Your Financial Advisor has your best interests at heart.

Really?

I am not a Stock Broker or Financial Advisor!

I am a CERTIFIED FINANCIAL PLANNER™ practitioner!

I am a Fiduciary!

W. David McShane, CFP®, AAMS®

CFP Board ID 56728Insurance License {NV} 1019578

Investment Experience

• 40 years financial & investment industry experience• Regional Director, Sage Advisory Services {$11 billion institutional fixed income

manager}• Senior Vice President, Wachovia Wealth Management• Senior Vice President, Bank of America Wealth Management• Certified Financial Planner (CFP®)• Accredited Asset Management SpecialistSM (AAMS®)

Education

• Master of Business Administration - University of Pittsburgh• Bachelor of Business Administration - University of New Brunswick, Canada

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So…why does that matter?

A Fiduciary is bound by oath or regulation to always work in the client’s best interests…anyone else has NO obligation to do the best thing for you and will often work in their best interests as they are almost always compensated by the sale of a specific product.

As a Fiduciary I work in YOUR best interests.

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“Wall Street Spending Millions to Quash New Fiduciary Rule” Source: marketwatch.com May 15, 2015

Recent Headlines

“Can Wall Street Kill a Fiduciary Rule”Source: huffingtonpost.com April 3, 2015

“Wall Street Bristles at New Fiduciary Standards”Source: benefitspro.com February 23, 2015

“Wall Street Snipers Aim to Pick Off Fiduciary Duty Rule”Source: seekingalpha.com March 15, 2015

Can Wall Street Kill a Fiduciary Rule?Source: bettermarkets.com April 7, 2015

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Wall Street vs. The Fiduciary Standard

• “There's something called the Fiduciary Standard which stipulates that an advisor must place his or her interests beneath that of the client's. For instance: the standard would make it illegal for a broker to recommend a fund that would increase his or her compensation at the expense of the client's investment.”

• “As crazy as this sounds, the Fiduciary Standard currently doesn't apply to everyone. That means Wall Street brokers can push on their unaware clients poor investments that maximize  fees and, more likely than not, lack any upside. They won't actually be giving investors the good advice they claim to provide.”

Source: wealthdaily.com/articles/wall-street-vs-the-fiduciary-standard/5611

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Gordon Gekko: Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered.

Gordon Gekko: You’re walking around blind without a cane, pal. A fool and his money are lucky enough to get together in the first place.

Source: The movie Wall Street {1987}

The Wall Street Mentality

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Has this ever happened to you?

Insurance BrokerageCDs

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DO YOU CONSTANTLY WORRY ABOUT THESE FINANCIAL RISKS TO YOUR PERSONAL

RETIREMENT PLAN?

• The Market Equity Market Volatility Bond Market {interest rate increases}

• Taxes• Reinvestment Risk• Timing of Returns• Longevity - Outlive Your Money• Health Care Risks - Medical and LTC• Inflation

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Don’t you wish the market would give you a clear sign of what to do or not do?

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But what about the cost of your portfolio??

How does that affect your bottom line?

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• Expense Ratio: Average .90%

• Transaction Costs: 1.44%

• Brokerage Commission

• Market Impact

• Spread Cost

• Tax Costs: 1% to 1.2%

• Cash Drag: .83%

• Soft Dollar Cost: .40%

• Advisory Fees: .25% to 2.50%

Source: http://www.forbes.com/2011/04/04/real-cost-mutual-fund-taxes-fees-retirement-bernicke.html

Cost of a Taxable Mutual Fund

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• Expense Ratio: .90%

• Transaction Costs: 1.44%

• Tax Costs: 1.00%

• Cash Drag: .83%

*Total Costs 4.17%

But we also need to consider the other costs

• Soft Dollar Cost: .40%

• Advisory Fees: 1.25%

“Real” Total Costs 5.82%

* Source: http://www.forbes.com/2011/04/04/real-cost-mutual-fund-taxes-fees-retirement-bernicke.html

Cost of a Taxable Mutual Fund

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FundLast Year's Cost of

OwnershipProjected Value In

10 Years

Last Year’s Actual Returns

Pre-Tax After-Tax

Growth Fund of America; Class A Shares (AGTHX)

$102 1.02% $28,439 11.41% 11.41%

Fidelity Concord Street Trust: Spartan 500 Index Fund; Fidelity Advantage Institutional Class (FXAIX)

$7 0.07% $30,872 12.58% 12.58%

Vanguard Institutional Index Fund: Vanguard Institutional Index Fund; Institutional Plus Shares(VIIIX)

$7 0.07% $30,872 12.66% 12.66%

Vanguard Index Funds: Vanguard 500 Index Fund; Admiral Shares (VFIAX)

$9 0.09% $30,822 12.63% 12.63%

Vanguard Index Funds: Vanguard 500 Index Fund; ETF Shares (VOO)

$9 0.09% $30,822 12.63% 12.63%

You can see from this table what a difference costs make over time. Looking forward 10 years and assuming that all the funds in this category did average 12% before costs, your $10,000 would grow to $28,439 after subtracting our estimated cost of ownership – or to as much as $30,872 in one of the lower-cost funds in this category.  (See below for an important note about our projections.) 

What's more – and not reflected above – this fund carries a front-end load of 5.75%, so the future value of any new investment in the fund would be reduced by an additional 5.75% ($1,635 in this scenario). Of course, if you already own the shares, what's done is done – you won't recoup the load by selling the shares, so that's not relevant to deciding whether to keep them. (Note: many funds discount loads for large investors. We show here the maximum load, which is what most people pay.)    

Source: personalfund.com 5/20/2015

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Account Name of Fund Ticker Personal Fund

Expense Ratio (1)

Value of Fund (2)

Mgmt Fee (3)

Total Managemen

t Fees (4)

Estimated Annual Cost of

Ownership (5)

Account #1 Pas International Fund Of Funds FILFX 1.30% $58,839.00 0.50% 1.80% $1,059

Account #1 Strategic Advisers Core Fund FCSAX 3.50% $54,296.00 0.50% 4.00% $2,172

Account #1 Pas Core Income Fund Of Funds FPCIX 1.00% $37,178.00 0.50% 1.50% $558

Account #1 Strategic Advisers Value Fund FVSAX 3.30% $33,374.00 0.50% 3.80% $1,268

Account #1 Fidelity Strategic Advisers Growth Fund FSGFX 2.60% $32,372.00 0.50% 3.10% $1,004

Account #1 Fidelity Total Bond FTBFX 1.60% $20,760.00 0.50% 2.10% $436

Account #1 Pas Small Cap Fund Of Funds FSCFX 4.60% $16,411.00 0.50% 5.10% $837

Account #1 Fidelity Rutland Square Trust II FAUDX 0.50% $16,110.00 0.50% 1.00% $161

Account #1 Pimco Funds Total Ret Fund Admin Shr PTRAX 0.70% $13,476.00 0.50% 1.20% $162

Account #1 Pas Income Opportunities Fund Of Funds FPIOX 1.80% $11,331.00 0.50% 2.30% $261

Account #1 Fidelity Rutland Square Trust II FSAMX 1.10% $4,355.00 0.50% 1.60% $70

Account #1 Templeton Global Bond Fund Class A TPINX 2.70% $4,204.00 0.50% 3.20% $135

Account #1 BlckSt Alt Invt Shs -I- Multi-Mgr Fund BXMMX 2.50% $3,229.00 0.50% 3.00% $97

Account #1 Merger Fund [The] MERFX 1.30% $2,717.00 0.50% 1.80% $49

Account #1 Arden Inv Srs Shs -I- Alternative Stgs Fund ARDNX 2.50% $2,691.00 0.50% 3.00% $81

               

Summary

 Fee Structures Fee

     Self Managed ETFs 0.25% $778.36 Savings -$7,569.06 Total Value $311,343.00

Managed ETFs 1.41% $4,389.94 Savings -$3,957.48 Fees $8,347

Annuity Only Portfolio 0.25% $778.36 Savings -$7,569.06 Average Fee 2.68%

Annuity / ETF Combo 0.82% $2,553.01 Savings -$5,794.40    

Sample 1

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Account Name of Fund Ticker P Fund Expense Ratio (1)

Value of Fund (2)

Mgmt Fee (3)

Total Mgmt Fees (4)

Est. Annual Cost (5)

Bank #1 AIM Investment Securities Funds ARGYX 2.35% $7,882.81 1.75% 4.10% $323

Bank #1 William Blair International Growth I BIGIX 3.00% $15,103.28 1.75% 4.75% $717

Bank #1 Dodge & Cox International Stock DODFX 1.31% $19,371.01 1.75% 3.06% $593

Bank #1 Dreyfus Appreciation Fund DGAGX 1.55% $33,360.62 1.75% 3.30% $1,101

Bank #1 Goldman Sachs Fincl Sqr Trs Instr FST FTIXX 0.10% $4,014.95 1.75% 1.85% $74

Bank #1 JHancock Global Absolute Ret Strats I JHAIX 1.38% $8,017.49 1.75% 3.13% $251

Bank #1 Highland Funds I: Highland Long/Short Equity Fund HEOZX 12.39% $11,908.68 1.75% 14.14% $1,684

Bank #1 Hotchkis & Wiley Funds: Hotchkis & Wiley Diver. HWCIX 1.76% $33,217.41 1.75% 3.51% $1,166

Bank #1 JHancock Absolute Return Currency I JCUIX 1.05% $20,297.86 1.75% 2.80% $568

Bank #1 Lazard Funds, Inc: Lazard Emerging Markets Equity LZEMX 2.50% $23,006.43 1.75% 4.25% $978

Bank #1 Legg Mason Partners Eq Trust: ClearBridge AG Fund SAGYX 1.19% $43,400.93 1.75% 2.94% $1,276

Bank #1 MainStay Marketfield I MFLDX 1.52% $15,634.00 1.75% 3.27% $511

Bank #1 Neuberger Berman Alternative Funds: NB LS Fund NLSIX 4.40% $11,875.61 1.75% 6.15% $730

Bank #1 BlackRock Emerging Mkt L/S Eq Instl BLSIX 1.75% $8,037.84 1.75% 3.50% $281

Bank #1 Wells Fargo Funds Trust: WellWFAdvantage EGF WEMIX 4.16% $27,259.86 1.75% 5.91% $1,611

Bank #1 Heartland Group, Inc: Heartland Value Plus Fund HNVIX 4.57% $22,757.47 1.75% 6.32% $1,438

Bank #1 Oppenheimer Developing Markets Fund ODVYX 1.72% $15,382.52 1.75% 3.47% $534

Bank #1 PIMCO Funds: PIMCO Commodity RR Strategy Fund PCRIX 1.61% $11,901.11 1.75% 3.36% $400

Bank #1 RS Investment Trust: RS Value Fund RSVYX 3.10% $23,573.93 1.75% 4.85% $1,143

Bank #1 T Rowe Price Mid-Cap Growth Fund, Inc RPMGX 3.00% $27,691.97 1.75% 4.75% $1,315

Bank #1 Natixis ASG Managed Futures Strategy ASFYX 1.45% $8,079.48 1.75% 3.20% $259

Broker #2 Tocqueville Trust: Tocqueville Gold Fund TGLDX 1.48% $2,833.97 0.00% 1.48% $42

Broker #2 US Global Investors Funds: World Prec Minerals Fnd UNWPX 2.13% $1,152.10 0.00% 2.13% $25

Broker #2 US Global Investors Funds: Gold & Prec Metals Fund USERX 2.71% $2,306.25 0.00% 2.71% $62Summary

  Fee Structures Fee      

Self Managed ETFs 0.25% $995.17 Savings -$16,088.34 Total Value $398,067.58

Managed ETFs 1.41% $5,612.75 Savings -$11,470.76 Fees $17,084

Annuity Only Portfolio 0.25% $995.17 Savings -$16,088.34 Average Fee 4.29%

Annuity / ETF Combo 0.82% $3,264.15 Savings -$13,819.36    

Sample 2

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(1) Pesonalfund.com is a website that estimates the true cost of owning a mutual fund. It does not include what a manager might charge you. (2) Value of Fund: What you gave your planner as an estimate of what your fund is worth.(3) Management Fee: The fee that an investment advisor or money manager charges you.(4) Total Management Fees: The total from the fund and the money manager {column 1 + 3}.(5) Total cost of ownership: The value of the fund multiplied by the total management fees.

Disclosures: All fees are estimated by personalfund.com and may be higher or lower depending on the unreported internal fees by the fund. All estimates are based on past history and may not be an indication of the future. Alternative fee structures are only to make an estimated comparison and are not guarantees by any advisor presenting this calculation. This presentation is for example purposes only and does not constitute an offer to sell any particular strategy.

Personal Fund reference key and Disclosure

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So what effect do fees have on your retirement age?

* Case Study: 22 year old recent college graduate who makes $50,000 per year and invests 10%. What is the effect on retirement age assuming certain fees?

Total Fees Retirement Age

0.18% 56

0.39% 57

1.39% 61

2.75% 66

Source: http://cfiresim.com/blog/2013/11/07/how-fees-affect-retirement-dates/

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Results Summary

  Fee 1 Fee 2 Fee 3

Starting amount $5,000 $5,000 $5,000

Years 30 years 30 years 30 years

Additional contributions$5,000 per year, at

the start of each period

$5,000 per year, at the start of each

period

$5,000 per year, at the start of each

period

Annualized rate of return 7% 7% 7%

Annual investment fee 0.18% 1.39% 2.75%

Annual return after fees 6.82% 5.61% 4.25%

Total amount you will have contributed $155,000.00 $155,000.00 $155,000.00

Total at end of investment $524,653 $415,604 $322,284

Balance by Year

Source: http://dinkytown.com/java/CompareFees.html

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The future for some of us

Remember…fees are something you can help control.

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• Any discussions of legal matters are for education only and you should consult with a licensed lawyer prior to any actions.

• Although we may discuss taxes and how they can affect your finances, I do not prepare tax returns. We do, however, work closely with some of the countries’ top tax planning and business advisory practitioners. Consult a tax professional before implementing any tax planning strategies.

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We are offering a conference special of a FREE Cost Benefit Analysis prepared by a CERTIFIED FINANCIAL PLANNER™. If you hold Mutual Funds, Variable Annuities and/or Variable Universal Life Insurance in your portfolio let us take a look at it for you.

Webinar Special!!

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Thank you for your time.