South Carolina Firefighter’s ... - Abacus Planning Group
Transcript of South Carolina Firefighter’s ... - Abacus Planning Group
South Carolina Firefighter’sRetirement Plan – Investment Update
February 23, 2016
abacusplanninggroup.com
Agenda
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South Carolina Firefighters’ Retirement Plan
Introduction and overview
Plan performance and fees
Economic outlook
Questions and answers
Abacus team biography
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Charles B. Flowers, AIF®[email protected]
Bethany M. Griffith, CFP®, EA [email protected]
Edward W. Kramer, CFP®[email protected]
Cheryl R. Holland, CFP® [email protected]
William R. [email protected]
Anne Marie E. [email protected]
Advisors | Partners
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South Carolina State Firefighter’s Association - plan sponsor
Charles Schwab and Company, Inc. - custodian
Toledano and Associates - third party administrators| Ned Toledano| Kim Bowman| Kim Burdette
Abacus Planning Group, Inc. - registered investment advisor| Charles B Flowers| Bethany M Griffith| Cheryl R Holland| Anne Marie E Ihling| William R Jeter| Eddie W Kramer
Nexsen Pruet, LLC - ERISA attorneys| Joel Stoudenmire| Sue Odom
Trustees
Tommy Norris
Skip Hannon
Brantley Hanna
Kyle Minick
Raymond Lloyd
Les Williamson
Tres Atkinson
Dale Worthy
Charlie King
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Quick facts
10,552 participants
592 withdrawals in 2015 = $2,876,680
120 deposits in 2015 = $5,985,061
Portfolio value 12/31/15 = $52,108,019.06
Before any fees(Gross)
After Investment fees have been taken out
After administrative fees have been taken out
1 year12/31/2014 – 12/31/2015
(1.61%) (1.70%) (2.45%)
3 year12/31/2012-12/31/2015
13.89% 12.79% 10.16%
5 year12/31/2010-12/31/2015
21.92% 19.84% 14.30%
Since inception7/31/07 – 12/31/2015
27.45% 23.64% 13.71%
Moderate growth portfolio performance December 31, 2015
Source | Thompson Financial and Portfolio Center
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Portfolio Option 2015 Previous Three Years12/31/2012 – 12/31/2015
Previous Five Years12/31/2010 – 12/31/2015
Conservative Growth (2.44%) 6.48% N/A
Moderate Growth (2.45%) 10.16% 14.30%
Growth (1.90%) 8.90% 15.32%
Portfolio Option Portfolio value12/31/2015
Conservative Growth $393,187
Moderate Growth $51,215,996
Growth $476,912
5 Years till retirement* $21,922
* Individual firefighters who are five years from retirement can choose to move their funds to a money market account
Portfolio Performance December 31, 2015
Source | Portfolio Center
Advisor Fee as % of total plan assets
Fees for a $1,000 investment
Abacus Planning Group 0.31% $3.10
Trading fees 0.01% $0.05
Underlying mutual fund managers 0.43% $4.30
Nexsen Pruet 0.01% $0.10
Toledano and Associates 0.70% $7.00
Total fees 1.46% $14.55
Fees December 31, 2014 – December 31, 2015
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Source | Portfolio Center
Portfolio fees over time
0.50%
1.00%
1.50%
2.00%
2.50%
2008 2009 2010 2011 2012 2013 2014 2015
Fees over time
US EQUITY LARGE COMPANY 20.0%
US EQUITY SMALL COMPANY 9.0%
INTERNATIONAL EQUITY LARGE
COMPANY 12.0%
INTERNATIONAL EQUITY SMALL COMPANY 7.0%
EMERGING MARKETS 8.0%
INFLATION PROTECTION
8.0%
HEDGING STARTEGIES 6.0%
BONDS 30.0%
Target asset allocation
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Source | Morningstar
What helped returns
What hurt returns
Investment Return % of portfolio Contribution to return
International small company stocks 5.99% 6.6% 0.4%
Hedging Strategies 1.70% 10.0% 0.2%
Fixed Income 0.80% 26.9% 0.2%
Investment Return % of portfolio Impact on return
Emerging Markets (11.66%) 7.5% (0.9%)
Inflation Protection (commodities) (9.25%) 7.1% (0.7%)
US Small Company Stocks (5.63%) 8.6% (0.5%)
What helped and what hurt portfolio returnsDecember 31, 2014 – December 31, 2015
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Source | Portfolio Center
Benefits of diversification | Moderate
Source | JP Morgan Securitized Product Research, J.P. Morgan Asset Management
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Economic outlook
Is the stock market a good investment?
Is the bond market a good investment?
What are the headwinds our economy is facing?
What are the opportunities for the portfolio?
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Small and value premium in the equity markets⌃
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SmaU and value premium in the equity markets
Company Higher Expected Return
Large
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Small
Large
Value
Small
P1
P2
Q1 Q2Q1 Q2
P1
P2
Traditional Markets Commodity Markets
Oil prices⌃
Communication program ⌃
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Semi-annual webinar – February and August
Chief’s survey
Semi-annual newsletter
Department visits
Website updates
Convention booth
Quarterly huddle with Toledano & Associates and Association staff
We are always open for suggestions on how we can better communicate with participants
Options available to individuals
Options available to departments
Questions to ask potential investment advisors
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Plan options ⌃
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What may I do with my 1% money when I retire?
Transfer your money to another qualified retirement plan, e.g., 401(k), a Rollover IRA, or transfer your balance to a new department
Withdraw your money, pay federal and state income taxes, and depending on your age potentially an early distribution penalty of 10%
Leave your money in the plan
Combine one or more of the above options
Paid firefighters
Volunteer firefighters
Your money is held in the plan until normal retirement age or years of service.
(Typically between age 55 -62 or 20 years of service). Your withdrawal will be subject
to federal and state income taxes.
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Best Practices for 1% retirement accounts
Update beneficiary designations yearly.
Keep the most recent beneficiary designations on file at the department.
Submit a list of terminated department members that you no longer have their
contact information to Toledano and Associates.
Keep all file of all returned participant statements at the fire department
Withdraw your money, pay federal and state income taxes, and depending on your age potentially an early distribution penalty of 10%
Leave your money in the plan
Combine one or more of the above options
Paid firefighters
Volunteer firefighters
Your money is held in the plan until normal retirement age or years of service. (Typically between age 55 -62 or 20 years of service). Your withdrawal will be subject to federal and state income taxes.
Indicator Current value Reference value good, bad, better
Unemployment 5.0% 5.7% (a year ago) better
Household debt payments as a percent of disposal income
10.02% 11.3% (average) good
Months supply of existing homes 5.2 months 6.2 (average) good
Average hourly earnings all employees $25.24 $22.08 (3/2009) In line with inflation, but not uniform across the workforce.
Household debt to GDP 79.5% 87% (average) good
Car sales 17.2 million 14 million (average) good
Federal debt to GDP 102.5% 53% (average) can be addressed. 118% in 1946
Health care expenditures 2.28 billion 1.1 billion (in 2000) ??
Shiller PE 10 for the S&P 500 index 24.6 16.6 (average) warning signal for expectations.
Bulls vs. Bears⌃What are the economic gauges telling us?
Source | St. Louis Federal Reserve
128.4
‐43.5
480.2
0?
1952 – 1965 1966 – 1980 1981 – 2000 2001 - 2020
Cumulative Real Growth of Household Financial Asset Wealth⌃Data lumped into regimes
US Small Company stocks (ticker DFSCX), US Large Company stocks (ticker VFINX)
Small premium^US Small Company stocks minus US Large Company stocks 1993–2015
$‐
$0.200
$0.400
$0.600
$0.800
$1.000
$1.200
$1.400
$1.600
$1.800
$2.000
5/96 – 3/99 3/06 – 3/09 11/13 – 12/15
35 months 37 months 26 months
DFA US Large Cap Value (ticker DFLVX) minus Vanguard Index 500 (ticker VFINX)
Value Premium^US Large Company Value stocks minus US Large Company stocks1993–2015
$‐
$0.200
$0.400
$0.600
$0.800
$1.000
$1.200
$1.400
$1.600
9/95 – 2/00 7/07 - 2/09 4/11 - 8/12 8/14 – 12/15
54 months 20 months 17 months 17 months
US long rates heavily influenced by global rates ⌃
Source | Bloomberg
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US Long rates heavily influenced by global ratesA
0 9 Correlation between US short-term and US long-term interest rates
0.8
0.7
-| o Correlation between US and developed markets tong-term interest rates
Source | Bloomberg
Model Portfolios ⌃
Conservative Growth
50% conservative oriented investments. 50% growth oriented investments.
Projected return 5.25%Range (20%) – 24%Dollar range for a $5,000 investment: ($1,000) - $1,200
Moderate Growth Portfolio
30% conservative oriented investments. 70% growth oriented investments.
Projected return 6.75%Range (26%) – 32%Dollar range for a $5,000 investment: ($1,300) - $1,600
Growth Portfolio
20% conservative oriented investments. 80% growth oriented investments.
Projected return 7.25%Range (31%) – 38%Dollar range for a $5,000 investment ($1,550) - $1,900
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We at Abacus feel truly honored to have the opportunity of working with the South Carolina Firefighters’ Association, the Trustees and the participants and look forward to continuing to serve each of you.
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