the spring 2017 | VO L . 1
technology who is a fiduciary and what does it mean to you who could benefit from guided wealth portfolios orion is on the horizon
Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Fragasso Financial Advisors, a registered investment advisor and separate entity from LPL Financial.
W W W. F R A G A S S O A D V I S O R S.C O M
F
TABLE of C O N T E N T S
1 1
OPENING LETTER Marsha Posset
2 CONTRIBUTORS 2 3 3
WHO IS A FIDUCIARY AND WHAT THAT MAY MEAN TO YOU Robert Fragasso
5 5
POOR ADVICE CAN OCCUR Robert Fragasso
7 7
WHO COULD BENEFIT FROM GWP? James Danko
9 9
ORION IS ON THE HORIZON Brianne King
11 11
EDUCATION, PUPILS AND BARRIERS Robert Yelenovsky
13 13
CREDIT TRUMP? Mathew Karr
15 15
DON'T LET UNEXPECTED HEALTHCARE COSTS SINK YOUR RETIREMENT William Taylor
17 17
CLIENT PROFILES FEATURE Chuck Mattiucci
18 19
REFERRALS AND YOUR FINANCIAL ADVISOR Robert Fragasso
19 21
EMPLOYEE NEWS
AWARDS 23 23
NORTH HILLS OFFICE
As we begin to compose our first 2017 edition of The Advisor, “change” and “new beginnings” seem to be themes surrounding many of us. For all Americans, it’s a new calendar year with a new President of the United States. Additionally, there is a noticeable change in weather patterns. Any Pittsburgh resident would attest to that as we experienced near 70-degree temperatures in February! At Fragasso Financial Advisors, we are certainly impacted by this wave of changes and new beginnings. As you read on, you’ll hear about industry-related changes, like the Department of Labor’s Fiduciary Rule, as well as our own new technology initiatives: the launch of Orion performance software and Guided Wealth Portfolios. Another new endeavor Fragasso has embarked upon is hosting our own radio show, which shares the same name as our magazine - The Advisor. The Advisor is a one-hour weekly radio show which airs Sunday mornings from 8:00 – 9:00 am on Q9.29 FM and two rebroadcasts on KQV 1410 AM on Tuesday evenings at 7 pm and Saturdays at 5 pm. Bob Fragasso will host the show alongside co-host and financial advisor, Michael Fertig. The purpose of the show is to provide discussions on financial planning topics and insights into the investment industry. We’ll touch upon specialized topics, too, such as retirement planning, college planning and long-term care planning to name a few. The Advisor’s format also includes guest speakers consisting of financial experts from the Fragasso team, as well as economists, successful business owners and entrepreneurs. The inaugural show was broadcasted on Sunday, March 5, 2017. We hope you will consider making The Advisor radio show a part of your Sunday morning routine. To catch up on past episodes or to submit a question for the radio show, please visit www.fragassoadvisors.com/radio. In conclusion, I’m personally experiencing a new beginning by joining Fragasso Financial Advisors as the Marketing Manager. My career began in print media and graphic design. Some years later, I shifted into a marketing role at a local bank. Having witnessed firsthand the evolution of print media to digital and then making a career change to banking in 2008, which was one of the most turbulent years in the industry, change is no stranger to me. The lessons that change has taught me both personally and professionally is to remain true to your values, be trustworthy and perform to the best of your abilities each day. Fragasso Financial Advisors was built upon similar principles, which is why I am excited to be a part of this team. Cheers to new beginnings!
MARSHA POSSET marketing manager
1
CONTRIBUTORS
JENNAE BACKO
ROBERT FRAGASSO, CFP®
POLLY AITES Vice President of Operations
Assistant Marketing Manager
JAMES DANKO, AIF®
ABBY HAMILTON
BRIANNE KING, CFP®, AIF®
Chairman & Chief Executive Officer
Vice President
CHUCK MATTIUCCI, AIF® Financial Advisor
Marketing Intern
BILL TAYLOR, JD & LL.M in Taxation Advanced Estate and Business Planning Manager
Manager of Financial Planning
ROB YELENOSKY
Vice President and Manager Fragasso Retirement Plan Advisors
F
2
WHO YOU
is a Fiduciary
and what that may mean to
by RO B E RT F R AGA S S O
You are seeing that word, fiduciary, coming up in the popular and business media. It may not ignite your imagination or even stir your interest, but it is very meaningful to you as an investor who is trying secure a comfortable financial future.
The word goes back in legal literature and case law beginning with an 1830 court case involving Harvard College and a person named Amory resulting in what is known as “The Prudent Man Rule,” the first interpretation of fiduciary responsibility. A fiduciary is required to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” (They talked that way in 1830.) In 1942, the American Bankers Association codified it as the Model Prudent Man Statute. In 1994, the National Conference of Commissioners on Uniform State Laws created the Prudent Investor Rule patterned on its predecessor rulings and regulations. Still awake? The point is that today’s governing regulations have a basis in fair dealing that goes back 187 years. It’s not a new idea that investors like you, which includes people from all walks of life as well as institutions and charities, should be treated fairly. Thus, a “fiduciary” is a person who holds something in trust for others and involves public confidence and support. “Fiduciary ethics” refers to the actions of individuals who hold something in trust for others in accordance with the standards promulgated by the group. In our case, the group is the public as repersented by its legislators and regulators. Simply put, a fiduciary must put the interests of the client ahead of his or his company’s interests. Now we get real with all of this. The investment industry is populated by many business models. Yet in the eyes of the public, all investment professionals become lumped together and are usually indistinguishable. The models
can be characterized generally as falling into two broad categories: 1.) brokers who market products and and work for the product providers, and 2.) advisors who are fiduciaries and work for the client. Investment and financial services brokers who represent invesment products to the investing public are held to a simple standard of “suitability.” The pivital questions that broker must ask and determine are: First, can you afford the investment? And second, can you handle the risk? That is it. There is no requirement to determine if that investment fits with your objectives, life goals, time frame, tax bracket or any other financial planning consideration. By contrast, an investment professional held to a fiduciary standard must perform all of the financial planning due diligence work to evaluate a fit for you. The transactional broker working on commission is not a bad person by definition. But he or she is concerned with getting the investment product out into the hands to the public adhering only the suitability standard. The investment fiduciary is concerned with your financial future and security and strives to match the complete portfolio of investments to conform to what was determined through the evaluative process to be aligned with your goals and unique circumstance. The Department of Labor has addressed that issue as it pertains to corporate and individual retirement plan arrangements squarely in favor of the fiduciary standard. So, yes, it does matter to you if your investment professional is a fiduciary and if his or her investment firm fully supports that posture. We are and we do, so you may want to talk with us to see how our business model can benefit you. n 4
POOR
ADVICE Can Occur
by
robert fragasso
I’d like to share with you a case that illustrates how advice can become perverted and not accrue to the client’s best interest. A longtime client experienced a death in the family and was designated the beneficiary. The out-of-state attorney handling the estate worked with an advisor with whom he had a close relationship. Our client was rushed into signing transfer paperwork for a beneficiary IRA that the deceased left to them. The client felt uncomfortable with the vibe and haste of the activities but was challenged with other considerations in the relative’s death, so he signed. When the paperwork came in, our client discovered that, instead of transferring the assets to Fragasso for handling, the out-of-state broker had invested the proceeds in a commission product before effecting the requested transfer.
THERE ARE ALSO CASES where this occurs within professional organizations. Unfortunately, this is much more common than it should be. It can be addressed with a comprehensive review by our Retirement Plan Services Department. Call us at 412-227-3200 for a complimentary evaluation of how your plan measures against the existing regulations and the new rules.
When our advisor became involved, they researched this broker’s FINRA regulatory page and found he already had four complaints, two of which were similar in nature to what this client encountered. This client now must make withdrawals as required under beneficiary IRA rules and will encounter surrender charges. n The lessons we all must take from this include: • Trust your instincts and do not allow yourself to be rushed into taking investment action until you are completely comfortable with the transaction. • Follow the guidance of the state regulators when they admonish you in their advertisements to check the Financial Industry Regulatory Agency (FINRA) website, www.finra.org, for disciplinary action against a broker or advisor before beginning a relationship. • Deal only with advisors that you have come to trust based on the methodology and full disclosure that they provide.
5
SERVICE COMPANY CONCERN:
Lack of Fee Transparency — The previous advisor to the plan was also acting as the Third Party Administrator. The advisor was receiving revenue sharing from funds in the plan and at the same time billing the client for TPA services without offsetting for the amount of revenue received from the plan. Inappropriate Allocation — 47% of plan balances were in money market or cash equivalents, mostly due to investor fear and a lack of proper communication and education.
SOLUTION:
Open Architecture — Reviewed current plan and explained how current cost structure was impacting both plan sponsors as well as participants. Through a due diligence process we were able to match the client with a provider who utilized an open architecture platform that resulted in lower, as well as more transparent, fees to both the plan sponsor and participants. Participant Education — Through employee education meetings and targeting those with higher balances in money market funds, we were able to reduce money market to less than 1% of plan assets and give participants more opportunity to reach their retirement goals.
NON-PROFIT ORGANIZATION CONCERN:
Inefficient plan design & lack of communication — When we first started working with this organization over half of plan assets were in money market. The plan’s default investment option had been money market and most employees enrolled without making an allocation election, so they defaulted into money market.
SOLUTION:
Total Plan Management Approach – We reviewed the design of the plan and identified areas where changes could help both participants achieve their retirement goals, as well as plan sponsors to better meet their fiduciary obligations. We followed up those changes with participant education and communication, and currently the plan is fully invested. Participants have a much more appropriate allocation.
6
GWP ? Who Could Benefit from
Guided Wealth Portfolios
by James Danko
7
In the winter 2016 edition of The Advisor magazine, I introduced you to the concept of the robo-Advisor. To review, robo-Advisor is a generic term for a digital investment platform. In that same article, I also introduced you to the Guided Wealth Portfolios platform. Guided Wealth Portfolios is an advisor-enhanced digital investment platform that Fragasso Financial Advisors plans to launch in the second quarter of 2017 through our broker/dealer, LPL Financial. The Guided Wealth Portfolios’ platform combines the digital client experience and automated money management with a live financial advisor for oversight and advice. Guided Wealth Portfolios has married the digital and live advisor experiences to deliver added value to the investor. This follow-up article intends to identify some types of investors that may benefit from Guided Wealth Portfolios. First and foremost, Guided Wealth Portfolios would almost certainly appeal to the tech-savvy investor. Guided Wealth Portfolios is a sophisticated online investment platform that offers mobilefriendly, 24 hour access to a digital portfolio solution. For many potential investors, the idea of coming to an office to meet with a financial advisor in a face-to-face setting is a difficult task to fit into their daily, already hectic, lives. The fact that an investor has the ability to access the Guided Wealth Portfolios platform at any hour of the day through their smart device definitely has an appeal. As added peace of mind, the investor has access to a live financial advisor at their discretion to fully address their savings needs. The next group of investors who could benefit from Guided Wealth Portfolios is the grown children of our current wealth management and investment advisory clients. At this stage of their employment, these young adults are earning
more income than they are spending, thus tending to build up higher balances in their bank accounts. In today’s environment of low interest rates, that cash buildup is essentially sitting idle in their bank accounts. This next generation of existing clients may not necessarily require the full array of our financial planning services at this stage in their lives; but, with Guided Wealth Portfolios low initial investment requirement of just $5,000, these young investors can put that cash to better use and potentially accelerate the future need for Fragasso Financial Advisors’ full spectrum of financial planning services. Another group of investors who could benefit from Guided Wealth Portfolios is retirement plan participants who are employed at companies where Fragasso Retirement Plan Advisors manages their company-sponsored retirement plan. Guided Wealth Portfolios can provide these retirement plan participants with an opportunity to integrate their personal finances with their retirement plan investments. These retirement plan participants would have the ability to integrate their personal investments into the digital platform along with the access to a live financial advisor. This more comprehensive approach enables the assets invested in their employer-sponsored retirement plan to work in unison with their overall financial goals. In conclusion, the Guided Wealth Portfolios’ digital experience accompanied with the service of a live financial advisor can be appealing for many different types of investors. The three types discussed in this article are just the beginning. If you, or any interested investor for that matter, are interested in learning more about Guided Wealth Portfolios, do not hesitate to contact Fragasso Financial Advisors. n
Guided Wealth Portfolios is an investment advisory program sponsored by LPL Financial, an SEC registered adviser and member FINRA/SIPC, and subadvised by FutureAdvisor, an SEC registered investment adviser. SEC registration does not constitute an endorsement of the firm by the SEC and does not imply a certain level of skill or training. FutureAdvisor, Fragasso Financial Advisors and LPL Financial are not affiliated entities.
8
“Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful, that’s what matters to me.” – Steve Jobs
9
ORION IS ON THE HORIZON BY BRIANNE KING
Few can deny the impact Steve Jobs had on this world. He revolutionized the way we listen to music, communicate, work, and so much more. He took powerful ideas and technology and streamlined them for the everyday user. The concept of user friendly technology has rippled through the tech industry and changed the way many of us live our day to day lives. We, too, understand the significance of utilizing technology to make our time working for you, more effective and impactful. As we continue to embrace technology, Fragasso is happy to announce a very exciting new piece of software we’re adopting in 2017 called Orion. Orion will be utilizedto generate the performance reports and statements you see in your annual review every year. While the reports you have come accustom to have served us well over the past sixteen years, we’ve recognized that as we continue to grow as a firm, we want to provide you with the most robust performance reports as possible. Orion has hundreds of different reports and account analysis features available at our finger tips enabling enhanced communication in regards to your individual portfolio. In addition to serving as our reporting software, we will also utilize Orion for trading needs. Orion has the capability of trading and rebalancing accounts in mass which means we will be able to implement decisions made by our portfolio management team in a more timely fashion. This software will provide a more efficient way for us to work with your accounts, eliminating time consuming tasks and resulting in an overall more streamlined process. This will allow us to focus more on serving the needs of our clients and providing you with a greater client experience. As we continue to evolve and embrace new technology on your behalf, we encourage you to utilize the client access portals, Account View and WealthVision. Account View and WealthVision are great tools to monitor your accounts, personal financial plan and progress towards your financial goals. There is no cost associated with gaining access to either portal. We recommend all our clients consider taking advantage of these powerful tools as a way to view and track your investments and financial plan. You may also link other accounts that are not associated with LPL so you have the ability to view your all of you assets on one platform. Once all of your accounts are linked, we may then use real time values to update your financial plan on an annual basis. In addition, an important feature of Account View is paperless account statements. We know how overwhelming and cluttered the mail can become for each account. Electronic statements allow you to receive your account information much sooner than paper statements. We strongly recommend electing to access your statements electronically as the drive towards paperless is gaining momentum and someday a paper statement may be a thing of the past. If you are not currently enrolled in the Account View/WealthVision portal and you wish to gain access, please contact your wealth advisor at Fragasso to learn more. n 10
Q4
E D U C A T I O N, PUPILS and Barrie
I
have been providing employee education since the early '90s. Back then it was insurance; today it is about saving and investing for retirement readiness. What has changed is my service and offerings model. What hasn’t changed is employee behavior and business owners’ reluctance to embrace employee education. I remember calling on a small exterminator with twelve employees years ago. The employer offered health insurance only, and the employees paid half of the premium. No life or disability insurance. No spending accounts. The insurance was not paid pre-tax at the time, as the tax code was new. The owner was interested in the tax savings to the company with a pre-tax plan. He was not, however, 11
interested in the thirty minutes of individual employee time requested during working hours that I required in order to make sure that each and every employee was properly educated on both the benefits and the rules of using pre-tax dollars to pay for insurance and spending accounts. I remember to this day my argument on the phone with the owner: “You give me the time with your people and I’ll do a good job. Otherwise, I won’t set up your plan.” He agreed. The results were terrific! Every employee signed up with various insurance benefits to meet their needs. They all took advantage of the tax savings and most used the spending accounts. I witnessed several claims at this business. Some claims were serious and the employees really appreciated the supplemental insurance. The employees needed the
products and services. The employer needed the tax benefits. I needed the owner to provide the time for appropriate education. Everybody won. So the answer is simple, right? Persuade business owners to just get their employees in a room once or twice a year and educate them, or send an email with various videos to review at will. These approaches are not always so effective. The problem is two-fold. First, employees do not really know why they need to save. Those who think they do either put it off, save far less than needed, or they do it so reluctantly they look at it as a bill or a tax. The reasons for this are more complex. Saving for retirement has a longer time horizon than the average
lifetime. The lack of this knowledge causes disastrous results for the majority of adults, who have either taken on too much debt or worse, have not saved enough to even barely survive, let alone thrive, in retirement. The other problem is that business owners are busy and often over-regulated. They feel they have to be more concerned with having to deal with the compliance side of running a retirement program, than with employee preparedness. An audience poll of retirement plan advisors, plan providers and broker dealers at the 2016 PLANADVISER National Conference, asked “What is your client’s main concern regarding their retirement plan?” 43% stated fiduciary responsibility compared to 27% who stated participant retirement readiness.1
rs
by robert yelenovsky
Face it, business owners are also very busy. Their key employees and managers are busy. They all want their employees busy — busy working on their core duties. Many owners have a financial advisor to help them make important investment and financial decisions. They are typically financially literate. And for those owners who do care, and often ask their employees for input and what they may be interested in, they often fail to ask the right questions in the right way. The lack of responses reaffirm putting education low on the list of priorities. And so it goes. Business owners and HR managers need to embrace financial wellness and retirement readiness for their employees. Do it for them; but of equal importance, do it for the business. Employees who save and invest properly have the ability to retire on time. This makes room for advancement in the organization and a constant stream of new hires. It improves morale and encourages development. It reduces health care costs and improves productivity. Employees who are educated about finance and debt, budgeting, saving, planning for emergencies, insurance for their families, will have a positive impact on the business. Take the necessary action and make available the time and topics that will encourage employees to engage. Help them learn to empower and energize their financial preparedness and readiness for both life while working, and life after retirement. It is good business and the right thing to do.
employee even stays with his or her employer. We get bombarded with advertisements for the latest cars, tech gadgetry, high-cost drinks or coffee, convenience foods, or other ways to spend our money. If you look at a product online, all of a sudden it shows up in your social media feeds, or you get a daily email reminder “the generator you looked at is still in the cart, Robert” (true story). We as adults (and it continues to this day) have also not been properly educated about finance, debt, investing, or the value of compound interest. The subject of financial literacy is somehow not part of the curriculum in our schools. This, in my opinion, is one of the most important things to get “right” at an early age and to develop good habits that last a
I’ll leave you with one last short story. A couple of years ago I helped an employee of a local company with a rollover of his retirement plan into an IRA at Fragasso. He had saved a nice mid-six-figure nest egg through his employer’s retirement PLANADVISER National plan. He told me that Bob Fragasso Conference Asked: did a seminar for the employees of his law firm thirty years ago, that "WHAT IS YOUR CLIENT'S MAIN he paid attention, and immediately CONCERN REGARDING THEIR started saving and investing part of his RETIREMENT PLAN?" paycheck. He was so happy telling me the story! To this day it warms my heart that Bob took the time to help this wonderful man, who is now happily retired and financially prepared. FIDUCIARY Thriving. RESPONSIBILITY
43%
For a no-obligation appointment and a comprehensive review of your financial preparedness and education policy, or ideas on how to start one, please contact us at 412-227-3200. n 1 November-December 2016 PLANADVISER
27%
PARTICIPANT RETIREMENT READINESS1 12
CREDIT
TRUMP?
by M AT T H E W K A R R
Late 2016 and early 2017 trading activity in US equity markets has been dubbed the “Trump rally.” Investor sentiment has been fairly robust, with a rotation out of bonds and into equities. As of this writing, since November 7, 2016, the S&P 500 total return index is up 8.2%, the Russell Midcap total return index is up 9.5%, and the Russell 2000 total return index is up 15.3%. 1 Is Trump solely to credit? That narrative is easy, but underlying economic fundamentals do matter. To that point, another key event happened back in July 2016: 10 year Treasury yields put in their bottom for the year on July 5 at 1.37%.2 This period actually corresponds to improvements across a broad swath of economic data points that we monitor. The bottoming in 10Y yields helped stage the subsequent market rally, but trading activity after President Trump’s election explains roughly 75-80% of the total return in the aforementioned indices.
13
We believe these two story lines are extremely important as we aim to navigate 2017 and beyond. While improvements in some areas have been better than others, we certainly would concede the fact that, on the surface, things do appear modestly better on expectations than they had for most of 2016. By category of data, here’s what we see in a summary format3: Consumers: Consumer confidence readings posted a sizable jump in the final months of 2016, after bottoming early in the summer months. Employment trends are showing a slower rate of improvement throughout 2016, and wage growth has not materially changed as rapidly as confidence surveys. Consumer spending has been accelerating since the summer, but services spending has decelerated. Industrial & Businesses: Corporate profits grew year-over-year for the first time since 1Q 2015. Underlying manufacturing survey data shows improvement in activity levels since 1Q 2016, and leading indicators also appear to be firming up. Lastly, small business optimism sizably ramping, which is a big potential positive, as these businesses employ many US workers. Financial Conditions: The yield curve has steepened4 and the dollar5 has rallied approximately 4.6% since the end of June 2016. Overall credit risk appetite has increased, evidenced by narrowing spreads. The Fed’s Senior Loan Officer Survey continues to show modest tightening of loan standards in key categories, though less so than earlier in the year. Loan demand is generally still positive. 5Y inflation expectations6 have increased from ~0.93% in February 2016 to ~1.85% as of early January 2017. Valuation: Most areas of equities look expensive on 10Y percentiles. On a P/E basis, median sector valuations are modestly better than they were early in 2015, but still elevated by historical standards. Valuation alone is certainly not a catalyst, but we believe that security selection remains increasingly important in a backdrop of pricey conditions. Regarding pro-growth platform items, much commentary has been written on the effects of tax reform and the impact on various sectors and end consumers. While we certainly do not want to downplay the impact on pricing, a basic tenant of valuation is that, more often than not, terminal value (i.e. cash flow beyond the explicit forecast period), drives substantial amounts of corporate valuation. In our view, tax reform is likely to be a temporary boost to corporate free cash flow, and less likely to directly impact the terminal value. That said, the use of excess cash flow for stock buybacks or material debt reduction (should interest expense deductibility change) would be net positives for stock investors in US companies. As 2017 is ramping up, we find it hard to not observe that the “growth accelerating” trade is more crowded, using equity strategist preferred sector tilts as a proxy. Positively, our reading points to at least some degree of division among investor outlooks. We believe that this is a potentially healthy governor to the market in the short-term. In conclusion, pro-growth rhetoric seems capable of being credited with large chunks of the rally in stocks. What comes next is important, because the “steak” has to match the “sizzle.” Expectations are a huge part of investing, even for participants with a long-term focus. We worry that a rapid rise in equity indices creates a potential short-term problem if the reality fails to meet those expectations. This is why we prefer to build diversified portfolios invested across the world, and across asset classes, to mitigate potential swings in adverse scenarios. n 1 Thomson Reuters Datastream. Data as of January 27, 2017. 2 https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2016 3 All data sourced to Thomson Reuters Datastream 4 As measured by TED Spread (10s-2s). https://fred.stlouisfed.org/series/TEDRATE 5 DXY US Dollar Currency Index. Accessed 1/27/2017 via Thomson Reuters Eikon. 6 As measured by 5-Year Breakeven Inflation Rate. https://fred.stlouisfed.org/series/T5YIE
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Don’t Let
UNEXPECTED HEALTHCARE COSTS
SINK
Your Retirement by
W I L L I A M TAY LO R
15
Imagine for a moment that you’ve spent years building a ship for a long voyage across the ocean. Your planning has been meticulous, and attention has been given to every detail to help ensure a safe journey. You know the risks that the journey holds. However, a final inspection reveals that your ship cannot withstand any impact, be it from an iceberg or another vessel. You are presented with the choice: do nothing, or find a way to protect the ship. The choice seems obvious, right? Interestingly, many people approach their retirement plans differently. Most will spend years preparing for retirement under the assumption that they have everything “figured out.” They neglect to plan for major illness or healthcare events – the type that can put an individual or couples in a long-term care (LTC) facility. This can be a costly mistake, as a failure to consider potential healthcare expenses can be devastating to even an otherwise-sound financial strategy. There are a few things to differentiate in the area of LTC planning. Many people mistakenly believe that Medicare will cover the cost of long-term care. Not true! Medicare only covers a short stay in a long-term care facility following a hospital stay. Medicaid can be an option, but we’ll talk about that in a bit. Many retirees think that they can manage with only fixed income from Social Security. This is also a mistake. The average cost for a private room in a nursing home in Pennsylvania averages $9,733 a month1. This amounts to nearly $117,000 each year! As the boomer population continues to age, cost of care is likely to rise over the coming years ahead of typical inflation. Without proper advice and planning, people end up spending down their assets on healthcare costs before they’re even eligible to apply for Medicaid. Medicaid does provide benefits for those who do not have any other means to pay for LTC costs. Before you breathe a sigh of relief, remember our sturdy ship from the analogy. Do you want to fully dismantle your assets for healthcare costs in order to obtain public assistance? There are other strategies that we ask you to consider first. First, it is recommended that individuals consider protection in the form of LTC insurance. While it is difficult to fully project the cost of care, insurance policies can go a long way in either replacing or supplementing the need for using your personal assets or fixed income. Another strategy is gifting assets to children or grandchildren. This can be effective, but a word of caution: Medicaid has a five-year lookback period from the date of application. A penalty will be imposed for all gifts made during this period that exceeded $500 per month, and the cost is assessed in months without benefits. As an example, a $50,000 gift could force you to pay for your own room and board for more than 5 months! Worse yet, Pennsylvania law allows the care facility to sue your children for any unpaid balance when the assets run out. Whether the gift occurred last week or four years ago, it is best to understand how these will impact planning. In certain cases, the establishment of a trust or a guided gifting plan can make a tremendous difference. These are only a few of the items that you should consider as you strengthen your own retirement plan. Take the time to talk to your financial advisor about other options that might be available to you. It is recommended that you coordinate with your attorney, particularly if he or she has elder law experience. Rather than hope for a calmer sea, you should always strive to build a stronger ship! n 1 Genworth Cost of Care study 2016)
16
client
PROFILES THERESA
&
JACK PRICE JR.
written by Chuck Mattiucci, AIF ®
Scott Price with his brother Jack Price Jr.
Jack and Theresa were born and raised in the coal regions of East Central Pennsylvania, Shenandoah and Ashland, respectively. Jack’s father was a public school guidance director and also ran a part-time insurance agency. Jack’s mother was a housewife, who prior to marriage, was a surgical nurse. Theresa’s father was a disabled World War II veteran, having served in the Reconnaissance Portion of the 79th Infantry, where he marched to the Rhine under the command of General Patton, winning four bronze stars along the way. (Jack’s father also served during WWII spending thirty months in England as part of the 8th Air Force). Theresa’s mother, although modestly educated, was a housewife who was fluent in both Polish and Slovak. Jack and Theresa met in 1980 when Jack was an associate at a law firm where Theresa was a secretary for one of the senior partners. The two were married and have had a wonderful, loving marriage since.
17
Theresa Price
Jack and Theresa’s love for animals, combined with their respect for service men and women, and commitment to philanthropy have made working with them very rewarding. The couple is always looking for opportunities to give back through charitable donations. Just a few of the many charities Jack and Theresa support include: Susquehanna University (Jack’s Alma Mater), Ryan Veterinary Hospital of the University of Pennsylvania, The Refugee Clinic of the University of Pennsylvania, Ascension Sanctuary (an animal sanctuary operated by an Episcopal Nun who lives in human solitude) and the Hillside SPCA (a no-kill animal shelter in their area). Jack and Theresa were drawn to Fragasso Financial Advisors because of our reputation in the industry. However, another important criteria Jack and Theresa were impressed by was our culture of philanthropy and support of animal welfare. I am fortunate to work with such wonderful people and look forward to assisting Jack and Theresa with all of their financial objectives in the future. n
REFERRALS and
YOUR
FINANCIAL
ADVISOR
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We are asking that you, our clients, consider honoring your financial advisor at Fragasso, and assist others toward their financial goals by referring your family, friends, business associates and neighbors to your advisor here. We believe you know that they will be treated with the same care we have approached our work with you. Here is why we have comfort in making this request of you: Your financial Advisor here at Fragasso is dedicated to helping you reach your life’s goals. The firm has positioned an array of resources and team members to help him or her in that regard, such as an enhanced, centralized and wellstaffed portfolio management department, financial planning analysts and other specialists. But it is your advisor who spends every minute of every work week trying to improve and secure your financial future. It is much more than a job to our advisors. We know from the comments of our clients that you appreciate this. And we value the confidence you have placed in all of us and we work very hard to justify that. You have shown your loyalty to our firm, and we feel that you have validated our work and values by providing us with a substantial client retention rate.Every firm must grow to remain competitive in business. By growth, we mean adding the best talent to support what we do for you along with up-to-date research and technical resources. Consider still going to a medical doctor’s office equipped and staffed from periods past. Our industry is similar as we must bring the best to help make you successful. That is what growth means to us on your behalf. That talent and those resources do not appear upon our wishing. Rather, it is purchased out of increased revenues. So by referring your friends and associates, you are not only helping them toward their financial future, but you are also helping yourself with improved capabilities we can use for you. In considering who you may wish to refer, start with your extended family. If we are assisting you, wouldn’t it be beneficial to everyone if we were also assisting the other generations of your family — from grandparents down through to grandchildren? We know from 45 years of industry experience that the simplicity of multi-generational coordination helps everyone. Each family is treated uniquely and confidentially, but the coordinating effect among the generations helps to assure there is minimal leakage and expense involved with inter-generational wealth transfer. Next, consider your business partners if you own a business or possibly your business associates. Business continuity is as important as family wealth continuance. That is what we do for our business clients. Finally, consider those friends and neighbors who have expressed concern over their progress toward their financial futures. We can help them also, all while maintaining proper confidentiality. Thank you in advance for the compliment you will pay to your advisor, and to all of us at Fragasso, by referring. Sincerely,
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by abigail hamilton
NEWS
EMPLOYEE
BOB AND JANINE FRAGASSO
UNDERWRITE ADOPTION FEES
AT A N I M A L F R I E N D S
Through the generous support of Bob and Janine Fragasso, Animal Friends was able to offer “priceless adoptions” this holiday season from December 14 to December 31. This initiative resulted in new homes for a total of dogs, cats, and rabbits, far surpassing the original goal of 125 adoptions!
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Animal Friends then utilized the newly-emptied cages by continuing their New Year’s Eve tradition of taking in animals from overloaded shelters and animal control facilities where surplus animals are in danger of being euthanized. As a token of appreciation, Animal Friends organized a visit to Fragasso’s downtown office, where they surprised Bob and our firm with two adoptable pups, a plaque, and some delicious human treats! Visit thinkingoutsidethecage.org to view the list of pets who are currently up for adoption. n
FRAGASSO EMPLOYEES GIVE BACK
POLLY AITES was recently promoted to Vice President of Operations. Polly has been with Fragasso since 2005. She manages various aspects of operations, technology, and client care, ensuring seamless and productive care for each client. Polly continuously reviews and enhances the company’s processes and procedures as well as executing compliance procedures. She works closely with LPL, serving as a member of the LPL Service & Operations Council and the ClientWorks Advisory Council. n
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During this past holiday season, employees of Fragasso Financial Advisors gave back to the community by donating over seventy gifts to local children whose parents have been incarcerated. The children belong to the Pittsburgh organization Amachi Pittsburgh. Their mission is to empower young minds to overcome the challenges of parental incarceration and to reach their full potential. The event was organized by Fragasso Financial Advisor’s Director of First Impressions, Bonnie Katz, who was excited to report nearly 100% participation from Fragasso Employees. Bonnie, joined by Christina McCahill and Brooke Baressi, continued to spread good will by volunteering at Amachi Pittsburgh’s annual Holiday Party. n
CONGRATULATIONS ROBERT YELENOVSKY was promoted to vice president and manager, Fragasso Retirement Plan and Fiduciary Advisors. Rob started at Fragasso in 2014 and manages the Retirement Plan Advisors Department. He holds an Accredited Investment Fiduciary® certification.
WELCOME
WELCOME
AMY STOVER
Amy Stover has joined the firm in January of 2017 as an insurance analyst and client services associate. Amy works alongside our advanced estate planning and business planning manager to oversee the insurance activities in the firm. She brings a range of expertise to Fragasso, including experience in general management, marketing, sales, and risk management. Amy is a graduate of West Liberty University in Wheeling, WV and she currently serves as the vice president and shelter co-chair with The Jefferson County Human Society.
SAVE THE DATES! Congratulations to BRIANNE KING, manager of financial planning, and to BRANDON SCHWAN, financial advisor, on obtaining their Certified Financial Planner™ designations! CFP® professionals have completed extensive training and are held to the highest ethical and educational standards. They are committed to making financial planning recommendations in the best interest of the client.
We will be hosting TWO spring shredding parties. We will be hosting our first at our North Hills office on April 29 and the second on May 6 at our South Hills location. More details coming soon!
MARSHA POSSET Marsha Posset was hired in January of 2017 as the marketing manager. In her role, Marsha is responsible for the development and execution of the firm’s marketing plan and advertising strategy. She guides the marketing team to solidify and promote the Fragasso brand and corporate image throughout all marketing initiatives. Marsha brings with her over fifteen years of marketing, communications, media and graphic design experience, most of which has been focused in financial services. She is a graduate of Leadership Pittsburgh, Inc.’s LDI Class XXI and serves on the board of directors for the Financial Industries Network.
WARD HOME’S ANNUAL “PICTURE THIS!” EVENT Fragasso Financial Advisors was proud to sponsor the Ward Home’s 6th Annual “Picture This!” event on Saturday, April 1st, 2017 at the August Wilson Center for African American Culture in downtown Pittsburgh. Bob and Janine Fragasso served as the honorary event chairs. Guests enjoyed an interactive evening featuring a live painting demonstration, a caricature artist, a silent auction and a community art project – with all proceeds helping to support at-risk foster teens in our community. Support of the event directly impacts Ward Home teens and help them achieve successful independence through innovative life skills programming, emphasis on educational goals, enhanced creative arts programming, and most importantly, nurturing relationships with caring staff members and mentors. Visit www.wardhome.org to learn more! 22
CFO OF THE YEAR AWARD The Pittsburgh Business Times has named Christine Erimias one of the region’s CFO of the Year awardees. The CFO of the Year Awards honors financial professionals in western Pennsylvania for outstanding performance as corporate financial stewards. As CFO and COO of Fragasso Financial Advisors, Christine Erimias handles a lot, from finance to operations, administration to human resources. Her current responsibilities include: Financial reporting and analysis, budgeting, profitability measurements, operational oversight, and head of human resources. n Eligibility Nominees must be Chief Financial Officers or hold equivalent positions in the western Pennsylvania region. Companies do not have to be headquartered in the region, but CFO nominees must have home office in the region. An independent panel of judges, which includes winners of the 2015 CFO of the Year Awards select winners based on information provided through online nominations.
R E M I N D E R : F R A G A S S O’ S N O RT H H I L L S O F F I C E I S N O W F U L LY S TA F F E D ! In January of 2016, Fragasso Financial Advisors opened the doors to our brand new North Hills Office, located at 11269 Perry Highway, Pine Professional Building, Suite 430, Wexford, PA 15090. This development transformed the former North Hills satellite office into full-time, fully staffed office.
Planning Association. By developing a personal relationship and discovering what his clients are passionate about, T.J. helps his clients work towards both their personal and financial goals.
It is through the loyal support from our clients that Fragasso has continued to grow, creating a need for more space to provide our services. This expansion was conducted in an effort the meet this growing demand while providing our clients in and around the North Hills region with a convenient and accessible location to meet with their advisors.
Financial Advisor, Bill Wolfe, joined Fragasso in 2007 and holds a number of certifications, including: Certified Financial Planner™ Professional, Accredited Investment Fiduciary®, Series 7 and 66 securities licensed through LPL Financial, and Insurance licensed in Pennsylvania. In reference to his role, Bill says, “Helping clients reach their financial planning goals is what I enjoy most. It is rewarding to know that my research can help improve a client’s life.”
Fragasso Financial Advisors has assembled a team of experienced professionals to be based in the North Hills Office, who are ready to provide you with comprehensive, personalized financial services. This team includes seasoned Financial Advisors, T.J. Drost and Bill Wolfe, joined by Client Account Specialist, Lorraine Domhoff.
Client account specialist, Lorraine Domhoff, has twenty years of experience in the investment, financial services and banking industry. In her position as Client Account Specialist, Lorraine works with clients processing all administrative functions from opening a new account and transferring assets, to all ongoing servicing of their accounts.
T.J. Drost, has spent more than eighteen years of his professional career helping others achieve security in their financial future, and is a Certified Financial Planner™ professional, a Certified Fund Specialist®, and a member of the Financial
Fragasso Financial Advisors looks forward to increasing our presence in the Pittsburgh North Hills region, and continuing to help our clients propel their financial success. Fragasso Financial Advisors: We are where you live and work. n
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Please note that you have free access to other exclusive tools and resources curated at www.fragassoadvisors.com! If you navigate to our website resource center, you will find informational white papers, educational videos, our most recent news and FAQs. You can get timely information from our financial advisors and portfolio managers through our blog, which is updated several times each month. In our News section you will find recent local and national media posts that include interviews and quotes from Fragasso Financial Advisors management and staff. Also, visit www. fragassoadvisors.com/Radio to listen to our new radio program! Don’t forget to connect with us on social media for our latest updates!
S AV E T H E DAT E ! ANIMAL FRIENDS AND HCEF GOLF OUTING We invite you to join Fragasso Financial Advisors in offering support to the Animal Friends and Homeless Children’s Education Fund (HCEF) Annual Golf Outing, which will be held on May 8, 2017 at the Diamond Run Golf Club in Sewickley, PA. The event is being held in effort to raise funds for two organizations near and dear to the hearts of many: Animal Friends and the Homeless Children’s Education Fund. The HCEF and Animal Friends have been collaborative partners over the past ten years, united through the passions of shared volunteers and donors who work tirelessly to benefit these noble causes. It is the mission of HCEF to advance the education of children and youth experiencing homelessness in Allegheny County. Equally inspiring is the mission of Animal Friends: to ensure the well-being of companion animals, while ending overpopulation, abuse and unwarranted euthanasia. Visit homelessfund.org to learn more about how you can get involved. 24
610 Smithfield Street Suite 400 Pittsburgh, PA 15222
For the eighth consecutive year, Barron's has recognized Fragasso Financial Advisors as a top firm! 1 Bob is ranked No. 1 in Pittsburgh and No. 4 in Pennsylvania on Barron's 2017 list of the Top 1,200 Financial Advisors 1 The rankings are based on assets under management, revenue produced for the firm, regultory record, quality of the practice and philanthropic work. This is the eighth consecutive year Fragasso has been named to the Barron's top 1,200 list.
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Securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Fragasso Financial Advisors, a registered investment advisor and separate entity from LPL Financial. Š 2017 Fragasso Financial Advisors