Wealth Accumulation

The longer you invest, the more potential your money has to compound interest. With fluctuations in the stock market, it is important to remember that more conservative retirement strategies typically have only a portion of the assets invested in the stock market. 

We manage assets to build wealth through diverse portfolios tailored to each specific client. We guide clients towards financial independence and give them the ability to maintain comfortable lifestyles without worrying about running out of money in the future.

IRA & 401(k) Rollovers

When you change jobs or retire, there are four things you can generally do with the assets in any employer-sponsored retirement plan:

• Leave the money where it is

• Take the cash (and pay income taxes and perhaps a 10 percent additional federal tax if you are younger than age 59½)

• Transfer the money to another employer plan (if the new plan allows)

• Roll the money over into an IRA

Rolling over from one qualified plan to another qualified plan allows your money to continue growing tax-deferred until you receive distributions in retirement. We can help you determine if a rollover is the right move for you.

If you decide to cash out of an IRA, we can help you find suitable vehicles to help you reach your retirement income goals.

Retirement Planning

Is your retirement planning on-track? Do you participate in a 401k, 403b, Roth, or Traditional IRA? There are many different qualified, tax-deductible retirement plans. We can help determine which one is right for you.

Asset Protection

Because the stock market does not provide security, you may want your financial strategies to include some guaranteed* income products. For example, annuities, which are insurance products with guarantees,* can provide a source of supplemental income throughout your retirement.

Asset protection calls for more than just strategic asset allocation. Including products like annuities in your retirement income strategy can help protect* your money from declines due to market losses.

Diversifying your retirement assets among a variety of vehicles — both through insurance products and investments, depending on what is appropriate for your situation — may offer you the best chance of meeting your retirement income goals throughout your lifespan.

* Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

Insurance & Estate Planning

What are the needs for insurance in the planning process? How much insurance in do I need? How much does it cost? What about probate fees and death taxes and other settlement costs?

Estate Planning is a complex field that covers many areas, including wills, trusts, insurance, accounting, business contributions and estate, gift, and income taxes. It would be difficult to find one expert who is trained and licensed in all these areas. We recommend having an Estate Planning Team, including a qualified attorney, tax professional, insurance professional, trust administrator and financial advisor. Let us help you assemble your team.

PRIVATE WEALTH MANAGEMENT

We understand that some clients need customized separately managed accounts to address unique circumstances, like balancing highly concentrated stock positions and tax management. We work with highly skilled managers to deliver custom solutions to meet each client’s personal goals.

Long-Term Care

As the oldest baby boomers begin to wind through their 60s, one of the biggest concerns may not be outliving income, but outliving good health. For retirees, home health care can cost $45,760 or more per year*, and nursing home care can run as high as $97,455 per year*. Does your retirement income strategy account for this kind of possibility? Would you be prepared for twice that amount as a married couple?

Considering that you could have to reduce your financial means before Medicaid will pay for long-term care and neither your employer group health insurance nor major medical insurance will cover long-term care, you may want to consider planning ahead for these potential expenses.

We can help evaluate your situation and determine if purchasing a long-term care insurance policy may be the right move to help you feel confident in your financial future.

*Genworth 2017 Cost of Care Survey: Home Care Providers, Adult Day Health Care Facilities, Assisted Living Facilities and Nursing Homes

Annuities

The majority of the burden for retirement income has shifted to the individual. So, how can you get guaranteed income for life? Insurance companies such as Prudential, Jackson National, AXA Equitable, US Allianz, Lincoln and Transamerica offer programs that allow the customer to invest in a variable annuity with special riders that provide an income for life. Annuities have a special tax-deferred status, so while you are accumulating and growing your account, there is no current income tax. Tax-deferred annuities are generally considered long-term investments.

Stocks

Common stock is bought and sold each day on secondary markets around the world, including the New York Stock Exchange (NYSE), the NASDAQ, various Electronic Communication Networks (ECNs), or one of the many foreign exchanges.

Profitable companies often distribute a portion of their earnings to their shareholders in the form of dividends. The potential receipt of dividends is a common motivation for purchasing a particular stock. Perhaps more importantly, stock ownership permits investors the freedom to choose the companies they believe will be successful and to become an owner, to the extent of the shares they purchase, of those companies. Stock ownership can therefore be both exciting and liberating, but it should be pursued with caution, discipline and professional guidance.

Alternative Investments

An alternative investment is an investment product other than traditional investments such as stocks, bonds and cash. One of the alternative investments we like to use at Montecito Financial are Real Estate Investment Trusts (REITs) which can be either equity or debt. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. Alternative investments are attractive to investors because the returns tend to have a low correlation with the stock and bond markets.

Bonds

One of our goals is to provide income for our clients. We believe bonds are an excellent way of doing this, and should be part of any balanced portfolio, whether you own a corporate, municipal or government bond. The advantage of using high credit quality corporate bonds is that they allow for a slow and steady return with rates that can generally beat the banks.  How it works is the investor loans money to an entity (corporate or governmental) and they borrow the funds for a defined period of time, generally at a fixed interest rate. As with any investment strategy, diversification is the key. Therefore we use multiple issues from several different companies.  Because most bonds pay interest every 6 months, we like to establish a bond ladder portfolio which sets up our clients for a monthly income stream with various maturity dates.  If you find yourself paying too much in taxes municipal bonds can be a great way to lower your tax liabilities.

ETFs

Exchange-traded funds, or ETFs, are very much like mutual funds. That is, they are baskets of stock that are bought and sold. They differ from mutual funds in that shares of ETFs can be traded at any time while the stock market is open. Many track indexes and have very low expenses.

Municipal Bonds

Most municipalities raise money through the sale of bonds (i.e. they borrow from investors). Because there is a civic purpose for the money raised through these bond issues, they often receive special tax treatment from the state and federal authorities.

Tax-Exempt Municipal Bonds offer: 

• An exemption from state and federal taxes, allowing for a potentially higher rate of return;

• Guaranteed returns, backed by the borrowing institution or municipality, if held to maturity;

• The opportunity to sell currently held bonds, before maturity, at the market rate in the secondary markets.