial is the quarterly newsletter of Sgroi Financial LLC965 Union Road
West Seneca, New York 14224716-674-6700
Editorial Team:H. Joseph Sgroi CLU, ChFC,
Founder Patrick J. Sgroi, [email protected]
John G. Clouden, Vice [email protected] M. Lupkin,
Vice President Sales & [email protected] McLaughlin,
Marketing Support [email protected]
Design: Leith Design Group
cannot take the RMD and then write a check to the charity from their personal account to get the 100% deduction. Paperwork must be com-pleted to have the RMD sent directly to the charity.
How it works
If you are 70 ½ years or old-er, you can instruct the com-pany that holds your IRA to make a distribution directly from your IRA (other than SEP and SIMPLE IRAs) to a qualified charity. One of the key benefits of the direct charitable contribution from your IRA is that the distribution counts towards your Required Minimum Distribution (RMD). The distribution must be one that would otherwise be tax-able to you. Each IRA owner can exclude up to $100,000 of charitable donations from your gross income when they file their taxes (those filing joint tax returns can each take advantage of this tax break). Typically, charitable contributions are limited to 50% of Adjusted Gross Income (AGI) each year and the excess can be carried forward five