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Summit Capital Advisors (Summit) located in (Old Town) Tacoma, WA, offers Retirement Services to Soon-To-Be Affluent, Affluent (those individuals that have investment assets of $300,000 to $3,000,000) and Wealthy (those individuals whose investment assets exceed $3,000,000) individuals and their families. These services include the following:
- Investment Management
- Comprehensive Financial Planning
- Retirement Accumulation and Distribution Planning Services
- Diversification Strategies for High-Equity Concentrations
- Income Tax Preparation
- Family Estate Planning
- Philanthropic Planning
- Evaluation of Social Security Benefit Options and Medicare Insurance
- Evaluation and Selection Assistance with Long-Term Care and Medi-gap Insurance
- Evaluation and Selection Assistance with Nursing Homes, Assisted Living Facilities, and At-Home Health Care Living Arrangements
Affluent and Wealthy individuals and their families face highly complex advisory needs in retirement. Through Summit’s experience and network of financial and legal professionals, we provide value-added guidance and solutions to these complicated financial issues.
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WHAT WE DO
Retirement can be a wonderful period in one’s life. However, complexities can set in due to poor health and/or the onset of advanced age due to significantly longer life spans. Summit provides Personalized Retirement Services including Investment Management, Comprehensive Financial Planning, Retirement Accumulation and Distribution Planning, as well as Income Tax Planning and Preparation and much more in a fee-only environment. Summit’s objective is to deliver customized services to ease the everyday burden that retired client’s face, in addition to the innovative financial advice that we believe is unequaled in terms of quality, from which clients can derive maximum value.
Summit expects to achieve its objective by providing all firm members with extensive, ongoing internal and external education by utilizing cutting edge financial information, management, technology, hardware and software, while capitalizing on our extensive national and local networks of other financial professionals. Summit continually creates new services not offered by our competitors that are of value to the client.
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INVESTMENT MANAGEMENT SERVICES
Summit offers customized Investment Management Services to individuals and institutions. Investment portfolios are developed to match the client’s return and risk requirements, which are determined by the clients’ completion of a Risk Tolerance Questionnaire, and/or with the guidance of a Summit advisor. Each type of investment portfolio is managed to achieve both short and long-term investment objectives.
INVESTMENT PROCESS
Investment Research:
Summit performs extensive research as to how to structure investment portfolios. Emphasis is placed on developing portfolios that have historically achieved high returns, but with lower than normal risk.
Summit’s sources of academic and institutional research include:
- Morningstar
- TD Ameritrade
- Association of Investment Management & Research
- Various Investment Research Organizations
Sources of Current and Historic Worldwide Financial Market and Economic Data include:
- Investment Newsletters, Newspapers, Periodicals, Research Publications, and Professional Journals
- Portfolio Managers
Client Education:
Education is very important to us. Summit is dedicated to educating each client about the different investment portfolio types and how they relate to market volatility, time horizons, and investment returns. It is our goal to ensure that the client understands and agrees with our investment philosophy. Furthermore, we assist each client in selecting a risk tolerance level with which they are comfortable. Ultimately, an investment portfolio is designed to meet the client’s objectives.
Selection of Portfolio Managers for Multiple Manager Accounts:
At Summit, portfolio managers are selected first, then the investment vehicle. By constantly researching and identifying both the strong and weak characteristics of portfolio managers and their investment process, we are assured that our clients are receiving the highest quality management talent. All portfolio managers that we recommend are screened. In addition to private account management, Summit is recognized for our expertise in selecting mutual funds. Over the years, Summit has developed strong relationships within the mutual fund industry. As a result, Summit is able to leverage these relationships to benefit our clients. Also, our clients are offered on a no-load basis, (also known as load-waived), funds that would otherwise carry a commission load. Furthermore, the institutional funds used by Summit may significantly lower expense ratios.
MUTUAL FUND PORTFOLIOS
Lower Volatility Portfolios:
Our Lower Volatility Portfolios consist of a number of different investment portfolios each designed to meet a specific client need. These portfolios are designed for those investors seeking steady returns, with significantly less volatility than the overall market. To meet this objective, portfolio simulation and quantitative analysis are used to screen potential investment opportunities. Many of the funds selected for this portfolio historically have experienced far less downward movement than the overall market. Our Lower Volatility Portfolios combine traditional funds with non-traditional funds that, when combined, historically have exhibited a weak correlation to the overall market. In each portfolio, every combination of funds is rebalanced at least annually or when substantial amounts of new monies are added.
Global Asset Allocation Portfolios:
Summit believes that value in the various investment markets is the long-term determinant of asset prices and recognizes that mis-valuations occur regularly, providing opportunity to enhance performance by active management. Summit blends different types of investments having various capitalization sizes (large and small) and investment styles (value and growth) within each asset class. Summit also determines, through the analysis of current and historic worldwide financial market and economic data, which asset classes and investment styles are under-valued, fairly-valued, and over-valued. Summit may attempt to capitalize on these mis-valuations by weighting higher percentages of the client’s portfolio to the investments that offer the greatest value.
Part of our global asset allocation investment philosophy is to provide broad diversification by using a variety of different asset classes with low correlations to each other. Low correlations of return between asset classes and investment styles help to mitigate performance volatility, which in turn decreases risk while perhaps increasing return. The major asset classes used in our Global Asset Allocation Portfolios include:
- Short-Term Domestic Debt (Fixed Income - maturities of 4 years or less)
- Long-Term Domestic Debt (Fixed Income - maturities of 4 years or more)
- Long-Term International Debt (Fixed Income - maturities of 4 years or more)
- Domestic Equities
- International Equities
- Real Estate Equities
Ultra-Speculative Portfolio:
Summit’s Ultra-Speculative Portfolio focuses on buying high growth stocks, mutual funds, and to a lesser degree growth stocks that are, in effect, mutual funds. These high growth investments include not only such hot growth areas as the Internet, technology, biotechnology, and telecommunication companies, but also include liquid venture capital, emerging market country companies, small developed country international stocks, and aggressive hedge type investments, among others. We call this option the “Ultra-Speculative Portfolio” because frequently the prices for these securities make little sense based upon traditional valuation methods. When in favor, these securities show a tendency to generate spectacular returns. However, potential losses on some of these securities could approach 60% or even more. Predominantly, we utilize mutual funds as the vehicle to acquire these types of securities, although at times, individual equities are used. The mutual funds used could be diversified funds, sector funds, index funds, and perhaps even leveraged funds. We strongly recommend to our clients that no more than five to ten percent of their portfolios be invested in an Ultra-Speculative Portfolio. Account minimum is $100,000 for this strategy.
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COMPREHENSIVE FINANCIAL PLANNING SERVICES
INITIAL DEVELOPMENT:
After a client completes an extensive data questionnaire and delivers all relevant financial documents, Summit will develop a comprehensive financial plan. It will address the following areas:
- Preparation of financial statements including federal and state income tax projections
- Basic finance issues, such as debt structure, liquidity and cash flow issues
- Development of Investment Strategies including tax-sensitive strategies
- Income Tax Strategy Optimization, including providing alternative financial and legal structures
- Education funding
- Retirement planning as well as accumulation and distribution strategies
- Estate tax reduction analysis and philanthropic decision-making
- Trust Services through one of our independent trust company strategic alliances, if applicable
- Survivor needs analysis
- Risk Management/Asset Protection, including analysis of all insurance coverage
- Stock option exercise strategies, if applicable
RECOMMENDATIONS:
As part of the financial planning process, Summit develops specific recommendations addressing each of the above-listed areas. During this first part of the process, the client will meet with a Summit advisor approximately four to seven times, the first year of the client relationship. Each meeting will vary between one and two hours depending upon the complexity of the client’s situation.
- Once the recommendations are made, Summit will, at the client’s request, assist in the implementation of the recommendations where it can. A few examples include:
- Assisting in arranging loans, including mortgages and personal loans with private banking departments of banks and, when necessary, introducing a client with commercial loan needs to an appropriate banking officer
- Providing a banker with appropriate financial information to arrange or renew a loan for the client
- Sending financial information to attorneys so that they prepare the necessary estate documents, including wills, trusts, powers of attorney, health care proxy, and living wills
- Sending tax information to accountants, such as bonus payments and gains and loss information on the sale of securities, etc. in order to prepare the tax return and make appropriate estimated tax payments
- Requesting information on the policy status of life insurance and annuity policies on behalf of the client (This information would include such items as death benefits, cash values, surrender charges, beneficiaries, tax basis, investment return, etc.)
- Requesting the tax basis of securities on behalf of clients
Our objective is not to necessarily reduce the complexity of the client’s financial situation, because sometimes it does make sense to utilize trusts and other strategies to reduce taxes and achieve family friendly objectives. Rather, our goal is to save the client the time and the energy that it takes to manage his/her complex situation so that they are free to focus more closely on matters that mean the most to them.
ONGOING SERVICE:
During the first twelve months of service, as well as all ensuing years that Summit is retained, the client is entitled to unlimited phone calls, meetings, service, and advice. For the second and all subsequent years, retainer fees will be adjusted depending upon the level of complexity of the client’s situation. However, if the client has placed the greater of a minimum of $300,000 of assets under management or 50% of all investable assets with Summit, a financial planning retainer fee will not be charged after year one.
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RETIREMENT ACCUMULATION AND DISTRIBUTION PLANNING SERVICES
Many of our clients are interested in receiving guidance regarding retirement planning services. They especially want to know how much they need to accumulate, when they can retire, how to spend down their assets in the most tax-efficient manner and finally to properly distribute their assets to their heirs upon their death. Summit’s retirement accumulation and distribution planning services address all these areas and more.
- Summit assists each client during this stage of their life in a number of ways including:
- Counseling each client with regard to how to invest and accumulate monies for retirement during their employment years
- Performing extensive retirement calculations both before and during retirement to determine if the clients’ assets will be adequate to live on
- Advising each client as to what assets to spend down
- Guiding each client through the complex regulatory environment as how to distribute these assets from IRA’s and other retirement plans in the most tax-efficient manner, especially if the client is younger than age 59½
- And finally, facilitating the planning and transfer of the assets to the client’s heirs
These services are part of the comprehensive financial planning service.
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DIVERSIFICATION STRATEGIES FOR HIGH EQUITY CONCENTRATIONS
This service is designed to assist clients who have a large percentage of their net worth in one stock. While the simple solution is to sell the stock and pay the taxes owed, it may not be the most optimal one. There are a number of alternatives that can be utilized to maximize value. However, since many of the strategies are long-term in nature, finding the one most comfortable for the client entails a significant amount of planning around the overall financial goals of the client. Summit will review with each client a myriad of strategies including; gifting to family members, charitable-giving strategies, hedging through the use of puts and calls, also known as equity collars, tax loss harvesting or the transfer of a highly appreciated security into a diversified private equity pool of securities, also known as an exchange fund.
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INCOME TAX PREPARATION
Summit offers income tax preparation assistance to individuals. These are extra fee services. The areas of service include, but are not limited to, the following:
- Federal, state and local income tax preparation
- Calculation of federal, state and local estimated quarterly income tax payments
- Individual securities cost (tax) basis calculations
- Audit Management
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FAMILY ESTATE PLANNING AND TRUST SERVICES
Summit works closely with a client’s attorney in the development or revision of a client’s estate documents, including wills, trusts (including Revocable Living Trusts, A/B Credit Shelter Trusts, Irrevocable Life Insurance Trusts, Q-Tip Trusts, Intra-Family Gifts and Family Trusts), powers of attorney, health care proxy, and living wills. Trust services can be provided through one of the independent trust companies that we have strategic alliances with. The use of trusts allows clients to make a conscious decision regarding the passing of their wealth, during their lifetime and upon death, while retaining control.
In addition to estate planning, Summit will assist clients by verifying that their beneficiary designations on retirement plans and life insurance policies coordinate with the language within their estate documents. The titling of assets will also be reviewed to coordinate with the estate documents.
If applicable, additional advanced estate planning techniques that Summit will advise clients on include: Family Limited Partnerships, Limited Liability Companies, Standby Trusts, Foreign Situs Trusts, Medicaid or Special Needs Trusts, Generation-Skipping Transfer Trusts, Qualified Personal Residence Trusts, Self-Canceling Installment Notes, Private Annuities, Sale-Leaseback Transactions, Remainder Interest Transactions and Split Interest Transactions.
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GIFTING
Summit assists its clients in making wise decisions regarding gifting. Gifting has always been a method of reducing an estate. Individuals are permitted to make gifts of up to $13,000 per year to as many individuals as they wish without paying gift tax. Married couples can make gifts of up to $26,000 per year. Individuals can also gift unlimited amounts for tuition payments and medical bills if done correctly. Therefore, careful planning is necessary to stay within the limits, otherwise gift taxes will be assessed. Summit counsels its clients regarding various types of gifts including: securities, real estate and business ownership interest, in addition to cash gifts so as to avoid gift taxation while accomplishing estate planning objectives. Summit also advises those clients who would be affected by the Generation-Skipping Transfer Tax as to how they might avoid the tax.
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PHILANTHROPIC PLANNING
Summit assists clients’ in identifying their personal and family philanthropic values and priorities as well as designing a plan to fulfill them. Individuals can take advantage of different methods of making philanthropic gifts. For example, an individual investor could gift highly appreciated stock, instead of selling the stock and incurring the capital gain taxes. A real estate owner may want to give property, which has low earnings and because the management of the property is time consuming or facing a declining market value, but still is marketable. Here again the owner could avoid the capital gains tax as well as obtain income tax savings from the charitable deduction. Specific strategies that will be evaluated will include: Charitable Gift Annuities, Charitable Lead Trusts, Charitable Remainder Annuity Trusts (CRATs), Charitable Remainder Unitrusts (CRUTs), Net Income Charitable Remainder Unit Trust with Make-up Provisions, Flip Trust, Charitable Pooled Income Funds, Charitable Lead Trusts, and Private and Public Charitable Foundations.
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EVALUATION OF SOCIAL SECURITY OPTIONS AND MEDICARE INSURANCE
A service included in the Financial Planning process is the review of social security benefits. As a client approaches retirement, does it make sense to begin taking benefits at age 62 or should they wait until age 65 or later? Will those benefits be taxable if taken before age 65?
Medicare is a federal health insurance program for persons 65 or older, persons of any age with permanent kidney failure and certain disabled persons, who are eligible to receive Social Security benefits. All eligible participants receive Part A (Hospital Insurance) without charge. Summit assists clients in determining if the client needs Part B (Medical Insurance) protection, which has a monthly premium. The discussions also cover additional protection with Medi-gap Insurance, which is outlined in the section entitled “Evaluation and Selection Assistance with Long-Term Care and Medi-gap Insurance”. If a client is not eligible to receive premium-free Part A benefits and is age 65 or older, the coverage can be purchased.
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EVALUATION/SELECTION ASSISTANCE WITH LONG-TERM
CARE AND MEDIGAP INSURANCE
This service is to assist clients in determining if there is a need for Long-Term Care Insurance. Summit will evaluate the client’s ability to be self-insured. If there is a need for coverage, the client will be aided in choosing a carrier and selecting the benefits that coordinate with their needs. This service is part of the comprehensive financial planning service. Also, if the client so desires, they may want to consider living arrangements other than their present residence, for example: Continuing Care Retirement Communities. For more information refer to the Evaluation and Selection Assistance with Nursing Homes, Assisted - Living Facilities, and At-Home Health Care Living Arrangements.
Summit provides assistance by evaluating Long-Term Care Insurance options and coordinating them with the needs of the client. These areas include:
- Types of coverage
- Amount of coverage
- Term of coverage
- Activities of Daily Living (ADL)
- Coverage for mental illness
- Cost
Medi-gap Insurance fills in the insurance gaps that Medicare does not cover. There are various levels of coverage to choose as well as a wide variation in premiums. Evaluating pricing differences (Insurance premiums are based on factors such as community ratings, thoroughness of underwriting and health considerations) between each insurance company as well as the coverage differences among each of the ten mandated Medi-gap Insurance Plans (A, B, C, D, E, F, G, H, I and J) developed by the National Association of Insurance Commissioners (NAIC), can be difficult, if not downright intimidating. Furthermore, insurability is another consideration. Summit evaluates the clients’ needs and assists them in choosing the Medi-gap Insurance coverage that is right for them. Summit will also coordinate the benefits a client may receive from their previous employer with the need for any additional coverage, including medical, long-term care or life insurance.
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EVALUATION/SELECTION ASSISTANCE WITH NURSING
HOMES, ASSISTED - LIVING FACILITIES, AND AT-HOME
HEALTH CARE LIVING ARRANGEMENTS
When the decision has been made that a client or their loved one has to be moved to either a nursing home, assisted living facility or receive at-home health care, Summit can assist in the evaluation and selection of a facility or service. Also included in the evaluation are Continuing Care Retirement Communities or Lifecare Communities. These facilities not only provide housing for individuals age 62 or older, who are in good health, but also provide on-site assisted living accommodations and skilled nursing care, should the client need it, at virtually no additional cost.
A driving force behind Summit’s emphasis in assisting clients with this issue, is a study published by the American Journal of Public Health in September, 2001, which revealed that for-profit nursing homes tend to be poorly staffed and are cited for deficiencies by government inspectors almost 50% of the time. This is slightly more frequent than nursing facilities administered by non-profit groups or public institutions. In light of the poor record of all these facilities, a careful evaluation is necessary. Summit is available to meet with the director of the program as well as review the facility’s contract, their accreditation and licenses, plus the services that they provide to their patients or residents, as may be applicable.
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