The One Thing You Need to Know About Investing

Steve Meves, Senior Vice President/Chief Investment Officer, Wealth Managementmevess_bus009xqc

Investing is about using the money you’ve saved to purchase an asset that will hopefully appreciate over time. The key word in that last sentence is “time.” Giving your investments sufficient time to grow, regardless of what you are investing in, is the hard part. It’s also a key ingredient to building wealth.

Market Movements Are Noise

The financial markets go up and down, sometimes within the same day. But throughout history, they’ve kept climbing. The indexes we use to measure investment results—the Dow Jones Industrial Index and the S&P 500 Index—reflect this jagged climb. It’s this historical proof of resilience through wars, political mayhem and underperformance that allows professional wealth managers to remain calm in the face of sell-offs. They’ve seen the charts and looked at the data on market closes. And, they know that sell-offs end with recoveries. These recoveries may take time, but eventually they occur and have led to a resumption in the historical upward trend.

Go Long

The mistake many investors make is in assuming they need to do something when markets sell off. That’s only natural. It hurts to see your account balances decline, even if it’s a short-term occurrence. Our brains are hard wired to feel the pain of a loss—in this case money—more intensely than we feel the joy of a gain. It’s why we are intuitively risk averse. No one likes the way they feel when they lose.

When markets do sell off—whether during a day, over several weeks or even months—we all impulsively want to avoid further pain by selling. Some even want to anticipate the loss by selling before markets ever start selling off.

Taking evasive action may feel good in the short run, but it can destroy investment results in the long run, because you need to be right about the market continuing to go down when you are out of the market. More importantly, you also need to be in the market during its recoveries in order to benefit. It’s hard to know on any given day the kind of day it will be.

When Is the Right Time to Invest?

When you are an investor and take a long-term view, any time can be the right time depending on what you are investing in. Therefore, it’s advisable to have access to wealth managers who actively monitor markets daily to determine when it makes sense to pull back on investing in securities, or types of securities, and when to add more. It’s also our job to keep emotions like loss avoidance from endangering your overall goals so that your portfolio is diversified over different types of assets. That way, it’s better positioned to withstand volatility in any one type of asset.

In the end, the secret to successful investing is to remain focused on why you invest: to build wealth over time.

For more information on how our goal-driven wealth management services keep you on task over the long term, visit us here or call 630-801-2217. We can’t wait to talk to you about what we can do for you today.

 

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

5 Things to Consider When Deciding If a Wealth Advisor Is Right for You

Rich Gartelmann, CFP®, Senior Vice President/Senior Investment Officer—Wealth Management

Rich Gartlemann Bio PictureChoosing an investment advisor, like so many things in life, is all about finding a comfortable fit. If the relationship is going to work, you have to be comfortable not only with the person, but the company they represent and the approach they take to making recommendations and decisions regarding your future.

Taking Measure
Here are five things to keep in mind when evaluating an advisor to determine if they are a good match for you.

  1. Who does more talking in the meeting? Your meetings, especially the first meeting, should mainly be about you, not an advisor’s services and products. The advisor should be focused on listening to you talk about your goals for your money, your attitudes toward risk and your current needs. Only then can they know what services and products they should be discussing with you.
  2. How are they paid? When it comes to fees, it shouldn’t be about finding the lowest fee option but about finding the advisory relationship that provides you with the greatest value. That value should be a combination of good advice, a full range of services and the potential for achieving the long-term results you seek. For instance, wealth management departments like ours are fee based.
  3. How responsive is their approach to change? Automated advisor platforms are becoming more and more popular. They are certainly more economical. But, they are programed based on averages and logic. Your life is probably not average. It’s likely to be highly dynamic with unexpected events and expenses. When life doesn’t go as planned, it helps to be able to talk to a person who can advise you on how to make adjustments while keeping you on track for your reaching your goals.
  4. What are their qualifications? Many wealth managers—ours included—have earned the Certified Financial Planner (CFP®) designation. The designation is awarded after the completion of a rigorous certification process. To retain the certification, CFP®s have to meet ongoing education requirements. But, before handing your personal information over to anyone, no matter how many designations they have after their name, you should still follow a “trust but verify” policy. Find out if they have ever been disciplined for unethical or unlawful behavior. The Financial Industry Regulatory Authority (FINRA) makes checking backgrounds easy through its online source, BrokerCheck. You can also look up registered investment advisers—those registered with the SEC or the state’s regulatory authorities here.
  5. Are they willing to provide a preview? To get a feel for what your experience would be like if you were a client, ask the advisor about how often and under what circumstances you’ll hear from them. Also, ask how they communicate—is it by phone, email or will they text you for a quicker response? Then, request referrals from current clients and talk to them about what they like and wish would improve about their relationship.

In the end, hiring an advisor is a lot like hiring an employee—their qualifications, attitude and work ethic need to match yours for a long and successful relationship to flourish.

For more information on how we approach and deliver wealth management services, visit us here or call 630-906-2000. We can’t wait to talk to you about what we can do for you today.

What May Surprise You About Treasury Management at Old Second Bank

Juwana Zanayed, First Vice President/Director—Treasury Management

Juwana ZanayedIn today’s world, access to treasury management tools is beneficial to companies of all sizes. But, how you gain access to those tools, their level of sophistication and the support you receive once you sign up for them can vary greatly. At Old Second, we offer all the same big bank products, on a local level and with personal hands-on service.

At their most basic, treasury management products and services help your business in at least one of three ways:

  1. Increase cash flow through remote deposit or lockbox services
  2. Tailor treasury management services to reduce accounts receivables
  3. Streamline operations through improved efficiencies

As technological innovations have enabled more banks to offer these products to companies of all sizes, there has been a tendency for some of the larger banks to package these services into off-the-shelf solutions. There are some efficiencies to be gained from doing this—at least from a bank’s perspective. But, taking a one-size-fits-all approach to bringing treasury management products to mid- to small-sized companies isn’t always a more efficient option for each client.

For this reason, we customize the suite of services we offer to your firm’s needs and then scale those services to the size of your company, not the other way around. Taking a right-sized approach enables us to not only give more clients access to the latest innovations in treasury management as soon as they are available, it also ensures you only pay for the services that are right for you.

One-Stop Shop Thanks to a Team Approach

Each relationship manager has an in-depth understanding of and can suggest best practices in treasury management. This allows us to look at the customer relationship as a whole, drawing in experts from across different service areas of the bank as needed.

As a result of this approach, each client is assigned a dedicated team of experts—including a lender, treasury advisor and a wealth manager. Regardless of whom you reach out to on the team, each knows the history of your relationship and will take a hands-on approach to answering your questions and resolving any issues that may arise.

What You Need Today

In addition to treasury management and credit tools, including our BusinessManager® [DIRECT LINK to previous blog] product, we find what businesses are most in need of today is confidence that when they are transacting business online it’s secure.

Our commercial online banking platform allows you to manage your accounts twenty-four hours a day with secure access from any computer with Internet access.

For this reason, we provide our clients with access to multi-layered protection in a variety of ways. We use Trusteer Rapport, a security software, to protect online banking communication from being stolen by detecting malicious browser tampering. It can also remove existing financial malware from employee machines and prevent future infections.

Security Manager, is another software feature. It offers password authentication by generating single-use, text passcodes. Old Second also uses multi-layered security and encryption to keep bank and account information secure.

In addition, we offer two fraud prevention tools:

  • Positive Pay protects against fraud by validating each item on each check to ensure only authorized checks are cleared through your accounts.
  • ACH Fraud Protection blocks and filters information to protect against electronic fraud.

For more information our treasury management services click here. To determine which are appropriate for your firm—contact a commercial representative at 877-866-0202. We can’t wait to talk to you about what we can do for you today.

 

What You Should Know About Retirement

Jacqueline Runnberg, CFP®, Vice President/Wealth Advisor

Runnberg_2015 (1)For most, retirement is what you save for. It’s an activity that keeps you focused on accumulating assets and making long-term investment decisions. But, it’s hard to know how much to save and if you’ve saved enough. To do that, you need to know what your retirement will look like and when it will begin—things that are different for everyone.

To help you gain clarity, here are some factors to consider as you think about what you want to happen next, after the saving stops.

➢ Be realistic: Age 62 might be a little premature for retirement.
Although the age of 62 is still associated with retirement, if your birthday is between 1943 and 1954, your full retirement age for Social Security purposes is actually 66. The age increases gradually for those born in subsequent years, until it tops out at 67 for those born in 1960 or later.

While you can still initiate benefits at age 62, they will be seriously discounted (between 25% and 32.5%) from your full retirement age benefit for those born after 1942.1

This is why retiring early may not make financial sense—quite a bit of money could be left on the table, unless you’ve saved enough to cover expenses in the early years of your retirement without Social Security benefits.

➢ Think long term: Savings (and benefits) need to last longer than ever before.
According to the Social Security Administration, a man who reaches age 65 can expect to live, on average, until age 84.3. A woman can expect to see age 86.6. But, these are just averages. One-fourth of 65-year-olds will live past 90 and one-tenth can expect to live past 95.2 This means you’ll need a strategy for how your savings can be invested (and withdrawn) in a way that lasts your lifetime, a period that could rival the number of years you spent working.

➢ Rethink expenses: Your retirement spending level may not change as much as you think.
It’s entirely possible your expenses in retirement won’t change so much as what you spend your money on. And, that is likely to keep changing. For instance, in early retirement more of your budget will probably be devoted to entertainment and travel than in the past. If your health needs change, entertainment and travel expenses may fall as home care and medical needs rise.

➢ Sweat the details: It’s what you can’t control that you most need to plan for.
Both inflation and health care costs can seriously impact your financial footing in retirement. Any financial strategies you develop will need to be flexible enough to accommodate these factors. They are also the reason you can’t afford to be a conservative investor—you will need to keep a portion of your assets growing if these factors are to be addressed. You’ll also need a withdrawal strategy that can tolerate the unknowns as well as the knowns.

Retirement Is Another Beginning
Retirement is really more like the last quarter of a game that is likely to see multiple overtimes. That’s why envisioning what your retirement will look like and how you will sustain it over three to four decades is so critical while it’s still early in the game.

This is something our wealth management professionals can assist you with. Working together, we can create a plan that helps ensure what you save over your working life will support the retirement you envision and deserve.

 

1 Social Security Administration website, retrieved November 3, 2015.
2 Social Security Administration website, retrieved November 3, 2015.

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.

Women and Wealth: What You Need to Know

Jacqueline Runnberg, CFP®, Vice President/Wealth Advisor

Jacqueline Runnberg“Girl power!” isn’t just an empowered cry from the 1990s girl band rock scene. It speaks to the current reality: the growing influence of women as wealth creators and decision makers.

Today, women are more likely to achieve higher levels of education and participate in the workforce at a similar rate to men. They also head up a growing number of households due to divorce, lifestyle choices and longer lifespans. In fact, it’s estimated that 95 percent of women will be their family’s primary financial decision maker at some point in their lives.[1]

In the U.S., women currently control about $11.2 trillion—39 percent of this country’s investable assets.[2] By 2030, it’s expected that at least two-thirds of the nation’s wealth will be in the hands of women.[3]

Yet for all this financial firepower, women tend to lag men when it comes to planning for their financial futures.

What Makes It Different for Women

When it comes to investing, women are said to be more conservative investors who are generally inclined to take less risk. This isn’t entirely a bad thing—men generally take too much risk. But, being too conservative can leave women unprepared to meet their income and health care needs later in life.

Unlike men, women also tend to put more emphasis on objectives and planning and are better savers. These are also very good tendencies for ensuring that wealth takes care of family members. But often, this planning isn’t being expanded to accommodate their own needs, needs that arise from longer life spans.[4]

Thinking About Tomorrow

Runnberg InfographicAmong the realities we try to make our clients more aware of is that women tend to live longer, which leads to the need for their invested wealth to last longer. Women often outlive their husbands. And if they are single, their longer life span makes them even more vulnerable to the high cost of health care than men and puts them in even greater need for planning.

Addressing these issues can extend beyond money. It can require a Plan B, should it not be feasible to count on other family members to step in if a single or widowed woman becomes incapacitated.

As part of a bank trust company, we can provide more encompassing services than many financial advisors. These include serving as a trustee, settling estates and ensuring bills are paid and medical and household services are received when a client becomes temporarily or permanently incapacitated.

It’s all part of the holistic range of services we can provide our clients to help them feel empowered, confident and secure when it comes to talking about, understanding and then planning and investing for their family’s future needs as well as their own.

[1] Heather R. Ettinger and Eileen M. O’Connor, “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them,” Family Wealth Advisors Council, 2011.
[2] Sylvia Ann Hewlett and Andrea Turner Moffitt with Melinda Marshall, “Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth,” Center for Talent Innovation, 2014.
[3] Heather R. Ettinger and Eileen M. O’Connor, “Women of Wealth Study: Why Does the Financial Services Industry Still Not Hear Them,” Family Wealthy Advisors Council, 2011.
[4] Jean Chatzky, “Why women are better investors than men,” fortune.com, posted April 10, 2015, retrieved September 18, 2015.

Non-deposit investment products are not insured by the FDIC; not a deposit of, or guaranteed by, the bank; may lose value.