297 Prince Avenue
Our mission is to help you be good stewards of your finances. This includes helping you strive to increase your financial “margin” to have a “Full Cup”.
Our role is to encourage individuals, families, and organizations to become good stewards by becoming more proactive in addressing the key areas of their financial world. Everyone has a plan whether they acknowledge it or not. A proactive plan is designed to meet the personal goals and objectives, which are the most meaningful to individuals and their families. The alternative plan is “no plan,” in which the direction is uncertain with the likelihood of more unexpected outcomes and often detrimental to what is truly important to the individual.
Think about it… What are your priorities? Your calendar and checkbook will reveal what is truly important to you. The question is: Are you financially being proactive or are you only reacting to the events and situations around you?
John Keeble, CFP® (a CERTIFIED FINANCIAL PLANNER® practitioner), ChFC (Chartered Financial Consultant), is an Investment Advisor Representative and a Registered Principal of Cetera Advisors, LLC. Chris Foster is an Investment Advisor Representative and General Securities Representative with Cetera Advisors, LLC. We provide a local, independent, boutique experience for clients, and have access to the resources of some of the largest national firms. The clearing firm or custodian (the organization in which investments are bought and sold and which provides the monthly statements) is Pershing LLC, a subsidiary of the Bank of New YorkMellon, the oldest bank in the United States, and with the custody of assets exceeding $27 trillion. See www.fullcupfinancial.com under “About” for more information about our strategic partners, Cetera and Pershing.
As referenced above, we utilize Pershing as our clearing firm, or custodian (the organization in which investments are bought and sold and which provides the monthly statements). Pershing is a subsidiary of the Bank of New York-Mellon, the oldest bank in the United States.
One of the most important issues is having the correct beneficiaries on your retirement plans (such as IRAs and 401(k) Plans) and other non-probate assets, such as life insurance and annuities. For example, the best Last Will & Testament cannot direct where the assets of retirement plans and other non-probate assets go upon the death of the owner, as the beneficiary designations on these non-probate assets ignore, or trump the will. It is very important to secure a good estate plan (not just a will) and then follow your estate planning attorney’s recommendations in naming the beneficiaries of such assets so that it is consistent with and/or integrated within the terms of your estate plan.
It is important for you to tell us about any personal financial changes or changes in your investment objectives or risk tolerance so that we can adjust your portfolio accordingly. We also want to take the time to review with you in person your investments and any recommended revisions to your portfolio. We believe that meeting on a regular basis is important both to you and to us.
Call us any time at 706-395-0757.
1. To schedule or make changes to an appointment or event, press 1 for Beverly.
2. For servicing or account-specific questions, press 2 for Operations.
3. For Chris Foster directly, press 3.
4. For John Keeble directly, press 4.
Our newsletters, or visit our website at www.fullcupfinancial.com. From there, click on the “Resource Center” tab for information on the five key areas of financial planning including Retirement, Estate, Investment, Insurance, Taxes, and more. For information on the current market and economy, click on the “Market Perspectives” under the “Market View” tab to see weekly, monthly, and quarterly market updates. For all other questions, please call or email us.
Most of our clients’ questions and concerns fall into the five key areas of financial planning, as found in the CFP® Board required areas of study to become a CERTIFIED FINANCIAL PLANNER practitioner.
1. Risk Management / Asset Protection:a. How do I secure my family’s income and retirement if I am disabled or die prematurely?b. How do we protect our retirement assets and investments from Long Term Care costs if I (we) need Long Term Care or Nursing Home Assistance?c. How do I keep ahead of inflation, but also not take too much risk of big losses in the stock market? It is also important to address diversification of advisors and custodians. You need “checks and balances” with your advisors and service providers (such as with your financial planner, CPA and estate planning attorney) as a measure to protect assets and to bring light to any missed planning opportunities and any unnecessary risks concerning the advice being provided.d. How do we best attempt to avoid significant market losses with our investments?e. How do I protect my assets (home, investments, and retirement plans) from lawsuits related to an automobile accident or other areas of risk?f. How do I secure Health / Medical insurance if I retire before age 65 when Medicare begins?
2. Estate Planning:a. Who will help my spouse with the investments when I pass away, or if I am not able?b. How do I reduce or eliminate estate taxes and estate settlement expenses, especially considering that life insurance and the growth of my assets over time are included in my estate tax calculation, and the possibility that the estate tax laws will change?c. How do I correctly title my accounts and name correct beneficiaries to help ensure that my investments are adequately coordinated with my estate plan?
3. Retirement Income Planning:a. How do I plan to avoid running out of money in retirement?b. How much do I need to save each year to meet my retirement income needs?c. What Pension options should I elect? Survivor income with a lower monthly amount or no survivor income with a higher pension for me?d. Which assets do I spend first? My IRA or Non-IRA assets?e. How and when do I calculate Required Minimum Distributions from my IRA?f. How can my non-working spouse contribute to an IRA?g. At what age should I start my Social Security payments?
4. Tax Planning:a. How can I reduce taxes?b. Since only a spouse can affect a 401(k), IRA or other qualified Retirement Plan Rollover in order to continue tax-deferral, how do I reduce estate taxes and income taxes in any IRA when I die?c. Should I convert my IRA to a ROTH IRA?d. Should I pay off my mortgage and lose the mortgage interest deduction?
5. Investments:a. How do I invest for growth, but not take too much risk?b. How do I invest for income and growth, but not take too much risk?c. Should I invest in mutual funds, individual stocks or a mix of stocks and bonds?d. How do I know what fees I am paying in my mutual fund and investment accounts? (Many clients do not realize that they are paying mutual fund expenses - management fees, 12b-1’s, trading costs, etc.)
Our advisory program embraces active money management to provide clients the best of both worlds, the world of mutual funds and private money management. There is an ongoing debate on the practice of money management - mutual funds vs. private money management. Simply put, mutual funds offer good diversification, professional money management, and convenience. However, there are some disadvantages, including negative tax issues (in taxable accounts) and the reduced opportunities to allow the investor to “buy low”.
Private Money Management allows the money manager to hand-select individual stocks and bonds for your account at what is perceived to be a low price (Separately Managed Accounts (SMAs) are another term used for Private Money Management). Some accounts called Separately Managed Accounts (SMAs) purport that they are doing the same thing. Still, most often these other SMA accounts purchase a “block” of stocks and bonds (not adhering to a true “buy low” strategy”), and the account can resemble a mutual fund in that your money is invested in a “pre-assembled” basket of securities without regard to some of these securities being at a high price. Private Money Management does provide diversification, although not to the degree of mutual funds. However, utilizing a privately managed account may allow you to be more opportunistic in an effort to purchase stocks in quality companies at what is believed to be a low price.
You likely have been paying some type of fee or commission or experiencing some other cost for investing. In no-load mutual funds, brokerage accounts, and in mutual funds in 401(k) Plans, you pay the annual management fees (expense ratios) of the mutual funds in which you invest. You may not see these fees, although they are disclosed in the mutual fund prospectus, as these fees are deducted before you see the net results of the fund manager. Also, mutual funds are subject to additional trading costs not articulated in the prospectus. Still, they are often explained in the “Statement of Additional Information” of most mutual funds.
We disclose all fees, including, if applicable, advisory, mutual fund fees, and ticket charges, when the accounts are established and you receive a notice of the fees (in your Pershing statement), which are automatically debited from your account.
To be opportunistic, we take our time to get invested. There are times when bonds are paying a reasonable return with little risk of fluctuation. Still, there are other times when bonds are subject to variation due to an interest rate increase, or other factors. We will, therefore, use money market accounts, T-Bills, or other short-term securities as our “dry powder” with the strategy of waiting to buy securities at a lower, more attractive price. Keep in mind that these securities are liquid, thus allowing us to strike while the iron is hot. You could miss an opportunity being locked up for 12 months in your CD. Of course, there are situations where a one-year CD is appropriate.
The day that you no longer feel the urge to ask this question will be the day you truly appreciate fundamental value investing. Suppose you knew of a company that you believed was an excellent company, and you wished to invest in the company. The company has paid dividends for 20 years, has had increasing profit margins over many years, increasing ROA (Return on Assets), ROE (Return on Equity) and has had manageable, decreasing debt, and a management team which has been in place for many years. However, the price of the company has been too high. You have been watching this company for many years, and then you notice the stock price starts to fall. You resist buying too early and wait until the price drops to what you believe to be a fair price. You dip your toe in the water and buy just a few shares, but you really would like to own more shares. You are not sure if the price will go back up or will continue to fall. You want to buy more, but your investment model suggests that the price would need to fall more to justify buying more shares. Now, answer this question: Do you want the stock price to rise or fall at this point? If you said “fall”, then you understand why the stock prices on newly purchased companies in your portfolio may fall during the purchase period.
The yield of an investment is the interest or dividends which that investment pays to you on a regular basis such as monthly, quarterly, or semi-annually. For example, a CD which is paying 2.0% has a yield of 2.0%, and if compounded daily will yield slightly higher than 2.0%. A bond with a coupon or interest payment of 4.0% has a yield of 4.0%. Still, your total return at the end of the year is determined by adding the yield to the increase or decrease of the price of the bond. For example, TIPS (Treasury Inflation Protected Securities), from their inception in 1998 have paid yields of 2% to 4%, but total returns of close to 6% or 8% (assuming your purchased them before 2008), because the price of the bonds rose due to various factors, including the “flight to quality” during volatile stock market periods. Another example of total return is with a stock or mutual fund. If the stock or fund has a yield of only 1.5%, but the price of the fund increases by 7.0%, then the total return for the period is 1.5% + 7.0% = 8.5%. However, only the yield is shown on the quarterly statement. This sometimes-useful figure (yield) was first found on bank trust account statements. This figure helped the trust officer estimate the income which a portfolio could generate for a trust beneficiary, which is the income the portfolio would generate without spending the corpus or principal. Brokerage and advisory statements usually show the yield for the same purpose, but just remember, the yield is only part of the story! Don’t compare this number by itself with a CD or other investment without understanding the total return of the investments.
Not necessarily. To determine how your original investment has grown, look at the initial investment (not including the reinvested dividends) and compare this original investment to the current market value. This will reveal how your investment has grown. The “cost basis” is for tax purposes only. For example, you invest $10,000 on 1/1/2000. The fund pays dividends totaling $300 annually, so at the end of 5 years, or 12/31/2005, assuming that there is no growth (no increase in the price of the fund). The market value at the end of the 5th year would be $11,500. The cost basis would be reflected as $11,500 (your original $10,000 plus the offspring of your investing (dividends) $300 / year for 5 years). If you sold the fund, you would have no long-term capital gain and no taxes to pay. However, keep in mind that your original investment was $10,000, so your investment grew by $1,500 (i.e., the dividends). Of course, we expect that the price of the fund will grow, but there are times when the price may fall, but you may still experience a positive investment return because of the dividends paid. Summary: Do not assume that you have lost money always when you see a negative gain/loss value. You pay taxes on your dividends paid each year, and the government is kind enough to let you add the dividends to your starting point when you calculate gains or losses.
Please note that with individual bonds (not bond mutual funds), or even with mutual funds when dividends and interest are paid to the money market account (and not reinvested) that the interest is added to the money market account, thus increasing your total portfolio value. Still, it is not necessarily seen in the value of the bond or the mutual fund. Sometimes the bond / mutual fund may show a loss, but in fact, has contributed to an overall positive return. Still, the additional value is reflected in the money market account to be later invested in other opportunities. With TIPS (Treasury Inflation Protection Securities), there are two types of additions to the value: the interest which is paid to the money market accounts and the inflation increase (if there is inflation), but this is added to the principal of the bond, and not the money market account.
Any bond can fluctuate in value as interest rates move, or from other factors. If you bought a three-year CD paying 2.0% and just a few months later, you saw a three-year CD paying 3.0%, have you lost money? Not really, but you have lost an opportunity (You may recall the term “Opportunity Cost” from your economics class). In the world of bonds, if rates in the market place rise, then the bonds you own may reflect on your statement a lower value, because a bond of the same type could be bought at a better yield than the one you own. Generally, when interest rates in the market rise, the price of your bonds fall, and when interest rates fall, the price of your bonds rise. It is important to understand that bonds owned individually (as opposed to those owned in a bond fund) can offer more security, in that you will get the face value of the bond when the bond matures. This is not so with bond mutual funds. However, bond mutual funds can offer better diversification and professional management. We use a combination of both.
Hopefully you have determined by now that a key ingredient to growing your money is protecting your money from market losses, and other areas of risks. Index Funds and Exchange Traded Funds are non-managed baskets of stocks which represent a total market, such as the 500 stocks in the S&P 500, or stocks in a particular industry. These securities carry 100% of the risk of the market. You are buying the good and bad companies, the relatively underpriced and overpriced companies. This is a type of gambling or speculation, and we do not recommend it. We recommend utilizing “active management,” including professional money managers with favorable track records over time concerning the indexes, and do not utilize “passive management strategies.” Statistics may show for various periods that passive management appears to be superior to active management. Still, we do not embrace the concept of intentionally buying poor companies for our clients’ portfolios which most all of the passive management methods do because various sectors of stocks are purchased rather than the purchase of companies individually based on their merit. Based on our core beliefs about investing, we embrace fundamental, bottom-up security selection.
You cannot avoid RMDs, so you may as well make the best of the situation. You can appreciate the possible tax-deduction you enjoyed when money was contributed to your retirement plan and the tax-deferral while the money was growing in your account. Now that you are required to take some out, you can appreciate the fact that the money won’t be subject to income tax when you die, but will be taxed as it grows going forward. You may want to consider investing in tax-deferred annuities*, municipal bonds, or low turnover stock portfolios. We usually recommend that you transfer the RMD to a non-IRA account, which we manage so we can continue to manage the money. You do not need to take the money and spend it if you don’t need the income. Many clients find it fulfilling to take this money each year to fund a Long-Term Care Insurance policy to protect from a long-term care need cannibalizing a portfolio in later years. The fourth quarter is a good time to take RMD (not too close to the year-end), and it is a good time to meet with us to discuss investment strategies and your portfolio.
Most individuals are under-insured with respect to liability insurance on their home and automobile. This is not about hazard insurance (ex. fire insurance if your home is damaged or destroyed), but about liability (a risk that is difficult to measure both with the probability of occurrence and the magnitude of the risk if such an event were to occur). For example, suppose that you caused an automobile accident and a breadwinner earning a $100,000 salary with three dependents, can never walk or work again. How much do you think the judgment would be? How much liability insurance do you have? A good guess would be that the judgment would be in excess of $1,000,000. The average person we encounter has only $100,000 to $300,000 in liability protection on their home and auto. The same type of risk is present when someone is working on your home, or when anyone is on your premises. Call us about how to address this issue. We don’t sell property and casualty (P&C) insurance, but we can equip you to talk with your P&C agent.
We suggest you retain the most recent ADV Part 2, which we provide to you, your opening account forms and contracts, and prospectuses and replace them as you receive updates. Keep 1099’s and year-end statements for 7 years. You do not need to save each monthly and quarterly statement.
Yes. If you have determined that you do not want to take the risk of the stock market with a portion, or all of your portfolio, we can help design a three-part investment and savings strategy. This will have little or no risk of the stock market depending on your risk tolerance by utilizing a three “bucket” allocation model described as follows: “Blue money” which includes cash, CD’s, Treasury Bills, “Green Money” which includes guaranteed investments such as annuities* and other products provided by life insurance companies, and “Red Money” which includes individual blue chip stocks in professionally managed accounts and mutual funds.*Caution: Be careful with the numerous annuity products in the market place. Some may not be what you expect when you examine the annuity features. There are many possible fees associated with annuities. We can help determine if an annuity is suitable for your situation. There is a surrender charge generally imposed during the first 5 to 7 years that you own the contract. Withdrawals before age 59 ½ may result in a 10% IRS tax penalty, in addition to any ordinary income tax. The guarantee of the annuity is backed by the financial strength of the underlying insurance company.
If one particular spouse handles most of the financial management, including investments and financial planning, who would the non-financial spouse turn to and receive financial advice from when the financially oriented spouse passed away? We like to make sure that both spouses, regardless of individual account holdings, have a plan that they are confident in if either spouse passes away.
Whereas there is no dollar minimum to become a client, there is a requirement to become a client. You must convince us that you need our help. We offer free educational workshops and classes and complimentary strategy sessions, or initial consultations. During these initial consultations, you would explain your intermediate and long-term objectives as well as describe your primary concerns and your overall financial situation. We would then ask you several questions to better understand your needs and concerns. After a discussion where we have gathered sufficient information to identify areas that you would like to address, then we would describe how we work, how we charge for our services, and a general description of what we would offer as solutions to your needs and objectives. We would then ask, “Would you like us to prepare an analysis of your information and then have a follow-up analysis (second) meeting?” If the answer is “yes”, then we set a date on the calendar and usually request a few more pieces of information for you to provide. If the answer is “no”, then we are okay with that because we know that we are not a fit for everyone. We would rather you tell us “no” than spend any more of your or our time if it is not needed. If you do request a follow-up meeting, then we would prepare an analysis of your information with the expectation that you plan on moving forward with us as your financial advisor, which would include addressing the five key areas of financial planning and would involve us managing your investments. You would make a final decision at the analysis (the second) meeting of whether to move forward and become a client or not. Yes or no, and no is okay! If you decide to move forward, then we will have you sign the appropriate forms and paperwork to establish new accounts.
If you prefer to invest in fee-based advisory accounts, which would include equites (stocks and stock mutual funds), then we would explain the fees, which average about 1.25%. You may choose to invest in fixed accounts such as annuities that do not involve advisory fees but may be subject to charges for early withdrawal. You may decide on a combination of investments, which include (as referenced above, a model allocation where we describe certain levels of risk as green, blue, and red. “Blue Money” (cash and other safe money), “Green Money” (which may include fixed products such as annuities), and “Red Money” (which would include assets subject to more risk such as stocks).
Pershing would be the custodian of your accounts (see page one of this FAQ where Pershing and Cetera are discussed). You would have online access through Pershing to your accounts by computer and mobile phone. You would receive a statement every quarter for each account and a consolidated summary statement of all of your accounts each month. You can view your accounts at any time online through the Pershing portal. If you decide to become a client, we would then set a third meeting to occur in the following weeks to provide the financial analysis binder and a review of your new statements on your accounts. Going forward, we would then invite you in for a six-month review, although some clients prefer to meet only annually. We always welcome telephone calls and emails from clients and meetings by appointment whenever needed. We encourage open and frequent communication.
*Investments in securities do not offer a fix rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions and, when sold or redeemed, you may receive more or less than originally invested. No system or financial planning strategy can guarantee future results. Therefore, no current or prospective client should assume that future performance or any specific investment, investment strategy or product will be profitable.
*In addition to fees paid for advisory services with respect to your investment in mutual funds, you may pay additional mutual fund expenses, including management, trading and marketing fees. Mutual fund expenses, 12 (b)-1 fees, and any deferred sales charges are fully disclose in the mutual fund prospectus.
*Contact your investment adviser representative for a listing of all fees, charges and expenses related to this program. Such information is also listed in the firm's Form ADV Part 2A and disclosure brochure as provided.
*Investing in mutual funds is subject to risk and loss of principal. There is no assurance or certainty that any investment strategy will be successful in meeting its objectives.
Investors should consider the investment objectives, risks and charges and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds. Contact your Registered Representative at 706.395.0757 to obtain a prospectus, which should be read carefully before investing or sending money.