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Western International SecuritiesMarlin Smith, Wealth Manager, Corporate Services and BenefitsTim Tanner, Wealth Manager, Corporate Services and BenefitsLes Brockhurst, Wealth Manager, Corporate Services and BenefitsMichael Gorak, Wealth Manager, Corporate Services and Benefits W. Steven Temple, Wealth Manager, Corporate Services and Benefits

Pasadena, CA Leading Wealth Advisor

How can I keep my retirement funds intact if there is another downturn? By Marlin Smith

Recovering losses from inevita-ble market downturns that all long-term investors will face is difficult enough. Taking with-drawals from retirement accounts during those downturns makes recovery from those down years even more daunting.

All markets and investments experience periods of volatility and downturns. And diversifica-tion may help smooth over some of these down years. But losses in the initial years of retirement are especially devastating for a retire-ment portfolio.

Traditionally, advisors look to diversify with a mixture of equity and fixed income to protect against market volatility. However, in a retirement plan, cash-value life insurance is regularly overlooked as a powerful diversification tool. By strategically timing tax-free withdrawals and loans from the cash value in a life insurance pol-icy during down years, investors can avoid locking in losses in

primary retirement accounts, giv-ing them time to recover.

Assume a retired 65-year-old executive has $3 million invested in an equity heavy portfolio. The executive plans on an annual with-drawal of $210,000 (plus an infla-tion rate increase of 1 percent per year). It’s important to remember that these distributions from capi-tal gains, dividends and interest are taxable.

In any rolling 20-year period since 1950, the S&P 500 has had at least four years of losses. The pe-riod from 1973–1993 had five down years, two of which were negative years that occurred in the initial two years of that cycle. Combining early losses with annual withdraw-als during this time, our executive would have had $1,334,373 left in the retirement account after 20 years. This is 56 percent less than the starting amount of $3 million.

Now, look at what would have happened had the executive pre-pared for these downturns 20 years

ago. By utilizing strategic insur-ance planning, the executive would have allocated $21,000 per year to a $1.5 million cash-value life insur-ance policy, which would have resulted in an accumulated cash value of approximately $700,000.

With this plan in place, our executive may now take tax-free withdrawals from the insurance policy’s cash value, not from retire-ment accounts. By taking the after-tax equivalent amount of $151,200 (using a 28 percent effective tax bracket) from the policy and not tapping into retirement accounts in those five down years, our ex-ecutive’s outcome has signifi-cantly improved, from $1,334,373 to $10,761,000.

In addition to protecting your family from catastrophic loss dur-ing your working years, a cash value insurance policy may pro-vide an alternative to help you avoid tapping into retirement ac-counts during market downturns and provide added flexibility.

For the illustration, the hypothetical model assumes the retirement accounts were invested 100 percent in the S&P 500 index. Investors cannot invest directly into the S&P 500 index. Model adapted from “Smooth Sailing on Uncertain Waters,” AXA Advanced Markets, March 2014. The policy premium and death benefit amounts used for this case are intended only to help demonstrate the planning concept discussed and not to promote any specific product. The values are broadly representative of rates that would apply for a policy of this type and size for the insured’s health and age. Individual circumstances will differ. Under current federal tax rules, you generally may take federal income-tax-free withdrawals up to your basis (total premiums paid) in the policy or loans from a life insurance policy. Certain exceptions may apply. Please consult your tax and insurance professional. Past performance is not a guarantee of future results. Benefits received are subject to the claims paying ability of the insurance company.

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“Cash-value life insurance is regularly overlooked as a powerful diversification tool.”—Marlin Smith

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Financial Services Experience 100+ years (combined)

Methods of Compensation Fixed fees and asset based, commission (investment and insurance products)

Websitewww.wisdirect.com

Professional Services Provided Planning, investment advisoryand corporate services: 401(k), insurance, executive compensation, money management and supplemental bene� t platforms

Primary Custodian for Investor Assets Pershing

Email msmith@wisdirect.com mgorak@wisdirect.com ttanner@wisdirect.com stemple@wisdirect.com lbrockhurst@wisdirect.com

Western International Securities 70 South Lake Avenue, 7th Floor, Pasadena, CA 91101 626.529.2357

Marlin Smith has held managerial positions in the investment and financial planning industry since 1994. His team works with executives, business owners and family offices to design wealth preservation and tax minimization strategies. They also implement 401(k), insurance, money management and supplemental benefit platforms for businesses, non-profits, civic institutions and their employees. Prior to Western, Marlin was a wealth manager at Citigroup-Smith Barney, specializing in corporate clients. Before Citigroup, Marlin worked with international accounts at JP Morgan in New York and London. Marlin earned his BA from Harvard University. After graduating from Harvard with honors, he graduated from the London School of Economics with both MSc and MPhil degrees, specializing in international relations, economics and finance. He and his wife met in London and now have three children.

About Marlin Smith

Left to right: Tim Tanner,

Les Brockhurst, Marlin Smith,

Michael Gorak, W. Steven Temple

How to reach Marlin Smith

For more information about how we can help you or your organization, please call any member of our team at 888.793.7717 or contact Marlin by email at msmith@wisdirect.com.

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Marlin Smith Wealth Manager, Corporate Services and Benefits

Tim Tanner Wealth Manager, Corporate Services and Benefits

Les Brockhurst Wealth Manager, Corporate Services and Benefits

Michael Gorak Wealth Manager, Corporate Services and Benefits

W. Steven Temple Wealth Manager, Corporate Services and Benefits

t 70 South Lake, 7th Floor

Pasadena, CA 91101Tel. 626.529.2357