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CBRCOMMONWEALTH BUSINESS REVIEW

TAKING THE LEAD TO SECURE YOUR CLIENTS’ FINANCIAL WELL-BEING

POWERFUL NEW TECHNOLOGY HELPS YOU STAY AT THE HEAD OF THE RETIREMENT PLAN PACK

WHEN IT COMES TO INFORMATION SECURITY, KEEP AN EYE ON THE WEAKEST LINK

EMBRACING THE ROLE OF CFO

Don’t leave your firm’s fiscal management to chance. Adopting a more formal approach to forecasting and tracking your financials can help lead your business to greater prosperity.

JULY/AUGUST 2012

F R O M T H E E D I T O R

CREATING A LEGACY OF LEADERSHIP

KATE FLOOD

The essence of leadership encompasses so much more than these simple words. It involves creating our own opportunities to learn and to grow. It is about having a vision and a purpose for moving forward. It means inspiring ourselves and others to make better decisions. And it’s about leveraging the talents of those around us to find newer and better ways to accomplish goals, whether they be financial, professional, or personal. The Commonwealth community is full of advisors (see p. 7) who embody these traits and have successfully led their organizations—and, more important, their clients—to financial freedom.

To help our advisors continue to hone these essential skills, the Commonwealth home office staff has contributed a collection of insights and ideas—running the gamut from risk management, to operational efficiency, to information security. Here’s a preview.

The biggest threat to a portfolio isn’t a market downturn; it’s a death, disability, or extraordinary medical or long-term

care expense. For many advisors, though, talking about insurance can be uncomfortable. But that doesn’t remove your obligation to identify your clients’ goals and the effect of common risks on those goals. By following some of the guidelines shared in “Taking the Lead to Secure Your Clients’ Financial Well-Being” (p. 8), you’ll be better prepared to counsel your clients to make better decisions.

New to the qualified plan marketplace? Looking for ways to make your existing retirement plan business more efficient? Commonwealth’s Retirement Plan Manager (RPM) can help. Combining a custom IPS engine, RFP portal, and CRM tool, RPM makes it easy to deliver the full range of services your plan sponsor clients need. Learn more in “Powerful New Technology Helps You Stay at the Head of the Retirement Plan Pack” (p. 24).

“When It Comes to Information Security, Keep an Eye on the Weakest Link” (p. 28) examines the current environment, in which cyber crooks are increasingly setting their sights on clients’ e-mail accounts, hoping to perpetrate wire fraud schemes. In light of recent attempts to defraud Commonwealth advisor offices in this way, it’s more essential than ever to educate your clients about protecting their e-mail accounts from hackers. Their best defense? A strong password.

Through the Commonwealth Business Review, we continue to provide you with the thought leadership you need to create a lasting legacy of leadership in your businesses and your lives. If you have questions or comments, or ideas for future stories, we’d love to hear from you.

Kate Flood is the editor of the CBR. She is available at x9606 or at [email protected].

As Commonwealth Chairman Joe Deitch discusses in this issue’s editorial,

it’s easy to refer to someone at the head of an organization as a leader

and to his or her actions as leadership. But what does that really mean?

Be sure to check out our online exclusives (highlighted on p. 4) for additional valuable content from our subject matter experts.

CONTENTS

EDITORIAL

5 Leadership: The Multiplier Effect

WEALTH MANAGEMENT

8 Taking the Lead to Secure Your Clients’

Financial Well-Being

11 The Light at the End of the Tunnel

14 Standing Watch: A New Era of Due Diligence

16 A Good Time, a Terrible Time, or Just in Time?

Notes on the Insurance Industry

18 Keeping Your Clients’ Beneficiary Designations

Up to Date—And Your Name Out of the Press

21 Fixed Income Research: Supporting Your

Investment Needs and Goals

RETIREMENT

24 Powerful New Technology Helps You Stay at the

Head of the Retirement Plan Pack

COMPLIANCE

26 Leading by Example Can Help Your Firm

Stay Compliant

TECHNOLOGY

28 When It Comes to Information Security,

Keep an Eye on the Weakest Link: Your Clients

MARKETING

30 Using Social Media to Get Real-Life Results

PRACTICE MANAGEMENT

33 Embracing the Role of CFO

36 You’ve Hired a New Employee—Now What?

39 Commonwealth Mentors: Advisor Stories of Success

and Inspiration

BULLETIN BOARD

41 Leaders Conference Qualifiers Enjoy the Emerald Isle

43 Our President’s Club Gathers for Some Fun in the Sun

45 A Dose of Southern Hospitality Greets Our

Winners Circle Attendees

47 Commonwealth Cares Goes Macho for a Worthy Cause

48 A Welcome to New Advisors

49 Looking Forward to These Events . . .

49 2013 Top Producer Meeting Requirements

50 Top 10 Clubs

ON THE COVER:

Embracing the Role of CFO (p. 33)

Although reviewing their clients’ financial goals, investment performance, and risk is as natural to advisors as

breathing, when it comes to tracking the financials of their own companies, that instinct doesn’t necessarily kick in.

From forecasting revenue, to creating an annual budget, to benchmarking, these tips can help you embrace your

inner CFO so you can lead your firm to even greater prosperity.

JULY/AUGUST 2012CBRCOMMONWEALTH BUSINESS REVIEW

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AUTHOR

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wealth management | retirement | technology | compliance | practice management | bulletin board

BULLETIN BOARD

THERE’S MORE ONLINE!Looking for additional ideas and strategies for your business? Check out our online exclusives in the eCBR. (From the homepage of COMMunity Link®, click on More eCBR in the bottom right corner of the eCBR widget.)

WEALTH MANAGEMENT

Asset-Based Products: The Easy Long-Term Care Conversation— Susan Kobara, CLTC

As an advisor, one of your roles is to take an investment set aside for a specific purpose and move it into another investment set aside for the same purpose but with a potentially better outcome. And that’s just what asset-based long-term care products seek to do—provide a potentially better outcome for liquid assets set aside for emergency health care costs. Put that way, you may find the long-term care conversation less daunting than you imagined.

Bringing Fixed Income to the Unified Managed Account— Alicia Nisberg, CIMA®

Commonwealth’s Preferred Portfolio Services® Direct SMA/UMA platform has become an efficient choice for higher-net-worth investors, but it has been missing a key feature that many clients and advisors have asked for: the ability to hold bonds instead of fixed income mutual funds or ETFs. Now, with new technology, Envestnet, our overlay manager, can offer bond SMAs as sleeve options. Learn more about our first offering from Strategic Partners Investment Advisors.

Yield of Dreams: Finding Income in a Low-Yield Environment— Brian Glazer

With current interest rates close to zero, the need for investments that can generate retirement income is higher than ever. But that doesn’t mean that investors should blindly reach for yield. Here, we highlight various types of investments—including equity-income mutual funds, dividend-paying ETFs, and individual stocks—that have the potential to produce “safer and realistic” income, listing their pros and cons and when you might want to consider them for a portfolio.

PRACTICE MANAGEMENT

10-Point Financial Check-Up— Kenton Shirk

Practice Management has introduced a new tool to help you assess 10 critical levers that impact your firm’s profitability, including gross profit margin, operating profit margin, client revenue distribution, and other productivity measures. Each report is customized for your firm and compares your metrics with those of other financial advisory firms within a similar revenue range.

BULLETIN BOARD

Names in the News— Emily Guadagnoli

Read about Commonwealth advisors who have been recognized by and quoted in the financial industry press.

ARCHIVES Our comprehensive archive of online exclusives and print stories dates back to 2006. You can search by topic, author, or other keywords, or simply browse through historic content. Printer-friendly versions of articles are available at the click of a button. You’ll also find downloadable PDFs of our print issues.

Leaders possess a powerful combination of passion and purpose, and the more effective ones seem to be able to multiply the results of their followers more so than managers can. Given the enormous effect leaders can have, perhaps we need a better approach for understanding and learning from them—so we can emulate their positive attributes and apply them to our own lives, families, and businesses.

This discussion raises certain questions, such as:

• What’s the difference between a great leader and a great manager?

•Is leadership an innate talent or can it be taught?

•How do we measure leadership?

•How do we teach it?

•How do we ourselves become better leaders?

BACK TO SCHOOLThese issues became a priority for me last year when I received approval to create a leadership institute at my high school, Boston Latin School. Established in 1635, Boston Latin is the oldest public school in the U.S. Its halls are filled with the names and pictures of many of our country’s founding fathers . . . because that’s where they went to school!

As a kid growing up in the poor part of Boston, I thought this was pretty normal. In retrospect, I can say only that it was my normal. Regardless of where we see their names—on school walls or in books, on TV or on the Internet—all of us are surrounded by innumerable examples of leaders and leadership. So where do we go and what do we do with this information? This leads me to some basic observations about how we manifest leadership in our lives.

THE ESSENCE OF LEADERSHIPLeadership is about choice. In almost every aspect of our lives, we get to choose how and what we do or don’t do. We may stick our heads in the sand and accept the

status quo, but make no mistake: that is a choice, too. Leaders seem to understand more than most people not only that we have choices, but also that we have opportunities—and that we can choose to create more.

Leadership is about vision—and vision leads to purpose. People often refer to visionaries as those who can see beyond the constraints of their current situation. Is it a special talent? A sixth sense? Is it fueled by a desire to move toward or away from something? Can vision be learned?

Through my own experience, I have come to understand that we are much more than just a brain and much more than just a body. I was in my 30s when I became aware of how my entire being was designed to create a greater level of awareness. My biological computer wasn’t confined to my skull; it encompassed my entire body. I just had to learn to listen to it and use it better. And with increased awareness and practice came increased understanding.

But our powers aren’t confined to our physical being. We are electromagnetic entities. We emit and receive energy constantly. So does everything and everyone around us. The more we become attuned to this energy, the better we can see. There’s a tendency to ascribe such insights to some mysterious realm. Some call it intuition while others may explain it in more spiritual terms. Regardless of how we choose to describe it, we are absolutely part of something beyond the physical. And, like any other muscle, the more we choose to exercise and grow our awareness, the stronger this ability gets.

Leadership is about inspiration. Vision leads to both passion and purpose. Managers understand, organize, and execute. Leaders inspire. Managers operate mountains. Leaders move them! Both are valuable talents, but they are inherently different. The currency of leadership is energy. Energy can be communicated, but it’s much more than information—it is nourishment. Leaders get others to tap into this energy, to believe and then to act. And then, acting together, and with their energy multiplied, they effect change.

E D I T O R I A L

Leadership is a word that gets tossed around a lot. We tend to think of people at the

helm of an organization as leaders, and what they do to run the organization is

therefore leadership. But it’s much more than that.

commonwealth.com FOR BROKER/DEALER USE ONLY – NOT FOR USE WITH THE PUBLIC 5

LEADERSHIP: THE MULTIPLIER EFFECT

JOSEPH DEITCH

6 FOR BROKER/DEALER USE ONLY – NOT FOR USE WITH THE PUBLIC JULY/AUGUST 2012

E D I T O R I A L

That’s when the real magic happens! Because when we realize that we can go above and beyond, our beliefs increase to accommodate this new reality. Pretty soon, these new beliefs and realizations are creating new realities. As someone once taught me, “Whatever you can conceive and believe, you can achieve.”

Leadership doesn’t always involve others, though. The flame starts within, and one person can accomplish an enormous amount simply by putting his or her mind and imagination to work. Frankly, most of the time it’s ourselves we need to inspire! As individual entrepreneurs, there is no one there to lead and manage us.

Leadership is about leverage. This is the multiplier effect. As Archimedes said, “Give me a lever and I can move the world.” Whether you leverage and multiply your efforts by enlisting others or by creating new solutions (or both!), leadership is about getting more done. Certainly more than we could accomplish by accepting the status quo. By having a bold vision, by inspiring ourselves and others, and by creating new and improved methods, we can move mountains.

LEADERSHIP LABAt Boston Latin, our initial challenge in creating the leadership institute was a lack of time. Each day was filled with required classes, sports, clubs, jobs, and family responsibilities. Adding another course would mean deleting something else—and that would be a long, unpleasant battle. So, we came up with the perfect solution: learning by doing. You may want to try it yourself.

The lessons of leadership are relatively straightforward, and our goal is to show the students how to improve what they are already doing. In a sense, their lives are the leadership lab. And so is yours.

Leadership is not rocket science, and it actually helps to keep it simple. The following list is a good start. It only remains to put these lessons to work, or at least to better use:

•Choose to make a difference. Think big.

• Look within. Act in concert with your inner yearnings and intuition.

• Be more aware of your environment. Knowledge is power.

•Recruit team members, mentors, and supporters.

• Brainstorm. Play with ideas and possibilities. Let your minds expand and roam, and then identify and pursue the best options.

• Be aware of what motivates you and others, and then manage everyone accordingly.

• Make goals attainable and then make them happen. Create a sense of success and then a reality of success. Help yourself and others believe.

•Constantly refine and improve.

At Latin, as part of the leadership institute, we are inviting celebrated and successful alumni to visit and share their success stories and to be facilitators and mentors. We’re also sponsoring summer internships at a variety of businesses, as well as creating a mini grant program to fund inspirational student ideas that are intended to create change and foster leadership.

A website is in the works to serve as both a resource for information and archival experiences, as well as a platform for interaction. Often, it is the reinforcing of a lesson or an experience through exploration and sharing that helps it take root and then grow to the next level. For example, a recent luncheon at the school brought together the leaders of various teams and clubs to discuss their leadership experiences and compare notes. Amazing what the head of the school orchestra and the captain of the football team had to offer each other!

LEADERSHIP AT COMMONWEALTHCommonwealth offers similar resources through our corporate networking events, the Commonwealth Forum, and Practice Management programs, plus you may have noticed that we’ve been reaching out to you more over the past few years. This issue of the CBR, for example, is filled with many powerful examples of what we do and how we can help. And you can expect our commitment to continue to increase in the future, as our world and our business become ever more complex.

Any success story is filled with many leaders—and leaders abound both in our home office and in the field (see sidebar). We have a lot to learn from one another, and it all starts with a decision to engage in the process.

Joseph Deitch is the founder and chairman of Commonwealth Financial Network .®

E D I T O R I A L


#5. Muskat Financial, Simi Valley, California, managed by Al Muskat, who joined Commonwealth in 2009. Al runs a large and focused planning firm and pays attention to the details, whether they be the particulars of a client’s financial plan or the finer points of one of Commonwealth’s giving back events.

#4. Ball Financial Services Company, Westborough, Massachusetts, managed by Jim Ball. Jim is one of three members of the Ball family who are part of Commonwealth. The other two are Jim’s father, Nelson, and his brother, Dan, both of whom have been setting examples for their fellow advisors in the areas of product usage, IT, and marketing

for years. Jim and his wife, Spun, brought their children, AJ and Ava, to Ireland, and I can’t help but wonder if one of them will become a third-generation Commonwealth advisor.

#3. Financial Council, Inc., Towson, Maryland, led by Bill Leeb, who joined us in 2009. In just three years, Bill has established himself as a respected and sought-after leader among his peers for his approach toward continually improving his firm’s interfacing with Commonwealth, as well as his best practices with his clients.

#2. D.K. Brede Investment Management, led by Debra Brede from Needham, Massachusetts. I can’t remember a top five that didn’t include Deb, and she is a poster woman for leading by example. She works tirelessly for her clients and her community through giving back initiatives and leadership roles. I’ve said it before and I’ll say it again:

Deb represents the very best of what a Commonwealth advisor can do to change the world.

#1. Bartholomew & Company, Worcester, Massachusetts, managed by perennial top-five producer, Tom Bartholomew. In addition to heading up our largest office, Tom’s leadership is evident in his many charitable endeavors and in his continually giving of his time and insight to fellow advisors and members of the

Commonwealth team—yours truly included.

Congratulations, all. We couldn’t be prouder!

Wayne Bloom is the CEO of Commonwealth Financial Network .®

THE CREAM OF THE CROP AT COMMONWEALTH— Wayne Bloom

Commonwealth is continually recognized as a leading independent financial institution—and I’d like to think that our clearly defined vision, mission, and determination to innovate new ways to better serve our advisors are significant drivers of our success. We are also extremely fortunate to have in our network some of the industry’s best advisors, whether you measure by annual average production (which, at $385,000, recently topped an industry-wide survey) or by how they lead their practices and give back to their communities.

Ironically, the top producers of the firm have been known as Leaders for as long as I can remember. We held our annual top producer meeting—our Leaders Conference—in Ireland in May (see p. 41), and, during our final event, we announced the best of the best for 2011.

W E A L T H M A N A G E M E N T


Should I assume that, if they were in fact a health concern, my dentist would have referred me to a doctor? Or did he limit his comments strictly to my dental health?

Like a dentist or doctor, you’re a trusted professional in your field. You may consider yourself a specialist in investment advice, asset management, and retirement planning, leaving insurance, estate planning, and the like to others. But is that how your clients see you? They may well assume that, since you have all the information right in front of you, you would alert them to a potential risk or concern in any area of their financial lives.

ARE YOU DOING ENOUGH TO PROTECT YOUR CLIENTS? The sad truth is that many advisors, even those who call themselves financial planners, don’t always alert their clients to significant and evident risks to their financial well-being. The biggest threat to a portfolio isn’t a market downturn; it’s a death, disability, or extraordinary medical or long-term care expense.

Of course, advisors have plenty of reasons for not discussing insurance with their clients:

• I meant to, but we ran out of time in the appointment.

• Clients would rather talk about making money, not spending money.

• No one wants to talk about death, wheelchairs, or nursing homes.

• The client came to me for investment advice; life insurance is a poor investment.

• I don’t want to be viewed as a “product pusher.”

• If the underwriting goes south, my client might move his investment accounts.

• Insurance is too complicated. I can’t keep up with it.

It all boils down to one excuse, doesn’t it? Many planners simply aren’t comfortable talking about insurance. Even if you are purely an investment advisor, identifying your clients’ goals and the effect of common risks on those goals should be a core competency. Your clients expect and deserve your leadership and counsel.

“One of the great tests of leadership is the ability to recognize a problem before it becomes an emergency.” — Arnold Glasow

I hear many sad stories about clients’ lives that are cut short due to sudden death or acute illness, leaving families in emotional, if not financial, stress. One that comes to mind concerned a widow with two young children. Her advisor relayed his disgust with a local bank that fired the widow because she was taking too much time off, often leaving in the middle of the day. After taking several months of bereavement leave, she had returned to work full-time. Her children, particularly the boy in middle school, were having trouble dealing with grief. Several times a week, she was called away to deal with a child’s sudden illness, depression, or behavior problems. Meanwhile, the advisor was wrestling with how to pay the family’s bills without jeopardizing her retirement or the children’s education.

As I listened to the advisor tell the story, I wondered if he was deflecting his anger at himself onto the bank. Yes, the employer may have been callous, but what about the widow’s life insurance? If the family failed to plan the first time around, what steps had the advisor taken to ensure that it wouldn’t happen again? And what steps would he take to ensure that another client’s family isn’t faced with the same hard choices?

Recently, my dentist asked me to update my medical information and included a list

of possible symptoms and conditions. I checked off that I frequently get cramps in my

feet. After I left the office, it occurred to me that he hadn’t mentioned the cramps.

TAKING THE LEAD TO SECURE YOUR CLIENTS’ FINANCIAL WELL-BEING

TERE D’AMATO, CFP®, CLU®, CHFC®, MSFS



“A leader takes people where they want to go. A great leader takes people where they don’t necessarily want to go but ought to be.” — Rosalynn Carter

We wouldn’t be human if we didn’t try to avoid uncomfortable conversations. In his previous life as a corporate trainer, David Juliano of Commonwealth’s Advanced Planning team helped employees overcome this tendency using a concept called “comfortable versus right.” As David explains, “The idea was to get people to recognize that, in the regular course of conducting themselves in their jobs, they will repeatedly encounter situations where they have to decide what to do. Sometimes it might be tempting to take an easier course because it’s more comfortable, but that route may not be what’s right for the client. This philosophy helped people to pause in those situations and challenge themselves to always do what’s right, even though it might not be the most comfortable.”

Certainly, no one wants to lead clients through the uncomfortable conversation about death, wheelchairs, and nursing homes. But helping them make decisions about the best way to protect their financial futures is simply the right thing to do.

“Leadership should be born out of the understanding of the needs of those who would be affected by it.” — Marian Anderson

Discussing a client’s insurance needs is not the same as “selling insurance.” Although many advisors were introduced to financial services through an insurance company, today’s approach has moved away from “overcoming objections” to consultative selling. Try starting the conversation with open-ended questions like these:

• Is there something going on now that concerns you—an aging parent, a special needs child, health challenges, impending retirement?

• How do you feel this has affected or will affect your financial security?

• Are the consequences of these risks to your investments too large to ignore?

• Do you think your current level of insurance coverage is about right?

• Are your beneficiary selections still valid?

• What do you like about the insurance products you currently own?

•What would you change?

The answers to these questions can reveal the client’s preferences and biases, helping you make better recommendations. Most clients don’t know if their insurance coverage is adequate and will welcome a review.

As you initiate these conversations, don’t discount the sense of security that insurance can provide. I learned this lesson one December day as a young life insurance agent. A stranger walked into my office asking to buy life insurance as a holiday present for his spouse. It won’t surprise you that I was skeptical this gift would meet her expectations. I also suspected that if this stranger wasn’t contemplating suicide, he was scheduled for a major operation. I was wrong. When the policy was issued, the insured asked me to hand-deliver it that night to his wife. As I sat at the dining room table, he turned to me and asked me to tell his wife why he bought the policy. I was about to clumsily say, “It’s your Christmas present!” when he interrupted me. During this holiday season, he wanted her to have as much love, warmth, and security as he and their children received from her. He promised to always


be there for her in every way, but if he couldn’t, she would never have to worry about money. She cried; I cried. And they continued to be my very favorite clients through the years.

“Successful leaders . . . don’t tackle things they are not good at. They make sure necessities get done, but not by them. Successful leaders make sure they succeed!” — Peter Drucker

Imagine that a storm is coming. As you go around the house, you find one window stuck open. No matter how much effort you exert, nothing will make it budge. Would you stop there, throw up your hands, and ignore the rest of the open windows? Of course not. You would close the rest of the windows and take measures to minimize the damage from the open one.

Likewise, if you’re not comfortable with your insurance expertise, seek advice from advisors who are. Attend the Commonwealth Insurance Institute, connect with others on the Commonwealth Forum, or turn to Commonwealth’s

Insurance department for point-of-sale support contacts. If you really believe that the client would be better served by someone else, refer him or her to the best professionals in your community.

“You cannot be a leader, and ask other people to follow you, unless you know how to follow, too.” — Sam Rayburn

When was the last time you created a comprehensive financial plan for you and your family? When Commonwealth advisor John Augustine was asked what he would say to someone looking to integrate insurance into the financial planning process, he replied, “Do you own it yourself? Ask yourself who you love and care about; what would life be like for these people if you died or needed 24-hour care? Have you adequately provided for them? If not, insurance can do something that no other financial product can—create money when it is most needed.”

Tere D’Amato is the vice president of advanced planning. She is available at x9168 or at [email protected].


Simple can be harder than complex: You have to

work hard to get your thinking clean to make it

simple. But it’s worth it in the end because once

you get there, you can move mountains.

— Steve Jobs




As we look at the trajectory of the U.S. economic recovery, once again this year we

see a light at the end of the tunnel and wonder if it is an oncoming train. Although

improvements in 2010 and 2011 did indeed end up derailing, it looks, at this point,

as if 2012 may bring the start of sustainable growth. The end result remains vulnerable

to outside influences, though, so the real question here is, How will we know?

THE LIGHT AT THE END OF THE TUNNEL

BRAD MCMILLAN, CFA®, CAIA, MAI, AIF®

THE BRIGHT SPOTS: EMPLOYMENT AND HOUSINGWhen it comes to sustainable growth, the key indicator I focus on is employment, as employment generates wage income, which is the base of consumption. Because consumption accounts for over two-thirds of our economy, without growing employment, nothing else can grow with any lasting momentum.

The 2012 employment picture has been encouraging, and, despite some recent weakness, the numbers seem to indicate that the recovery is still on track. Unemployment currently stands at 8.2 percent, and the economy continues to add jobs, albeit at a sometimes anemic rate. These increases in employment have been accompanied by growth in incomes, which has helped to support an increase in consumer spending. While there has also been some drawdown in the savings rate, it is not yet at a problematic level. To me, this suggests that continued income growth will allow continued spending growth, at the same time as saving continues.

Employment isn’t the only bright spot, however. Other positive factors in our economy include the apparent stabilization of the housing market, which has been hovering at depressed levels for several years. Housing is a foundational component of any recovery, and we’re starting to see rising prices in some markets, as well as

an uptick in housing starts. Combine that with current record-high affordability levels, record-low mortgage rates, and rising rents, and you’ve got a recipe for a continued recovery.

Similarly, demand for durable goods, such as cars, also seems to be recovering. This is due, in part, to deferred

demand. You may not need a new car every year, but you will eventually, and it seems that many Americans are digging into their pockets to fund these big-ticket purchases again.

But is it all sustainable? I think it could be. Employment growth at the current level seems to be sustainable around a trend line that would promote continued recovery. Continued growth

in spending would follow as a result. The housing recovery and growth in durable goods demand should also be able to continue their forward trajectory. When you also factor in a gradual recovery in government spending and slow growth in business investment—both of which are occurring—the recovery appears to be on track.

So what could derail it?

THE OBSTACLES: POLITICAL VS. ECONOMIC Major obstacles to the ongoing economic recovery would be external events—a war in the Middle East, a European economic collapse, or a significant political event in the U.S., for example. Of the three, the most probable seems to be the last (although renewed talks about Greece’s exit from the euro have certainly added to market volatility). Notably, however, all three examples are political, not economic, events. That political events now trump

MAJOR OBSTACLES TO THE ONGOING ECONOMIC

RECOVERY WOULD BE EXTERNAL EVENTS—A WAR IN THE

MIDDLE EAST, A EUROPEAN ECONOMIC COLLAPSE, OR A

SIGNIFICANT POLITICAL EVENT IN THE U.S., FOR EXAMPLE.



economic ones is a reflection of the new world order. In some sense, though, this is just a reversion to the origins of the economics discipline, when it was known as political economy.

It also reflects a reversion to the real rather than the financial. The past 30 years have been an exceptional period in world history, with unprecedented growth in finance and financial markets. Now, politics and the real economy are reasserting themselves against the primacy of finance.

We might also examine this situation by considering the effects of nationalism and geography on recent economic developments. The Middle East and the oil price, the European financial crisis and the Greek and French elections, turmoil in Russia and its effect on natural gas prices across Europe . . . all show that the return of the real is not limited to the U.S. In order to start to understand where we as a country now are economically, we must take a wider perspective than we have done during the past couple of decades.

There are two dimensions we need to look at in this analysis. The first is whether a country is a consumer or a producer of key items, such as capital, raw materials, and manufactured goods. The second is the key dependencies of a country, whether they are capital, energy, market access, or other factors. The first dimension looks at how a country operates, the second at its vulnerabilities.

Compare Germany with Greece. Both are European countries, but the similarities end there. Germany produces capital; Greece consumes it. Germany manufactures goods; Greece imports them. Both consume raw materials, but Germany uses them more efficiently. Overall, Germany depends on market access and raw materials, while Greece depends on access to capital, imports, raw materials, and other factors. Unsurprisingly, Greece has been more economically vulnerable.

Running this analysis on the U.S., we find that, overall—and with one big exception—we are in a strong position. The big exception, of course, is capital. The U.S. has been running large deficits for some time, depending on foreign capital for continued operation. In other areas, including manufacturing, demographics, geography, and even energy, the U.S. remains relatively strong. Because our capital

dependency stands out in a generally healthy picture, it has, unsurprisingly, become a focus of national concern and policy debate under the name of the deficit.

THE ONCOMING TRAIN? Which brings us to the major outstanding economic and political issue of our day. The U.S. capital dependency means that this year’s presidential election will determine the government that will have to make long-term decisions about how to deal with the country’s budget problems—because we can no longer continue to kick the can down the road. To understand the basis of the decisions they will make, we must first understand the underlying facts.

We currently spend about 50 percent more than we raise in taxes—that is, taxes cover about two-thirds of spending and borrowing accounts for about one-third. Approximately 37 percent of the spending is discretionary (defense and other government programs), about 57 percent is mandatory (Social Security, Medicare and Medicaid, etc.), and about 7 percent is net interest on the accrued debt.

In order to balance the budget, we have two options: reduce spending or raise taxes. The numbers above mean that if we raised taxes without cutting spending, taxes would have to go up by about 50 percent. Everyone in the country would be paying half again as much as they now do.

If, on the other hand, we balanced the budget by cutting spending alone, we would either have to substantially eliminate the discretionary spending—all of defense and everything else we typically associate with the federal government—or, for example, cut discretionary spending by half and Social Security and Medicare by about one-third. The details can vary, but this is broadly what it would take. I don’t have to tell you that neither “solution” would sit well with U.S. citizens; just look at what happened in Greece.

This suggests, then, that any resolution for our budget woes will probably require a mix of tax increases and spending cuts. The details, as always, are what we want to know, but, at this point in the election campaign, we don’t have any. A review of both parties’ proposals thus far suggests that neither has a credible plan for getting the problem under control.

There is another complicating factor to consider as well: the numerous looming changes coming toward the end of this year. The expiration of the Bush tax cuts and the sequestration of government spending will both hit at the end of 2012. Worse, the debt ceiling debate will fire up

again, quite possibly even before the election. Any one of these would have significant political and economic effects, but if they all come at the same time—with a presidential election mixed in—we could be facing some extreme uncertainty and the possible derailment of the economic improvements we’ve seen thus far.

COMMONWEALTH RESOURCESCommonwealth has provided support in similar situations in the past—the Turbulent Market materials from 2008 and 2009 and the extensive commentaries on the last debt ceiling debacle and U.S. credit rating downgrade, among others—and we will continue to do so. More, since we know this is coming, we will be providing materials to get ahead of the storm as the election nears and more details become available. In the meantime, we’ll keep an eye on the light in the tunnel and hope for the best.

As always, feel free to contact me or another member of Investment Research if we can provide any assistance.

Brad McMillan is Commonwealth’s chief investment officer. He is available at x9269 or at [email protected].



Keeping a little ahead of conditions is one of the

secrets of business; the trailer seldom goes far.

— Charles Schwab

Recognizing this risk, Batman has made it his personal mission to stand watch over the city and protect its citizens from criminal mischief. Ironically, the financial services industry currently finds itself in a similar scenario, searching for its own Batman to stand watch over its citizens (i.e., its investors) and protect them from financial malfeasance.

Recent investment scandals and financial debacles have highlighted the need for more stringent oversight and put the process of assessing and monitoring risk at the top of the list of regulators’ priorities. Consequently, due diligence programs are evolving from their previously narrow focus toward a more holistic analysis of both products and sponsors. Industry experts believe that this dual level of review will reduce overall risk while ensuring that broker/dealers engage in an ongoing effort to protect their customers.

WHAT DOES IT MEAN FOR COMMONWEALTH?Broker/dealers have always been required to perform due diligence on the products they make available to their advisors and clients. But in this environment of heightened sensitivity, the regulators have begun asking B/Ds to evidence their due diligence programs through written supervisory procedures and documented backup. The SEC and FINRA have gone so far as to announce that they are making due diligence a key focus of the 2012 exam cycle. As a result, B/Ds that are unable to evidence sufficient due diligence procedures may face enforcement actions, fines, suspensions, and even expulsions.

Clearly, from a regulatory perspective, it’s important that Commonwealth maintain an appropriate due diligence program. But it’s also important from an advisor perspective in that it:

1. Affirms our commitment to running a compliant firm and ensuring that we have effective procedures in place to properly analyze sponsors and their products

2. Gives advisors more confidence in the products they ultimately recommend to their clients

Commonwealth’s due diligence program is managed through the collaborative efforts of our Investment Research, Compliance, and Legal teams—and led by our dedicated due diligence officer (that’s me).

OUR VERY OWN BATMANCommonwealth’s Wealth Management division already had a robust due diligence program that encompassed many layers of analysis. Product managers and analysts monitored products to help ensure that our platform offerings met appropriate guidelines for quality and oversight. In recent years, however, it became clear that we would benefit from a dedicated position that could be bridge between Compliance and Wealth Management. By establishing a leadership role for the entire process, we would help alleviate the procedural burden our analysts faced in documenting, tracking, and maintaining this centralized due diligence program. And with more time on their hands, our analysts could devote more of it to consulting with advisors and helping them find the most appropriate investments for their clients’ portfolios.

While I don’t claim to have an alter ego who prowls the streets in a car shaped like a bat, as Commonwealth’s due diligence officer, it is my personal mission—with support from my partners in Research, Compliance, and Legal—to stand watch and be ready to identify regulatory, product, and operational risks.

THE DUE DILIGENCE REVIEWHere at Commonwealth, the due diligence program encompasses a multistage review process that starts with a due diligence questionnaire. We ask questions to gather information on the firm’s history, product results, existing compliance oversight, any regulatory updates, operational process, and financial procedures. Sponsors are required to complete the comprehensive questionnaire during the

I’ve always been fascinated with comic book superheroes, especially Batman. As any

comic book fan knows, Gotham is filled with criminals seeking to disrupt the city

by spreading fear, chaos, and uncertainty.

STANDING WATCH: A NEW ERA OF DUE DILIGENCE

FRED SHANE





RFP phase, as well as annually. We then review these questionnaires and any supporting documents provided in order to fully understand a sponsor’s internal controls, organizational effectiveness, and products.

Throughout the year, we conduct random spot checks, analyzing legal and regulatory updates to identify any potential red flags, such as regulatory fines, headline risk, pending lawsuits, or legal decisions that would negatively impact the firm. In addition, I, along with our product managers and analysts, hold periodic on-site meetings with select groups of sponsors, digging deeper into their internal controls, compliance program, operational infrastructure, and financial condition. This allows us to analyze a firm’s infrastructure beyond the due diligence questionnaire while building stronger relationships with our sponsors.

Besides this sponsor-level review, our product managers and analysts review sponsors’ products on an ongoing basis utilizing various research tools, product documents, and analytical techniques to ensure that management teams are adhering to their processes and mandates.

Products that are currently vetted through this due diligence process include:

•SMAs/UMAs

•Third-party asset managers

•Alternatives

•Real estate

•Leasing programs

•Variable annuity/life core sponsors

•Mutual fund core sponsors

•Commonwealth’s Mutual Fund Recommended List

•PPS Select models comprising mutual funds

•UITs

•Retirement (to be activated fall of 2012)

Finally, through an extensive network of tracking documents, authorized stakeholders are able to obtain information on all of our products and sponsors whenever it is needed—and so we can evidence our due diligence efforts should the regulators come calling.

WHAT IS IN STORE IN THE FUTURE?We will continue to review, analyze, and enhance the firm’s due diligence program to ensure that it remains viable and adheres to regulatory requirements. In addition, we will expand the program into various aspects within Wealth Management as new risks are identified. As our program grows, other departments within Commonwealth are beginning to leverage the process to help identify opportunities for improvement within their own areas.

FINAL THOUGHTSThe success of Commonwealth’s due diligence program is due to the collaborative efforts of members of Research, Compliance, and Legal—the superheroes who stand watch and help protect the interests of Commonwealth, our advisors, and their clients.

And it’s just one more way in which Commonwealth lives and breathes our client-forward™ philosophy. As a sponsor recently shared with me: “Honestly, I think it is terrific that the advisors at Commonwealth have a diligence person like you protecting their clients. I can attest that it is more thorough than what we see from many firms.”

Fred Shane is a due diligence officer in Investment Research. He is available at x9931 or at [email protected].

CentralizationMultistage

Review

Collaboration

Tracking

Transparency



While not as bad as the panic of 2008, where many justifiably feared the survival of weaker carriers, the current state of affairs offered little to feel optimistic about. The speaker outlined numerous contributing factors: an aging sales force, declining revenues, and unhedged variable annuity business. But the main negative factor was the low-interest-rate environment, which hamstrung insurance companies’ ability to invest premium dollars in fixed income.

At the time, the 10-year Treasury was yielding around 3.5 percent, and, despite the gloomy mood, the speaker and others felt it couldn’t possibly get any worse. And yet, today, the 10-year Treasury hovers below 2 percent and carriers have responded accordingly by restricting or eliminating products or leaving the business altogether. What does this mean for clients who need to manage risk in such an uncertain and unprecedented environment? Are there any opportunities now, or should advisors wait until it gets better?

WHERE WE STAND TODAYOn a positive note, the carriers that have left the business or limited their products are still financially strong, according to ratings agencies. For clients with existing policies, particularly those with guarantees, their protection remains. And because those products were sold at a time of higher interest rates, the premium dollars they previously paid were invested in higher-yielding assets than are available today. A contractually guaranteed income benefit or death benefit often remains the same as the day it was bought.

On the flip side, products without guarantees could be at risk, as underlying fixed accounts may now be at or near contractual lows. During your quarterly and annual reviews, be sure to evaluate these products using in-force illustrations to ensure that they’re still on track to be there when your

clients need them. Commonwealth’s Insurance and Annuity Research teams can help with this analysis, providing insight and potential alternatives to your clients’ current coverage. But thankfully, in most cases, clients who have already bought the coverage they need are in products better than what’s available today.

COMPANIES ARE HUNGRY FOR BUSINESSOf course, carriers that remain in the business still want and need new sales, especially of products with systematic premium payments rather than lump-sum premiums. Insurance is inherently a long-term product, and carriers, particularly mutual carriers, see the long-term opportunity for revenue. With sales numbers at historic lows, many are willing to compete on price, underwriting, or compensation to win market share and stay on target to meet their goals. Commonwealth’s Insurance team has helped many advisors shop the dozens of available carriers to find cost-effective solutions for clients, pinpointing those with the best chance of winning the case.

Take a look at indexed life and traditional whole life. With companies eliminating some of their guaranteed no-lapse universal life products, and others raising costs on such policies, indexed life and traditional whole life insurance have both picked up the slack for many advisors. Although each product takes a very different approach to cash value—indexed products offer a cap and floor return tied to an index like the S&P 500, and whole life pays fixed rates and dividends—they have had similar historical returns and volatility. Both products offer fixed income-like returns and risk, though neither has the risk to principal carried by fixed income funds or individual bonds when interest rates do eventually rise.

Although carriers and advisors can debate whether life insurance deserves to be called an asset class, both of these products can help diversify your clients’ holdings while providing valuable protection. In addition, such products give clients options if they later decide to 1035 or surrender their contracts, whereas most no-lapse universal life policies and term contracts have no such equity built up in later years.

CLIENTS NEED INSURANCE MORE THAN EVERAlthough investing may allow for a wait-and-see approach, insurance planning for most clients can’t wait. A premature

In March of last year, I sat in a packed

audience listening intently while a

former insurance company CFO

explained why this was a terrible time

to be in the insurance business.

A GOOD TIME, A TERRIBLE TIME, OR JUST IN TIME? NOTES ON THE INSURANCE INDUSTRY

BRIAN HARRISON, CFP®, CLU®, CHFC®, CLTC



death, disability, or long-term care event would bankrupt most families. And with life insurance ownership at historic lows, according to LIMRA, clients’ needs are as great as they’ve ever been. A recent Genworth study found the following: “Over 42 percent of American adults with household incomes between $50,000 and $250,000 do not have life insurance. Even for those who do own life insurance, 40 percent recognize that they need more. This is likely due to the fact that the average Main Street American only has enough life insurance to cover 3.6 years of income . . . the average amount of coverage is $155,000. 69 percent of single adults with children are uninsured.”

Conduct a simple needs analysis. The Genworth study also found that clients would welcome a needs analysis and annual insurance review, but they want the process to be quick and easy. Commonwealth’s interactive Life Insurance Needs Analysis Tool can help you quickly determine the right amount of coverage for a client; it’s as simple as inputting some basic information. (You can access the tool on COMMunity Link® at Products > Insurance > Request a Proposal.) For term life insurance, our one-click quote engine lets you see how much it would cost in a matter of seconds. And then, through our App Assistant program, you can delegate all of the paperwork to us.

Consider this: one average term life insurance policy per week could add more than $50,000 to your top-line revenue while protecting your clients against a financial tragedy. The Genworth statistics make a compelling case, and with the number of traditional insurance agents in decline, you may be the only person to bring up the topic, perform a needs analysis, and get clients the coverage they need.

ESTATE TAX OPPORTUNITIES WON’T LAST FOREVERFor higher-end clients, the current estate tax rules may present a once-in-a-lifetime opportunity to remove assets from a large estate. Until year-end, the federal lifetime gift tax exemption is unified with the federal estate tax and generation-skipping transfer tax exemptions, for a total possible exemption of $5.12 million; the maximum tax rate on anything above that amount is 35 percent. Thus, during life and at death, a client may make total taxable gifts (other than annual exclusion amounts or transfers for medical or educational purposes) of up to $5 million before owing gift taxes. And life insurance provides an opportunity to leverage that gift substantially.

Time is of the essence, however. Unless Congress acts to extend the current law (a big uncertainty considering the persistent gridlock in DC), the exemption limit will decrease to $1 million and the tax rate will rise to 55 percent in 2013.

Talk to your high-net-worth clients now. By taking advantage of life insurance, healthy clients can give away $5 million in assets without writing a check for $5 million. Guaranteed products offer the chance to pass on wealth today with “discounted dollars,” creating a substantial legacy and preventing the challenging fire sale that could occur should clients die without proper planning. For example, a $1 million gift into a Penn Mutual Survivorship Plus Indexed Universal Life policy for two very healthy 55-year-olds would guarantee in excess of $7.8 million in death benefits; thanks to the cash value’s indexed opportunity for growth, it could be even be more. Business owners who have a sizable illiquid asset in their companies may benefit the most from such a strategy. Estate planners and insurance companies should be busy at year-end; now is the time to start the conversation with your clients.

A GREAT TIME FOR ADVISORSWith the combination of favorable tax laws, carriers desperate for business, and a vastly underinsured population, you have a tremendous opportunity over the next few months. And Commonwealth has the resources to make the process easy. We can design the case, take the application, and usher it through underwriting. All you need to do is have a conversation with your clients about the risks that remain in their financial plans. From the kids of a client who just had their first child to your wealthiest clients, you can make a meaningful difference in their lives. While it may not be a good time to be an insurance company, it’s a great time to be an advisor who makes risk management part of his or her practice.

Commonwealth Financial Network® does not provide legal or tax advice.

Brian Harrison is the director of insurance and financial planning marketing. He is available at x9174 or at [email protected].

The story has the usual cast of characters: a wealthy client (a lawyer) and his broker, ex-wife, and widow. After a bitter divorce, Newman Trowbridge Jr. presumably didn’t intend to retain his former wife as his IRA beneficiary. When he died unexpectedly in 2009, however, the beneficiary designation on the IRA hadn’t been updated, leaving the account’s considerable holdings to his ex-wife.

Citing the securities industry’s Know Your Customer rule, Trowbridge’s estate sued the broker and broker/dealer, alleging that they were guilty of negligence and a breach of fiduciary duty. (“Estate Sues B/D and Broker Over Lawyer’s Designation of Ex-Wife as IRA Beneficiary,” the Forbes.com headline read.) The suit claimed that the broker failed to regularly review Trowbridge’s accounts and to advise Trowbridge to designate his current spouse as his IRA beneficiary after he remarried. Ultimately, the FINRA arbitration panel found that the burden lay with Trowbridge, a sophisticated attorney who routinely oversaw his own investment and estate planning decisions. Although no one seemed to think his ex-wife was the intended beneficiary, she received the money.

Although it may seem that the B/D and the broker won this case, the reality isn’t quite so rosy. Nobody embroiled in a lawsuit comes out a winner after spending large sums of money on his defense. And would you want the terms defendant, breach of fiduciary duty, and FINRA arbitration panel associated with your name and practice?

IRA BENEFICIARY FAQSFortunately, when it comes to conducting beneficiary reviews, Commonwealth advisors are ahead of the game. I don’t need to tell you that regular reviews are essential to keeping your clients’ estate and financial plans current and in line with their wishes. Based on my daily conversations with advisors, most of you are already providing this important service. In fact, many of you are calling for advice on complex beneficiary issues so that you can guide clients in working with their attorneys and tax advisors. Here’s a sampling of questions I commonly hear from advisors regarding IRA options in estate planning.

How do I know the right beneficiary is named? The only way to be sure is to gather all the facts and review the client’s estate planning documents. While it’s important to consider tax consequences and ways to keep distribution options open, it’s equally important to understand the client’s planning goals. Does he or she have minor children, spendthrift concerns, children from a prior marriage, or worries about children getting divorced? If so, the client may be willing to sacrifice a beneficiary’s flexibility in terms of taking distributions or maximizing tax advantages. Estate planning isn’t a perfect world. More often than not, clients will have to make a choice between control, flexibility, and tax savings.

How important is it to keep tabs on your clients’ beneficiary designations? As one

recent case shows, it’s an area advisors shouldn’t overlook.



IT’S POSSIBLE TO BYPASS EXPENSIVE AND

TIME-CONSUMING PROBATE PROCEEDINGS

BY INITIATING A DIRECT TRUSTEE-TO-TRUSTEE

TRANSFER FROM THE DECEASED SPOUSE’S

IRA TO THE SURVIVING SPOUSE’S IRA.

KEEPING YOUR CLIENTS’ BENEFICIARY DESIGNATIONS UP TO DATE—AND YOUR NAME OUT OF THE PRESS

ROSE WATSON, ESQ.



Don’t bad things happen when a trust is named as beneficiary? Not really. In order for IRA proceeds to be distributed via a life expectancy payout, there must be a designated beneficiary, which the IRS defines as an individual. A trust can qualify as a designated beneficiary to take required minimum distributions (RMDs) if it meets the IRS’s “see-through” rules, which are outlined in the next section. In this case, the trustee may take RMDs over the life expectancy of the oldest individual beneficiary. (The other options are a lump-sum distribution or a full distribution within five years.) In comparison, if individual beneficiaries are named, they may set up their own IRA beneficiary designation accounts for their shares and take RMDs over their own life expectancies.

Clients who are considering naming a trust as an IRA beneficiary should keep the following points in mind:

• Separate account treatment is never available. If the trust beneficiaries range widely in age, the trust may end up taking distributions on a much more accelerated time frame than if the youngest individual were named.

• A trust, even a see-through trust, cannot exercise the spousal rollover option. If a surviving spouse is the income beneficiary with children as remainders, upon the surviving spouse’s death, the trust must continue with RMDs based on the surviving spouse’s life expectancy, consuming the IRA assets more quickly.

Clients may find it easier to swallow these potential limitations if designating a trust allows them to achieve their primary planning goals, such as asset protection and control from the grave.

How do I know if this is a see-through trust? There is no specific language that determines a see-through trust. Instead, four criteria must be met:

1. The trust must be valid under state law;

2. The trust must be irrevocable or become irrevocable upon the participant’s death;

3. The trust beneficiaries with respect to the trust’s interest in the IRA must be identifiable from the trust instrument; and

4. Certain documentation must be provided to the plan administrator.

If the trust satisfies these four requirements, the trust beneficiaries will be treated as designated beneficiaries of the IRA for most, but not all, purposes. Keep in mind that all trust beneficiaries must be designated beneficiaries (i.e., individuals). If the trust has beneficiaries that do not qualify as designated beneficiaries, such as charitable organizations, it must be carefully reviewed to determine if it qualifies as a see-through trust.

What are the differences between the IRS’s RMD rules and the trust distribution provisions? A trust is governed by two sets of rules. The first are the IRS regulations that determine the schedule the trust must follow to take distributions from the IRA. Once the trustee has taken the IRA distributions, the trust document itself determines the beneficiaries’ access to the trust assets.

How do I include an IRA in a testamentary trust and preserve the designated beneficiary? If the IRA benefits are payable to the estate, there is no designated beneficiary, even if all the beneficiaries of the estate are individuals. The executor can transfer the inherited IRA to the estate beneficiaries, but the estate beneficiaries can’t use their own life expectancies to compute RMDs. If the client has a testamentary trust and wishes to preserve the IRA’s designated beneficiary status, the testamentary trust should be named in the beneficiary designation. (For example, “John Doe, Trustee of the Trust Established Under the Jane Doe Last Will and Testament, dated January 1, 2012.”)

What if the surviving spouse is the sole beneficiary of the deceased spouse’s estate? A long line of IRS rulings establishes that, if the IRA benefits are paid to the estate, the surviving spouse can roll over the benefits to his or her own IRA, provided certain conditions are met. In fact, it’s



possible to bypass expensive and time-consuming probate proceedings by initiating a direct trustee-to-trustee transfer from the deceased spouse’s IRA to the surviving spouse’s IRA, a procedure blessed by the IRS in a similar situation in Private Letter Ruling 201211034 (December 22, 2011).

Why is it often recommended to “name the spouse as primary and the trust as contingent”? A widow or widower who inherits IRA benefits from his or her deceased spouse has two options that are not available to other beneficiaries. The surviving spouse can take a life expectancy payout with the life expectancy recalculated every year, or the spouse can roll the whole amount over to his or her own IRA. Thus, the goal of naming the spouse as the primary beneficiary and the trust as secondary is to maximize flexibility for the spouse while preserving some protection and control in the event the spouse dies first or disclaims the asset.

Can clients name an UTMA or UGMA account for minor beneficiaries? If a client wishes to benefit a minor directly, he or she may do so. (NFS does not permit a custodial designation.) One benefit of using an UTMA or UGMA account for minor beneficiaries is that the client avoids the expense of drafting a trust. For IRAs with smaller balances, this approach may be preferable. Another benefit of using an UTMA or UGMA account is that, until the beneficiary reaches the age of majority, the account’s custodian has control over the funds. The age of majority varies from state to state between 18 and 21. The major drawback is that, once beneficiaries come of age, the money is theirs to use as they wish.

Why do estate planning attorneys rely on advisors? It’s simple: you’re competent and they need your help. Plus, they know your clients trust you. In most cases, you probably know more about the client’s financial plan than the attorney, and you may also be more familiar with the complex IRS rules governing IRAs. Clients are sometimes reluctant to pay legal fees to have an attorney help review their beneficiary designations, and the attorney may rely on you to see that everything is wrapped up. Working with the attorney to ensure that the client’s estate is in order is a great way to build a strong foundation for future referrals.

TOOLS TO USE WITH YOUR CLIENTSFor additional resources to assist your clients with their beneficiary designations, visit the Financial Planning Playbook on COMMunity Link® at Planning & Research > Financial Planning > Playbook > Estate Planning > Coach Your Clients. There, you’ll find our Reviewing Your Beneficiary Designations worksheet and a new client-approved piece titled “FAQs: IRA and Trust Basics.” We hope you’ll find these resources useful during your regular beneficiary reviews. Remember, asking the right questions can go a long way toward protecting your clients’ assets and your own good name.

Commonwealth Financial Network® does not provide legal or tax advice.

Rose Watson is an advanced planning consultant. She is available at x9891 or at [email protected].

PULL QUOTE



From a high level, our team specializes in the analysis of individual credits across the fixed income universe, including Treasury, agency, mortgage, municipal, investment-grade, high-yield, and preferred securities. We also provide regular market commentary through a weekly publication, Across the Curve, as well as via the Investment Research team’s quarterly conference call.

To date, we have had the opportunity to work with more than 500 Commonwealth advisors in various capacities, and, through this article, we hope to introduce our team to an even broader base. Read on to learn how you can leverage our team to meet your clients’ fixed income investment needs and goals.

ANALYTICAL SUPPORT AND INSIGHTDuring the past three years, our team has served as a highly specialized resource for advisors seeking insight or analytical support across fixed income markets and individual securities. We provide a broad range of capabilities to advisors for both existing and prospective clients, offering analytical solutions that are specifically customized in accordance with advisor needs, client risk tolerance and investment objectives, and any unique analytical goals.

Here are some specific ways you can leverage our team:

The evaluation of an existing fixed income portfolio or security. This analysis may include a written report summarizing the market environment of the associated asset class, an aggregated portfolio overview and relative comparison to the broader asset class, and individual credit analysis, which focuses on fundamental issuer credit quality and unique security structure. The goal is to identify key risks within a portfolio and assess whether or not existing holdings, in aggregate, appear to best reflect the client’s targeted risk tolerance and investment objectives.

Appraisal of a prospective client’s existing portfolio and proposal for alternative fixed income investment solutions. This analysis may include a written report similar to that noted above. In addition, we seek to provide you with value-added solutions that you can present to your potential new client, including suggestions on portfolio realignment, possible investment strategies, and appropriate fixed income strategies given the investor’s articulated goals.

Portfolio construction and/or strategic repositioning. In this endeavor, the team works closely with the Fixed Income Trade Desk to assist advisors in constructing customized fixed income portfolios or strategically liquidating existing positions to effectively reposition a portfolio. We may also collaborate with you to build a personalized bond ladder based on the client’s needs. When appropriate, different potential portfolio illustrations may be provided to depict varying income generation opportunities that may be available through alternative fixed income strategies. These illustrations are meant to serve as examples of

Since its establishment in the spring of 2009, Commonwealth’s Fixed Income Research

team and capabilities have expanded in an ongoing effort to meet the evolving needs of

our advisors for information and insight related to individual fixed income securities.

FIXED INCOME RESEARCH: SUPPORTING YOUR INVESTMENT NEEDS AND GOALS

MEAGAN SWANSON, CFA®

risk/reward opportunities in the current market environment, as well as to provide you with material and talking points for navigating conversations and framing expectations with existing and potential clients.

Idea generation associated with new potential investment opportunities. Through this analytical process, we seek to identify new potential individual fixed income investments given a set of client constraints and objectives. This screening process can be completed on an ad hoc basis or periodically, depending on your needs. The level of detail we provide can also vary, ranging from a basic security screen to a highly detailed, individual credit analysis by security.

Formulation and implementation of fixed income strategies. This process involves the collaboration of the Fixed Income Research team, the Trade Desk, and the advisor. We will work closely with you to help you take advantage of market dislocations with an aim to opportunistically maximize yield and minimize cost basis while gradually building out portfolios. The goal is to marry credit analysis, portfolio construction, and effective trading strategies.

Prospective account proposals. Through this analytical exercise, we strive to provide advisors with the information and presentation material necessary for initial and ongoing meetings and conversations with prospective clients. The effort typically begins with an introductory discussion to gather information about the client’s unique investment goals and objectives, risk tolerance, broader investment portfolio, and net worth composition. Then, we work with you to identify appropriate asset class allocations and potential investment opportunities. We may also

leverage the broader Investment Research team for additional analysis.

Market commentary and insight. Our team produces a weekly publication, Across the Curve, which includes commentary on the fixed income markets, Federal Reserve policy, new issuance trends, and market performance. Additionally, we collaborate with the Investment Research team to produce a weekly client-approved market commentary. We also provide periodic commentary on market-moving events (e.g., the U.S. Treasury downgrade; municipal market “60 Minutes” response). As we are consistently following various fixed income market trends and news-related items, we aim to be a resource for advisors seeking to discuss the general fixed income asset classes, current trends, and near-term outlooks.

These are just a few ways in which our team works to consistently support the growing analytical needs of Commonwealth advisors in the individual security fixed income space. That said, we know that the markets—and, thus, clients’ investment needs—are always in flux, so please feel free to reach out to us directly with any unique question or request that relates to individual fixed income securities. If we do not have a solution already, we are happy to work with you to create new tools and processes to support the evolution of your investment management practice.

E-mail us at [email protected].

Meagan Swanson is a senior fixed income analyst. She is available at x9968 or at [email protected].




Susan Kelly, CAIA Manager, Alternative Financial Strategies

Susan is responsible for products within alternative financial strategies (e.g., managed futures, hedge funds, private equity, structured products, individual fixed income securities), as well as for assisting advisors

with case design and asset allocation decision-making. Prior to Commonwealth, Susan worked for Citizens Advisors, John Hancock, and Citigroup/Smith Barney. She holds a BS in management with a concentration in finance from Purdue University and an MBA from New York University.

Fred DeBaets Senior Fixed Income Analyst

Fred’s primary responsibilities include fixed income strategy and portfolio construction; idea generation for new investment opportunities; research related to Treasury, agency, mortgage, and municipal

bonds; implementation of opportunistic trading and market strategies for client accounts; and market commentary. Prior to Commonwealth, Fred worked at Morgan Stanley and Bear Stearns in fixed income. He graduated from Plymouth State University with a double major in financial management and economics, going on to get his MBA at the university.

Meagan Swanson, CFA® Senior Fixed Income Analyst

Meagan’s primary responsibilities include portfolio construction; idea generation for new investment opportunities; research related to investment-grade and high-yield bonds and preferred securities; customized

proposals and reviews for prospective accounts; and market commentary. Prior to Commonwealth, she worked for Babson Capital Management, Fidelity Management & Research, and Acuity Capital Partners, focusing on corporate fixed income markets. She graduated from the University of Massachusetts at Amherst with a major in finance and a minor in economics. Meagan is a candidate for CFP® certification.

Joe Maduri Fixed Income Associate

Joe is a convert from Commonwealth’s summer internship program. His primary responsibilities include analyzing individual fixed income securities, responding to advisor inquiries, and assisting with

market research and commentary. Joe graduated from Westfield State College in May 2009 with a degree in business management with a concentration in finance. He is a CFA® Level II candidate.

Samantha Quinn Fixed Income Associate

Sammy also started in our summer intership program. Her primary responsibilities include analyzing individual fixed income securities, responding to advisor inquiries, and assisting with market research and

commentary. Sammy graduated from Bentley University in May 2012 with a major in finance and a double minor in management and psychology.


MEET OUR TEAMOur five-member team has 46 years of industry experience and 43 years of fixed income experience, and they are fast becoming an invaluable resource to Commonwealth advisors.


R E T I R E M E N T

No sooner did I have my feet strapped in, however, than they were jumping into the lift line and encouraging me to follow. Of course, I fell trying to get off the chairlift—a move I’d repeat dozens of times that first day. (I’ll let you imagine what I looked like trying to get down the hill.)

Like snowboarding, building a retirement plan business often comes with a steep learning curve. But, unlike my well-meaning friends, Commonwealth’s Retirement Consulting Services team won’t just get you onto the chairlift and wish you good luck making your way down the mountain. Whether you’re new to the retirement plan business or a pro looking for a tune-up, we’re with you at every turn, offering hands-on advice and insight, sharing industry best practices, and providing the latest tools and state-of-the-art technology. Our goal is simple: to help you build and maintain your position as a trusted leader in the retirement plan arena.

GIVING YOU AN EDGE IN THE QUALIFIED

PLAN MARKETPLACEIn the summer of 2009, in step with a general industry shift, Commonwealth introduced the fee-based Retirement Plan Consulting program, which allows advisors to work on a fee-for-service basis instead of on commission. The program gives Commonwealth advisors a competitive advantage in an ever-changing ERISA environment; with Retirement Plan Consulting, you can be a co-fiduciary to your retirement plan clients and provide advice to plan participants.

Recently, we added another piece of quality equipment to your arsenal of tools and resources: Retirement Plan Manager (RPM). Designed to serve as the hub of your retirement plan business, RPM has three major functions: it’s a

retirement-centric CRM tool, a robust investment policy statement (IPS) and fund analytics system, and an electronic RFP/proposal portal. RPM helps you deliver the full range of services your plan sponsor clients need, all in one place, while freeing up your time to focus on acquiring new clients. Let’s take a closer look at several of RPM’s key features.

A TIME-SAVING (AND TIMELY) RFP TOOLThis July marked a milestone in the retirement plan world, as the Department of Labor’s (DOL) 408(b)(2) regulation mandating plan-level fee transparency took effect. More than ever, plan sponsors will be seeking advisors’ help in evaluating the reasonableness of their plans’ fees.

Historically, putting a plan out to bid has been a manual process, requiring advisors to e-mail wholesalers the plan’s investment lineup, asset flow, and participant count so they can provide an accurate price proposal. Typically, you’d spend hours on the phone learning the ins and outs of their service offerings, trying to figure out what makes each recordkeeper unique. After that, you’d need to compile all the data into a client-friendly, easy-to-understand format. According to advisors, the entire process can take anywhere from 15 to 40 hours.

With RPM, putting a plan out to bid is far more efficient: you can initiate and send an RFP in as little as 15 minutes.

POWERFUL NEW TECHNOLOGY HELPS YOU STAY AT THE HEAD OF THE RETIREMENT PLAN PACK

BRIAN DOUGLAS, AIF®, APA

When I was a freshman in college, I

took an interest in snowboarding, and

some experienced snowboarder friends

offered to teach me the ropes.


R E T I R E M E N T

Once the recordkeepers have responded, you compile their answers and customized price proposals into a side-by-side preformatted report—all with one quick click of the mouse.

A CUSTOM IPS ENGINEThe DOL mandates that all qualified plans have an investment due diligence process, a requirement that’s typically satisfied with an IPS. This document defines acceptable investments for the plan, mapping out when the plan sponsor should keep its fund lineup intact and when it should swap out underperforming investments.

Here, too, RPM can save you a significant amount of time. The system writes a customized IPS for each plan sponsor and continually monitors the plan’s funds with quarterly Morningstar® data updates. One of the key benefits of using RPM’s IPS module versus other available systems is that it allows you to custom weight each screening criterion, giving more weight to tougher-to-pass screens and minimizing the weight for easier-to-pass screens.

A HANDY ELECTRONIC FILE CABINETTraditionally, a plan’s fiduciary file (containing contracts, investment committee notes, investment monitoring reports, and all other relevant documents) has taken the form of a fat three-ring binder. A copy is usually kept in both the advisor’s and the plan sponsor’s office. For advisors, maintaining these hard-copy files takes up a ton of valuable time and office space.

The Documents module in RPM allows you to store all of your clients’ essential documents online—think of it as your electronic fiduciary file cabinet. Simply upload the documents and file them in one of five prebuilt folders:

•Plan Documents

•Conversion Information

•Investment Reviews

•Communication

•Ongoing Services

And, if you choose, you can share certain documents with your plan sponsor clients using RPM’s Plan Sponsor Portal, which they can access via their own computers. Offering to organize and store sponsors’ important plan documents, such as 408(b)(2) disclosures, RFP reports, and vendor contracts, can help them fulfill their document retention duties under ERISA, a unique value-added service. RFP reports not only help the client select a new vendor, but they also paint a picture of the plan’s due diligence process, documenting why one vendor was chosen over the others. As a former senior DOL investigator remarked at a recent industry conference, “If it’s not documented, you didn’t do it.” Since RPM’s debut early this year, advisors have uploaded years’ worth of records, including Word, Excel, and PDF files, and even scanned copies of handwritten meeting notes. Keep in mind that, if you use the Plan Sponsor Portal, you control the content your clients see, file by file.

GETTING UP TO SPEED WITH RPMWith the DOL’s new fee disclosure rules going into effect this summer, now’s an opportune time to focus on taking your retirement plan business to the next level. Whether you’re new to the qualified plan marketplace or simply looking to make your business even more efficient, RPM’s customized solutions can help. For more information, visit the RPM page on COMMunity Link® at Products > Retirement > Retirement Plan Resources > Retirement Plan Manager. Or, contact Retirement Consulting Services at x9415, option 5, or at [email protected]. Remember, we’re always here to assist you, no matter where you are along the retirement plan learning curve.

Brian Douglas is a retirement sales consultant. He is available at x9924 or at [email protected].

He wasn’t exactly sure how it happened, not that it mattered at this point. The amount of the distribution for Mrs. Brady’s wire request hadn’t been included. Patrick thought he had prefilled the form, but no one had noticed that the amount was blank. And the client had already left the office.

This was only Patrick’s third week as Julie Advisor’s assistant, and he wasn’t looking forward to confessing this error. Mrs. Brady had come in unexpectedly to request the distribution, and Julie wasn’t in the office today. As Patrick pondered his options, he imagined that filling in the amount himself would do no harm. Sure, it was against policy, but . . .

Sometimes, problems happen that are outside of our control. What we can control, and what you can develop in your staff, is how to behave and what actions to take when faced with a difficult situation.

EXHIBITING MODEL BEHAVIOR Leadership doesn’t always require you standing on a chair and giving a speech. Leadership can sometimes be most effective when it’s simply based on doing the right thing.

Your staff ’s reaction in circumstances like the one described above is built on the hundreds of observations and experiences they’ve had working alongside you. The actions you take and the behaviors you exhibit serve as examples and are extremely important, especially in an industry like ours that relies so heavily on trust to properly function. Identifying your values and sticking to them fosters an office culture that encourages making the right decisions—even when an employee finds him- or herself in a tough spot.

FOUR COMMON CORE VALUESCommonwealth’s advisors are a diverse group, and their core values are equally diverse. Nevertheless, there are several commonly shared behaviors that most advisors should look to develop within their staff:

• Ownership: Accepting responsibility for one’s actions or decisions and taking advantage of opportunities to continually improve.

• Open communication: Establishing an open dialogue within the office where everyone is encouraged to voice their opinions, ideas, and concerns.

• Preparation and foresight: Identifying risks or operational inefficiencies and proactively creating solutions instead of waiting for problems to present themselves.

• Personal development: Encouraging staff to assume new responsibilities or learn new concepts and processes.

BEST PRACTICES FOR INCORPORATING CORE VALUES

IN YOUR DAILY ROUTINEConsider the following best practices as ways to actively incorporate the four common core values into your firm’s routine:

• When your office receives its annual audit letter from Commonwealth, take ownership of the findings and share them with the entire staff. This is a great way to recognize and reinforce the contributions and good decisions you and your staff have made while pointing out—and deciding how to correct—areas for improvement.

• Review and communicate to your staff the importance of Commonwealth’s Compliance

When it comes to handling compliance-related issues, as the following story can attest,

there are benefits to having established principles and procedures, as well as standards

of behavior.

LEADING BY EXAMPLE CAN HELP YOUR FIRM STAY COMPLIANT

TOM RICHARDSON

C O M P L I A N C E



C O M P L I A N C E

bulletins. This will not only demonstrate that the information shared in the bulletins matters to you, but it will also enable you to confirm that your staff understands whom the messages affect.

• Encourage open discussion regarding office matters, whether compliance-related or not. This will allow everyone to recognize and join together to resolve minor issues before they become major ones.

• Schedule regular staff meetings and use them to review what is working in the office and what is not.

Take ownership of the feedback and make changes where needed.

• Discuss Standing Letters of Authorization (SLA) or instructions for electronic funds transfer (EFT) when establishing a new client relationship or account. This type of proactive thinking can save time and frustration down the road if a client requests a withdrawal but cannot sign the required forms.

– You can find EFT instructions at Client Service > Take Assets Out and Client Service > Put Assets In on COMMunity Link® and forms for establishing SLAs in the Forms section of the website.

• Use the Alternative Client Contact Information Worksheet, available in the Forms section of COMMunity Link. If a client is difficult to reach, this worksheet will give you another method for attempting to make contact.

• Develop a formalized annual training plan for your associates. Well-rounded associates who know the services you provide and the procedures for processing business will take the paperwork burden off you so you can spend more time with clients and prospecting for new business.

• Ask staff members to document their day-to-day responsibilities and the procedures they follow to accomplish those tasks. That way, they can more easily step into one another’s roles during vacations, unplanned or extended absences, or when an employee leaves your firm.

– Commonwealth’s Compliance and Office Procedure manuals, available on COMMunity Link at My Practice > Compliance > Policies & Procedures > Manuals and at My Practice > Practice Management >

Operational Efficiency, respectively, can help you and your team in this endeavor.

To sum it all up, regardless of which core values you hold most dear, the behaviors you want to see in your

staff should be the same ones that you display every day. Because Julie had set a good example and taken the time to properly train him, Patrick’s story ultimately had a happy ending:

As Patrick rummaged through his desk drawer for a pen to fill in the missing $48,000 withdrawal amount, he remembered one of his first meetings with Julie, when he was introduced to his training plan. Because he would be handling client paperwork frequently, he had learned about document integrity. Suddenly, he recalled that Julie had told him that she had set up EFT instructions or Standing Letters of Authorization for numerous clients for situations just like this one.

Sure enough, he did some checking and found that Mrs. Brady had EFT instructions on file. After confirming the instructions with her, Patrick wired the funds and saved everyone’s time because he didn’t have to complete new wire paperwork. Even better, he had a great story to share at this week’s staff meeting.

Tom Richardson is a compliance advisor. He is available at x9092 or at [email protected].

WHEN YOUR OFFICE RECEIVES ITS ANNUAL AUDIT LETTER FROM

COMMONWEALTH, TAKE OWNERSHIP OF THE FINDINGS AND SHARE

THEM WITH THE ENTIRE STAFF.


T E C H N O L O G Y

For 2011, the FBI’s Internet Crime Complaint Center reported a 3.4-percent increase in cybercrime compared with 2010’s statistics; 314,246 complaints were filed for reported losses of $485.3 million.

A few months ago, I met with Fidelity’s fraud department to discuss the cybercrime epidemic, particularly the problem of wire fraud. Fidelity has been working closely with the FBI to trade information about every scam that the company and its correspondents, including Commonwealth, encounter. Based on the data they’ve compiled, it’s easy to spot the big-picture trends and see how the scammers adapt their tactics to exploit the newest “weakest link.” Unfortunately, that link is now your clients.

Across the financial industry, scammers are waging an ongoing assault on clients’ e-mail accounts, attempting to trick firms into wiring client funds to both domestic and international banks. Fidelity alone has seen approximately $15 million in losses as a result of fraudulent wire requests originating from clients’ compromised e-mail accounts. Commonwealth advisor offices have been targeted numerous times as well, sometimes successfully. As cybercriminals increasingly set their sights on clients, it’s clear that we must take the lead to educate and help protect them.

STRONG PASSWORDS: A CLIENT’S BEST DEFENSEI firmly believe that education is one of the most powerful weapons in the fight against online crime. But where to start? Here’s the first and most important thing you should communicate to your clients: a strong password is their best, and sometimes only, defense in keeping their funds safe.

In many of the recent attacks we’ve seen, a scammer hacks into a personal e-mail account and learns, by looking through current, past, and deleted correspondence, about the client’s financial accounts. The hacker then turns his attention to the financial advisor’s office, sending e-mails

that appear to be from the client asking for account information and ultimately attempting a wire transfer. A few of these criminals have been successful in fraudulently acquiring funds from Commonwealth advisor offices.

It’s important to remember that E&O insurance does not cover fraud; you are responsible for knowing your customer and verifying that client requests are legitimate. In response to recent wire fraud attempts, Commonwealth now requires you or a staff member to have a verbal conversation with the client—either in person or via phone—to confirm that the request is valid. Of course, if a hacker can’t access the client’s e-mail account, he can’t try to scam you in the first place.

Let’s review two of the major types of attacks on client e-mail accounts and how a strong password can help.

Brute-force attacks. In a brute-force attack, hackers run a program that systematically tries every possible combination of letters, numbers, and symbols until it finds one that works. Although this type of attack can eventually crack any password, the more complex the password, the longer it will take to crack (and the more likely hackers will be to give up first). If a client’s password is just four letters or numbers, it will be compromised instantaneously in a brute-force attack. A simple increase to eight characters provides exponentially greater protection; adding a letter and a symbol bolsters that protection even further. (See Table 1.)

Dictionary attacks. Similar to a brute-force attack but not as comprehensive, a dictionary attack program runs through words until it finds a match. Clients who use everyday words (i.e., anything found in a dictionary) as passwords are vulnerable to this type of attack.

What qualifies as a strong password? For the greatest protection, your clients should be using eight-character passwords made up of upper- and lowercase letters, numbers, and symbols.

It’s a never-ending cycle: just as we identify and start cracking down on one online

scam, the bad guys find new gaps to exploit. Despite our best efforts to curtail it,

Internet crime is on the rise.

WHEN IT COMES TO INFORMATION SECURITY, KEEP AN EYE ON THE WEAKEST LINK: YOUR CLIENTS

MICHAEL SUNDBERG

T E C H N O L O G Y


TABLE 1: Password Recovery Speeds

Length TypePossibilities per Field Total Combinations Estimated Time to Break*

4 Numbers only 10 10,000 Instantaneous

4 Alphabet 26 456,976 Instantaneous to 46 seconds

4 Mixed-case alphabet 52 7.3 million Instantaneous to 12.5 minutes

4 Numbers and mixed-case alphabet 62 15 million Instantaneous to 24.5 minutes

4 Numbers, mixed-case alphabet, and common symbols

96 85 million Instantaneous to 2.25 hours

8 Numbers only 10 100 million Instantaneous to 2.75 hours

8 Alphabet 26 200 billion 3.5 minutes to 242 days

8 Mixed-case alphabet 52 53 trillion 15 hours to 169.5 years

8 Numbers and mixed-case alphabet 62 218 trillion 60.5 hours to 692 years

8 Numbers, mixed-case alphabet, and common symbols

96 7.2 quadrillion 83.5 days to 22,875 years

THE YAHOO!, HOTMAIL, AND GMAIL WEAKNESSThe main security flaw in personal e-mail accounts is that they don’t automatically disable after numerous invalid password attempts. Your COMMunity Link® account, for example, will automatically disable after five invalid password attempts. But users of Yahoo!, Hotmail, Gmail, and other free e-mail programs don’t have this safety net. If someone tries to guess a client’s password, they will have an infinite amount of time and chances to do so. This makes it all too easy for hackers to gain access to clients’ e-mail accounts—and is even more reason to encourage clients to use strong passwords. After all, these are often the same e-mail accounts that clients use to correspond with your office!

JOINING FORCES TO EDUCATE CLIENTSWe realize that talking about information security may not be the first item on your agenda when a client walks into your office. But it’s important to recognize that the

strength of a client’s personal e-mail password can directly affect you. By combining forces, we can strengthen Commonwealth’s security posture all the way down to the client level.

To help you spread the word on password security and other topics, the Information Security team has created a wealth of client-approved content, including informative articles, alerts, and best practices, which is available at My Practice > Technology > Information Security on COMMunity Link. These materials cover a broad range of information security risks and scams, with a special emphasis on those that Commonwealth advisor offices and clients see most. We are also in the process of creating material that you can add to your EasySite website. More information will be available in the coming months.

Michael Sundberg is the director of information security. He is available at x9172 or at [email protected].

*Depending on the type of attack and the power of the computer Source: LockDown, www.lockdown.co.uk

M A R K E T I N G


It’s time to expand your virtual network and start turning some of those online relationships into real ones.

By now, you’ve probably realized that future clients aren’t likely to hand you a check simply because they’ve seen your profile on LinkedIn or Facebook or read some of your tweets. It’s possible that your social media presence has prompted someone to check out your website and then place a call to your office. But, most likely, you’re still wondering how—and when—your efforts will begin paying off.

As I’ve mentioned before, social media should not be viewed as a quick and easy way of getting new clients. Instead, think of it as a tool to strengthen existing relationships and generate opportunities for starting new ones, with the ultimate goal being to turn your virtual relationships into real-life connections. From that point on, it’s all you.

Let’s look at several steps you can take now to get the most out of your social media profiles and start producing tangible results. (If you haven’t yet delved into the world of social media, see the first two articles in this series: “Getting Social in 2012” [eCBR, March/April 2012] and “A Step-by-Step Approach to Getting Started with Social Media” [eCBR, May/June 2012].)

STEP #1: ENHANCE YOUR EXISTING RELATIONSHIPSStep up your client interactions on Facebook. Post engaging comments, questions, and articles that will encourage your Facebook fans to respond. (When they do, the post will show up on their walls and potentially on the news feeds of their Facebook friends.) For example:

• “My dream vacation would be to drive cross-country and see every major league ballpark. My wife’s would

be skiing in the Swiss Alps. What’s yours? What about your significant other’s?”

• “Recent trends in the market indicate . . . ”

• “Just read an interesting article on the best places to retire: <insert link>”

You could also post pictures from a recent charity event, or talk about what a great time you had at your daughter’s soccer game over the weekend.

Whatever you post, be sure to respond to every comment you get. The more comments a particular post generates, the more likely it is that the conversation will appear in the news feeds of your fans’ friends. Responding also helps demonstrate your commitment to customer service, your accessibility and openness, and your expertise. Plus, depending on what you post, your clients might get to know another side of your personality.

STEP #2: BROADEN YOUR NETWORK Link to your profiles. Include icons that link to your social media pages on your website, in your e-mail signature file, and on any e-mail templates you use (i.e., Constant Contact). A general best practice is to link to your corporate social media pages from your website’s homepage and add links to your individual LinkedIn and Twitter profiles to your e-mail signature and website bio page. If you’re the only producer in your office, however, it makes sense to link directly to your personal LinkedIn and Twitter profiles whenever you can.

Get the word out via e-mail. Using Constant Contact or another e-mail service, send a message to all of your existing clients and prospects asking them to become fans of your Facebook business page, connect with you on

So, you’ve taken the plunge and decided to incorporate social media into your overall

marketing strategy. You’ve set up your profiles and are beginning to feel comfortable

using the different websites. What next?

USING SOCIAL MEDIA TO GET REAL-LIFE RESULTS

LORI YAVERBAUM

M A R K E T I N G


LinkedIn, and follow you on Twitter. Be sure to include links, and don’t forget to let them know what’s in it for them. Include a benefits statement such as, “Every week on our Facebook page, we’ll post two articles on financial topics we think you’ll find interesting.” If you’re stuck on what to write, check out the templates we provide on COMMunity Link,® which you’ll find in the We Also Recommend box at My Practice > Marketing > Building Your Brand > Website, E-Mail, & Social Media Marketing.

STEP #3: FOCUS ON LINKEDINAs I noted in the last article in this series, we recommend focusing your online networking efforts on LinkedIn. After all, the site was created specifically for professional networking and tends to attract a slightly older, more professionally oriented demographic than Facebook and Twitter. To expand your LinkedIn network, it helps to set some concrete goals.

Post regularly. Make a LinkedIn posting schedule and stick to it! For example, commit to posting two business updates and one question every week. Share the posts on your other social media sites as appropriate. If you prefer, you can delegate posting duties to a staff member.

Join the 500 club. Having more than 500 connections on LinkedIn gives you a certain status whereby you’re perceived to be an expert in your field. Set a goal to achieve this status within the next six months.

First, calculate how many more connections you need and divide that figure by the number of weeks you’ve given yourself to reach the 500 mark. Then, send connection requests to that many people once a week—say, every Tuesday morning. For suggestions, look at the People You May Know section on the right side of your LinkedIn profile. You can send a connection request directly from this box or click on the See More link in the bottom right corner to view and connect with more people.

Be sure to quickly personalize all of your connection requests and include your approved e-mail signature file before sending. This small gesture demonstrates the care, attention to detail, and personalized approach you bring to everything you do.

Another way to seek out potential connections is to subscribe to e-mail updates through the Settings section on LinkedIn, located in the top right corner of the screen.


M A R K E T I N G

By doing this, you’ll be able to see who your connections are connecting with and which of those people might fall into your target market. Each week, set a goal to ask one of your connections to facilitate an online introduction to one of those promising connections.

Here’s an example: I notice in a LinkedIn update that my brother is connected to Mark DiMassimo, the CEO of an advertising and PR agency whom I’ve seen profiled quite a bit in the news. I think it would be great to speak with Mark about a presentation I’m working on. I go onto LinkedIn, message my brother, and ask him to “introduce” me to Mark. I believe my chances of Mark accepting the request will be much higher because of this introduction. And I also believe Mark will be more receptive to speaking with me because of my relationship with someone he does business with fairly regularly. In this case, it happens to be a family member, but you can extend the idea to any of your LinkedIn connections.

Create a private group for one of your niche markets. For instance, if you’re an expert on the executive benefits compensation program at XYZ Company, why not set up a private group for the execs there?

Here’s how to do it:

• Invite your existing clients who qualify to join the group and ask them to let their peers know about it.

• Actively monitor the group for new members and personally reach out to welcome each of them.

• Invite group members to contact you directly by phone or through your work (hosted) e-mail with questions or concerns they might not be comfortable discussing with everyone.

• Actively monitor the group discussions and participate when appropriate to demonstrate your expertise.

STEP #4: MAKE IT “REAL”Once you’ve built a solid group of online connections, it’s time to begin converting virtual relationships into real ones. Here are two simple ideas to get you started:

• Each month, ask two LinkedIn connections (who are also your clients) to facilitate an in-person introduction with friends of theirs. Invite the clients and their friends to dinner.

• Set up an educational event for members of your private group based on what they’re discussing in the online forum you created for them. For example, if you notice that charitable giving and associated tax laws is a hot topic, put together a seminar on the subject and invite the group members. For a topic like this, you could also ask a strategic partner to copresent with you and invite some of his or her clients as well.

Remember, social media is no different from any other type of prospecting that you do. You’re only going to close new business if you can convert your virtual relationships to real ones. You’ve been practicing those skills for years, right? So step outside your comfort zone a little and embrace the networking opportunities that social media provides. By doing so, you’ll be able to get more prospects in your pipeline and then do what you do best: tell them in person how you can help them work toward their financial goals.

Lori Yaverbaum is the director of web services and usability. She is available at x9653 or at [email protected].

PULL QUOTE

Intro


P R A C T I C E M A N A G E M E N T

Although reviewing their clients’ financial goals, investment performance, and risk is as natural to advisors as breathing, when it comes to tracking the financials of their own companies, that instinct doesn’t necessarily kick in. Some advisors assume that, if they take care of their clients, their firm’s finances will take care of themselves. That’s a dangerous assumption.

TRACK YOUR FINANCIALS, AND PRACTICE WHAT

YOU PREACH One industry resource who can help advisors step up to their CFO role is Mark Tibergien. He has written books—most recently, Practice Made More Perfect with Rebecca Pomering—given presentations at major conferences, and, in general, been a force for motivating advisors to become more sophisticated in managing their businesses’ fiscal responsibilities. Still, many advisors remain rather unsophisticated when it comes to using financial data to manage their firms.

What interferes with advisors embracing these resources? There are several hypotheses:

• Change is hard. If you have used a seat-of-the-pants approach to financial oversight for decades—or if you are a baby boomer and getting close to retirement—you may feel that making a big change isn’t worth the effort.

• New technology and software require energy. Many advisors use QuickBooks, for example, but resetting and reformatting the software requires time—time to understand the accounting principles of solid fiscal management, time to decide on what to have reported on monthly, and time to make the changes.

• Inertia is powerful. Before pursuing a more sophisticated way to assess your firm based on

financial performance, you need to appreciate what’s in it for you. Many solo organizations, in particular, may find it challenging to find a compelling reason to change.

In addition, advisors have varying perceptions of the value of the following:

• Producing a balance sheet, an income statement, and a monthly statement of cash flow

• Paying advisors a defined monthly salary as a direct cost of running the business

• Calculating and using operating profit margin (OPM), gross profit margin (GPM), and productivity ratios to analyze the financial performance of the firm

• Applying generally accepted accounting principles (GAAP)

Although it may be a best practice to embrace these metrics, it is a worst practice to make no effort at all to enhance fiscal management. Every organization, regardless of size, can benefit from carefully forecasting revenue and tracking expenses.

FORECAST REVENUE ANNUALLYSome advisors are hesitant to forecast revenue for the next year, while others rely on a casual approach, plucking a number out of thin air. A more formal approach is to arrive at a forecast based on detailed analysis. Consider the following method:

1. Old/old. Start with recurring revenue from existing clients. What can you safely assume existing clients will generate in the next year if the market stays the same? “Old” recurring revenue from existing clients includes 12b-1 and AUM fees, annuities that pay commission over time, and ongoing insurance premiums.

If a business isn’t growing, it’s . . . well . . . you fill in the blank. As the CEO of

your small business, you are responsible for leading a thriving entity. But in order to

truly thrive, you need to be able to wear another hat—that of chief financial officer

(CFO)—so you can manage your firm’s financial risks.

EMBRACING THE ROLE OF CFO

JONI YOUNGWIRTH



– Subtract systematic withdrawals that you are confident will occur. This is especially important for advisors with a book of clients who are predominantly in retirement.

– Subtract the assets of any clients whom you are reasonably sure will be leaving your practice or whom you plan to terminate.

2. Old/new. Add to your calculations any new monies (and their impact on the bottom line) that you are confident you will receive from existing clients. If, for example, you know that Tom Jones will retire in June and roll over $500,000 for your firm to manage, include it in your calculation. In addition, don’t forget to add the total from the existing periodic investment plans of current clients.

3. New/new. Add assets from anticipated new clients. Consider the number of new clients you tend to take on, as well as the amount of your average commission sale or the average AUM of your clients.

– Add the impact of other factors you are confident will occur. If you have new initiatives scheduled, how will they impact the top line? If you are investing in new marketing campaigns, when do you expect results? A strategic example is the pending purchase of a book of clients. If the buy-sell is signed and the transition will occur in the upcoming year, what will the revenue impact be?

– Convert AUM or expected commissions to revenue by applying your payout structure.

Somewhere between the casual and the formal approach is the application of historical data. For those with decades of experience, applying the percentage of average annual growth they have experienced can substitute for the analytical process.

Coming up with a revenue forecast is easy if you pull a number out of thin air. It takes careful analysis to be accurate. And, even then, given all the variables that can affect the top line in any given year (particularly market movement for fee-based advisors), many advisors find it useful to project a range of anticipated revenue growth instead.

CREATE A WRITTEN ANNUAL BUDGET By tracking fixed and variable expenses, you can keep track of where you are spending your money—and where you may need to reassess your expenditures. Below are some common budget items:

•Business development or marketing expenses

•Health insurance and employee benefits

•Technology

•Insurance

•Office expenses

•Rent/maintenance

•Outsourcing (excluding IT)

•Professional services

•Salaries/bonuses/taxes/retirement

•Taxes/licenses

•Training/continuing education/dues

•Equipment leases, purchases, and maintenance

•Travel

•Utilities

•Auto expenses

•Depreciation/amortization

•Other

Aligning budget items with data from a third party can help you benchmark your firm against others in the industry. The items above were chosen from categories in the biennial Moss Adams Financial Performance Study of Advisory Firms. Even if you don’t benchmark externally, by keeping your expense categories consistent, you can better evaluate changes in your own expenses from one year to the next.

Of course, one can look at historical data as a starting point for estimating a budget, but the analysis of a business plan and the relevant costs associated with identified goals will help ensure greater accuracy of projections. For example, if you plan to rebrand your logo, stationery, and website, you should include graphic design, printing, web development, and possible external consulting costs.

Tips:

• It is wise to represent expenses in actual dollar amounts, in addition to as a percentage of the total budget. Using percentage figures encourages internal benchmarking against previous years.

• Be sure to think through each expense. This helps to prevent unfortunate surprises. For example, John Advisor moved his office to a metropolitan area. He decided to pick up the parking costs for clients when they came in for reviews. A year later, his parking costs had increased three-fold!

BENCHMARKING—THE FORMAL WAYBenchmarking makes a lot of sense when done well, but beware of casual benchmarking. Each advisor can code expenses differently, which can lead to misleading information and assumptions. For example:

Two advisors discuss their expenses. Patricia says, “My rent is outrageous—$10,000 a month.” Cliff (from five miles away in the same town) responds, “That’s ridiculous. I only pay $4,000 a month.” Later, Cliff learns that Patti’s office is a condo and that she, as condo owner, pays herself rent!

What about salaries paid by advisors to employee family members? Or technology costs that are high in one firm

and low in another because technology is subsidized by a business partner (e.g., a broker/dealer)? The moral is: Don’t take the numbers at face value when you casually benchmark with other advisors.

Using financial data to make informed decisions about if and when to augment a

niche or change interaction within a particular business segment requires formal benchmarking. For more than a decade, Moss Adams has provided biennial financial benchmark performance reports for financial advisory firms. Its two major studies, the Financial Performance Study of Advisory Firms (taken in even years) and the Adviser Compensation and Staffing Study (taken in odd years), allow advisors to formally benchmark against similar-sized firms, yielding more legitimate data.

THE FINAL WORDIf an advisor should have a balance sheet, income statement, and monthly cash flow statement, then the advisor should be prepared to use them. The thoughtful analysis of this data—in addition to deducing OPM, GPM, and productivity ratios—is worthwhile only if the data is used.

Maybe your firm will never use GAAP. Maybe you will never want to pay yourself a salary. But, in the industry as a whole, the trend toward more sophisticated financial management marches on. The bandwagon is moving. It’s your choice whether and when to hop on.

Joni Youngwirth is the managing principal of practice management. She is available at x9124 or at [email protected].



10-POINT FINANCIAL

CHECK-UPCommonwealth advisors looking for help in assuming the CFO role can take advantage of a new Practice Management resource. In an online exclusive, “10-Point Financial Check-Up” (eCBR > Online Exclusives), Kenton Shirk discusses a COMMunity Link®-based tool you can use to benchmark your financials—including OPM, GPM, and productivity measures—against Moss Adams industry data.


According to the Society for Human Resource Management (SHRM), 25 percent of the U.S. working population experiences a career transition each year, and half of all hourly workers leave new jobs within the first 120 days. Does this resonate with your hiring experience? If so, developing an onboarding system can help you better acclimate new employees to your firm and provide an important competitive advantage.

Research and conventional wisdom suggest that employees have about 90 days to prove themselves in a new job. Every firm has its own process for helping new employees learn the attitudes, knowledge, skills, and behaviors required to be successful. Traditionally, new hires have participated in one-time orientation programs designed to familiarize them with the organization, their benefits, and the company culture. Increasingly, however, employers are using onboarding—a more in-depth, ongoing process that teaches new workers about their roles, the company norms, and how they are expected to behave.

Let’s look at several key components of onboarding, as well as best practices for establishing an onboarding system in your firm.

CLARIFY THE NEW HIRE’S ROLEOne of the greatest challenges for new employees is role clarity—that is, how well they understand their jobs and your performance expectations. If your expectations are ambiguous, the employee’s performance will suffer. In Onboarding New Employees: Maximizing Success, SHRM cites a study conducted in the United States and United Kingdom

that found that businesses lose an estimated $37 billion per year as a result of employees not understanding their jobs. The lesson businesses are learning is that you can’t just hire new employees and leave them on their own to figure it all out.

For this reason, role clarity is critical. Establishing clear expectations up front helps curb potential performance issues before they get worse, possibly leading to poor job attitudes. Often, however, employers make assumptions about employees’ level of understanding. For example, just because an employee has done something once doesn’t mean he or she understands the entire process. You might expect the employee to take the next logical step, but the employee has no idea what that step is, which creates role conflict.

To help ensure that employees understand their roles, keep the following tips in mind:

• Start establishing expectations from the get-go by reviewing the job description with the new employee on his or her first day.

• For the first month, dedicate a certain amount of time each day to train your new hire, adjusting your training schedule as needed. This short-term investment of time is worth the long-term benefit of having a well-trained employee who can contribute to your firm at a higher level.

• Ask new hires to take notes during training sessions so that they have a resource to refer to later.

• Break training down into three steps: (1) explain to the employee what you are doing and why; (2) show the employee how to do it; and (3) watch him or her perform the task and provide feedback. This process reinforces the concept and helps ensure that your expectations are met.

• When an employee asks a question about a subject you’ve already covered, use it to create a learning opportunity. Gently push back by asking the employee where the information might be found (i.e., in his or her notes or another resource).

You’ve worked hard to recruit and hire

the right person for your firm. What

next? If your goal is to retain that

employee for the long term, making the

hire is just the first step.

YOU’VE HIRED A NEW EMPLOYEE—NOW WHAT?

ANGELA C. SARVER



TAKE ADVANTAGE OF TRAINING RESOURCESOf course, besides understanding their roles, new employees need the skills to perform the job they’ve been hired to do. The training you offer should cover hard skills, soft skills, and onboarding skills.

• Hard skills relate to technical or administrative tasks, such as computer protocols and financial procedures. These skills are typically easy to observe, quantify, and measure; they’re also easy to train because most of the skill sets are new to the learner.

• Soft skills, also called people skills, are typically harder to observe, quantify, and measure, as they deal with how people relate to one another. Soft skills include communicating, listening, giving feedback, cooperating as a team member, solving problems, and resolving conflict.

• Onboarding skills pertain to your firm’s unique culture and language; they help employees determine how to conduct themselves within the framework of your organization.

To assist you in getting new employees up to speed, Commonwealth offers a suite of training tools and resources.

New Hire Training Checklist. Located on COMMunity Link® at My Practice > Practice Management > Human Resources > Management > Staff Development, our New Hire Training Checklist is a great place to start. Even if a new employee has industry experience, he or she needs to get acquainted with your office technology, processes and procedures, and culture. The checklist takes you through six steps that address topics from office orientation to money movement. Using the checklist as a starting point helps ensure that you address the most critical topics at the beginning of the relationship.

In-person training sessions. Commonwealth 101, our nuts-and-bolts training program for field staff, introduces employees to the basic platforms we use to process new accounts, transfer assets, and so on. The program also includes sessions on critical topics like compliance and navigating COMMunity Link. The Advanced Topics Symposium, our annual conference for field staff, offers a blend of beginner, intermediate, and advanced sessions to meet the continuous learning needs of this diverse group.

Online learning. Our online learning modules introduce staff to a variety of topics, including compliance, Client360,º ® and operations. Varying in length, the modules can help set the stage for the one-on-one training you provide in your office. You can browse our online learning offerings on COMMunity Link at My Practice > Education > Online Education.

DON’T FORGET SOCIAL INTEGATRAIONSocial integration is another important aspect of onboarding. New employees need to feel comfortable interacting with their advisor, coworkers, and, eventually, clients and vendors. Establishing an effective working relationship is critical if the employee is to be successful. Informal social interactions such as lunch or a coffee break are a great way for the new employee to connect with coworkers. We often talk about an employee’s “fit.” Social interaction helps the new employee navigate the firm’s culture, understand its goals and values, and learn its unique language.

ONBOARDING BEST PRACTICESBig things, like a formal training program, and little things, like greeting a new employee warmly, make a difference in the onboarding process. Here are some additional best practices to facilitate a smooth transition for new employees:

• Make the first day on the job special. You might host a team lunch or simply post a welcome sign on the new employee’s computer.

• Use technology to help with the process. Whether it’s an online learning module or showing the new



hire how to navigate online files, technology can complement one-on-one training.

• Create 30-, 60-, and 90-day milestones to check in with new employees and review their progress. Feedback is a critical component of the training process, and predetermined milestones give you an opportunity to review job expectations and celebrate progress.

• Ensure that your processes are participatory. Ask new employees for their thoughts and ideas for enhancing your programs.

• Clearly articulate the firm’s mission and vision so that new employees understand what you’re trying to achieve, where they fit in, and how they can impact the business.

Remember, the steps you take after the job offer is accepted are critical to the new hire’s success. An effective onboarding program can yield more engaged and productive employees, diminishing turnover and giving your firm a leg up on the competition.

Angela C. Sarver is a practice management consultant. She is available at x9873 or at [email protected].

Pull the string, and it will follow wherever you

wish. Push it, and it will go nowhere at all.

— Dwight D. Eisenhower




COMMONWEALTH MENTORS: ADVISOR STORIES OF SUCCESS AND INSPIRATION

KENTON SHIRK

This year, as part of the Commonwealth Mentor Program, which launched in 2011, this column will feature stories of advisors who have experienced significant growth in their businesses. The advisors may be solos or ensembles, top producer meeting qualifiers or those in the early stages of business development. Every advisor has a story to tell. What’s yours?

USING PRACTICE MANAGEMENT’S DASHBOARD TO

TARGET GOALSThrough a combination of ongoing marketing initiatives, client referrals and prospecting, and plain hard work, Kevin Carbin Jr., CFP ,® of Northeast Financial Services in Brunswick, Maine, grew his business 29 percent in 2011.

For many years, Kevin has worked with Commonwealth’s Practice Management team to help him articulate his vision and evolve his business. One simple but powerful tool their guidance led him to create is a dashboard to track progress toward predetermined goals. Kevin has used the dashboard to keep an eye on gross production, average household balances, Preferred Portfolio Services® account balances, and AUM.

In particular, the dashboard has helped Kevin stay focused on his referral and prospecting efforts. He hosts quarterly retirement income planning dinners, finding them to be “a fairly successful way to generate prospects.” Kevin and his team also hold client appreciation events for their A and B clients, and they urge those who attend to bring a guest. During 2011, the firm hosted two wine tastings at local restaurants, a golf tournament, and a midsummer boat cruise off Bailey Island, Maine. They also held a holiday party in mid-December and encouraged attendees to bring nonperishable food items to be donated to the Mid Coast Hunger Prevention Program.

Last year also resulted in a moderate growth for Kevin’s 401(k) business. He earned the CRPS® designation early in the year, a requirement for Commonwealth advisors who wish to provide investment advisory services to

qualified plans. “Given the upcoming fee disclosure requirements,” Kevin says, “this is an opportune time to be prospecting for qualified plan business.” Continuing with his commitment to growing this segment of his business, next month, Kevin will host two luncheons for plan sponsors and human resources executives to help them learn more about the new fee disclosure rules. After that, Kevin plans to learn more about the Retirement Plan Manager, so he can leverage it to better manage existing plans and prospect for new business. Later this month, he will host a continuing education breakfast event for CPAs, with the goal of creating strategic alliances.

Although his business is clearly important, Kevin emphasizes that “family, friends, and health always come first.” In fact, last year was a special one for Kevin, as he and his wife, Maura, celebrated their 25th wedding anniversary. He tries to maximize his time with his two daughters, attending lacrosse and field hockey games, and he even trekked 185 miles on a bike across Maine.

MAKING CLIENTS RAVING FANSCliff Caplan, CFP ,® MBA, of Neponset Valley Financial

Partners in Norwood, Massachusetts, grew his business 23 percent in 2011, continuing a 10-year growth trend during which his business has expanded between 12 percent and 18 percent year-over-year (with the exception of 2008).

A core element of Cliff ’s strategy is “service, service, service.” In this low-growth, high-unemployment economy, he feels it’s essential to service your existing clients to the point that they would never consider leaving. “Make them raving fans,” he explains. Although Cliff believes that performance always matters, he says, “Happy clients will be more understanding during volatile financial markets if they are convinced that you are on top of events.” For advisors who are looking to grow revenue, the starting point is to under-promise and over-deliver, Cliff advises. Continual contact can help bring in more referrals—and potentially more assets—from existing clients.

Learning is a lifelong process, and participating in the exchange of ideas, best

practices, and inspiration with our peers can help us thrive.



The majority of Cliff ’s growth has been organic; many clients have made significant additions to their accounts as a result of rollovers, inheritances, and the exercise of stock options. Over the years, Cliff has employed a very consistent strategy designed to pursue both accumulation and asset protection. Intergenerational planning has also been a factor in his success. Not only has he been able to retain assets from the heirs of clients who have passed away, but he has also acquired additional assets from those heirs.

Cliff has been slowly incorporating Reg D offerings, as well as private REITs, which provide a bounce to revenue in the form of up-front commissions. Finally, Cliff also presents what he calls “CD or bank alternative strategies.” Many of his clients are frustrated with miniscule returns offered by money markets and banks, so Cliff has offered and delivered on fixed income strategies that can potentially provide higher yields with marginal risk. The current low-interest-rate environment is likely to continue for some time, and with the prospect of increased income taxes on the interest, Cliff believes that he can benefit from this trend by providing viable and low-risk alternatives for his clients.

Despite being in the business 34 years, Cliff feels that he didn’t “make it” until he converted to a fee-based business model 15 years ago. The annuitization of his business resulted in predictable cash flow and made long-term planning much easier.

Ultimately, Cliff believes, “We are all commodities in this business, no matter what view we have of our abilities.” To differentiate, advisors need to showcase their unique knowledge of certain products or tax law, as well as provide out-of-the-box thinking. “When I hear the same investment themes over and over again,” Cliff says, “I begin to worry.” He recommends challenging conventional wisdom. Clients do “get it” when you bring them a different idea that can assist them in achieving their objectives.

LEVERAGING OTHERS’ WISDOM LEADS TO A NEW

BUSINESS APPROACHStuart Benjamin, ChFC ,® of The Benjamin Group in Birmingham, Alabama, earned a spot at Chairman’s for the first time after growing his business 26 percent in 2011.

Stuart believes wholeheartedly in finding opportunities to improve his knowledge and recommends that advisors attend Commonwealth’s National Conference each year to learn about different products and strategies and to talk with their peers about what they are doing. “It’s a tremendous way to find new ideas to help grow your practice and diversify your business model,” he explains.

After 33 years in the business, Stuart decided last year that he wanted to incorporate alternatives into certain client portfolios. He had been exposed to these new investment options at the 2010 National Conference, and they opened his eyes to potential solutions for diversifying away from traditional asset classes to help manage his clients’ risk: “I saw that these investment options could create a win-win situation for me and my clients,” Stuart says. After the conference, Stuart consulted with Commonwealth advisors to gain additional insights. In particular, he talked with Bob Condon, an advisor based in Berkeley, California, who specializes in alternatives and has extensive expertise in the space. For additional due diligence, Stuart reached out to Susan Kelly, Commonwealth’s manager of alternative financial strategies, to get input about various products and sponsors.

Armed with new knowledge about these investments, Stuart used his annual review meetings to broach the subject of using alternatives as a hedge against portfolio volatility with clients who met the suitability parameters. His resultant business growth is an indication that the approach has been successful.

As Stuart says, “When you seek to improve your knowledge by attending conferences and speaking with other advisors, you give yourself a terrific opportunity to take your practice to a new level.”

ANYONE CAN BE A MENTORIf you have experienced a significant breakthrough in your production, we’d love to hear about it. Send an e-mail to [email protected].

Kenton Shirk is a practice management consultant. He is available at x9807 or at [email protected].

B U L L E T I N B O A R D


LEADERS CONFERENCE QUALIFIERS ENJOY THE EMERALD ISLE

LOUISE SANTRY

Commonwealth’s 2012 Leaders Conference was held May 15–20 at the Ritz-Carlton Powerscourt in Enniskerry, Ireland. This resort, set amidst the 1,000-acre Powerscourt Estate and Gardens, is one of the most scenic and historic locales in Ireland. With two championship golf courses, a state-of-the-art 30,000-square foot spa with a Swarovski crystal-lit indoor pool, a Gordon Ramsay restaurant, and all of the other luxuries you would expect from a Ritz-Carlton resort, this location was the perfect base for an authentic Ireland experience. Activities included hiking, cycling, and fly-fishing; visits to stately homes and castles; and a trip to Dublin to explore the city’s many attractions.

Our ubiquitous giving back activity took place at Barretstown, a nonprofit organization founded by Paul Newman that helps rebuild the lives of children affected by childhood cancer and their families. We landscaped and planted a welcome garden to greet the children and families arriving for camp, painted a boat the children use for fishing on the ground’s lake, and did some additional painting around the property.

Louise Santry is a conferences and events planner. She is available at x9337 or at [email protected].

The Ritz-Carlton Powerscourt, graced by views of the Sugarloaf Mountain, was the perfect setting for a week of networking, unique activities, and catching up with old friends and new.

A group poses in front of one of Dublin’s classic pubs during our musical pub crawl. Great fun was had by all as they sampled Ireland’s finest brews and listened to traditional Irish musicians.

John Rooney, Valerie Tesauro, Nick Cosentino, and Carrie and Kelli Coghill take time to catch up during our first night in Ireland.

Kim Dignum, Todd Estabrook, Veronica Bloom, Nancy Morris, Randy Morris, and Laura Daniels pose proudly in front of the garden they created, a tribute to the Barretstown logo and a welcome garden for the children.

TITLE

AUTHOR



Leaders Conference Qualifiers Enjoy the Emerald Isle continued

Falconry, one of the unique activities we offered during the conference, allowed attendees to get up close and personal with falcons, owls, and many other wild birds. Here, Tom Bartholomew poses with a new friend.

Participants in the Barretstown giving back activity added some aristic touches to the children’s boat.

Sláinte! A great night was had by all at Johnnie Fox’s Pub. Attendees dined amongst Irish antiques and memorabilia at this rustic, charming pub, fondly referred to as the highest pub in Ireland. Later, a traditional Irish band and dancers performed for the group. Before joining other guests at the final night

Gala Celebration, Lynne and Charlie Parks pose on the grounds of the beautiful Powerscourt Estate and Gardens.



The picturesque Salt Creek Beach and the magnificent West Coast sunsets were the perfect backdrops for a week of networking, unique activities, and catching up with old friends and new.

Sharon and Jim Werst enjoy the view of Salt Creek Beach during the Welcome to Laguna Reception on our first evening together.

Known as the “Jewel of the Missions,” Mission San Juan Capistrano is a place of historical, cultural, and religious significance, as well as a source of inspiration and education. During one of our evening events, conference attendees enjoyed the Spanish-inspired music of Kenny Garcia and dined on traditional Spanish tapas at this stunning historic sight.

Commonwealth advisors and their families, home office staff, and sponsors painted, cleaned, and landscaped the Boys & Girls Club of Laguna Niguel. A fulfilling afternoon for a worthy cause!

OUR PRESIDENT’S CLUB GATHERS FOR SOME FUN IN THE SUN

JESSICA FOUGERE

Commonwealth’s 2012 President Club conference was held April 27–May 2 at the Ritz-Carlton, Laguna Niguel in Southern California. Breathtaking panoramic views of the Pacific and the serene elegance of the Ritz-Carlton proved an idyllic setting for 97 qualifying advisors, their guests, Commonwealth staff, and our generous sponsors to relax, renew, and awaken their senses. Qualifiers who share a passion and drive to succeed networked with one another to energize their businesses and further tap their potential. As a balance to the event’s many professional benefits, our agenda provided opportunities for attendees

to immerse themselves in the artistic culture, culinary flavors, and historic and natural wonders of this unique Southern California community.

During our stay, 50 attendees generously gave of their time to paint, clean, and landscape the Boys & Girls Club of Laguna Niguel, which services hundreds of children daily.

Jessica Fougere is a conferences and events planner. She is available at x9366 or at [email protected].

Photograph courtesy of Mission San Juan Capistrano

TITLE

AUTHOR



Our President’s Club Gathers for Some Fun in the Sun continued

Nick and Mike Ovshak stroll along the beach before taking to the waves during one of Commonwealth’s kayaking excursions.

The winning foursome of Commonwealth’s golf tournament—Ray Dunlap, John Rooney, Jeff Segal, and Matt Garzone—are all smiles. (Other winners included Shawn Hill and Michong Sparhawk [longest drive] and John Ledford and Jana Olsen [closest to the pin].) Congratulations!

Hal and Susan Michels tackle the Pacific Ocean surf.

Sylvia and Nelson Ball, who has been with Commonwealth for more than 25 years, enjoy a moment together before the gala night dinner. The Ball family was well-represented at this year’s top producer meetings, as son Jim attended Leaders and son Dan, Winners Circle. Margie and Rich Robb, Dan and Maureen Romaine, Lisa

and Bob Sherr, and Tom and Ann Brooks enjoy our final evening together.



The Ritz-Carlton, Amelia Island is an oasis situated on a 13-mile stretch of sandy dunes and pristine coastline.

Even the rain couldn’t stop us from taking in a magnificent fireworks display!

A DOSE OF SOUTHERN HOSPITALITY GREETS OUR WINNERS CIRCLE ATTENDEES

MICHELLE LOVELY

Commonwealth’s 2012 Winners Circle conference was held May 6–10 at the Ritz-Carlton, Amelia Island in Florida—a place where magnificent oaks and Southern charm meet Florida’s warm ocean waves and white-sand beaches. Located on a grand stretch of pristine coastline, this elegant barrier island hotel offered a luxurious spa, a fitness center, 3 swimming pools, 18 holes of championship golf, 4 clay tennis courts, and 3 private boardwalks with direct beach access. Attendees participated in a number of activities, including a tour of beautiful Cumberland Island, surfing lessons, a bike tour, a boat cruise, and a trip to quaint downtown Fernandina.

Volunteers in our giving back activity partnered with the Safe Harbor Boys Home, a nonprofit organization with a mission to effect positive and permanent change in the lives of hurting boys. Since 1984, the waterfront and sailing vessels have formed the foundation of a unique residential, academic, and vocational education program for the boys who call Safe Harbor home. We worked together to repair the dock, paint, landscape, clean, and perform general maintenance

Michelle Lovely is a conferences and events planner. She is available at x9875 or at [email protected].

Attendees roam among wild horses (some just a few days old) on spectacular Cumberland Island, a hidden gem located off the coast of Georgia, known for its wildlife, natural settings, and private beaches. In 1884, Thomas Carnegie began building a mansion on the island, and its ruins remain today.

Dick Hildebrand seems to be enjoying his ride to Fort Clinch!

TITLE

AUTHOR



A Dose of Southern Hospitality Greets Our Winners Circle Attendees continued

Linda and Bob Keeling and Phil and Nabila Fluegge share a few laughs at the cocktail reception on our final evening together.

Advisor Steven Andrews and his beautiful family take time out for a great family photo.

Chris Borden and Ed Stiles work hard to put the finishing touches on the newly renovated dock at Safe Harbor Boys Home. Special thanks to all those who contributed to an amazing day of giving

back at Safe Harbor!

A fantastic beach sunrise greets attendees who gather to participate in a Boot Camp workout.



COMMONWEALTH CARES GOES MACHO FOR A WORTHY CAUSE

GAVIN MORRISSEY, JD, LLM

The Super Macho Tough Man Charity Beard Competition marries the fun-loving spirit of the Commonwealth community with our competitive drive to create a truly unique giving back opportunity. Participants contribute $20 to enter the competition and are encouraged to collect pledges from coworkers and other sponsors. Each contestant gets his own personal Make-A-Wish donation page where sponsors may make a one-time donation or pledge a per-day amount for each day that the participant doesn’t shave. (The contest lasted from March 12 to May 31.)

Lest you think we left the Commonwealth women out of the mix, they got to determine the winners, awarding distinctions such as Manliest Beard, Best Try, and Patches McGee. But the Make-A-Wish Foundation was the real winner. Our 19 participants raised $6,945—surpassing last year’s record high by nearly $800. Commonwealth Cares contributed an additional $5,000 to the cause, bringing the grand total to $11,945!

Of course, this is just one of the many giving back opportunities Commonwealth offered this past spring. In May, we held fundraisers for the MSPCA and the San Diego Humane Society, soliciting both monetary donations and supplies. Between the two

home offices, we raised $1,570 for the two charities. Commonwealth Cares matched these funds, bringing our grand total to $3,140.

Also in May, San Diego home office employees volunteered their time to repaint tired and worn areas at Our Lady’s School. They also partnered with local contractor and flooring vendors to repair the girls’ and boys’ bathrooms and recarpet a classroom. And you can read more about our conference giving back events—where we supported Barretstown, the Boys & Girls Club of Laguna Niguel, and Safe Harbor Boys Home—starting on p. 41.

We’re pleased to continue to offer opportunities for the Commonwealth community to give back to those in need. Stay tuned to this column throughout the year for news on the latest developments.

Gavin Morrissey is the vice president of wealth management and the chair of Commonwealth Cares. He is available at x9719 or at [email protected].

Only at Commonwealth . . . For four years now, the men at the home office have

engaged in a friendly, testosterone-laced competition to see who can grow the best

beard. And it’s all for the benefit of the Make-A-Wish Foundation, a nonprofit that

grants wishes to children with life-threatening illnesses.

The Commonwealth Cares Fund, Inc., is a registered 501(c)(3) charity dedicated to empowering all of our future corporate philanthropic efforts. Its goals are simple: to relieve human suffering, promote social and economic growth, and sustain and protect our planet’s resources.

For more information, including how you can make a donation, visit the Community tab on COMMunity Link.®

Competitors proudly display their follicular achievements.



A WELCOME TO NEW ADVISORS

ANDREW DANIELS

Please welcome the following advisors who have recently joined us.

NAME FORMER B/D

Courtney Altemus, Bethesda, MD Barclays Capital

Jamie Arnold, Cottage Grove, WI LPL

Rick Carlson, Franklin, TN UBS

Tim DiSette, Overland Park, KS Lincoln Financial Advisors

Ray Evans, Overland Park, KS Lincoln Financial Advisors

Brian Hart, Lakewood, CO N/A

Matt Jessup, Dayton, OH LPL

Cheryl Evans Lawless, Webster, NY Ameriprise

Brad Melsa, Edina, MN Cuna Mutual

Scott Meyerson, Shallotte, NC Edward Jones

Chris Moran, Ijamsville, MD LPL

Kimberly Ann Nourie, San Antonio, TX United Planners

Philip Nybroten, Brookfield, WI Investment Planners, Inc.

David Pacer, Overland Park, KS Lincoln Financial Advisors

Dale Rice, Ijamsville, MD LPL

Jim Stanziola, Overland Park, KS Lincoln Financial Advisors

John Steiger, Waltham, MA MML Investor Services

Andrew Wank, Overland Park, KS Lincoln Financial Advisors

David Weigert, Kensington, CT Hartford Investment Management

Brad White, Midland, TX Sammons Securities

Skip Yackel, East Syracuse, NY Merrill Lynch



DATE MEETING LOCATION CONTACTSeptember 26–28, 2012 Commonwealth 101 Commonwealth Chris Blasdel x9559 Waltham, MA

October 1–2, 2012 Commonwealth 101 Commonwealth Chris Blasdel x9559 San Diego, CA

November 2–5, 2012 National Conference JW Marriott San Antonio Michelle Lovely x9875 San Antonio, TX

April 3–7, 2013 Winners Circle El Conquistador Karen Tucker x9463 Fajardo, Puerto Rico

April 21–26, 2013 Leaders Conference St. Regis Bahia Beach Resort Karen Tucker x9463 Rio Grande, Puerto Rico

June 18–23, 2013 President’s Club Montage Deer Valley Karen Tucker x9463 Park City, UT

LOOKING FORWARD TO THESE EVENTS . . .

For more information, visit My Practice > Education > Conferences & Events on COMMunity Link®.

Chairman’s Retreat: $1.2 million gross broker/dealer concessions* in 2012 qualify you to attend.

Leaders Conference: $975,000 gross broker/dealer concessions* in 2012 qualify you and a guest to attend.

President’s Club: $675,000 gross broker/dealer concessions* in 2012 qualify you and a guest to attend.

Winners Circle: $500,000 gross broker/dealer concessions* in 2012 qualify you and a guest to attend.

Calculation considerations: For split cases, credits will reflect preestablished formulas used by our back office. Overrides do not count as production; split commissions do. Insurance business is credited according to agent commission rather than gross concession.

*Gross broker/dealer concessions are indicated on your semimonthly commission statement, on the year-to-date summary page in the production credit column.

2013 TOP PRODUCER MEETING REQUIREMENTS


COMBINED PRODUCTION

Below are the 10 highest-producing Commonwealth advisors for May and June based on equity, RIA, and insurance business.

May 20121. Jon Pinnock2. Tom Bartholomew3. Jared Horner4. Debra Brede5. Joe Chornyak Sr.

6. Bob Condon 7. Dan Wyson 8. Mike Ovshak 9. Marty Kossoff 10. Paul Miller

June 20121. Tom Bartholomew2. Wes Nicholson3. Ashok Shendure4. Jon Pinnock5. Debra Brede

6. Joe Sullivan 7. Al Muskat 8. Paul Miller 9. Nick Cosentino 10. Alex Armstrong

INSURANCE

Below are the 10 highest-producing Commonwealth advisors for May and June based on insurance business.

May 20121. Jared Horner2. Jon Pinnock3. Michael Fein4. Mike Privett 5. Kip Matteson

6. Alan Zartarian 7. Steve White 8. Tim Brennan 9. Walt Anderson 10. Blake Ford

June 20121. Jon Pinnock2. Jared Horner3. Randy Morris4. Marcus Pinnock5. Kip Matteson

6. Marty Gaughan 7. Jeff Karelis 8. Guy Swain 9. Mike Finnell 10. Justin Bitner

WEALTH MANAGEMENT CONSULTING

Below are the 10 highest-producing Commonwealth advisors for May and June based on Wealth Management Consulting business.

May 20121. John Raybould2. Pamela Monetti3. Joe Romano4. Kerri Sullivan-Kreiss5. Eileen Burkhart

6. Mark Phillips 7. Gerard Suarez 8. Randy Morris 9. Andrea

Stackland-Winterer 10. Bobby Cummings

June 20121. John Raybould2. Eileen Burkhart3. Brian Joyce4. Donald Hehir5. Tom Hine

6. Irwin Gross 7. Richard Grund 8. Alex Levi 9. JoanAnn Natola 10. Gerard Suarez

PREFERRED PORTFOLIO SERVICES® (PPS)

Below are the 10 highest-producing Commonwealth advisors for May and June based on new PPS assets under management. (Advisors must have been with Commonwealth for at least 90 days to be eligible.)

May 20121. Chuck Olsen2. John Raybould3. Debra Brede4. Jeffrey DeBoer5. Tom Bartholomew

6. Larry Wilson 7. Greg Farland 8. Al Hall 9. Gerry Swift 10. Joe Sullivan

June 20121. Marty Kossoff2. Alp Atabek3. John Raybould4. Kim Moore5. John Gingas

6. Jeffrey DeBoer 7. Debra Brede 8. John Freer 9. Jim Weiss 10. Laurence Hale

TOP 10 CLUBS


BULLETIN BOARD E-MAIL In general, Commonwealth staff e-mail addresses are: [first initial][last name]@commonwealth.com For example, Kathy Lafreniere’s e-mail address is: [email protected]

DIRECTORY WHOM TO CALL AT COMMONWEALTH (listed alphabetically)

COMMONWEALTH DIRECT 800.251.0080 (Waltham) 877.347.1983 (San Diego)SUPPLY LINE (9232) TECHNOLOGYJennifer Cray (9298) Advisor Tech Support (9995)

TRADE DESK (9991)Fixed IncomeDean Litchford (9190), Mike Lovering (7145), Alex Magararu (9211), Kathy O’Loughlin (9151)Stock/Bond ExchangeJim Carlisle (9847), Jeff Carmel (9536), Chris Ciccolini (9571), Anthony DiBattista (9662), Domenic DiMascio (9112), David Kelly (9909), Dean Litchford (9190), Mike Lovering (7145), Alex Magararu (9211), Kathy O’Loughlin (9151), Mike Romano (9669)

TRANSITIONSharon Burchfield (9423), Shirley Burchfield (9679), Nancy Dusseault (9113), Michela Giordano (9188), Denise Harrington (6849), Devon Lampert (9521), Devanie Moore (9397), Katie Ormsbee (9528))

WEALTH MANAGEMENTInvestment Consulting Services (9415, Option 1)Brian Brelinsky (9486), Brian Glazer (7134), Greg Gohr (9136), Bryan Griffin (9589), Brian Lampron (9395), Duane McDonald (9104), Patrick Sarne (9759)PPS Direct SMA/UMAAlicia Nisberg (9448)Insurance Consultants/Case Design (9914)Justin Duft (9857), Brian Harrison (9174), Ward Johnson (9896), Susan Kobara (9737), Neil Krause (9161), Carla Lawton (9197), Noah Wizer-Vecchi (9072)Insurance Operations/Case Managers (9915)Shannon Brennan (9203), Sue Carrozza (9577), Melissa Falone (9387), Marie Hendrickx (9260), Jenna Maloney (6846), Sophie O’Brien (6847), Rebecca Riter (9346)Variable Annuities (9415, Option 2)Matt Chiccuarelli (9832), Brian Donahue (9859), Ethan Young (9148)Investment Research (9415, Option 4)Jonathan Belanger (9686), Melissa Bradley (9682), Charles Brown (9099), Mike Cornacchioli (7130), Fred DeBaets (9371), Peter Essele (9627), Sean Fullerton (9262), Simon Heslop (9131), Susan Kelly (9858), Chad LaFauci (9722), Joe Maduri (9316), Jim McAllister (9660), Brian McCormick (9367), Brad McMillan (9269), Brian Price (9251), Sammy Quinn (9677), Elise Randazzo (9500), Fred Shane (9931), Meagan Swanson (9968), Lincoln Webber (9767)Retirement Consulting Services (9415, Option 5)Shawn Aulenbach (9861), Brian Douglas (9924), Shaan Duggal (9998), Paul Mahan (9969), John Peters (5990), Kathleen Roche (9476), Derek Swinamer (9926)Advanced Planning (9415, Option 6)Kol Birke (9663), Tere D’Amato (9168), David Juliano (9481), Gavin Morrissey (9719), Rose Watson (9891)PPS Direct Operations (9424, Option 3)Ray Acchione (9623), Sean Girard (9293), Fadi Khoury (9546), Xuan Le (9288), Patrick Silva (9313), Jack West (9618)Advisory Fees (9424, Option 2)Carlos Grafals (9187), Nakisha Jerry (9621), Jennifer McTague (9307), Chris Wilkins (9268), Nora Wrana (9798)Advent (9424, Option 2)Carlos Grafals (9187), Nakisha Jerry (9621), Jennifer McTague (9307), Chris Wilkins (9268), Nora Wrana (9798)Oil & Gas Tax CreditsJohn Rooney (9716) Chad LaFauci (9722)Real Estate, Managed Futures, Hedge Funds, Leasing Jonathan Belanger (9686), Susan Kelly (9858), Chad LaFauci (9722), Brad McMillan (9269), Lincoln Webber (9767)

ACCOUNT SERVICES Account Services Service Center (9992)Nick Alvanos (9204), Jennifer Bray (9496), Tim Burke (9345), Ashley Burneka (9742), Dorian Carbunari (9844), Tara Chiacchieri (9883), Mike Davis (9674), Erin Esposito (9462), Chris Fagan (9843), Jennifer Franco (9129), Leah Granger (9327), Amy Jerzyk (9697), Andrew Liakos (9455), Dan Litterio (9550), Lindsay LoPorto (9470), Jay Marino (9696), Brandon Mather (9963), Christina McCalla (9974), Stephanie McCann (9447), Tim Milbert (9419), Kent Miller (9673), Jonathan Munro (9189), Heather Murphy (9359), Kevin O’Hearn (6866), Costas Papadopoulos (9946), Kelly Pennell (9854), David Sawan (9097), Lisa Temple (9551), Amy Thaler (9826), Nicole Venuti (9361), Giovanna Zaffina (9193)Data Integrity (9992) and Advent Support (9424, Option 4)Nuno Barbosa (9373), Guy Barra (9324), Mike Baum (9375), Paul Bhatti (9285), Amit Chogle (9650), ChiWai Chow (9824), Barry Clayman (9365), Vernon Connell (9458), Charles Conte (9982), Mark Driscoll (9531), Charlotte Eastman (9632), Richard Eurich (9967), Kevin Ewert (9671), Mark Hazel (9602), Jeff Hoesly (9636), Grace Huang (9841), Xiamin Huynh (9839), Andrew Klema (9910), Joe Marsh (9604), Sai Palsam (9888), Logan Patrick (9948), Michelle Penido (9927), David Plante (9949), John Reid (9862), Rich Saron (9562), Monica Spencer Lopez (6881), Stephen Spurrier (9289), Pat Sullivan (9881), Lorraine Tracy (9882), Ben Whitaker (9575), Jacy Wong (9321), Ted Zhang (7133), Stephen Zorkers (6874)New Accounts/Direct Investments (9992)Sal Accardi (7147), Justin Almeida (7155), Mike Arbonies (7146), Mike Blau (9116), Matt Brooks (9167), Lira Bukuvali (9672), Mike Carretta (9290), Jon Cooper (6871), Jessica Delaney (9199), Karen Donahue (9223), Lou Glantz (9970), Nella Hogarth (9601), Esther Iantosca (9207), Brennan Jones (9087), Gregg Joyce (9863), Brian Kennedy (9436), Jeremy Krol (9617), Zak Lash (9443), Joe Mayo (9487), Josh Mayo (6868), Steve McCarthy (9838), Michael McDermott (9744), Judy McGue (9817), Meredith O’Connor (9334), Nick Pantano (9217), Todd Strott (9624), Todd Recene (9417), Courtney Templin (9196), Leonard Wencis (9213), Graham Whitelaw (9683)Retirement Operations (9992)Mike Clifford (9335), Nick Follett (9591), Steve Kochis (9182), Rick Slingluff (9210), Mike Triana (9752), Sheryll Yee (9775)Transfer of Assets (9992)Dan Berman (9347), Wellington Garcia (9678), Mary Harkins (9221), Ellen Lemieux (9310), Melissa Mather (9339), Megan Owens (6840), Aaron Piscia (9670), Jesse Snow (6884), Chris Varakis (9640)

ADVISOR MARKETINGGina Grandone (9865), Nicole Lamoureux (9153), Gillian McAuley (9895)

CASHIERING (9992)Bill DeProfio (9160), Kevin LaVelle (6839), Brian Macey (9596), Audrey Mariner (9150), Carrie Murphy (9434), Kristi Pero (9233), Matt Reilly (9831), Libby Ricciardi (9409), Amanda Woolridge (9644)

COMMISSION INQUIRIES (9990)Bill Donnelly (9382), John Dorff (7169), Mike Kenney (6878), Sean Lawton (9292), Ryan McEntee (9258), Cortney Myers (9275), Tracy Paulo (9185), Jeff Ramsayer (9202), Jennifer Wyatt (9166)

COMMUNICATIONS Todd Estabrook (9363), Kathy Lafreniere (9916), Lisa Maregni (9248), Regina Recene (9156)

COMPLIANCE (9603)Jason Almeida (9874), Derek Anderson (9852), Steve Breton (9557), Tony Carter (6853), John Clark (9446), Brittany Conant (9690), Keith Crowley (9192), Heather Doherty (9498), Staci Fall (9222), Rich Fuller (9594), Brian Giue (9274), Sheila Hancock (9122), Deb Hansen (9634), Cynthia Jeffries (9283), Levi Lamfers (9935), Nathan Law (9461), Thuy Le (9625), James Leahey (9403), Gavin Lucca (9157), David McCann (9806), Riddhi Patel (7131), Tom Richardson (9092), Scott Solod (9225), Matthew Sugden (9615), Stephanie Surette (9402), Paul Tolley (9390), Alex Travers (9856), Jaime Whiteman (9825), Scott Wilkinson (9295), Brandon Zatopek (9526)

CONFERENCESJessica Fougere (9366), Lauren Gingerella (9445), Kathy Lafreniere (9916), Mike La Vita (9894), Michelle Lovely (9875), Kristen Malone (9889), Meg Marchese (9135), Louise Santry (9337), Karen Tucker (9463), Angela Whitney (9814)

LEGALJim Adelman (9323), Brendan Daly (9107), Ellen Rosenberg (9191), Joe Tully (9133)

LICENSING, REGISTRATION, & TESTS (9994)Jonathan Bray (9542), Anthony Costanzo (9872), Laura Cronin (9308), Brenda Fleurancois (9117), John Hagberg (9163), Sean Lawrence (9227), Kyle Murphy (6858)

MAIL APPLICATION PROCESSINGService Center (9992)

NFS INQUIRIES OPERATIONSDavid Kelly (9909) Janet Reckman (9219)

PRACTICE MANAGEMENTMaria Considine King (9485), Erin Murphy (9320), Angela Sarver (9873), Kenton Shirk (9807), Sherri Taylor (9965), Kristen Terpstra (9605), John Walsh (9517), Joni Youngwirth (9124)

PUBLIC RELATIONS RECEPTIONEmily Guadagnoli (9639) Linda Pruett (9494)

RECRUITINGJessica Blood (9386), Sharon Butters (9717), Andrew Daniels (9183), Becca Hajjar (9195), Melissa Hughes (9173), Nicole Van Kleef (9287)

WEST COAST OPERATIONS

Account Services Service CenterTara Gruteke (5987)Jim McDermott (9720)Corie New (5989)Jeff Pavey (9776)Todd Stewart (9781)Heather Zack (6852)

Cashiering Fiel Barrow (5907)Eileen Piston (9724)Stephanie Segal (9791)

ComplianceTim Badertscher (9765)Jen Del Santo (5910)Iliana Kline (9712)Elizabeth Legacy (5986)Rob Molinari (9828)Matthew Nakamura (9777)Ashley Rinaudo (9754)Ty Rocheleau (9272)Lisa Roth (9747)

Managing Principal John Rooney (9716)

New Accounts/Direct Investments Valerie Carlson (5905) Jennifer Couture (9748) Veronica Csiza (5984) Dianne Davis (9749) Brittany Finch (5988) P.J. Gagne (9877) Chris Galiano (9718) Alex Johnson (5918) Eugenio Meza (9789) Michael Rudy (5913) Sharon Russell (9715) Cameron Smith (9769) Jessica Warner (9782)

Stock/Bond Exchange Kate Mee (9788) Davis Plowden (9714) Sandra Sinner (9723)

Transfer of Assets Rebekah Ellington (5919) Mark Frantz (9378)

Transition Chris Barber (9783) Jennifer Barhoum (9794) Sharon Butters (9717) Mariana Donnelly (5920) Vicki Smith (9746)

Commonwealth Financial Network 29 Sawyer Road Waltham, MA 02453-3483

WALTHAM OFFICE29 SAWYER ROADWALTHAM, MA 02453-3483TOLL-FREE: 866.462.3638PHONE: 781.736.0700MAIN FAX: 781.736.0793

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