SPRING 2010 C L I E N T A DV I S O R U.S. EDITION A Publication of the Private Wealth Management Group St. Louis, Missouri TEAM GROWTH LITTLE-KNOWN TIPS FOR COLLEGE SAVINGS You may have noticed something different about Private Wealth Management. I don’t mean the newly redesigned corporate office space in St Louis. And no, I don’t mean our national website or recent headlines. I’m referring to the addition of Aaron Kolkman to the Private Wealth Leadership Team. TIP #1... Regardless of income, all families considering post-secondary education expenses should apply for financial aid. Most institutions today use the FAFSA (Free Application for Student Financial Aid) to determine aid eligibility. However, some use it to screen for tuition discounts called “merit money”. These discounts are not need-based, but instead are used to lure certain types of students to the institution. In fact, most schools will discount tuition for the kids that they really want, meaning that merit money is often awarded to children from affluent families. Fact: the average tuition discount at private four-year colleges and universities is 33.5%, so merit money can save families a great deal of tuition dollars. By the way, public universities use merit money as well. “Kolkman will play a key role in expanding the firm in key markets nationally. We expect significant growth over the next five years and need the right leadership to get there,” said Joseph Altic, CFP®, MBA, Managing Partner of the Private Wealth Group and President of Private Wealth Management, LLC. Kolkman formerly managed Boulevard Private Wealth Management of Arizona, and joined the Private Wealth Group following its acquisition of Boulevard in 2009. He has a B.A. from the University of St. Thomas in Minneapolis/St. Paul, MN, and is fully registered and licensed. Kolkman will be a candidate for the Certified Financial Planner (CFP®) designation in November, 2010. His experience includes asset management strategies, benefits planning, and charitable gifting strategies. He is a member of Trinity Lutheran Church in Chesterfield, MO, and enjoys volunteering for multiple local charities. Three of his favorite pastimes are his two kids, Allison and Jackson, and his niece Kaylee Knudson-Subialka. Aaron also enjoys jogging and racquet sports, and is a sports car enthusiast. Aaron’s three guiding principles are Faith, Patience, and Discipline. SURPRISING NUMBERS $750… Cost of one year’s tuition at Syracuse University in 1964. $47,820… Cost of one year’s tuition at Syracuse University in 2009. 250-300… Millions of cell phones currently being used in the US. 240,000,000… Number of jobs affected by the world’s largest industry– tourism. TIP #2... Understand which assets count in the financial aid formula and which don’t. All assets are not treated equally, so its important to start planning early to qualify for some traditional, need-based aid. With the right strategy, it is even possible to own a vacation home, have a couple million dollars in retirement accounts, and still qualify for traditional aid. In fact, federal aid rules permit families to shield certain assets by using the Asset Protection Allowance. This allowance depends on whether a household has one or two parents and the age of the oldest parent, among other criteria. TIP #3... In general, it’s also important to title assets correctly as titling determines which assets count towards financial aid calculations. Also, different ownership counts in different proportions. Parents’ assets are counted towards the Expected Family Contribution (EFC) at 5.64% of the actual value of the assets, while kids’ assets are included from 35 to 50% of the actual value. An important note: 529 and Coverdell assets are considered parental assets for the purposes of financial aid. Remember, education funding is a tricky proposition. The expense is large, the inflation is high, and the timeline is short. THE LONG TERM CARE DILEMMA Long-term care (LTC) insurance is an unfamiliar and often misunderstood form of insurance. Also called extended care, LTC insurance covers care that is needed beyond the time period covered by Medicare or major medical insurance. LTC insurance pays health care expenses 1) when Medicare and private major medical coverage is exhausted, or 2) for intermediate or custodial care, which are not covered by Medicare or major medical at all. When you consider the potential risks of not purchasing long term care insurance, the consequences could be disastrous... According to the U.S. Department of Health and Human Services, at least 70 % of Americans over age 65 will require some long term care services at some point in their lives. LTC insurance provider John Hancock estimates the average current costs of nursing homes to be $185/day nationally. At that rate, a three-year stay would have an average cost of $202,575 nationally in today’s dollars. This amount of money can take a big bite out of your retirement if you make the decision to self insure. As nursing home costs rise rapidly, so does the risk to your wealth... The cost of LTC insurance is based on your current age, health status, and residential location. To cut premium costs, purchase the coverage sooner than later, as premiums can more than double between the ages of 55 and 65. Also, there are now different types of LTC policies available beyond the traditional “use it or lose it” policy, such as policy benefits tied to life insurance and/or money-back guarantee programs, in which the benefits are guaranteed by the claims paying ability and financial stability of the issuing insurance company. Carefully evaluating your options can literally save a fortune during the golden years. In support of this article, Private Wealth Management will coordinate a 30-minute long-term care plan analysis with consulting fees waived. Please call (888) 878-1804 and reference “LTC Article” (valid through June 30, 2010). MARKET INDEX ASSET CLASS 3 MONTHS 246… Tons is the weight of $1 million worth of Dow Jones Industrial Average Blue Chip Stocks + 4.11% + 42.49% pennies (100 million pennies). Standard & Poors 500 Large Cap Stocks + 5.39% + 49.54% NASDAQ Composite Small & Large Cap Stocks + 5.68% + 56.60% 1951… Year in which the first credit card was MSCI EAFE International Stocks + 0.94% + 54.94% issued, released by American Express. Barclay’s Aggregate Fixed Income + 1.78% + 7.66% Journal of Financial Planning Q1, 2010 12 MONTHS Performance Data as of 03/31/2010. Past performance no guarantee of future results. Indexes are unmanaged and cannot be invested in directly. www.us-privatewealth.com This material is for information purposes only and is not intended to provide specific advice or recommendations for any individual. Before making any financial commitments, please consult with your financial professional. Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a Registered Investment Advisor
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