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John Burns – Bingham, Osborn & Scarborough

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The market has been pretty resilient, said Mr. Burns.

“There has been a lot of positive movement and portfolios are getting higher,” he said. “The temperament and anxiety level of clients is a lot lower in the last few years.

“One thing our clients are making use of is the Roth IRA conversion. While the law changed this year to allow anyone, not just people with income under $100,000, there were a lot of retirees that were fairly wealthy that got below that income level, and we were working with their accounts to do some conversions in 2008 and 2009,” he said.

He said the situation with Roth accounts is interesting in terms of tax diversification, which he looks at in addition to asset allocation and diversification.

“As far as taxes are concerned, everybody should have three buckets of money,” he said.

One is taxable money, a revocable trust or a joint account; one is retirement money, a 401(k) and profit sharing; and one is Roth money, tax free.

“Who knows what the government will do? If they raise taxes, you can take out of Roth; if it lowers, take it out of retirement,” he said.

Joe Delany – Vista Wealth Management

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Mr. Delany said he hears a number of questions about education, retirement issues, financial planning, how much to pass to children, what is appropriate or what is not.

He said clients are either goal-based or value-based.

“Some are concerned about the uncertainly of the market and how to get a well-thought-out investment plan. Clients who are not financially set play more in the market,” he said.

In 2008 he said it was more difficult to keep people on the right path and to stick to the plan they had.

“We encouraged that because over the long term there will be appreciation,” he said.

He said valuation opportunities are low for closely held businesses and real estate, and it is a great time to explore intergenerational giving, family limited partnerships and interfamily loans.

It is also a favorable time for installment sales and real estate, and the intentionally defective grantor trust is more effective.

Mr. Delany also mentioned Grantor Retained Annuity Trusts, where during the term of the trust the grantor gets an annuity payment and the balance is distributed to the beneficiaries.

“You are making a bet that the assets you are putting into the GRAT will appreciate faster than the annuity rate."

He said there is a twist on the GRAT called Charitable Lead Annuity Trust, where a charity is the beneficiary during the time of the trust.

“Say Mr. Smith puts $1 million in a 20-year charitable lead trust to benefit his alma mater. The trust agreement stipulates that the school is to receive $70,000 in income annually for the purposes spelled out in the trust agreement. At the end of the 20-year term, Mr. Smith’s son, Jack, is to receive the trust principal,” he said.

For gift tax purposes, only the remainder interest is subject to tax. In this case, Treasury tables project the value of the remainder to be about $222,500. The trust principal, however, actually grows to about $2,597,000, and this is what Jack receives.

The difference between the value of the remainder interest under the Treasury tables and the actual trust value at the end of the trust term passes to Jack, free of transfer taxes.

George McCuen – Napa Wealth Management

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“Anyone who knows us and our perspective on the market and the economy will tell you that we are very cautious – some will say concerned. In our opinion, this stock market is moving higher without strong fundamentals. In other words, there is no compelling reason that the stock market should move higher in light of the bleak economic environment and lack of investors buying stocks,” he said.

He said people are hearing of the pickup in economic activity. “But drill down a bit and look at the facts. Our jobless rate is 9.6 percent and near a 26-year high. The underemployment rate, including discouraged workers and part-timers who would rather work full-time, is over 17 percent. Most recessions see unemployment recover to pre-recession levels in 20 to 40 months. This last recession, which began 33 months ago, has taken its toll on job losses, and it is estimated that the jobless rate will not reach pre-recession levels until 2020,” he said.

He said with the massive amount of people out of work, meaning companies not profitable enough to hire, the longer it will take for the economy to recover. The stock market is a picture of the economy. It is an indicator of earnings growth.

“How can a company grow its earnings if people are not buying their products?” he said. “Surely products are being sold in a slow economy, but consider what people are buying – necessities. The reckless spending of pre-recession levels is over.”

He pointed to price inflation coupled with assets deflation as another hurdle.

“The real inflation on items we actually purchase on an ongoing basis is rising. On average, our basis food costs have increased 48 percent over the last year, measured by wheat, corn, oats and canola prices. Energy costs are up 23 percent on average. Beef and pork are up 39 percent.

“Our cautious stance does not mean we have no idea where to invest. We continue to find very attractive investments that pay handsome dividends with companies that have free cash flow and are essential service businesses. These are companies that sell products or offer services that we need even if we are in a depression,” he said.

Chuck Root – Double Eagle Financial

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“Most of our clients are not having a problem with what is going on,” said Mr. Root. “From what I can see and from what I am reading the economy is recovering, though very, very slowly.”

He said people are worried about the job situation because they see low employment numbers, but employment is the last thing to come back in a recession.

When talking to clients about some of the issues coming up, such as the estate tax question, most of it is speculation.

“We can speculate and not come up with a result,” he said.

As far as some of the other tools that are on the horizon, he sees no reason to take advantage of the standard IRA to Roth IRA conversion enacted last year unless the owner is really young.

“If you look at appreciation on accounts these days it would take seven years to get to even, and anything over 5 or 6 percent is the topside of returns.”

Mr. Root said client questions are unique with each client.

“We talk about the overall strategy and global thinking. In terms of investments, the U.S. is OK but foreign investments are doing way better, particularly in emerging markets,” he said.

He said gold is a trading conversation, not an investment conversation.

“It is not something you want to watch on your monthly statement without keeping your Alka Seltzer handy,” he said. “Gold may in the future be a more solid commodity but in the past it has not been and now it is not. The basic thing is if you are a business person, keep spending money on marketing and be out there networking and keep your face fresh so you can come out ahead when things turn around.”

John Whiting – Moss Adams

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“Most portfolios have come back strongly,” Mr. Whiting said. “We didn’t make a lot of wholesale changes, and while they experienced a drop that the market created, things are stabilizing.”

He said there is still a lack of comfort in the new reality of volatility in the market.

“We are not suggesting making any wholesale changes. We are more mindful of the allocation and looking at the time horizon. Three years ago when the world wasn’t upside down, a 63-to-65-year-old's portfolio was still very conservative. It is conservative now as well. Everything we do from an investment standpoint is to ask what is the hurdle and what will we need to jump it?

“Since March of last year we have seen the market come back around, but the fact of what we have just gone through is front of mind for everybody.”

He said the challenge for those in the business is there isn't anyone in the industry who could say, when this happened before this is what we did.

“The results coming out of this are the same; they are just bigger than in another smaller downturn. We are trying to stay in contact with clients so they are not left to the 24-hour news cycle, as there is an abundance of information and a lot is not relevant.

He said gains are at a lower interest rate than they will be in 18 months or so, and if clients have existing real-time losses those gains can be eliminated from being exposed to higher tax risk.

“If they have loss carryforwards we can do some harvesting of gains to kind of wash the tax effects,” he said.