In Perspectives

For anyone who relies on an investment portfolio for a significant amount of their retirement income, volatility control is critical to ensuring that the portfolio will survive a long retirement.  On average, a retiree will experience 5 down years in the market during any given 20 year period.  As those who retired in the mid 2000’s can attest, experiencing one or more down markets early in retirement can be devastating to the long term viability of a retirement plan and corresponding investment portfolio.  To fund cash needs during a down market, a retiree is often forced to sell investments at depressed prices, which permanently reduces a portfolio’s ability to recover value when the market reverses course.  To reduce the impact of a temporary market decline, Legacy Trust recommends that a well-structured retirement portfolio include sufficient stable investments to cover several years of cash needs.  A seasoned life insurance policy can sometimes be a good source for some of this risk reducing liquidity.

The accrued cash value of a permanent life insurance policy purchased to protect a young family can grow to become a significant asset and an important risk protection tool in retirement.  Although the traditional death benefit may be less important by the time retirement arrives, the cash value can be a stable and reliable source of liquidity, especially when markets are down.  With many policies, this value can be realized through tax free withdrawals (or loans) and when carefully planned they will reduce the need to realize cash from the investment portfolio.  This avoids the need to sell assets when values are down and provides a better opportunity for the portfolio to recover its value as the markets improve.  Since the withdrawals are often structured to be tax free, fewer assets are consumed when taking advantage of the life insurance.

Having the availability of a non-volatile asset that can be utilized during periods of market decline may provide some retirees the comfort to pursue a more aggressive investment policy, eventually extending the life of their portfolio.  It may also provide the comfort to spend a higher percentage of their investment assets each year to enhance lifestyle.  Or, it may simply provide comfort knowing that they are in a better position to absorb unexpected expenses, including healthcare costs, along with the occasional market decline.

Life insurance policies should be reviewed regularly to ensure that they are utilized effectively throughout the owner’s lifetime.  Although their original purpose may become less important, they may still be a very valuable asset.  Utilizing the cash value during periods of market decline is only one way to capitalize on this value.  There are others that may apply.  Legacy Trust would be happy to help you develop a long term retirement plan, as well as a strategy to maximize the value of the life insurance policies you have invested in over the years.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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