section 1 - The American College Online Learning Center

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(3) Tax control17. Conversations in product selectiona. When would you consider:18. Ethical issues(1) Individual equities over stock mutual fund?(2) Variable annuity over stock mutual fund?(3) Individual bonds over bond mutual fund?(4) Deferred annuity over bond mutual fund?a. Using one investment company or branching out?(1) Expertise(2) Asset classes(3) Breakpointsb. Commission(1) Share type(2) Short term compensation or long-term clientsc. Alternative product choices(1) Mutual funds in IRAs(2) Deferred annuities in IRAs19. Assess client and fund objectives.a. Match client objectives to fund investment policy.b. Analyze client risk tolerance.(1) Does client risk tolerance match the client investment objectives?(2) Assess the capacity and ability to take risk.c. Analyze the fund components.(1) Do the fund components match the fund investment objectives?(2) Assess past performance, style drift.(3) Read the prospectus.20. Selecting a mutual funda. Client focused(1) Asset classes(2) History(3) Cost(4) Management type(5) Performance(6) Supportb. Objectivity and fairness21. Analyzing mutual fundsa. Style analysis7.12
(1) Benchmarking mutual funds(2) Appropriate(3) On target(4) Costb. 1-, 3-, 5- and 10-year comparisons(1) Index (find the correct index)(2) Peer group(3) Compare to industry; not market22. Systematic approacha. Consider a blended portfolio(1) Equity and bond mutual fund holdings (80%)(a) Domestic and international(b) Diversification and low correlations are key(2) Alternative funds to combat inflation (20%)(3) Low annual costs(4) Avoid back-end or redemption chargesb. Monthly withdrawals(1) Set a date (1 st of month) to eliminate timing risk(2) Fund proceeds settle to cash account23. Bucket approacha. Consider distinct funds for each bucket(1) Equity based fund for long-term holdings(a) (15+ year needs)(b) Value and growth(c) Tax efficient(2) Bond based funds for mid-term holdings(a) (10–15 year needs)(b) Varying durations(c) Safer (80%) with some higher yield components (20%)(3) Cash based instruments for short-term holdings(a) (1–5 year needs)(b) Tax friendly(c) Lower yield than other buckets(d) Stress liquidity24. Flooring approacha. Mutual funds are not intended to “guarantee.”(1) Avoid mutual funds if guaranteed income is absolutely needed.(2) Blend mutual funds with other higher cost guarantee-based products.7.13
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Huebner School SeriesHS 353 STUDY O
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THEAMERICANCOLLEGE.EDUThrough The A
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c. But it is more comprehensive bec
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(3) Work part-time during retiremen
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SECTION 2: UNDERSTANDING RETIREMENT
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d. Solutions(1) The model considers
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. Other sources of retirement incom
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c. Another option for solving cash
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(b) Net worth statements that ident
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d. Be ready to reengage with the cl
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(b) In financial planning(c) In inv
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j. Planning Point: Planners can use
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e. We also need them to have a bett
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Assignment 2IDENTIFY RETIREMENT INC
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(2) Income4. Determining risk toler
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collaborative experience which focu
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6. Asset allocation and risk tolera
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c. How long will the income last?d.
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. Durationc. Reliabilityd. Other6.
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c. Supplemental Security Income (SS
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. An unused emergency fund can supp
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5. Inflation(2) The expense method
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Assignment 3CHOOSE APPROPRIATE STRA
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. Save as a percentage of income an
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(1) Note that 38% of second income
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(4) The AARP website has a national
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4. Contributions to IRAs and Roth I
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carve out the nondeductible contrib
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(2) Plus salary deferrals (for an i
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a. Example:(1) Save $10,000 in 25%
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(a) This requires knowing four fact
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. Solution(1) Li and Lin Lin are bo
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(1) The increase in dollar amounts
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9. In some circumstances, an indivi
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2. Reverse mortgage basicsa. Almost
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5. Planning considerations(b) Keep
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(2) Some funds that are promoted as
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(1) Berstresser, Chalmers, and Tufa
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RESOURCES FOR COMPETENCY 3: CHOOSE
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(2) From the previous employer(s) p
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8. IRA funded plans (IRAs, SEPs, SI
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. Does the distribution election fi
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6. Net unrealized appreciation rule
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a. Tax-exempt plans include Roth IR
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8. Calculating required distributio
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(2) Exception: If there are separat
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5. Impactc. Tax rates are low in ea
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(7) Based on ordering rules, identi
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7. A married couple who file jointl
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(1) Needed to provide the appropria
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13. Transfers at deatha. Wills(2) A
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(1) The Retirement Equity Act manda
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(2) Beneficiary designation of bene
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13. Overview14. Types(2) The donor
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(1) Charity needs only to payout in
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c. Access should be granted to an a
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nightmare of living probate might h
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(6) Powers to represent their princ
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c. If the policy is term coverage w
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e. Factoring personal and family he
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problem. On the other hand, we can
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d. Adding a cost of living adjustme
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g. Planning Point: Sometimes a high
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(2) Clients may not be able to “a
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c. Ensure that the client is receiv
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a. Example: Because of physical and
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options about where to get his/her
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(2) Facilities, monthly fees, and s
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8. Other strategies that help to co
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standard deviations of the returns
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a collapse in the real estate marke
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a. In a later competency we will di
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years of service with the employer)
Page 154 and 155: a. Planning Point: Planners should
Page 156 and 157: (2) If you have locked in food, ren
Page 158 and 159: (4) Loss-of-spouse risk—Deferred
Page 160 and 161: (1) Excess withdrawal risk—The us
Page 162 and 163: (5) Frailty risk—Managing assets
Page 164 and 165: 7. Practice good career management:
Page 166 and 167: Assignment 6CHOOSE APPROPRIATE STRA
Page 168 and 169: c. Example: Chuck and Sarah divide
Page 170 and 171: e. The bucket approach can be thoug
Page 172 and 173: 3. Understanding systematic withdra
Page 174 and 175: (1) The time horizon used in the ca
Page 176 and 177: 12. Four percent is not the number.
Page 178 and 179: markets have declined by a specifie
Page 180 and 181: (2) Annuities and long-term care an
Page 182 and 183: anticipates ramping down her activi
Page 184 and 185: c. Each of the three portfolios wil
Page 186 and 187: SECTION 4: THE ESSENTIAL VERSUS DIS
Page 188 and 189: d. Clients give up investment contr
Page 190 and 191: geared toward long-term growth. Thi
Page 192 and 193: . Trade-offs involve:(1) Irrevocabl
Page 194 and 195: (1) Rate at which banks lend to the
Page 196 and 197: . Dollar-denominated liabilities of
Page 198 and 199: (a) Dividend taxed in year paid out
Page 200 and 201: 4. Taxationtheir return generating
Page 202 and 203: . Close ended(1) IPO style launch(2
Page 206 and 207: (3) Mutual funds provide lower cost
Page 208 and 209: way to obtain increasing payments t
Page 210 and 211: protection from the downside risk w
Page 212 and 213: 6. Today’s annuitization rates ar
Page 214 and 215: h. Planning Point: Markets are very
Page 216 and 217: a. The client may not be clear abou
Page 218 and 219: a. Problems with implementation are
Page 220 and 221: c. Product solutions work together
Page 222 and 223: (1) A problem is that if the client
Page 224 and 225: (b) A traditional fund company(c) A
Page 226 and 227: d. Evelyn is in great health and he
Page 228: RESOURCES FOR COMPETENCY 7: INTEGRA
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