time tested presentation 0413
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Experience the Power of Membership
A Time-Tested Approachto Retirement Investing
Before investing, carefully read the prospectus(es) or summary
prospectus(es) which contain information about investment
objectives, risks, charges, expenses and other information all of
which should be carefully considered. For current prospectus(es)
call (800) 874-6910. Investing involves risk. The investment
return and principal value will fluctuate and, when redeemed, the
investment may be worth more or less than the original purchase
price. Mutual funds and money market funds are not insured
or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency. Although money market funds
seek to preserve the value of $1 per share, it is possible to lose
money by investing in these funds.
Asset Allocation or the use of an investment advisor does not
ensure a profit nor guarantee against loss.
Disclosures
3
manage investments for:
– 52.9 million people
– $3.2 trillion dollars
&
Defined benefit plan sources: Employee Benefit Research Institute and U.S. Census Bureau
Public Retirement
Systems
CorporatePension
Plans
use a time-tested investment approach
Institutional Pension Plans
4
They follow a disciplined process to actively manage retirement assets
They analyze historic asset class returns to construct diversified portfolios with acceptable risk parameters
They seek to reduce risk through asset allocation and diversification techniques
utilize time-tested investment strategies
Institutional Pension Plans
5
Common Mistakes
individual investors make
Buying investments after the market has made big gains
Selling investments after the market has declined
Overreacting to short-term market events
Failing to adhere to a long-term investment strategy
Taking on additional risk by failing to diversify properly
6
time-tested approach as the professionals?
Are you using the same
Your Portfolio
Typical STRS Pension Portfolio
Typical Corporate Pension Plan
Portfolio
11%
28%
39%
10%
30%
40%
20%22%
These asset allocation portfolios are for illustration purposes only. They do not use any specific indices and are not available for direct investment. The public and corporate portfolios above are based on interviews with officials at 577 corporate and 234 public pension plans conducted by Greenwich Associates.
Money Market Funds Fixed Income US Equity
International Equity Alternative Investments
7
Your retirement account deserves the same level of investment expertise and portfolio diversification as the nation’s largest pension plans.
8
A simple four step process to build wealth for retirement
Let’s focus on the investment aspects of the program
The PlanMember Services Program
utilizes time-tested investment strategies
1 2
34
ADVICE
SUPPOR
T
REVIEWANALYSIS
SERVICESPROGRAM
PLANMEMBER
9
The PlanMember Services Program
Create and adhere to sound investment policies and procedures
Regularly evaluate current economic, political and market events
Apply disciplined process to the management of investment portfolios
Maintain a long-term outlook for retirement investments
follows a disciplined process
10
analyzes asset class data to construct diversified portfolios
The historic asset class returns are not intended to imply a guarantee of return on the principal investment and are not indicative of the past or future performance of any portfolio or fund in the PlanMember Services Program. The asset class returns are provided by Ibbotson Associates for the period beginning January 1, 1962 and ending December 31, 2011. Large-company stocks measured by Standard & Poor’s 500 index. Small-company stocks measured by the fifth capitalization quintile of stocks on the New York Stock Exchange from 1962-1981, the performance of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to March 2001 and the DFA Micro Cap Fund from April 2001 to December 2011. Corporate bonds measured by the Solomon Brothers Long-Term High Grade Corporate Bond Index. Intermediate government bonds measured by a one-bond portfolio with approximate maturity of five years. Treasury bills measured by one-bill portfolio with approximate maturity of 30 days. All results assume reinvestment of dividends on stocks or coupons on bonds and assume no taxes. Source: Ibbotson Associates.
15%
10%
5%
0%
7.11% 7.52%
9.80%
13.44%
5.18%
7.70%
U.S. Treasury
Bills
Int-Term Gov’t Bonds
Long-Term Gov’t Bonds
Corporate Bonds
Large Company
Stocks
Small Company
Stocks
The PlanMember Services Program
Historic Asset Class ReturnsJanuary 1, 1963 - December 31, 2012
Average Annual Returns
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Sample PlanMember
Services Portfolio
15%30%
50%
5%11%
28%
39%
10%
30%
40%
20%22%
These asset allocation portfolios are for illustration purposes only. They do not use any specific indices and are not available for direct investment. The public and corporate portfolios above are based on interviews with officials at 577 corporate and 234 public pension plans conducted by Greenwich Associates.
The PlanMember Services Program
seeks to reduce risk through portfolio diversification
Typical STRS Pension Portfolio
Typical Corporate Pension Plan
Portfolio
Money Market Funds Fixed Income US Equity
International Equity Alternative Investments
12
historically have more long-term potential than fixed-rate alternatives
Diversified Portfolios
Conservative Portfolio composed of 40% large-company stocks, 5% small-company stocks, 20% corporate bonds, 20% intermediate government bonds and 15% treasury bills. Moderate Portfolio composed of 55% large-company stocks, 10% small-company stocks, 12.5% corporate bonds, 12.5% intermediate government bonds and 10% treasury bills. Aggressive Portfolio composed of 70% large-company stocks, 15% small-company stocks, 5% corporate bonds, 5% intermediate government bonds and 5% treasury bills. Large-company stocks measured by Standard & Poor’s 500 index. Small-company stocks measured by the fifth capitalization quintile of stocks on the New York Stock Exchange from 1962-1981, the performance of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to March 2001 and the DFA Micro Cap Fund from April 2001 to December 2011. Corporate bonds measured by the Solomon Brothers Long-Term High Grade Corporate Bond Index. Intermediate government bonds measured by a one-bond portfolio with approximate maturity of five years. Treasury bills measured by one-bill portfolio with approximate maturity of 30 days. All results assume reinvestment of dividends on stocks or coupons on bonds and assume no taxes. Source: Ibbotson Associates. Charts are for illustration purposes only and do not predict or depict any mutual fund or portfolio offered through PlanMember Securities Corporation.
Aggressive Portfolio Moderate Portfolio Conservative Portfolio 7% Fixed 5% Fixed Inflation
19631965
19671969
19711973
19751977
19791981
19831985
19871989
19911993
19951997
19992001
20032005
20072011
20122009
$200,000
$400,000
$600,000
$1,000,000
$1,200,000
$1,400,000
$1,263,615
$929,452
$650,466
$294,570
$114,674$75,841
$800,000
Hypothetical Growth of $10,000 Portfolio – From January 1, 1963 to December 31, 2012
12
Historically, Diversified Portfolios have more long-term potential than fixed-rate alternatives
Conservative Portfolio composed of 40% large-company stocks, 5% small-company stocks, 20% corporate bonds, 20% intermediate government bonds and 15% treasury bills. Moderate Portfolio composed of 55% large-company stocks, 10% small-company stocks, 12.5% corporate bonds, 12.5% intermediate government bonds and 10% treasury bills. Growth Portfolio composed of 70% large-company stocks, 15% small-company stocks, 5% corporate bonds, 5% intermediate government bonds and 5% treasury bills. Large-company stocks measured by Standard & Poor’s 500 index. Small-company stocks measured by the fifth capitalization quintile of stocks on the New York Stock exchange from 1962-1981, the performance of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to March 2001 and the DFA Micro Cap Fund from April 2001 to December 2011. Corporate bonds measured by the Solomon Brothers Long-Term High Grade Corporate Bond Index. Intermediate government bonds measured by a one-bond portfolio with approximate maturity of five years. Treasury bills measured by one-bill portfolio with approximate maturity of 30 days. All results assume reinvestment of dividends on stocks or coupons on bonds and assume no taxes. Source: Ibbotson Associates. Charts are for illustration purposes only and do not predict or depict any mutual fund or portfolio offered through PlanMember Securities Corporation.
Hypothetical Growth of $10,000 PortfolioFrom January 1, 1963 to December 31, 2012
Growth Portfolio Moderate Portfolio Conservative Portfolio 7% Fixed 5% Fixed Inflation
19631965
19671969
19711973
19751977
19791981
19831985
19871989
19911993
19951997
19992001
20032005
20072011
20122009
$200,000
$400,000
$600,000
$1,000,000
$1,200,000
$1,400,000
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
$1,263,615
$929,452
$650,466
$294,570
$114,674$75,841
$800,000
13
reduces portfolio risk
Conservative Portfolio composed of 40% large-company stocks, 5% small-company stocks, 20% corporate bonds, 20% intermediate government bonds and 15% treasury bills. Moderate Portfolio composed of 55% large-company stocks, 10% small-company stocks, 12.5% corporate bonds, 12.5% intermediate government bonds and 10% treasury bills. Aggresive Portfolio composed of 70% large-company stocks, 15% small-company stocks, 5% corporate bonds, 5% intermediate government bonds and 5% treasury bills. Large-company stocks measured by Standard & Poor’s 500 index. Small-company stocks measured by the fifth capitalization quintile of stocks on the New York Stock Exchange from 1962-1981, the performance of the Dimensional Fund Advisors (DFA) Small Company Fund from 1982 to March 2001 and the DFA Micro Cap Fund from April 2001 to December 2011. Corporate bonds measured by the Solomon Brothers Long-Term High Grade Corporate Bond Index. Intermediate government bonds measured by a one-bond portfolio with approximate maturity of five years. Treasury bills measured by one-bill portfolio with approximate maturity of 30 days. All results assume reinvestment of dividends on stocks or coupons on bonds and assume no taxes. Source: Ibbotson Associates. Charts are for illustration purposes only and do not predict or depict any mutual fund or portfolio offered through PlanMember Securities Corporation.
Long-Term Investing
Best and Worst Case Portfolio Performance 10 and 20 Year Holding Periods
From January 1, 1963 to December 31, 2012
Conservative Moderate AggressiveBest 15.41% 16.49% 18.24%
Worst 2.03% 0.70% -0.75%
Average 9.26% 9.99% 10.62%
Best 13.81% 15.47% 17.06%
Worst 7.30% 7.42% 7.45%
Average 10.25% 11.13% 11.91%
20 YEAR PERIODS
StocksBondsCash
10 YEAR PERIODS
14Your Portfolio Allocation should gradually change as you move through your career.
makes the most sense for you now?
Which Portfolio Strategy
Early Career Mid Career Late Career
Portfolio
IMore Conservative
Portfolio
II
Portfolio
IIIPortfolio
IVPortfolio
V
More Aggressive
A PlanMember Portfolio for Every Career Stage
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Personalized plan and savings analysis
Online retirement plan review
Market and portfolio strategy updates, membership newsletters and quarterly consolidated statements
Online account access and toll-free customer service support
Dedicated Financial Advisor
additional benefits
PlanMember Services Program
Economic Review and Outlook
The recent battle in Washington over the debt ceiling culminated with an agreement to raise the debt limit on the condition that the Federal government enacts significant spending cuts. While this agreement avoided a catastrophic U.S. default, the deficit reduction requirements put a burden on an already weakened economy. Unfortunately, there seems to be wide agreement at all levels of government that deficits must be curtailed, either through reduced spending or tax increases. These beliefs were only reinforced when Standard & Poor’s (S&P) downgraded long-term U.S. debt. We have already begun to witness the effects of government spending cuts to reduce the deficit (austerity), with many economic indicators falling short and growth forecasts being revised downward. In addition, the extension of austerity policies in Europe and Asia will likely produce economic slowdowns for virtually all countries. These
slowdowns could accelerate market weakness across the globe.
Financial market volatility has increased recently, due in part to a wave of poor economic statistics. The consensus forecast for GDP in 2011 has been revised down from 2.7% to 1.7%, while at the same time the forecast for unemployment was raised from 8.7% to 9.0%. Such downward economic pressure took a toll on the stock market, with the S&P 500 down 5.4% year-to-date as of September 2, 2011. Unfortunately, the push for austerity may only serve to prolong economic weakness.
Japan has experienced an austerity experiment since its market peak in 1989. Errant monetar y and f iscal policy has pushed the Japanese economy into and out of recessions for more than twenty years. Interest and inflation have remained near zero with a surging national debt. Some economists
Portfolio
V
Portfolio
IV
Portfolio
III Portfolio
IIPortfolio
IMore Aggressive More Conservative
Early Career Mid Career Late Career
PlanMember ServicesASSET ALLOCATION PORTFOLIOS
The PlanMember Ser vices Program offers a professionally-managed asset allocation portfolio for each stage of your life. Each PlanMember Portfolio consists of a strategic blend of mutual funds and is managed with the same time-tested approach used by the pension plans of the nation’s largest employers.
In l ight of t hese recent economic developments, we have made adjustments to the PlanMember Services Portfolios in an effort to reduce their volatility. These adjustments include increasing fixed-income allocations and reducing equity allocations across all portfolios. Fixed-income assets have
primarily gone into GNMA and long-term U.S. government bonds, while high-yield bond exposure has been reduced. In addition to reducing the overall equity exposure, we have also shifted from international equity funds to domestic large-cap stock funds.
believe that we are on the same road to a period of stagnation, low interest rates and low inflation where economic growth remains close to zero. Without the implementation of a growth solution, America may be faced with more hard times. On the positive side, as the economy begins to unwind, the policy makers are getting a wakeup call and are being forced to focus on making decisions that can turn the economy in a positive direction.
Note: Current PlanMember Portfolio allocations and performance information can be accessed through the website address listed on your statement, by visiting www.planmember.com or by calling the PlanMember Service Center at (800) 874-6910.
PlanMember Services Portfolio Strategy
© 2011 PlanMember Financial Corporation Quarterly MO Portfolio4Q11
Before investing carefully read the prospectus(es) which contain information about investment objectives, risks, charges, expenses and other information, all of which should be carefully considered before investing. For current prospectus(es) call (800) 874-6910. Investing involves risk. The investment return and principal value will fluctuate and, when redeemed, the investment may be worth more or less than the original purchase price. Asset allocation or the use of an investment manager does not ensure a profit nor guarantee against loss. Past performance does not guarantee future results. Foreign securities pose additional risks that are not associated with U.S. domestic issues, such as changes in currency exchange rates and different governmental regulations, economic conditions and accounting standards. Small and mid-cap investments may have additional risk including greater price volatility.The information and opinions in this report have been written by the investment staff of PlanMember Securities Corporation. Opinions, estimates and projections in this report constitute PlanMember’s judgment and are subject to change at any time without notice. The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but PlanMember makes no representation as to the accuracy or completeness of such information. This report is provided for information purposes only. It is not to be construed as an offer to buy or sell nor a solicitation of an offer to buy or sell any financial instrument or to participate in any trading strategy. The financial instruments discussed in this report may not be suitable for all investors. Investors must make their own investment decisions based upon their specific financial situations and investment objectives.
Representatives registered with and only securities and advisory services offered through PlanMember Securities CorporationA registered broker/dealer, investment advisor and member FINRA/SIPC
6 1 8 7 C A R P I N T E R I A A V E , C A R P I N T E R I A , C A 9 3 0 1 3
Shrinkonomics
Fourth Quarter 2011
PlanMember Services® Program
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fall 2011
Planning your future…today®
Continued on Page 2
® Membership News
INCOME AND
INVESTMENT
PLANNING IN
RETIREMENT
Putting Your Savings
to Work for You
FEATURED IN THIS ISSUE:
Get Smarter with the
New PlanMember Online
Putting Your Savings
to Work for You
Money Lessons for Parents
to Teach their Kids
If you’re one of the millions of Americans getting ready to retire, you’ve worked
hard most of your of life saving for your future. Now it’s time to put your nest egg
to work for you. As you prepare for your golden years, one of the first things you
should understand is that investing IN retirement is much different than investing
FOR retirement. The transition from the accumulation to distribution phases
of your life will require some significant changes to your investment objectives
and strategy in order to make the most of your hard-earned savings. While your
portfolio will still need to maintain some emphasis on growth, your primary focus
now shifts to generating the income you will need to live comfortably in retirement.
16
for successful retirement investing
Follow a time-tested approach for long-term retirement investing
Work with a professional investment advisor to manage your retirement assets
Implement a long-term retirement investment strategy
Monitor your progress with an online retirement plan review and other ongoing communications
Summary of Key Steps
17
Complimentary Plan and Savings Analysis
Joining PlanMember
– Provides an estimate of Social Security and/or state retirement system benefits
– Estimates savings necessary to reach retirement income goals
– Calculates payroll contribution amounts to meet long-term savings goals
– Recommends a suitable PlanMember Asset Allocation Portfolio
Your Customized Retirem
ent Saving and Investment Plan
Representative registered with and securities and advisory services offered through PlanMember Securities Corporation
A registered broker/dealer, investment advisor and member FINRA/SIPC
6187 Carpinteria Ave, Carpinteria, CA 93013, (800) 874-6910.
Before investing, carefully read the prospectus(es) or summary prospectus(es) which contain information
about investment objectives, risks, charges, expenses and other information all of which should be carefully
considered. For current prospectus(es) call (800) 874-6910. Investing involves risk. The investment return
and principal value will fluctuate and, when redeemed, the investment may be worth more or less than
the original purchase price. Mutual funds and money market funds are not insured nor guaranteed by
the Federal Deposit Insurance Corporation or any other government agency. Although money market
funds seek to preserve the value of $1 per share, it is possible to lose money by investing in these funds.
Asset Allocation or the use of an investment advisor does not ensure a profit nor guarantee against loss.
Time-TestedPresentation0313
Thank you
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