Financial Considerations in Migrating to ISG

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Financial Considerations in Migrating to ISG

• Qwest Seminar
•  Presented by

Securities offered through Kevin Tolsma,
Registered Principal, ePLANNING Securities, Inc.,
Member NASD, SIPC Investment Advisory Services
offered through Kevin Tolsma as Investment
Advisory Representative of ePLANNING Advisors,
Inc. A Registered Investment Advisor Neither
ePLANNING Securities, Inc., ePLANNING Advisors,
Inc., nor Caleb Consulting Group, Inc. are
affiliated with Qwest Communications or
International Business Machines Inc. (IBM).
Employees of Caleb Consulting Group, Inc. are
Registered Representatives and not employees
of ePLANNING Securities Inc. or ePLANNING
Advisors, Inc.
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Savings Plan Options
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Savings Plan Options

• 3 CHOICES
• Transfer funds into IBM 401(K)
• Leave funds with Qwest
• Transfer funds to an IRA

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Transfer Your Funds Into the IBM 401(k)

• PROS
• Greater investment selection than Qwest
• Maintain one consolidated 401(K) account
• CONS
• Investment selection and options not as
• diverse and numerous as an IRA
• No safety nets available

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Leave your Funds with Qwest

• PROS
• Easiest option Requires little or no action on
  your part
• CONS
• Investment options are more limited than those of
  IBMs 401(K) or an IRA
• No safety nets available

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Transfer Your Funds to an IRA

• PROS
• Number of investment options are far grater than
  both of the 401(K) plans of Qwest and IBM
• May utilize one or more safety nets

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Transfer Your Funds to an IRA

• CONS
• Requires more effort to choose among a greater
  number of options and to monitor the account
• May have to pay extra fees for the selection,
  management and monitoring of the investments

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Pension Distribution Choices

• Evaluate and Compare the Differences of Each

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Lump-Sum vs. Monthly Pension
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Monthly Pension Features

• Payments Guaranteed to Last as Long as You Do
• Payments are Fixed for Life
• No Access to Principal

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Lump-Sum Features

• Control Over Account
• Investment Flexibility
• Distribution / Payment Flexibility
• Account Subject to Investment Performance
• Could Outlive the Account
• Lump-Sum Amount is Based in Part on Prevailing
  Interest Rates

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Investment Strategies and Guidelines
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The Qwest Quandary

• Dark clouds provide a good time to buy,
• not to sell.

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How to Place a Safety Net on Your Account

• Guaranteed Retirement Income Benefits
• Reducing Interest Rate Risk

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Illustration of a Guaranteed Retired Income
Benefit
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Where Can One Find Decent Yields

• Fixed (Principal) Accounts
• Money Market Rates 1 0.65
• 3 Month Treasuries 2 0.92
• 1 Year C.D. Rates 1 0.90
• 2 Year C.D. Rates 1 1.35
• Fixed Annuities 3 3.00

1 Washington Mutual Interest rates as of 8/7/2003
based on investment of 100,000 or more.2
13-Week Treasury Yield Index as of 8/7/2003
Source Yahoo! Finance.3 ING/USG 5-Year Select
Guaran Fixed Annuity. Rate quoted as of 8/5/2003.
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The Current Paradox of Bonds
Value ofBonds
Bonds
Longer
Shorter
Duration
InterestRates
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Hypothetical Returns of Hedged versus Non-Hedged
Bond Portfolio

• Assume Interest Rates rise by 3 over the next 2
  years, not unlike what happened in 1993-1994
• In this scenario a hedged bond portfolio would
  out perform an unhedged portfolio by about 11.

 
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Benefits of More Concentrated Portfolios
SP Study Shows Concentrated Funds Outperform
Non-Concentrated Funds over Long Term
(April 30, 2003)

• Standard Poors study shows that, over the
  long-term, investors can benefit from investing
  in a fund with concentrated holdings. In
  addition, the average absolute return and Sharpe
  Ratio of concentrated funds do show these types
  of funds provide better return relative to the
  risk they incur than their diversified
  counterparts.
• Phil Edwards, Managing Director of Funds Research

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Definition of Portfolio Concentration

• Funds where the top ten holdings account for at
  least 30 of the funds total assets.

Portfolio Concentration
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Benefits of More Concentrated Portfolios

• SP Study Shows Concentrated Funds Outperform
  Non-Concentrated Funds over Long Term (April
  30, 2003)

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Seeking Additional Return through Portfolio
Concentration and Complimentary Managers

• AssetMarks Best of Class Managers
  Hypothetical Returns Illustration of Managers
  Risk / Return verses the Index For 5 Years Ended
  3/31/03

3.00
2.00
Combined
1.00
Managers
0.00
-1.00
TCW
William Blair
Annualized Returns ()
-2.00
-3.00
-4.00
-5.00
Russell 2500
Growth
-6.00
-7.00
20.00
30.00
40.00
50.00
60.00
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Questions?