Download wealth matters.

SUMMER 2015
WEALTH MATTERS.
NEWS, COMMENTARY AND UPDATES FROM THE EXPERTS AT CHEMICAL BANK WEALTH MANAGEMENT.
FROM THE SENIOR TRUST OFFICER
Fall is quickly approaching! We hope all of you had the chance to enjoy the pleasant
weather and recreation that our great state has to offer. This summer we are
pleased to announce that our Traverse City Wealth Management office has relocated
from Garfield Street to downtown Traverse City. For those of you in the Northern
Michigan region, you may now visit our exceptional team of Wealth Management
professionals at 109 East Front Street. We look forward to providing you with the
same, unparalleled service from our new office and hope that you will enjoy visiting
us at our new downtown location.
Thank you for being a client of Chemical Bank Wealth Management. We appreciate
the opportunity to share our news, employee achievements and financial expertise
with you. If you have any feedback or comments you’d like to share with us, I welcome
you to contact us at [email protected].
John E. Kessler
Executive Vice President
Senior Trust Officer
GUARDIANSHIPS & CONSERVATORSHIPS
A Guardian is appointed by a
probate court to be responsible
for, and make decisions about, the
daily care of a legally incapacitated
person (LIP). An LIP is an adult who
the Court deems impaired by reason
of mental illness, mental deficiency,
physical illness or disability, chronic
use of drugs, chronic intoxication,
or other cause, which impairment
causes the person to lack sufficient
understanding or capacity to
make or communicate informed
decisions.
The legal Guardian
stands in the shoes of the LIP to
make daily care decisions that
the LIP is unable to make and is
issued “Letters of Guardianship” as
evidence of his/her legal authority.
The Guardianship may be a Full
Guardianship, meaning the LIP is
totally without the capacity to care
for him/herself or it may be a
Limited Guardianship, meaning the
LIP lacks the capacity to do some,
but not all, of the tasks necessary
to care for him/herself.
Unless limited by the court order, a
Guardian has the responsibility to:
•
•
•
•
Make provision for the LIP’s
care and comfort, including
food, clothing and shelter
Take care of the LIP’s
vehicles and personal
belongings
Return the LIP to selfmanagement, if and when
possible
Obtain professional
services the LIP might need
such as:
- Health and dental care
- Personal care, including
feeding, bathing, dressing
- Nutrition, including home
delivered meals and food
stamps
- Day care
-Transportation
While a Guardian makes decisions
concerning
an
LIP’s
physical
care, a Conservator is a bank
trust department or an individual
appointed by the court to handle
an LIP’s property and financial
affairs.
Once appointed, a
Conservator receives “Letters of
Conservatorship” and takes title to
and manages the LIP’s assets.
Similar to a Trustee, Guardians
and Conservators are fiduciaries
that owe a duty of loyalty to an LIP.
Guardians and Conservators are
supervised by the Probate Court
through the filing of annual reports/
accountings, which detail their
efforts and financial transactions
on behalf of the LIP.
If you or one of your loved ones is in
need of more information concerning
Guardians and Conservators, one
of our knowledgable Trust Officers
are available to help.
INVESTMENT COMMENTARY
THE ECONOMY
Real gross domestic product (GDP)
increased at an annual rate of 2.3% in
the 2nd quarter of 2015 based on the
preliminary estimate. In the 1st quarter,
real GDP increased only 0.6% as bad
weather and a stronger dollar impacted
growth.
Real personal consumption
expenditures, which represent roughly
70% of GDP, increased 2.9% in the
2nd quarter compared to an increase
of only 1.8% in the previous quarter.
The Federal Reserve is projecting
roughly a 2% growth rate for 2015 and
a projected growth range of 2.3% to
3.0% for 2016.
Much of the recent economic data has
been solid or better than expected. The
widely-watched jobs report, a lagging
indicator, in July showed that non-farm
payrolls increased by 215,000. The
average monthly gain over the past year
has been a very healthy 246,000. The
unemployment rate was unchanged at
5.3%. Average hourly earnings over the
past year have risen by 2.1%, slightly
higher than the core rate of inflation. The
latest report from the U.S. Bureau of
Labor Statistics showed that the number
of job openings was little changed at 5.4
million on the last business day of May,
the highest level since the series began
in December 2000. The number was
only 4.6 million last May. Job openings
increased over the past year for many
industries with the largest increases
occurring in professional and business
services, and in health care. This is a
very good sign and should bode well for
the still 8.3 million unemployed people.
Index of Leading Indicators (LEI), an index
made up of 10 economic components,
whose changes tend to precede changes in
the overall economy, continues to point to
further U.S. expansion. Lastly, consumer
confidence, which had improved in June,
declined in July. While it is still slightly
higher than it was at the end of 2007, it is
well below the peaks seen just prior to the
last three recessions.
THE MARKETS
Interest rates across the yield curve
increased from the end of the 1st quarter,
but by 7/31/15, were close to where they
stood on 12/31/14. The 10-year treasury
yielded 2.18% at the end of July. The
2-year treasury yielded 0.67%, surprisingly
only 2 basis points from its 0.69% yield on
12/31/14. The 2-year treasury is closely
watched because it is most sensitive to Fed
policy. With rates virtually unchanged in
2015, bond performance was only slightly
positive year-to-date through 7/31/15.
The Barclays U.S. Intermediate Govt/
Corp Bond Index returned +1.2% and the
Barclays Aggregate Bond Index returned
+0.6%.
The Fed will most likely end its zero interestrate policy this year and increase the federal
funds rate by 0.25%, possibly as early as
September. They have stated that the first
rate hike remains data dependent. This
will be the first rate hike in more than nine
years. The tightening process will most
likely be very gradual and orderly. The Fed
could wait until 2016 before its first rate
hike given recent turmoil in Greece, China,
and Puerto Rico. However, since next year
is an election year, they may prefer to get
Building permits, a leading indicator, far started sooner instead.
exceeded expectations in June, reaching The domestic stock market YTD through
an annual rate of 1.34 million, the highest 7/31/15 provided positive returns. Both
level since July 2007, and 30% higher large-cap stocks and small-cap stocks
than just one year ago. The Composite performed in line with one another.
CONTINUED ON NEXT PAGE.
EMPLOYEE
SPOTLIGHT
HAPPY ANNIVERSARY!
35 YEARS!
KIRK FISHER, CFA
Vice President & Trust
Investment Officer
25 YEARS!
PATTIE KEITH
Administrative Assistant
15 YEARS!
SUSAN SHELDON
SVP & Director of Sales
and Service
10 YEARS!
CAROL JACKSON
Administrative Assistant
5 YEARS!
LESLIE TOLAND
Investment Executive
SHARON SLEEPER
Administrative assistant
WELCOME!
JOSH BEITEL
Financial Advisor
MIKE LANGENBERG
Associate Investment
Executive
CONGRATULATIONS!
CYNTHIA WOLF
Retiring:
Administrative Assistant
ROGER NORKOLI, CFA
Retired:
Vice President & Trust
Investment Officer
HERBERT HARDY
Retired:
Vice President &
Employee Benefits Officer
KIMBERLY MELROSE
New Position:
Administrative Assistant
KEVIN SCORSONE
Promoted:
1st Vice President
& Director of Private
Banking
INVESTMENT COMMENTARY CONTINUED
The S&P 500 Index returned +3.4%, while the Russell
2000 Index returned +3.5%. Developed international
stocks outperformed domestic stocks by a fairly large
margin. The MSCI EAFE Index, our bogey for international
stocks, returned +8.1%. Emerging markets were the
exception. The MSCI Emerging Markets Index declined
4.0% YTD through 7/31/15.
Best performing S&P sectors YTD through 7/31/15:
Healthcare (+12.6%) and Consumer Discretionary
(+12.0). Worst performing S&P sectors YTD through
7/31/15: Energy (-12.0%) and Utilities (-5.3%).
Many are concerned that the stock market will
struggle in the face of rising interest rates. Historically,
however, the stock market generally trends higher
during the earlier stages of tighter monetary policy.
While stock valuations are above historical averages,
earnings are expected to continue growing in 2015,
albeit at a very low pace; inflation is low and the level
of interest rates is still very low justifying a higher
valuation for the market. Lastly, keep in mind that
the S&P 500 Index has not seen a 10% correction
since October 2011. So, increased volatility in the
market should not be a surprise.
WHY EVERYONE NEEDS A PLAN
Have you heard the saying, “If you don’t know where you’re going, how do you expect to get there?” It is a simple
but true statement when it comes to financial planning. Few American households have a comprehensive plan in
place that will map out their long term financial goals. In some instances, clients do have enough funds to retire
when the time comes. Having a financial plan in place will help get individuals closer to that dream.
A financial plan is the formal process of charting a road map of financial goals while taking into consideration an
individual’s assets and liabilities. There are many benefits of making a financial plan:
1
FUTURE GOALS
By estimating your retirement income and
expenses, you can begin to determine the
amount you need to save to meet your retirement
goals.
2
TIMING
By planning, you can gain a better handle
on the time needed to get to your goal. The
sooner they start putting away, the less money they
need to put away to get to that goal. Time is money
as they say, and the compounding effect is powerful.
3
ASSURANCE
A good financial plan will provide you and your
trusted advisors a clear and complete picture
of your financial condition and future strategy.
4
5
FINANCIAL CONTROL
Your family is better protected against a
possible financial crisis and assumes more
control by implementing a solid plan.
REDUCING TAXES
By allocating income and assets more
effectively with the help of a financial plan,
individuals have the potential to reduce taxes and
develop a tax-deferred strategy.
6
INVESTING IN A PROFITABLE PORTFOLIO
A financial plan makes it simpler for
individuals to increase their cash flow and
make good investment decisions. They can make
better decisions when allocating their financial
assets.
In summary, a financial plan can give you a clear picture of your current financial situation, a strategy of where
you are going, and give you a peace of mind about your financial future. If you’re interested in learning more
about financial planning and retirement, visit your local branch or call us at 800.808.5404.
715 East Main Street | PO Box 2049
Midland, MI | 48641-2049
800.808.5404
ChemicalBankMI.com/WM
INSIDE
Investment Commentary:
- The Economy
- The Markets
Why Everyone Needs a Plan
5 Ways Life Insurance
Can Benefit You
This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher
nor any other party assumes liability for loss or damage due to reliance on this material.
5 WAYS LIFE INSURANCE CAN BENEFIT YOU
When you list the financial assets
on your balance sheet, you might
think immediately of your house,
vehicles, retirement funds or financial investments. Another essential element in your financial
plan, your life insurance, offers
benefits that other assets don’t.
Beyond the familiar death benefit, permanent life insurance has
several valuable advantages that
can both expand and protect your
financial security. Here are some
of the additional opportunities life
insurance can offer:
1
LIQUIDITY
Once it accumulates, your
life insurance cash value
is accessible through policy loan or withdrawal for family
and business opportunities, education funding, retirement income, emergencies, or to pay
policy premiums.
2
PROTECTION
Life insurance can offer a
financial
fall-back
when
needed and offset the
impact of estate taxes upon your
death. The death benefit also can
provide surviving family members
with funds they need to live comfortably and achieve their goals.
3
FLEXIBILITY WITH LESS
RESTRICTION
You
can
access
your
accumulated cash value
without restrictions that exist on
other assets. For example, there are
no penalties or required minimum distributions, unlike other tax-favored investments such as IRAs and 401k
plans.
4
value
LONG-TERM FINANCIAL
SECURITY FOR YOU AND
YOUR FAMILY
Once you have built cash
over decades, you have
multiple options for accessing
those funds. You can cash in the
policy, convert it to an annuity for
guaranteed lifetime income, keep
a portion of the death benefit and
access some of the cash value, or
continue the policy to protect your
family and leave a legacy.
5
GUARANTEED
INSURABILITY
As long as premiums are
paid, permanent life insurance provides coverage throughout
your life, even if health or personal
situations change. And buying a policy at a young age locks in insurability.
With so many unique benefits, permanent life insurance can be a
strong addition to your balance sheet
and the foundation for your financial
security.