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Credit Suisse Securities LLCMark�C.�Hutchinson,�CFA®

Director—Private�Banking

Chicago, IL Leading Wealth Advisor

I NEVER LEAVE HOME WITHOUT…

My brother’s watch

MY HOBBIES ARE…

Collecting out-of-print booksabout the stock market—the

past can be prologue

WHAT’S ON MY DESK…

Pictures of my daughters andstacks of annual reports

Assets�Under�Management�

$1.5 billion

Minimum�Fee�for�Initial�Meeting

None required

Minimum�Net�Worth�Requirement

$5 million

Largest�Client�Net�Worth

$8 billion

Financial�Services�Experience�

24 years

Compensation�Method�

Asset-based fees

Professional�Services�Provided

Planning, investment advisory and money management services

Association�Memberships

CFA Institute

About Mark C. Hutchinson

Mark C. Hutchinson, CFA, director of Private Banking at Credit Suisse Securities, began his career nearly 25years ago at Lehman Brothers in Chicago and until 2010, was managing director of wealth management atMorgan Stanley Smith Barney. He is an avid collector of Wall Street books, with a private collection comprising of over 2,500 volumes and is a regent of the CFA Institute's Financial Analyst Seminar and pastpresident of the CFA Society of Chicago. He is a graduate of DePaul University and has an MBA degree fromthe University of Notre Dame.

How to reach Mark C. HutchinsonPlease e-mail me at [email protected].

Website

www.credit-suisse.comEmail

[email protected]

Credit Suisse Securities LLC 227 W. Monroe Street, Suite 3100, Chicago, IL 60606 312.345.6828





How�have�you�helped�your�clients

navigate through�the�markets?By�Mark�C.�Hutchinson

Our practice follows simple princi-ples to serve current and new clients’interests no matter what the marketconditions. We would counsel investorsto make certain their advisors followthese principles:

Intense client knowledge. To under-stand the full complexity of theirfinancial profiles, we meet with clientsregularly, as well as with their spouses,life partners, lawyers, CPAs, etc. Itallows us to become trusted confidantsso that all manner of issues, includingthose that might be considered “fam-ily only,” can be thoroughly vetted.Being a real advocate requires deepknowledge—it cannot be done withonly a partial view of the mosaic. Inshort, the simplicity of trust has an ele-gance that sophistication cannot touch.

Enforce thorough diversification.Our job is to keep people wealthy andto prevent them from ever having tosay, “I was once rich.” We make it apoint not to let our clients love thingsthat will not love them back.

Avoid the use of leverage. Usingborrowed money to try to enhanceinvestment returns is generally a badidea. Buying leveraged products andthen leveraging them up even moreis an even worse idea. Just because

someone is offering to lend you moneyis no reason to borrow it.

Pay attention to inflation. Mygrandfather Hutchinson was a partnerin an NYSE member firm. He retired in1970 as a millionaire and was investedcompletely in bonds. In 1970, $50,000tax-free income was big money, butby 1998, his earnings were hardlyenough to sustain him and his wife.A balanced approach that protectedhis savings from inflation would havemade all the difference in how hisfinal years turned out.

Be anticipatory and pragmatic inequal measures. I believe that waitingfor all of the evidence to arrive willput an investor at a permanent dis-advantage. Taking anticipatory actionahead of time pays, although I amwilling to reverse myself if the evidencechanges. It is OK be wrong. It is notOK to stay wrong.

Research-driven fundamentalapproach. Using the balance sheetas a starting point for equity andfixed-income research will immedi-ately separate weak companies fromthe strong. In my opinion, if you arenot willing to be a lender and own acompany’s debt, why would you everwant to own its common stock?

REACHING FOR YIELD: IF IT LOOKS TOO GOOD TO BE TRUE…

I believe that more money hasbeen lost reaching for yield thanat the point of a gun. Buying onlythe highest-yielding stock, bondor other investment (or evenworse, buying them on margin orin some sort of leveraged prod-uct) is a formula for disaster. Ifyou cannot explain how an invest-ment generates above-marketreturns, you probably should notown it. With fixed-income products,

generating above-market returnsgenerally happens either throughleverage, credit research orthrough trading. Always separatethe underlying investment returnfrom the return on leverage. Any-one can leverage something up.You need to ask, “What does thebusiness or investment actuallyearn?” That exercise was com-pletely ignored by many in the lastcycle, with disastrous results. Asthe saying goes, if something lookstoo good to be true, it probably is.





What�paperwork should�you�show

your�advisor?�In�a�word,�everything!By�Mark�C.�Hutchinson

If you expect your advisors to providereal-world, 360-degree advice, theyneed a look at your entire financialpicture. One of the biggest advantagesof working with professional advisorsis the level of organization they canhelp you achieve in order to understandyour finances.

The minimum starting point for nec-essary paperwork would be the following:Bank statements, brokerage statements,fund of fund statements, hedge fundstatements, restricted stock/option grantstatements, IRA/pension plan state-ments, wills and trusts, private equitypartnership statements, life insurancepolicies, income tax returns, homeown-ers insurance policies, auto insurancepolicies, umbrella insurance policies,directors and officers liability policies,employment contracts, mortgage state-ments and loan statements.

What can be done with all of thatpaperwork? The first step is to assembleall of the information into a consolidatedbalance sheet to create a comprehen-sive net-worth statement. Then, on anaccount-by-account basis, due dili-gence can be done on your behalf. Duediligence with a set of statements likethis is really where great value can bemaintained—not created so much, butmaintained. Questions you need toask include:

Are the bank deposits at any one institution in excess of FDIC insurancelimits? Are any banks holding certifi-

cates of deposit versus expired letters ofcredit or repaid loans? If so, those arefunds that can be instantly freed up.

Are the beneficiaries of the pensionplan, IRAs and insurance policiescorrect? You really would not wantyour former spouse to inherit moneyfrom you, would you? That happensthousands of times every year due tothe failure to perfect paperwork.

Are all of the accounts properly titled? Setting up a living trust with yourlawyer and failing to transfer assets intoit is the equivalent of never setting up thetrust. Your estate lawyer would tell you hesees it happen regularly.

Have your wills and trusts been reviewed since their original execu-tion? Are your designated executorsstill the people who you would wantacting in that capacity? Our legalteam suggests that those documentsbe reviewed at least every five years.

Is your umbrella liability policy,which protects you above and beyondyour homeowners and auto insurancepolicies, big enough and with a strongenough carrier to protect your networth in the event of a serious accidentor lawsuit?

I could literally go on all day about theimportance of paperwork, but simplystated it comes down to this: In the details and in the fine print of your investment paperwork lay many key details that make no difference at all—until they make a world of difference.

IF YOU DO JUST ONE THINGAFTER READING THIS…

Ask your IRA or pension plan cus-todian to confirm in writing who,or what, is the beneficiary of youraccount. These assets transfer afterdeath based upon the instructionson file. Confirming periodically thatthe instructions are correct is justplain smart. If you have set up a trust to be

the IRA beneficiary, the custodianshould have that on its system. Ifthe beneficiary is your spouse, notonly should the custodian havethat on file, it is very importantthat you also have contingentbeneficiaries listed in the eventthat your current beneficiary diesbefore you do. Most people listtheir children or charities as con-tingent beneficiaries. The conse-quences of not having contingentbeneficiaries could be that insteadof them receiving the funds andpaying the taxes over many years,they could be required to pay all ofthe taxes immediately. Beneficiarypaperwork is simple and easy toamend, but all too often, onceexecuted, it is never revised.





What�are�important�questions to

ask�when�a�friend�or�acquaintance

gives�you�an�investment�idea?

By�Mark�C.�Hutchinson

How does the company makemoney? If it is not profitable now,

what will have to change to make the com-pany profitable in the future? When exactlyis the company expected to be profitable?The answers to these questions may juststun you.

Is the company fully reportingto the Securities and Exchange

Commission? Have you looked at its finan-cial statements?

How is the stock currently valued?Price-to-earnings ratio, price-to-

book ratio, dividend yield? Price to cashflow? Priced to infinity with no earningsor book value?

How much has the person givingyou the idea already invested in

this idea—in dollars or as a percentage of aportfolio? Did the person just buy in, or isthis merely boasting about an investmentmade years ago that is now going up? Thisis an important question.

How much skin in the game doesmanagement of the company

have in terms of outright ownership of thecommon stock? Which choice is better—owning shares of a company where themanagement owns half of the company's

shares outright, or where managementonly has stock options? Stick with thecompany that has management with equityownership. Managers and executiveswho have only upside via stock optionsand no downside via ownership of commonstock behave very differently than thosewith actual money invested.

Are any insiders currently sell-ing stock, or have any insiders

recently bought any stock?

Does the company need to raisemoney anytime soon to carry out

its business strategy? If so, that may presenta better time to invest.

What are the risks here in thebusiness, and who are its com-

petitors? Does it have a better product orservice and is there a big enough marketfor what it is selling for real wealth to becreated?

What sort of loss limit does yourtipper have on the investment? A

hard stop, a mental stop, or no strategy tolimit risk whatsoever?

What is the upside on the invest-ment, and what is the expected

timeline on that return?

TELLING A TOUT FROMSOMEONE WITH REALINSIGHT

I hope the questions pre-sented here help you asthey have helped myclients. Having too muchinformation prior to makingan investment is never toyour disadvantage. If you do just one thing

after reading this: Starttaking notes of the name,price and date when friendsgive you investment ideas.Over time, keeping track ofpast ideas is one of theeasiest ways to differentiatebetween a tout with no realinsight and someone withgenuine investment insight.

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Slowly and carefully. When coming into a large sum of

money, either through inheritanceor via a monetization event, it is veryimportant that you consider workingslowly and carefully to get the fundsinvested. It may be a one-time-onlyevent. So if you make mistakes withthe proceeds, a “do over” is just notan option.

Involving your spouse, childrenand your other trusted advisors atthis time can facilitate a better dis-cussion around expectations andneeds going forward. Do not do thisin isolation—involve and inform thepeople who matter to you so as tohave no misunderstandings. Yourchildren or spouse may have unreal-istic expectations that you will needto temper. Better to do that soonerrather than later.

The plan that may make sense is tohave your financial advisor first do athorough analysis of your current financial situation, post the funds

coming into your balance sheet, andmake adequate provisions for anytaxes that might be due. Next, youshould build an adequate cash bal-ance, and then create a comprehensivecash-flow analysis that suits yourlifestyle. Only then should you beginto think about what sort of asset allocation might work for you.

Generally a two- to three-year timeframe is optimal for getting a large inheritance or monetization proceedsfully invested and diversified intoyour assets of choice. A very largesum might be stretched out anothercouple of years. To be clear, investingthese funds in high-quality, short-term,fixed income is not a permanent allo-cation. Instead, think of it as a parkingspace until the assets are committedto higher-return asset classes.

In the event of a substantial andprolonged rally in the stock market,this strategy may underperform, butgiven the volatility of the last 10 years,some people may find confidence

knowing that they have not fully invested their funds.

For example, if based upon yourneeds and cash-flow requirements youwant to invest equally in stocks andbonds, and invest 2 percent of yourprincipal to each asset class eachmonth, in just over a two-year periodyou should create a fully invested port-folio. Commit a total of 3 percent ofyour principal each month betweenstocks and bonds, and you should getfully invested in about three years.

By working slowly and proportion-ately each month you can end up withthe portfolio that suits your own risk-and-reward characteristics. You canagree in advance to accelerate theprocess under certain circumstances—but be clear to define those in advance.

Clearly, there are numerous waysto invest a large lump sum, but youdo not want to jump the gun andchase performance. Invest slowly,and carefully, because remember:There are no do overs.

How�should�I�invest�a�large,

one-time�sum of�money?By�Mark�C.�Hutchinson

R E P R I N T E D F R O M

THE EVOLUTION OF FINANCIAL INTELLIGENCE

®

W

Credit Suisse Securities LLC is featured in Worth® 2012 Leading Wealth Advisors™, a special section in every edition of Worth® magazine. All persons and firms appearing in this section havecompleted questionnaires, have been vetted by an advisory group following submission by Worth®, and thereafter paid the standard fees to Worth® to be featured in this section. The informationcontained herein is for informational purposes, and although the list of advisors presented in this section is drawn from sources believed to be reliable and independently reviewed, the accuracyor completeness of this information is not guaranteed. No person or firm listed in this section should be construed as an endorsement by Worth®, and Worth® will not be responsible for the performance, acts or omissions of any such advisor. It should not be assumed that the past performance of any advisors featured in this special section will equal or be an indicator of future performance. Worth®, a Sandow Media publication, is a financial publisher and does not recommend or endorse investment, legal or tax advisors, investment strategies or particular investments. Those seeking specific investment advice should consider a qualified and licensed investment professional. Worth® is a registered trademark of Sandow Media LLC.See "About Us" for additional program details at http://www.worth.com/index.php/about-worth.

Mark C. Hutchinson, CFA®

Director—Private Banking

Credit Suisse Securities LLC227 W. Monroe Street, Suite 3100

Chicago, IL 60606Tel. 312.345.6828

[email protected]

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