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Resources

Who is SEI?

Markets are always uncertain, which makes controlling the risks that can be controlled a key component in keeping our clients’ investments safe. Selecting a knowledgeable, capable and ethical fund manager for Financial Strategies to partner with is a critical component of our stewardship. Using our many years of experience and expertise to screen and evaluate the many management options, we selected SEI as our partner of choice.

SEI is our choice of fund manger and custodian, because after careful investigation and monitoring, we have consistently been impressed with their ethics as well as their professional and intellectual approach to the management of assets. Established in 1968, SEI custodies and administers over $395 billion in assets. Their multi-manager approach to mutual fund construction is somewhat unique in the industry. We like that it allows us to develop exceptionally well-diversified portfolios for our clients, which we feel is an important component in the management of assets that is too often overlooked. SEI helps us do OUR job of constructing portfolios that manage our clients’ risk more effectively.

SEI often provides information and videos that we feel might be of interest to our clients. When that happens we will post them here on our site. Check back often for timely information.

 

Archive

As our resource library grows, previous articles of interest will become available here for convenient PDF download.

Commentary

The professionals of Financial Strategies provide articles here about investments, taxes and insurance issues written for the financial well-being of Connecticut consumers.

Insurance

  • Homeowners Insurance

Hurricane season is here!
Know your coverage before catastrophe strikes

By Steve Brill, RPLU

A new hurricane season is upon us, and once again it is time to check your preparedness for the next devastating event to impact our home and possessions. According to the consumer group United Policyholders, history reveals that 50-60% of homeowners discover after the fact that they were underinsured, often by hundreds of thousands of dollars.

After every major disaster, insurance companies review losses and look for ways to limit their future exposure by limiting the coverage they offer. Subsequent to Hurricane Andrew in 1992, insurers started developing hurricane deductibles, and now many standard policies contain these high deductibles exposing homeowners to very large out of pocket expenses. At that time insurers also started strictly enforcing flood exclusions, along with wind deductibles and other restrictive exclusions. Claim time is not the right time to find out what is, or is not covered in your homeowner’s policy. As always, planning and reviews of coverage are best done before a disaster.

Standard homeowners insurance should provide adequate liability limits if someone is injured on your property. It should provide replacement cost limits adequate to rebuild the entire home in the event of total loss as well as adequate coverage to replace the contents of the home at today's cost. Additional expenses due to loss of the property, such as temporary living space or money for meals and other essentials, should also be covered. Optional coverage for jewelry and furs (standard limits are $1000 or less), other collectibles and valuables, should also be available and considered when appropriate. If you are in a federally determined flood zone, NFIP flood insurance is available and should be purchased for both the structure and the contents. Flood damage for property and contents will not be covered by traditional homeowners insurance.

While homeowner insurance policies can be fairly standard in terms of language due to regulated insurance forms, companies will deviate from the routine with proprietary exclusions as well as expansions of coverage. Although many people treat homeowners insurance as a commodity distinguished only by price, it is really much more and your insurance professional should be able to help select the appropriate risk coverage for the most competitive cost. Independent brokers such as FSIAS will help select this best coverage with the best price from the many highly rated insurers we represent.

Financial Strategies can assist you with your insurance review. Our 35+ years of experience and expertise will provide the added sense of security a sound insurance program will provide. Call Steve Brill to set up a time for your review-today!

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  • Long Term Care Insurance

Is what you got worth what you get?

By Steve Brill, RPLU

Long term care insurance can help make the difference between the golden golden years and rotten, dependent and burdensome golden years – or can it?

The cost of care for the elderly and infirm has steadily risen over the years reaching prohibitively expensive levels for most people. Traditional long term care insurance was designed to help relieve families of that financial burden, but has itself become increasingly expensive, complicated to understand, and harder to maintain when people need it most. Premiums have been increasing at a steady 6-17% rate each year on new policies, and some insurers have even doubled their premiums on existing policies adding to cost and uncertainty. Roughly 50% of the top insurers have exited the market completely as rising health care costs have made it difficult to underwrite policies effectively, and consumers remain skeptical of purchasing a high cost policy whose benefit may never be triggered if the insured is fortunate enough to maintain good health. Costs for pure long term care insurance vary widely, with some companies charging 50% more than others for similar coverage, and it’s difficult for consumers to comparatively evaluate complex policies with sales people tending to push what they know best or in some cases what pays them the best.

What can you do to avoid the pitfalls of purchasing the wrong LTC product?

First and foremost is to do your homework. Speak to qualified, reputable insurance and financial professionals who are willing to explain the various methods of financing future long term care needs. They should help you understand how this expense fits into your estate and financial plan, and help model scenarios comparing some type of LTC funding vs. self-funding options. Most importantly, understand that there are new and emerging products and methods to manage and finance this risk that were not available even just a few years ago.

What are some of the newest methods of planning for this exposure?

While traditional long term care insurance continues to be available, hybrid insurance products offering benefits for long term care expenses melded with life insurance benefits in the event long term care is never needed are becoming attractive options. In some cases, riders offering living cash benefits simply upon reaching a certain age are available as well. These hybrid insurance products are designed to address concerns about funding health care needs but also address the desire to know that the premium expense will at least provide a benefit for heirs if long term care is not needed. These products come with many variations and should be evaluated with professionals who understand the individual’s circumstances and needs, and who will only act in the highest of ethical standards to assist you.

What can Financial Strategies do for you?

The professionals at Financial Strategies start with a keen sense of your financial situation, then add a thorough knowledge of funding mechanisms for the circumstances you may face to bring the most competitive, cost effective solutions for your consideration. Our access to hundreds of financial plans, insurance products and hybrid solutions assures our clients that they will receive the most current and complete information available in helping you decide the best path forward.

Talk to us at Financial Strategies – we will represent your interest first!

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Investments

  • Thinking About Bonds

Generating Income in a Zero Income World

By Ronald Brault, MBA, CFA

It seems like interest rates for savers (savings accounts, money market funds,
CD’s, etc.) have been at 0% for all intents and purposes for a long time now.
Treasury Notes, the highest quality, have been stuck near ¼ of 1% for 2 year
maturities and roughly 2% for 10 year maturities. With inflation rising, at least in
terms of food and gas, it’s become very difficult to generate reasonable interest
income.

Earning 0% in an economy where prices are rising anywhere from 2%-3%
constitutes a real loss of buying power on an annual basis. Savers of all types are
being forced to come to grips with that reality. In terms of purchasing power, it’s the equivalent of taking a 3% cut in value every year with the added indignity of
compounding over time. That means a dollar today will buy 97 cents of goods a
year from now, and approximately 84 cents of goods 5 years from now. Everyone
is feeling this, but because it happens slowly, it’s difficult to recognize.

Over many years, our professional view of the risk and safety of bonds and bond
portfolios has changed. Unless we can create more income in a portfolio, we are
forced to accept the slow erosion of value in our accounts. Years ago, when
Treasury interest rates were in double digits, it was an easy decision to opt for the
relative safety of US guaranteed notes over other riskier offerings. It’s not so easy
in today’s world. Now, bonds come in many flavors and shapes, both US based
and international. The past 2 decades have seen tremendous growth in markets
outside of the US, and international bonds have become an important part of
diversified portfolios.

All bonds have risk, even Treasuries. Since our government can create additional
dollars, Treasury obligations are assumed to carry no default risk. True enough, in
spite of our debt ceiling debates. However, Treasury notes do have interest rate
risk and the price of Treasuries can vary from a little to a lot depending on both length of maturity and amount of change in market rates. Other bonds also carry
interest rate risk, but have additional factors that can influence the behavior of the
bond or bond sector in different ways. For example, corporate bonds are affected
by events specific to a corporation, or sector (ie, finance) and can also be more
generically influenced by the overall direction of the economy. High yield bonds are
more likely to be influenced by economic conditions and specific events, and
somewhat less by changes in overall interest rates. International bonds are
influenced by events outside of our domestic conditions, even though global
markets have become more correlated over the years. By blending various
components of risk, a portfolio can be created that is diversified and can generate
some incremental income.

A portfolio like this is not without risk, although prudent allocations and
management can help to control overall volatility. A savings account may feel like
the safe option, particularly for those who like to see a stable balance, but it is in
fact losing value at a steady, if not accelerating pace. Which is the riskier option?
An account that can generate some positive yield but that could incur some price
fluctuation, or an account that locks in an erosion of value in return for a stable
price? The answer is not a simple one and may depend on many different factors
unique to your situation.

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Taxes

Articles to come.

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