News and Information

 Are You on the Right Rung of Your Retirement Ladder?

Tips to Avoid Being Wrung Out at Retirement

By, Kimberly Dwan Bernatz, CFP®

To paraphrase  Stephen Covey’s famous quote, “It would be a waste to spend your life climbing a ladder only to find that when you get to the top, it’s leaning against the wrong wall”. This happens all too often with investors who, as they make investment choices along the ladder to retirement, don’t ask the right questions or succumb to negative behaviors that run contrary to their best interests.

Investor Behavior

One of those negative behaviors is that investors tend to focus primarily on making the right stock pick in the hope of getting a big payoff in rate of return. The media, with its endless broadcasts and articles that  peddle the hot stock or asset “class-de-jour” and with its heavy focus on returns, fuel this behavior. We’ve been conditioned to think that rate of return is the only thing that matters. But to what end and with what risk?

What investors need to know is that it’s more important  to look beyond the right stock pick and  focus on the right  process that will ultimately get them to their long term goal. We don’t really have control over market rates of return, but we do have control over our own financial goals and expectations, and we have control over implementing the right plan that should lead us there. A professional financial advisor is a valuable resource to help investors navigate through that process.

A recent survey (Sept. 2011) by Franklin Templeton indicates that having professional financial advice clearly makes a difference in how individuals approach their retirement goals. The survey found that 66% of Americans who work with a financial advisor know how much of their retirement savings they will withdraw each year in retirement, compared with only 36% of those who have never worked with a financial advisor.  Running out of money is a concern for 35% of respondents who have never worked with an advisor, but for those who do work with an advisor, only 24% said they were worried about running out of money. Professional financial advice is a key resource for developing a roadmap for retirement.

Know the Right Questions to Ask

Too often, as people consider whom to hire as their professional financial advisor, the first two questions they pose in the screening process are: “What are your fees and what is your performance?” Just imagine taking a similar approach when booking a trip on a cruise ship. If you only asked how much it will cost and the length of the trip, you may find yourself bunking below decks in steerage versus traveling first class and, you could very well arrive at the wrong destination!

While fees and performance are important pieces of information to know, there are other key questions that should be asked and factored into the mix. Consider if the financial advisor is qualified to provide you with answers to the following questions:
• Can I afford to retire when I want and still meet my retirement objectives?
• Are my assets allocated properly to meet my short and long term goals while letting me sleep well at night?
• Is my income in line with my spending?
• Does my estate plan reflect my desires?
• Am I doing everything I can to minimize my taxes including income, capital gain and estate taxes?

The Process in a Nutshell

A good planner will navigate you through the six steps of the financial planning process: 

Throughout the process, a broad range of wealth management issues should be addressed, including but not limited to: cash flow planning, investment allocation, college savings, retirement goals, stock option planning, insurance needs, philanthropic goals, titling of assets, and planning for transfer of wealth upon death. Addressing these issues should provide a thorough roadmap to make sure you are on pace to achieve your financial goals and objectives.

Summary

Investor behavior tends to focus on stock picking and chasing previous investment performance while ignoring factors with outcomes that can be controlled. By seeking the advice of a qualified financial planner, you can gain a more clear understanding of how to effectively attain your goals. Armed with this knowledge and an effective plan, comes peace of mind and a greater likelihood of achieving your goals. So, just how far up the ladder are you and is it leaning on the right wall?

Kimberly Bernatz, CFP® is Senior Vice President and Director of Wealth Management Advisory with First American Trust. She leads a team of wealth management advisors who work with successful individuals, families and foundations to help them plan for and achieve their current and future financial needs. An active volunteer in our local community, Kimberly serves as Chairman of the Hoag Hospital Foundation Planned Giving and Endowment Council, Membership Chair for the UCI Paul Merage School of Business Center for Investment and Wealth Management, Immediate Past-Chairman of the Board of Pacific Chorale and as an Advisory Council member for the Assistance League of Newport-Mesa.

Alert: Third Week in October (October 17-23, 2011) is National Estate Planning Awareness Week

Estate planning is one of the most overlooked areas of personal financial management. It is estimated that over 120,000,000 Americans do not have up to date estate plans to protect themselves and their families in the event of sickness, accidents, or untimely death. This costs the affluent and middle classes wasted dollars and hours of emotional hardship each year that could be minimized with proper advanced planning and action.

The NAEPC Education Foundation, and other professional organizations representing over 200,000 attorneys, accountants, trust officers, life insurance and financial planning professionals, have made it an ongoing commitment to promote National Estate Planning Awareness Week, the third week in October each calendar year.

Rep. Mike Thompson (D-CA) and 49 other members of the House of Representatives co-sponsored and helped pass H. Res. 1499 on September 27, 2008, creating a Congressional Proclamation for National Estate Planning Awareness Week.  Visit  http://www.estateplanninganswers.org/  for more information.
 

Kimberly Dwan Bernatz Named Senior Vice President of First American Trust 

June 2, 2011, SANTA ANA, Calif.

First American Trust announced today that Kimberly Dwan Bernatz has been named senior vice president.

In this role, Bernatz will serve as the director of wealth management sales and marketing for the Trust company and oversee the team of wealth management advisors and all business development and marketing initiatives.

Bernatz, who has been with First American for 10 years, has served in the capacity of vice president, wealth management advisor for the duration of her career at First American. In that role, she was responsible for working with high net-worth individuals, families and foundations to assist them with building and implementing plans for their investment management, trust and overall financial planning needs. Prior to joining First American, Bernatz served in a similar capacity as vice president of business development at Northern Trust Company in Newport Beach, Calif.

 “Kimberly has been a valued member of the First American Trust wealth  management team for over a decade and she has been a significant contributor to the overall growth of our client base and revenue. We look forward to her leadership and guidance as she steps into her new role managing our team of wealth management advisors and implementing initiatives that will help us grow the business,” said Kelly Dudley, president of First American Trust.

Bernatz is Membership Chair of University of California-Irvine’s Center for Investment and Wealth Management and past Chairman of the Board of Pacific Chorale.  In addition, she is a member of the Hoag Hospital Foundation’s Endowment and Planned Gifts Committee, a member of the Orange Coast Estate Planning Council and an advisory council member for the Assistance League of Newport Mesa.  

She holds a bachelor’s degree in political science from the University of Southern California and is a CERTIFIED FINANCIAL PLANNER^™ professional.

Economic Update – February 2011

For the year ending 2010, the Russell 3000 equity index returned 16.93%, principally a result of an 11.59% gain during fourth-quarter of the year. During the month of November, the Federal Reserve announced a $600 billion round of quantitative easing, sparking a rally in equities as investors pushed concerns aside about the U.S. economy and drove stock market indices higher. Investors were also heartened by Congress extending the Bush-era tax cuts for U.S. taxpayers, mitigating fears of higher taxes on income and investments in 2011. The stock market’s positive tone helped equities reach two-year highs, although the major equity indexes are still significantly below their 2007 peak.

Improving prospects for the U.S. economy has led to increases in interest rates, both globally and domestically.  These same growth prospects, as well as deleveraged corporate balance sheets, have led to additional narrowing of corporate yield-spread premiums. Uncertainty in the Euro Zone has persisted, as bond market participants continue to evaluate the potential outcomes of the current sovereign credit crisis on the European continent. The Barclays Capital Intermediate Government/Credit Bond Index fell 1.44% during the fourth-quarter, reflecting these improving economic conditions and continuing global credit concerns.

While the stock market has performed well and interest rates have bumped up, the current economic outlook remains somewhat muddled. The unemployment rate has remained unchanged from where it began the year, just under 10%, and while we are no longer seeing widespread job losses, aggressive hiring that is going to be necessary to reduce high unemployment levels has yet to occur. The economically-important housing market remains weak and has yet to show definitive signs of a bottom. GDP data have shown that the U.S. economy is growing, but the sustainability of the recovery is still somewhat in question.

DISCLOSURE:  The information in this analysis was obtained from sources believed to be reliable.  No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions, and there is no obligation to update or correct any of the information.  This report is intended for informational purposes only and does not constitute or contain an investment recommendation and is issued without regard to the specific investment objectives, financial situation or particular needs of any specific recipient.  First American Trust, FSB and its affiliates do not accept any liability for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.