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Retirement Tools to Defuse the Demographic Time Bomb

Retirement Tools to Defuse the Demographic Time Bomb. Tony Batman Chairman & CEO 1st Global, Inc. December 7 , 2012. For Use with Prospective Wealth Management Firms Only – Not for Use with Clients. 1st Global Capital Corp., Member FINRA/SIPC. Agenda. Overview & Foundation

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Retirement Tools to Defuse the Demographic Time Bomb

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  1. Retirement Tools to Defuse the Demographic Time Bomb Tony Batman Chairman & CEO 1st Global, Inc. December 7, 2012 For Use with Prospective Wealth Management Firms Only – Not for Use with Clients 1st Global Capital Corp., Member FINRA/SIPC

  2. Agenda • Overview & Foundation • Pre-Retirement Wealth Accumulation Risk • In-Retirement Sustainable Income Risk • Solutions • Practical Retirement Advice • David Shill, GPP Wealth Management, LLC, Dallas • Closing Thoughts & Key Takeaways • Questions 2

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  4. Broad Market Environment • Baby boomer retirement still the big driver • Liquidation will create more millionaires (rollovers, house downsizing and small business sales) • Issues include shrunk value of assets, increasing life expectanciesand lack of inheritances • Consumers still arithmetically poor • Yes, investable assets and retirement plan assets now above 2007 levels • But … homes and small businesses still below 2007 (hence home equity is the #1 issue for most consumers’ psyches) • Consumers don’t realize financial assets are way up. They still feel stressed. • Bottom line … both household assets and net worth still below 2007 levels and probably will not change consumer viewpoints given other uncertainties Source: 10/9/12 TD Ameritrade Email (Schweiss); 4/18/12 1st Global Presentation (Batman);4/18/12 Berkshire Capital Securities Presentation (Cameron);4/18/12 BrightScope Presentation (Alfred); 4/18/12 FT Ventures Presentation (Cukier);4/18/12 LPL Presentation (Casady);4/17/12 Fidelity Investments Presentation (Young); 4/17/12 Jefferson National Presentation (Caplan);4/17/12 TD Ameritrade Presentation (Bradley); Tiburon Research & Analysis

  5. Baby Boomers’ Pending Retirement will Drive More Assets into the Investable Assets Market Consumer Households Assets ($ Trillions) $76.1 $7.7 $22.0 $13.7 $30.5 Investable Assets Retirement Plan Assets Personal Assets Other Illiquid Assets Total Household Assets Source: 10/14/12 Joyce Financial Management Email (Joyce); 6/30/12 Federal Reserve Flow of Funds Report; 3/31/12 Federal Reserve Flow of Funds Report;12/31/11 Federal Reserve Flow of Funds Report;10/4/11 Triton Pacific Email (Michie); 9/16/11 Federal Reserve Flow of Funds Report; 4/8/11 Fidelity Investments Email (Graham); 4/7/11 TD Ameritrade Email (Schweiss);12/31/10 Federal Reserve Flow of Funds Report; Tiburon Research & Analysis

  6. The Share of the U.S. Population Over the Age 65 is Increasing Rapidly Share of US Population Age 65 & Over Source: 4/17/12 Fidelity Investments Email (Young) (US Department of Health & Human Resources; US Department of Commerce);Tiburon Research & Analysis

  7. An Erosion of Confidence 82 percentof workers are not confident they will have enough money for a comfortable retirement. • A sharp increase from 73 percent in 2007 66 percentof workers are notconfident they will have enough money to take care of necessities(medical care, housing, food and transportation)during retirement. • Up from 52 percent in 2007 From the Employee Benefit Research Institute Study Source: EBRI; Retirement Confidence Survey, 2008. Information provided by John Hancock Funds. 7

  8. Most underfunded1 Frozen2 Won’t offer pension2 $32.2 billion total 61 percent of workers expect to receive income from a defined benefit plan²… but only 20 percent of workers are covered by such plans.3 1. Cerulli Associates Quantitative Update. “Retirement Markets.” 2007.2. “While America Aged.”Roger Lowenstein, 2008.3. U.S Bureau of Labor Statistics, 2008. Information provided by John Hancock Funds. 8

  9. Workers with Pension Coverage By Type of Plan, 1983, 1995 and 2010 Source: Center for Retirement Research, Boston College 9

  10. Baby Boomers Have a Growing Set of Financial Issues • First baby boomers turned 65 in 2011 (birth years 1946 to 1964) • 10,000 baby boomers turn 65 each day 2011-2029 • Many unprepared for retirement (57% have less than $100,000) • Average life expectancy reached 78 • And it is +10-20 years for those who reach retirement age • Inheritances not materializing (~2% of baby boomers to receive over $100,000) • And now… the twin threats of elder care and the kids moving back in, plus potentially higher taxes, and a possible reduction in Social Security and/or Medicare benefits Source: 10/14/12 Pew Research Center Web Site; 10/14/12 Loring Ward Email (Potts) (Pew Research Center); 10/14/12 Joyce Financial Management Email (Joyce); 4/10/12 Fidelity Investments Email (Graham);10/4/11 Triton Pacific Email (Michie); 8/26/11 Joyce Financial Management Conversation (Joyce); 4/14/11 Edelman Financial Services Presentation (Edelman); Tiburon Research & Analysis 10

  11. 2010 Incomes by Generation Source: Center for Retirement Research, Boston College 11

  12. The National Retirement Risk Index 1983-2009 Source: Munnell, Golub-Sass, and Webb (2007); and Munnell calculations from the 2007 Survey of Consumer Financial (SCF). 12

  13. Percentage of Households “At Risk” by Cohort, 2009 Source: Munnell, Webb, and Golub-Sass (2009). 13

  14. Life Expectancy at 65 for Men and Women, 1983 and 2010 Source: Center for Retirement Research, Boston College 14

  15. Percentage of Households Ready for Retirement at Selected Ages, by Income Source: Center for Retirement Research, Boston College 15

  16. Percent of Households “At Risk” at Age 65 by Income Group(2004, 2007 and 2009) Source: Center for Retirement Research, Boston College 16

  17. Percent of Households “At Risk” at Age 65 by Age Group(2004, 2007and 2009) Source: Center for Retirement Research, Boston College 17

  18. Number of Years Beyond Age 65 that Households Must Work to Attain Readiness Source: Center for Retirement Research, Boston College 18

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  20. Eight Risks to Retirement Source: Center for Retirement Research, Boston College 20

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  22. Our Approach • Discover client’s ideal vision of retirement. • Craft a plan that addresses client’s unique risks and helps them reach that vision. • Maximize clients Social Security and pension income. • Help you understand the potential benefits and tradeoffs associated with their retirement income plan. • Instill more confidence that clients will have sustainable income for the rest of their life. 22

  23. Sustainable Income Solutions™ 23

  24. Clarifying the Retirement Vision 24

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  27. Scenario Presentation 27

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  31. Practical Retirement AdviceDavid Shill, GPP Wealth Management, LLC, Dallas 31

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  33. Closing Thoughts & Key Takeaways 33

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  35. Questions 35

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