Generate Income from Alternative Investments

Plan Well. Invest Smart. Live Better 12 Amidon Avenue, Amesbury, MA 01913 | (978) 388-0020

Creating and Protecting Your
Retirement Paycheck – Finding Steve Stanganelli, MSF, CFP®, CRPC®
Principal
Income in Unexpected Places Steve@ClearViewWealthAdvisors.com

Using Alternative Investments to
Preserve and Grow Wealth

Clear View Wealth Advisors, LLC www.ClearViewWealthAdvisors.com

Steve Stanganelli, MSF, CFP®, CRPC®
Principal
Steve@ClearViewWealthAdvisors.com

Plan Well. Invest Smart. Live Better 12 Amidon Avenue, Amesbury, MA 01913 | (978) 388-0020

Today’s Presentation:

1. Living in Retirement: Some
Retirement Facts to Consider
2. Practical Tips on Preparing Your
Portfolio for Retirement
3. Generating Income from Your
Portfolio
4. Limiting Your Risk
5. A Sound Strategy for Efficient &
Sustainable Withdrawals
Clear View Wealth Advisors, LLC www.ClearViewWealthAdvisors.com

Principal of the Firm

Steve Stanganelli, MSF, CFP®, CRPC®
– Over 20 years experience
advising individuals
– Former mortgage banker
– Graduate of UMass – Lowell
and Bentley
– Member of Financial Planning
Association

© Clear View Wealth Advisors, LLC. 2010

Clear View Wealth Advisors: The Firm

Who is Clear View Wealth Advisors, LLC?

•Clear View Wealth Advisors, LLC is a Massachusetts-registered
investment advisory firm serving individuals, couples and business
enterprises with comprehensive planning and investment services.
•Established in 2010
•Located: Amesbury and Wilmington, Massachusetts

•Primary Goal: To protect client wealth through proactive and
ongoing planning combined with risk-controlled investing.

•Investment Strategy: Clients win by not losing. A multi-bucket
approach is used combining strategic and tactical asset allocation.
The long-term bucket is focused on an absolute return strategy
that includes the use of convertible bonds, MLPs and Alternatives.


Living in Retirement: Facts & Concerns

Retirement Facts to Consider
1.) Americans are living longer, healthier lives
2.) Today’s retirees have the most healthy and active
retirement of any generation
3.) Retirees face formidable financial challenges
Common Retirement Concerns
1.) Income
2.) Health related matters
3.) Outliving their money


Living in Retirement: The Truth About Retirement Costs

• 1.) Experts¹ estimate 70–80% of pre-retirement income
will be needed to support a comparable lifestyle
• 2.) Healthcare expenses tend to rise with age
• 3.) Low interest rates affect savings growth
• 4.) Inflation will erode purchasing power
• 5.) Taxes do not go away

1. Source of data: U.S. Department of Labor, Employee Benefits Social Security
Administration www.Dol.gov/ebsa


Living in Retirement: Life Expectancy

Longer Life Expectancy
1.) In 2005, men and women reaching age 65 had an 1
average life expectancy 82 and 85 years respectively
2.) A couple reaching 65 today has a better than 50% chance
that at least one of them will be alive until age 90
3.) The older population (65+) numbered 35 million in 2000,
2
an increase of 3.7 million (or 12%) since 1990
4.) By the year 2030, the older population will more than
double to 70 million
1. 2005 OASDI Trustees Report; Social Security Administration;
2. Department of Health & Human Services, Administration on Aging 2005


Living in Retirement: Healthcare Costs

Longer Life Expectancy
1.) The availability of employer-sponsored retiree health
benefits continues to decline
2.) It is estimated that between 30% and 40% of all 1healthcare
expenses are incurred during the last years of life
3.) 44% of Medicare beneficiaries need 2nursing home care
with an average duration of 2–5 years
4.) In 2003 the average annual cost of nursing home care was
3
$57,700
5.) Medicare does not pay nursing home benefits
1. Source of data:Health Services Research, December 2002.
2. Source of data: “New Estimates for Nursing Home Use” Medical Care 2002 Urban
Institute.
3. Source of data: Kpplinger’s Retirement Report, March, 2004.


Living in Retirement: Inflation Matters

1978: $6,379 Auto 2010: $28,050

Source: NADA Industry Analysis Division, May, 2005
340%+
1978: $37,229 College Tuition (not including boarding and books) 2010: $88,328

Source: The College Board, 2005
116%+
1978: $62,500 Home 2010: $235,000

Source: US Census Bureau, 2005
260%+

Living in Retirement: Inflation Matters

What Will It Cost to Maintain Your Lifestyle?
Through the 15 Year Period Ending 2004, Inflation Averaged 2.85%

Be Prepared to Double Your Money If You’re Retired for 25 Years

What 3% Inflation Can Do to a $30,000 Per Year
Standard of Living?

5 Year $34,778
10 Years $40,317
15 Years $46,379
20 Years $54,183
25 Years $62,813


Practical Tips to Prepare Your Portfolio for Retirement

1.) Set a Realistic Budget for Your Retirement Lifestyle
Needs
2.) Assess Your Risk Tolerance – Try
www.MyRiskProfile.com
3.) Stay Invested But Be SMART in Limiting Risk
4.) Control What You Can: Costs, Emotions & Allocation
5.) Have a Plan for Withdrawals
6.) Don’t Forget About Income Alternatives


Historical Bear Markets: DJIA
Year Number of Bear Markets Percent Decline

1900s 3 46%, 49%, 27%
1910s 3 24%, 40%, 47%
1920s 1 89%
1930s 3 23%, 49%, 41%
1940s 1 24%
1950s 1 19%, S&P 500 fell 22%
1960s 3 27%, 26%, 36%
1970s 2 45%, 27%
1980s 2 24%, 36%
1990s 1 21%
2000s 2 38%, 53%
All numbers are approximate.
All percent declines are declines in the Dow Jones Industrial Average.

Generating Income For Retirement

Standard Options: Fixed Income Investments -
CDs, Treasury Bills & Bonds, Corporate Bonds, Municipals

There’s more to diversified income investing than stocks and bonds

1. Bonds: Go Beyond the US

2. Consider Hybrids like Convertible Bonds

3. Add Income-Paying Stocks: US & Foreign
4. Add Master Limited Partnerships

Generating Income for Retirement: Convertibles

Convertibles have the characteristics of three asset classes:

1. Bonds

2. Equities

3. Options


Convertibles Beat Equities Over the Long Haul
Cumulative Total Returns 12/73 – 6/10

Source: BofA Merrill Lynch Convertible Research 6/30/10

An asset class that has been utilized for over 150 years


Appendix: Convertibles as an Asset Class

1 Year 3 Years 5 Years 10 Years

All US Convertibles (VXA0)* 22.64% -6.79% 17.70% 22.84%
VXA0 Underlying Equities* 28.38% -30.78% -6.73% -27.19%
S&P 500 14.43% -26.62% -3.90% -14.77%
Russell 2000 21.50% -23.65% 1.93% 34.99%
Through 6/30/10 *Source: BofA Merrill Lynch Convertible Research 6/30/10

© Wellesley Investment Advisors, Inc. 2010
Please see Wellesley performance notes in appendix.

Convertibles as an Asset Class

Get Paid While You Wait

Convertible bonds combine the stated repayment dates and
yields of bonds and the upside potential of stocks.

Convertible bonds offer investors the potential to get paid
with interest during market corrections or bear markets while
they wait for the next market recovery or bull stock market.



Convertible Bond Advantages:

a) Yield advantage over equities
b) Capital appreciation potential
c) Low correlations with stocks and bonds which enhances
diversification
d) History of strong risk-adjusted returns
e) Track record of capital preservation
f) Unlike other types of bonds, convertible bonds have generally
performed well during periods of rising interest rates
g) Convertible bonds have generally performed well in inflationary
periods



Who Should Invest in Convertible Bonds?

a) Bond holders seeking less exposure to Treasury
bonds, municipal bonds or ‘straight’ corporate
bonds with greater potential upside
b) Investors wanting reduced equity exposure without
giving up stock market upside
c) Investors looking for a non-correlated asset class
for more diversification
d) Investors fearful of rising interest rates on ‘straight’
fixed income products

Performance Record
Year WIA S&P 500 MLV0A0
1995 20.05% 37.58% 24.75%
1996 10.15% 22.96% 14.30%
1997 22.92% 33.36% 18.98%
1998 16.56% 28.58% 8.21%
1999 19.60% 21.04% 44.32%
2000 17.32% -9.10% -11.70%
2001 11.74% -11.93% -3.95%
2002 3.08% -22.06% -4.95%
2003 15.28% 28.68% 25.80%
2004 6.58% 10.88% 8.49%
2005 3.60% 4.91% -0.34%
2006 9.57% 15.80% 12.75%
2007 7.33% 5.49% 4.12%
2008 -11.09% -37.00% -33.02%
2009 36. 58% 26.46% 47.19%
2010 0.12% -6.65% -0.34%

Annualized 11.72% 7.29% 8.11%
Annualized returns are from January 1995 to June 30, 2010. Please see performance notes in appendix.
The BoA / ML V0A0 represents the US Convertible Market excluding mandatory convertibles.


Complete Market Cycle Performance (Annualized):


Investing with Convertibles

Convertibles can be structured as a

Core Principal Protected Equity Strategy

Or an

Enhanced Fixed Income Strategy


What Lost Decade?

What Would Happen to $1 Million Placed in WIA
Convertibles VS the S&P 500?

Wellesley Investment Advisors S&P 500 Total Return
Annual 5% Annual 5%
Year % Inc (Dec) Balance Withdrawal Year % Inc (Dec) Balance Withdrawal
1999 1,000,000 1999 1,000,000
2000 17.32 1,173,235 58,662 2000 -9.10 909,000 45,450
2001 11.74 1,245,423 62,271 2001 -11.93 760,528 38,026
2002 3.08 1,219,538 60,977 2002 -22.06 563,118 28,156
2003 15.28 1,335,634 66,782 2003 28.68 688,389 34,419
2004 6.58 1,352,372 67,619 2004 10.88 725,122 36,256
2005 3.60 1,331,048 66,552 2005 4.91 722,689 36,134
2006 9.57 1,385,530 69,277 2006 15.80 795,030 39,752
2007 7.33 1,412,692 70,635 2007 5.49 796,743 39,837
2008 -11.09 1,193,158 59,658 2008 -37.00 476,851 23,843
2009 36.58 1,548,089 77,404 2009 26.46 572,874 28,644

Total Return: 145.63% Total Return: - 9.10%


Convertibles as a Fixed Income Replacement

Wellesley VS Pimco
Growth of $1,000,000 : January 1995 – June 2010

WIA $5,572,662

Total WIA
Advantage:
90.89%

PTTAX
$2,919,320

Sources: PIMCO Total Return Fund A – Ticker Symbol: PTTAX
Please see performance notes in appendix.

Fed Tightening Cycles

How Do Convertibles Perform When The
Fed Tightens?


Fed Tightening Cycles

Merrill Lynch
Fed Policy Rate S&P 500 V0A0 Index

Duration Interest Rate
Start Date End Date (months) Start Value End Value Increase Change (%) Change (%)

03/29/88 02/24/89 11 6.50 9.75 3.25% 10.38% 11.20%

02/04/94 02/01/95 12 3.00 6.00 3.00% 0.13% -8.46%

06/30/99 05/16/00 11 4.75 6.50 1.75% 6.80% 26.47%
06/30/04 06/29/06 24 1.00 5.25 4.25% 11.58% 8.67%

Source: Fed data provided by Deutsche Bank. V0A0 data provided by Merrill Lynch/Bank of America. All numbers are approximate.

Notable Convertible Quotations

Quote from Forbes Magazine

“If you stay out of stocks, you might miss the rally. If you buy stocks, you might
get creamed in another slump. But convertible(s)…let you have it both ways.

Making good selections from among convertible securities with so many variables
is challenging, but very rewarding. Finding the right convertibles is like a
game where you can win or, alternatively, get your money back – with
interest.”


Generating Income: Dividend Payers

Value of Dividends in Retirement
• Historically Higher Yields than Bonds: 3.54% vs 3%
• Historically Higher Total Return than Bonds – Dividend Payors
Benefit from Stock Appreciation Potential
• Historically Higher Income, Price Appreciation & Total Return
Compared to S&P 500 Stock Index: 11% vs 8.4%

Annualized Total Dividend S&P 500
Return Period Aristocrats Index
1990-94 12.58% 10.4%
1995-99 19.48% 28.54%
2000-04 9.79% -2.29%
2005 – 9/2009 2.32% -0.08%
1990 – 9/2009 10.97% 8.41%

Generating Income: Alternative Investments

Alternatives Provide Income & Protection
• Historically Provide Protection Against Inflation
• Cash Flows
• Typically Low Correlation to Stocks

Types of Alternatives to Consider
• Real Estate Investment Trusts (Global)
• Commodities
• Master Limited Partnerships (MLPs)
• Managed Futures


Generating Income: Master Limited Partnerships

Master Limited Partnerships (MLPs)–
The Toll Roads for Commodities
• What Are They?:Build and Operate Pipelines and Distribution
Networks for Commodities Like Oil and Gas
• Cash Flows: Predictable Cash Flows Not Impacted By Commodity
Price
• Inflation Hedge: Over Time Distributions Have Grown Outpacing
Inflation
• Performance: Strong Historical Record Compared to Other Assets
• Tax Preferred: Distributions Considered Return of Capital


Generating Income: Master Limited Partnerships

Master Limited Partnerships (MLPs)–
Solid Income Producing Asset Class



Creating Your Paycheck: A Multi-Bucket Approach
stions.
1. Add Up Your Income Sources (Social Security, Pension, Jobs)
2. Consider Your Retirement Expenses
3. Calculate the Gap (if any)
4. Have a Solid Plan for Taking Money Out – Be Tax Wise!
5. Stay Globally Diversified
6. Have a Cash Flow Reserve Bucket

Note: See Part 7 of “Road to Retirement”



When You Start and How Much You Draw Matters
stions.

Source: Fidelity Investments. Hypothetical value of assets held in an untaxed balanced portfolio of
50% stocks, 40% bonds, and 10% short-term investments and inflation-adjusted withdrawal rates
as specified. Average rates of return for stocks, bonds, short-term investments and inflation are
based on the risk premium approach. Actual rates of return may be more or less. The chart is for
illustrative purposes only and is not indicative of any investment. Past performance is no
guarantee of future results.


Two Options: Lifestyle vs Endowment
stions.
1. Lifestyle: Rule of Thumb of 4% to 5% of Portfolio
– Pros: Simple
– Cons: May not be sustainable especially in times of a bear market

2. Endowment Spending: Acting Like the Big Boys
- Pros: Allows for more controlled withdrawals with a built-in “smoothing rule” that
will work well
- Cons: Takes more time to master; Requires “belt tightening” during bear markets
– This is a blended approach that combines prior year’s spending levels with current
portfolio performance
– Smoothing Rule: 90% is determined by prior year’s spending PLUS 10% from the
current portfolio value
– Ties a portion of spending to current portfolio value
– Works especially well at preserving portfolio during periods of inflation


What You Should Do Next

• 1.) Learn More. Sign up for the ViewPoint Financial Planning Strategies
e-newsletters.
• 2.) Check out www.moneylinkpro.wordpress.com and
www.ClearViewWealthAdvisors.com for more information and resource
links.
• 3.) Log onto the Free Money Road Map Program to complete your own
starter financial plan at www.ClearViewWealthAdvisors.com or
www.BabyBoomerRetirementPro.com
• 4.) Call 978-388-0020 or 617-398-7494 for a complimentary Money
Tune Up, Portfolio Review or College Money Assessment
• Call 978-388-0020 to discuss any questions.


• Call 978-388-0020 to discuss any questions.
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About Steve Stanganelli, CFP®, CRPC®

Chief Personal Portfolio Strategist & Money Coach

Steve Stanganelli, MSF, CFP®, CRPC® (978) 388-0020 or (617) 398-7494
Steve@ClearViewWealthAdvisors.com

Steve Stanganelli is a five-star rated, board-certified financial planning professional who has over 20 years of experience coaching individuals
and businesses on ways to improve and protect their personal or business bottom line.

Steve has worked with numerous individuals and businesses as a mortgage banker, business owner, business finance consultant and now as a
CERTIFIED FINANCIAL PLANNER ™ Professional.

His practice encompasses retirement income planning, investment management, divorce settlement analysis and college funding strategies. He
is a published author and regularly presents on these topics to businesses, civic groups and community organizations.

Steve works with a variety of individuals and families with a special focus on Baby Boomer pre-retirees, business owners, corporate executives
and medical professionals.

Steve earned his Master of Science degree in Finance (MSF) from Bentley College with high distinction. He is also an honors graduate of the
University of Massachusetts – Lowell.

Steve holds the designations of CERTIFIED FINANCIAL PLANNER ™ and CHARTERED RETIREMENT PLANNING COUNSELOR ™ awarded after
completion of extensive, in-depth studying and exam requirements.

Steve is an executive officer of the Greater Merrimack Valley Estate Planning Council. Steve, formerly of Methuen, is a resident of Amesbury
where he lives with his wife, Kristin, a Registered Dietitian, and their infant son, Spencer. He is an avid competitive cyclist.

About Clear View Wealth Advisors & The Tool Kit for Money

Clear View Wealth Advisors, LLC is a fee-only state-registered investment adviser.

The firm provides personalized financial planning advice on a broad range of topics with an
emphasis on retirement income planning, self-directed IRA strategies, college funding and
financial aid strategies, and divorce planning and settlement analysis.

Money management tools are available including customized investment programs for
individuals.

We offer a tool kit for money and help people make smarter money moves for life.

Clear View: Who We Serve

We work with individuals or couples in need of trusted guidance while going through transitions
like a job change, retirement, divorce or other life-changing event.

We strive to make our services accessible to busy professionals and their growing families to
assist with retirement planning, elder care or college funding issues.

Wellesley Investment Advisors - Footnotes

Footnotes for WIA Convertible Bond Returns
1. This presentation reflects only the convertible bond portion of WIA's client accounts. Returns are based on all convertible
bond positions held in accounts of all WIA clients during the periods reflected. Actual client accounts include positions other
than convertible bond positions. Such other positions are not included in this performance presentation. Accordingly, the
actual return of WIA client accounts is different, in some cases substantially, from the performance information presented for
convertible bonds. During the periods reflected, WIA did not manage any other accounts that included convertible bonds in
their portfolios.
2. Returns include a 0.00% annual management fee. WIA's standard fee schedule is included in its Form ADV Part II.
3. Past performance is not indicative of future results.
4. No representation is made that the investor will obtain similar results to those shown above. The performance presented
may not be representative of investments held in any one client account or performance realized in any one client account. An
investor's actual performance may differ from the performance presented above due to timing of investment, contributions and
withdrawals. Performance does not reflect the effects of taxation, which result in lower returns to taxable investors.
5. This report is meant for broad discussion purposes only, and is not intended as a recommendation to buy or sell any security.
6. An investment in convertible bonds involves a risk of loss. The value of an investment in convertible bonds may decrease as
well as increase.
7. WIA's convertible returns have been calculated using the methodology set forth below. Such methodology includes several
assumptions that result from systems limitations on aggregating the convertible bond portion of multiple client accounts.
Although information has been obtained from and is based on sources WIA believes to be reliable, WIA does not guarantee the
accuracy of the information, and it may be incomplete or condensed. Returns do not reflect reinvestment of interest and
dividend income.

Wellesley Investment Advisors
8. Methodology for WIA Convertible Bond Returns:
(a) Listed the market value of all convertible bonds held on the last day of each month.
(b) Determined the weight of each bond holding in the portfolio (individual bond value / total bond value).
(c) Determined each bond's return for the month (monthly interest earned plus / minus monthly price change).
(d) Assumed that a bond entered the portfolio on the first day of the month in which it was first purchased.
(e) When a bond is completely sold out of the portfolio, its prior month end value is adjusted to reflect the final sales price.
(f) Weighted each bond's return for the month by the bond's weight in the portfolio.
(g) Summed each bond's weighted return for the month to get the portfolio's return for the month.
(h) Compounded monthly returns to calculate annual return.

Other Footnotes
- A complete market cycle is defined either by a top-bottom-top or bottom-top-bottom pattern in the stock market. In the WIA
analysis, the S&P 500 was used to define the market cycle of the stock market.

- Bond & Average Credit Quality reflects the higher of the ratings of Standard & Poor’s Corporation, Moody’s Investors
Service, Inc., and Fitch. If a bond is not rated by any of these organizations, Wellesley Investment Advisors uses their
proprietary credit rating system to demonstrate the credit quality of convertible bonds. Ratings are relative, subjective and not
absolute standards of quality.

- Alpha statistics provided by Morningstar, Inc. as of June 30, 2010.

Appendix: A Fairly Balanced Universe of CB Issuers

Source: BofA Merrill Lynch Convertible Research 6/30/10



Convertibles From an Issuer Viewpoint:

Less dilutive than common stock offering, issuer monetizes volatility
Less costly than pure debt offering, and potential conversion to
common by holders if equity performs  no principal repayment

Expand investor base – flexibility, less restrictive covenants
Recent innovations provide tax and EPS advantages
Exchangeable structure allows for monetizing a stake in another
company
• Defers capital gains until maturity
Part of the classic financing chain

Source: Barclays Capital


Why convertibles cannot be replaced with Equities, Bonds
and Options:

a) Unlike Bonds and options, many convertible bond holders can
obtain a certain amount of underlying shares in exchange for the
convertible bond structure at any time.
b) Unlike options, most convertible bonds have dividend and takeover
protection.
c) Convertibles offer optionality for companies where there is no liquid
option market.
d) Convertible bond market tendency is to offer investors the
opportunity to buy volatility exposure at a relatively cheap price
e) Convertible bonds offer issues “suboptimal” call features

Source: 2007 UBS Global Asset Management (Americas) Inc.

Generate Income from Alternative Investments

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