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Pitfall prevention through estate planningIn our previous edition of FOCUS 360, Dan Ray talked about the attraction of “do it yourself” (DIY). Well, he had another item to add to the “don’t do it yourself” list: Estate planning.

“Estate planning can be a tough topic to talk about. It has to do with mortality, so it’s understand-able how some aren’t comfortable discussing it,” Dan said. “I believe people go into the process knowing what they want the outcome to be, but the reality is people need to rely on outside expertise to accomplish their wishes. And there are a lot of ways for a DIYer to get it wrong.”

According to Dan, estate laws can be complicated and sometimes counter-intuitive. For most, that means add-ing an estate-planning attorney to your financial team.

Perils and pitfallsEveryone knows how important estate planning can be. Most people want their assets to transfer to their heirs at their own passing with a minimum of diffi-culty. And most know how strategic estate planning can create financial advantages in the here and now, while minimizing taxes on yourself and your heirs. But why consider hiring a professional to accomplish this? According to Dan, it has to do with level of detail, and prevention of needless and expensive errors.

Dan cited trusts as an example. “Trusts are intended to allow assets to pass privately, quickly and efficiently, while avoiding the hassle and expense of probate,” Dan said. “But I’ve seen many people come through who’ve gone to the trouble of setting up a trust and then placed none of their important assets within that trust,” an error that can defeat the purpose of having the trust in the first place.

Dan has also seen situations where something as basic as how real estate is held in title can cause problems. “It’s possible for a couple to hold title to their real estate in a way where they receive a step up in basis when one of them passes away,” he said. “But I’ve seen this done wrong many times, where the surviving spouse sells the property and needlessly has to pay income taxes on the gain because the property was titled incorrectly.”

Also, there’s a whole list of legal items to accomplish in the wake of someone’s passing. “The complexity and need for accuracy can be difficult for a DIYer to achieve on a good day. But imagine leaving all of that detail for a bereaved spouse to accomplish during what could be the worst time of their life,” Dan said. “If the passing isn’t recorded correctly, if signatures aren’t notarized correctly or notices sent in a timely manner, there could be all kinds of negative consequences for your heirs.”

Proactive problem preventionAccording to Dan, one way to avoid those potential negative consequences is to hire an attorney who has a specialty in estate planning. “I’ve heard people say they’ll just write their own will, or visit one of those legal-help websites and download the documents,” he said. “But based on my experience, I have to state my opinion that estate planning is another of those areas you don’t want to handle on your own.”

Dan also believes that engaging with an estate-planning attorney should be an ongoing process. “A lot of folks think of estate planning as a one-time thing. They put the book on their shelf and consider it ‘done,’” Dan said. “But I want to emphasize that clients should probably meet with their estate-planning attorney at least every three to five years. Estate planning is best as a relation-ship, so that a professional can help ensure your wishes are fulfilled as life changes occur.”

So how do you find an estate planning attorney? “As our clients know, Regency does not give legal or tax advice. But we can recommend professionals who do,” Dan said. “In our business, we tend to know attorneys in town who either specialize in estate planning or make it a significant part of their practice. As part of our holis-tic, team approach to working with our clients, we have a unique understanding of our clients’ needs, so we’re positioned to make recommendations based on your situation, with confidence.”

Estate planning is an important part of your financial life. “So, we recommend hiring a professional to do your estate planning. From there, update your plan, keep your professional informed about life changes, and see them from time to time to ask if there’s anything you should be doing differently,” Dan said. “At Regency, we’ll be happy to work with your estate planner as part of your team.”

Dan Ray

FOCUS360°August 2016

REGENC Y MARKET COMMENTARY: THROUGH JULY 31, 2016Key Indexes

Source: MorningstarYTD 1 yr 3 yr 5 yr 10 yr 20 yr

ANNUALIZED RETURNSDJ Industrial Average – Large Cap 7.38% 7.01% 8.57% 11.52% 7.92% 8.65%

S&P 500 – Large Cap 7.66% 5.62% 11.16% 13.38% 7.75% 8.31%Russell 2000 – Small Cap 8.32% 0.00% 6.74% 10.43% 7.17% 8.42%

MSCI EAFE – Foreign Large Cap 0.42% -7.53% 2.00% 3.02% 1.98% 4.37%Barclays US Aggregate – Bonds 5.98% 5.94% 4.23% 3.57% 5.06% 5.69%

USTREAS 3-Month T-Bills 0.14% 0.16% 0.08% 0.08% 0.98% 2.26%IA SBBI US Inflation 1.74% 0.83% 1.00% 1.27% 1.69% 2.16%

FOCUS 360 Disclosure: Past performance is not indicative of future results, and inherent in any investment in the market is a possibility of loss. There are inherent limitations in making assump-tions due to the cyclical nature of the market.

Although market returns in 2Q 2016 were good, their performance belies an apparent inability to determine a clear direction in the short term.

A quick review of the 2Q market returns will reveal gains in almost every asset class. Nevertheless, investors are still experiencing volatility in the markets. Not as bad as that experienced during 1Q 2016, but still volatile, with much of the current volatility driven by headline news instead of fundamentals.

Brexit reactionAs an example, consider “Brexit,” the United Kingdom’s decision by referendum to exit the European Union. Analysts and experts were nearly all convinced that the United Kingdom would vote to remain in the EU. The end result, however, was completely the opposite of what those analysts expected.

The resulting volatility was significant but short-lived. For example, shares of one European-based ETF (EFA) opened the day after the vote down 8.2 percent, while shares of a UK-based ETF (EWU) declined 11.2 percent almost immediately after the vote. But by the end of June, each of those ETFs had rallied, 3.6 percent and 4.6 percent respectively, as investors brushed the Brexit decision aside. All of which illustrates the difficulty of predicting where markets are going in the short term.

Looking beyond the headlines, fundamental mea-sures of economic and market performance continue to improve. The Fed made no changes to interest rates in July, noting their opinion that near-term risks to the economic outlook have diminished. The Bank of Eng-land recently cut rates, which has left the Fed as the lone central bank considering a rate hike. June’s non-farm payroll report was strong, easing concerns about how the economy will perform. Foreign investors are

recognizing the strength of the U.S. economy as evi-denced by the surge in U.S. corporate bond purchases by foreigners. Flows into U.S. corporate bonds by for-eign investors set a record in 2015, with more than $350 billion flowing into that asset class. Forecasts for 2016 are even stronger, with estimates reaching $450 billion.

Fixed-income markets around the globe rose during the 2Q 2016. In the U.S., a rebound in energy prices eased concerns especially in the high-yield markets. The Credit Suisse High Yield index rose 5.92 percent in the quar-ter and the Barclays U.S. Aggregate bond index gained 2.21 percent. These gains came mainly through a com-bination of falling interest rates and tightening credit spreads. In Europe, Morningstar’s Eurozone bond index rose 2.14 percent as interest rates continued to decline. In fact, both German and Swiss ten-year bonds fell fur-ther into negative territory reaching negative yields of 0.13 percent and 0.58 percent, respectively, at the end of the quarter. This means the bonds are priced so high that investors that purchase the bonds and hold them to maturity are locking in a loss. The search for positive yields is another factor for the increase in foreign flows into U.S. corporate bonds mentioned earlier.

Equities continue to growDespite the volatility and concerns, most equity mar-kets have continued to push higher. The S&P 500 gained 2.46 percent and the Russell 2000 rose 3.79 percent in 2Q 2016. Foreign markets as represented by the MSCI EAFE index fell 1.46 percent in the quarter, but rebounded dramatically in July rising 5.07 percent. In fact, the month of July was a positive month for inves-tors in every asset class category with the exception of commodities (Bloomberg Commodity index), which declined 5.11 percent. Commodities were on a tear in 2Q 2016 gaining 12.78 percent before the July sell-off.

As a long-term investor, short-term movements in the market should not stir you up too much. Regency’s consistent recommendation is that investors not allow short-term headline news or market movements to dissuade them from executing a well-thought out and appropriate investment plan.

Want to talk about your investments? Call your Regency Advisor at (559) 438-2640.

A memorable evening, to help those sometimes forgotten

When you’re in the backyard with your family, or at your desk running your business, or out for a night under the stars with friends, it’s easy to forget. That’s even true for Kelly Lilles, Executive Director for Catholic Charities in Fresno since 2007. But to these “first responders” to people in crisis, what society occasionally forgets soon becomes unforgettable.

“When I’m up in my office signing contracts or work-ing on reports, I still have to be reminded sometimes to look out the window, or to go downstairs and see who our clients are,” Lilles said. The clients she describes are desperate people, lining up outside Catholic Chari-ties, overwhelmed, burdened perhaps by afflictions like hunger, unemployment, mental illness and more.

“When you see that desperation and know you can make a difference, the feeling you get is hard to explain,” Lilles said.

Catholic Charities has been addressing such needs in Fresno, Merced and Bakersfield for nearly half a cen-tury. They serve more than 300 clients every day in Fresno alone — sometimes individuals, sometimes entire families — providing the basics of food and cloth-ing to those in desperate need. In 2015 alone, Catholic Charities distributed nearly 2 million pounds of food locally. Lilles projects the amount will be similar in 2016.

What’s neededBut the assistance Catholic Charities provides is not just about food. The families they help are struggling to keep the lights on, to find jobs that sustain them and to find childcare or transportation so they can work those jobs.

“Our food pantry is open daily, but we’re also referring people to places like the 2-1-1 Help Line, and connect-ing people with employment and financial literacy,” Lilles said. “We not only help people in crisis with basic necessities such as food and clothing, but we’re also launching a Career and Education Center starting in the fall.” That Center’s goal is to help people get the life and time-management skills they need, to help them go back to work and become self-sufficient.

The services Catholic Charities provides are not lim-ited to those of a single faith. “We don’t even ask about someone’s faith when they come in for help,” Lilles said. “We serve all.”

In addition, Catholic Charities has one less-publicized goal. To provide those in desperation something so basic that it’s also often forgotten: Hope.

Sponsoring hopeOne way Catholic Charities funds its efforts is through the annual “Harvest of Hope” event, scheduled Satur-day, Sept. 24, 2016. In its 13th year, Harvest of Hope is “a really wonderful event,” according to Lilles. “This year John and Lisa Bonadelle have graciously opened their five-acre backyard, where we’ll gather under the stars and host around 600 people. We’ll have a champagne reception with the Bishop of our Diocese and President of our Board Armando Ochoa, an awesome band to dance to, silent and live auctions, a rocking violinist to greet people, and more,” Lilles said.

Harvest of Hope fills to capacity each year; Lilles describes the event as “all the movers and shakers in Fresno,” gathering to bring hope. Support comes less from ticket sales to individuals — indeed, Harvest of Hope has become so popular that the organization shies away from offering individual tickets — and more from corporate and individual event sponsorships at several levels. “Every year we say ‘We just can’t top last year,’ and we end up topping the previous year every time,” she added.

And those sponsorships are impor-tant. “When I started with Catholic Charities, we were very top-heavy in grant funding,” Lilles said. “These days it’s about 75 percent private funding, and 25 percent grants. That shift gives us the flexibility to apply those funds where they’re needed most.” According to the Guidestar and Charity Navigator nonprofit rating ser-vices, 90 cents of every dollar donated annually to Catholic Charities goes back to services and programs, remaining right in Fresno where it’s needed.

“I’m reminded of how we’re all so blessed,” Lilles said. “When you’re helping people with young families, young children in need, knowing that if it weren’t for us they wouldn’t be getting fed, that’s another story. We’re not here to judge. Our job is to serve the people that come to us, because they’re here for a reason.”

Want to learn more? Contact Catholic Charities Execu-tive Director Kelly Lilles, (559) 237-0851 ext. 1104 or at klilles@ccdof.org, or learn more about sponsorships at www.ccdof.org.

From time to time FOCUS 360 will include profiles of people and organizations making a difference in our community. It is not known whether those profiled approve or disapprove of Regency Investment Advisors or its advisory services provided. This article reflects the opinions of those interviewed, and should not be taken as a request for you to donate to any particular organization.

FOCUS360° August 2016

Kelly Lilles

Hot Topics: Is the world ending? By Steve Guinn, CIMA® AIFA® AIF® and Client AdvisorConsensus so far on 2016 is that we’re having a year full of terrible headlines. Terrorism. Brexit. Elec-tion fears. It seems like it’s been a long time since we’ve had a year where the headline news was so consistently bad.

Headlines like Brexit — Great Brit-ain’s decision to exit the European Union — and constant news about people dreading the election outcome regardless of who wins are a recipe for uncertainty. And markets hate uncertainty.

But we can’t let the uncertainty of headlines undo years of careful and diligent investing. The “sell everything and get out of the market” reaction to headline news makes no sense. Regardless of the outcomes, consum-ers will still consume, and companies will still be pro-ducing goods and services. Both of which can be viewed as the true drivers of the markets in the long term.

Recently, Putnam Investments went all the way back to the Fall of France in 1940 and examined market per-formance in the wake of other crises. They examined Pearl Harbor, the Korean War, JFK’s assassination, the Iraq War, 2008, and more.

In their analysis, Putnam found that immediate S&P 500 losses after each of the 18 crises examined ranged from 2.0 percent to 39.1 percent, working out to an average immediate loss of 10.2 percent. But five years after each crisis, the S&P 500 gained an annualized average of 14.1 percent. The five-year returns ranged from a low of 1.8 percent annualized after the Long Term Capital Man-agement crisis in 1998 to a high of 27.7 percent annual-ized over the five years following the Korean War.

The same was true in 2008, when the markets crashed to kick off the Great Recession. The people who pan-icked and got out hurt themselves, missing the oppor-tunity to recoup those immediate losses. But the peo-ple who stayed in — while enduring genuine pain and anguish, to be sure — were eventually rewarded for it.

Given such performance after truly historic crises, it would seem events in the news tend to work them-selves out in the markets for those with a long-term perspective.

The message here? The people who tend to lose value in their portfolio permanently are the people who leave the market when they see too many negative headlines. They lose the opportunity to make up those immediate losses, and indeed miss out on the inevitable opportu-nities that come as things return to normal. Investing, by definition, is for the long term, so investors should avoid the temptation to be panicked by short-term headlines.

Steve Guinn