The Smart Take:
Retirement planning (done right) has always been a continuous process. With the turmoil caused by the Coronavirus, prudent planning is having to be done and redone in short order. Things are changing quickly and you need to take a dynamic approach to your planning and investing to avoid dangers and capitalize on opportunities.
Hear Kevin dissect a ten-year client’s dynamic retirement story. Learn why their withdrawal rate was more than twice the 4% rule of thumb and how their portfolio allocation has changed over time. And be sure to pay attention to the end to discover why their prudent planning has afforded them the luxury of taking a conservative investment approach or allows them to now be opportunistic.
Prefer to read? See below for the transcript.
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1:16 – You Can’t Teach Experience
9:30 – Kevin Talks About Initially Meeting John And Jane
13:48 – Reducing Stock Allocation
16:47 – Appropriate Withdrawal Rate
19:47 – John And Jane In 2020
26:55 – Proving Your Worth Everyday
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Intro: Welcome to Retire Smarter with Kevin Kroskey, find answer to your toughest questions, and get educated about the financial world. It’s time to retire smarter.
Walter Storholt: It’s another edition of Retire Smarter. Walter Storholt, alongside Kevin Kroskey, president and wealth advisor at True Wealth Design, serving you throughout northeast Ohio with offices in Akron and Canfield. You can find us online by going to truewealthdesign.com to listen to past episodes and learn more about Kevin and the team. I’m excited for today, Kevin, because we’re doing a little of… it’s like show and tell back when we were kids in school. We’ve done a lot of telling on the show recently, covering a lot of details about the coronavirus and about proper planning techniques and some of the changes and adjustments that you guys have been looking at. We’re going to have the show part on today’s show and get some great examples and some case studies of folks that you’ve worked with and an inside look at some of the actual moves that you guys are doing to help people through this time and to put together proper plans. So this is a fun episode. I always love the storytelling element of when we get together.
Kevin Kroskey: Yeah. We work with a lot of smart clients, but this isn’t what they do. And even though many have the aptitude to be able to learn how to do it, I can’t teach all the things that they need to do and know. I’ve learned over 15 years of doing this, and I’ve probably worked the equivalent of 30 years, given how many hours I put in. But I can’t teach expertise in soundbites.
Walter Storholt: You can’t teach experience.
Kevin Kroskey: You can’t. And not only experience but wisdom too and know when something matters or how to interpret something in light of new information. It’s like when I go to the dentist. Several years ago, I had a tear in my rotator cuff from playing volleyball and one orthopedic surgeon that I respected told me that I had to have surgery to repair it. I got a second opinion, and he said, “You really don’t. You’re going to be fine. You can’t be doing this overhand sports stuff anymore. Go play golf or something. But you’re going to be fine. You’re probably going to have to have it at some point, but now’s not the time.” And so I had two people that I respected that, no matter how much I went online or how much I spoke to them, I wasn’t going to be able to really comprehend what they know and what they do from all their years of formal education, from residency, from fellowships, to experience actually performing the surgeries and seeing the results of it afterward.
Kevin Kroskey: And so ultimately, frankly, it comes down to trust. And evaluating the situation too. I mean, the worst-case there was I don’t have the surgery now and the second guy was wrong, and I do have to have it. Well 12, 14 years later, it’s been fine. So I had a similar experience with getting wisdom teeth pulled out. I had three different dentists that I personally know to tell me three different things that I needed to do with my wisdom teeth. I went, “Wow, this isn’t good.” So believe me, I get it when somebody’s tuning in to this or coming into our office, and some of the things that we may be saying may sound good, but there’s a lot of trust that anybody puts into a professional service person that they work with. And we’ve talked about this in the past but these people that are providing advice, that are providing, hopefully, leadership during times like this need to be competent and need to be trustworthy.
Kevin Kroskey: And if either of those two things aren’t present, frankly, the client can get hurt. So I think through having the podcast, and I’ve been writing for more than a decade now. But I think it makes it certainly more transparent and clearer as far as, “Hey, what is our competency? What is it that we do?” And the trustworthiness is something that’s built over time. Certainly, you get an implied basis when you get a referral from a client to a friend or family member or attorney or accountant that we work with that we’ve been working with for a long time, but somebody gets introduced to us. People get to know me a bit from listening to the podcast through all these episodes that we’ve been doing. But this is really the time where we have to roll up our sleeves, not only do the work, but we really have to execute, and we really have to show some leadership.
Kevin Kroskey: And it’s been happening at breakneck speed. It’s retirement planning. It’s an ING word. My wife was an English teacher, and she has a graduate degree in composition. And I asked her before the episode we’re recording here, I said, “That’s a present participle. Right, hun?” And she’s like, “Yes. Yes, good job, honey.” So maybe I got a brownie point with my wife, or maybe she thought I should have known that and shouldn’t have asked the question in the first place. I’m not sure.
Walter Storholt: It’s always better than a dangling participle.
Kevin Kroskey: Yeah, don’t ask me what that is. But it’s an ongoing thing. It’s a continuous form of a verb. And things have been happening quite quickly. So going back through the 40 or 50 episodes that we’ve done now, we’ve been picking up a lot of new listeners and maybe just coming in at this episode, or maybe you’ve listened to some others, but frankly, if you go back episodes three through 10, we did a whole series on what we call retirement rules gone awry. Where just a lot of rules of thumb on retirement planning either aren’t accurate, aren’t likely to apply, or really designed for, frankly, for people that probably aren’t tuning into this podcast.
Kevin Kroskey: It is something that’s customizable, the whole retirement planning process as well as the outcomes from it. And what actually was born out of that is what we take clients through today called our Retire Smarter Solution. And we actually have a podcast coming out on that soon. But basically, our retirement planning process, packaged together to make it really clear and show clients, “Here’s all the things that we have to do to make sure that we’re going to help you retire smarter.” So if you haven’t listened to those episodes or even if you have, it’s probably not a bad time to go back and listen to some of those about the dynamic nature of things that we find ourselves in and really what are some of the things that maybe need to be re-looked at in your retirement plan right now.
Kevin Kroskey: The investment markets have been changing wildly on a daily and weekly basis. We went through an investing process series in episodes 27 through 30 that really just talked about our process. We had a call with a prospective client earlier this week that was interviewing us, and a couple of other firms and one of his questions was, “Hey, what are you guys doing differently now that we’re in this. And I said, “The process is the same. It’s just the speed with which you need to execute it in light of the new information and the new inputs that are being fed into it is just happening quite quickly.” So the plan needs to be updated, we need to look at that.
Kevin Kroskey: The investments are continually being monitored and new inputs feeding into there. Certainly, there are some other things that we may need to do just from a prudent management standpoint of rebalancing or tax-loss harvesting. But things are just changing very quickly, and we did a retirement income planning series where we looked at two broad camps of having more of a probability-based approach using investments versus more of a guaranteed based approach using insurance products. And as any long time listener to the show knows that it’s not like I completely disdain the insurance-based approach. We all have social security or a pension that has some guarantee based elements to it. I’m generally not a big fan of buying more of it through a fixed or indexed annuity or variable annuity or something like that.
Kevin Kroskey: And what we made a case for was having more of a dynamic approach to having this probability-based, investing based approach to generating your retirement income. And those dynamic things are, “Hey, what are market expectations and then what is your investment allocation need to look like in light of those expectations as well as in light of what your financial plan looks like.” Because we’re matching those investments back to your financial plan and make sure that we can meet your cash flows and maintain your lifestyle. If we need to have a dynamic nature to our spending, if things do go awry, if this coronavirus thing continues to protract longer and longer, we may need to go ahead and cut back spending a little bit for certain clients. But we need to have a preordained plan to go ahead and think through that and execute during times of stress.
Kevin Kroskey: So those are things that I think anybody, I’ve encouraged even the other advisors in our office, just to go back and re-listen to that. I think it’s helpful just to get that checked as far as, “Hey, we talked about all this stuff. We just need to execute it now.” And when I was preparing for today, frankly I had a smile on my face when I was signing on, Walter, and it wasn’t just because I was getting ready to talk with you-
Walter Storholt: You get to talk to me, yeah.
Kevin Kroskey: Yes. I mean, it was certainly part of that reason. But I went back and looked at a client that we’ve been working with since 2011 and, of course, as I always do when I’m on the podcast, and I’m talking about a client situation, you’ve got to change up a few things. But we use the prototypical John and Jane here. And John and Jane are 69 and 68 respectively, currently. So in 2020 as we sit here today in early April. They’ve been clients since 2011. John was working and retired in 2014. Jane was taking care of the household for many more years and retired before him. Conservative or aggressive, those are all qualitative words that I prefer more of a mathematical definition.
Kevin Kroskey: But they would describe themselves as more conservative investors. They’ve never had a really high allocation to stocks. I mean, we started working with them, we had about 50% stock portfolio for them. So they became clients in 2011, conveyed to us that, “Hey, we’re conservative.” So, again, we had a more balanced approach for them, which was, more importantly, in my view, consistent with their financial plan. Both in terms of how much risk they could afford to take as well as in terms of meeting the required return that they really needed to make their plan work.
Kevin Kroskey: When he first became a client in 2011, there was still al to of concern about a double-dip recession. That was the year that the Greek debt crisis happened, the U.S. defaulted technically on the debt ceiling and on their debt. Returns weren’t great in 2011 for the stock market. There was still a lot of concern. And then there was a lot of money sloshing around. There was concern at that point in time as well about inflation and rising interest rates. We arm-wrestled them a little bit on delaying social security. That is something that they have done, and John’s getting ready to start social security here at his maximum benefit later this year at age 70. And it’s going to kick in at about 42,000 dollars a year for him.
Kevin Kroskey: We availed ourselves of a Social Security strategy, now no longer available, where we had Jane file for her benefits and then John did a restricted application just to take a spousal benefit on Jane’s benefit. Meanwhile, he was deferring his own benefit to age 70. So we’ve been doing that now for several years. But the Social Security strategy meant they didn’t receive that much at retirement, so they’ve been taking a lot of money out from their portfolio for six years or so. In the beginning of 2014, again the year that John retired, their portfolio was around 900,000.
Kevin Kroskey: And so they started taking money out, had to get used to pulling money out and having their portfolio, their savings recreate their paycheck. At this point, social security hadn’t stated at all for them and so it was doing 100% of the work. So when you think about in terms of income planning, anything from social security or anything from if you are still working in any way, your earned income is going to be used first and foremost. But then as you look at and see, “Here’s what we want to spend, here’s what we can afford to spend. Social security is not really providing that much or anything right now given the age that we retired, so our portfolio has to do all the work.”
Kevin Kroskey: So when John retired in 2014, stock valuations by many metrics had gotten quite expensive, and the U.S. market particularly had done quite well. 2013 it was up more than 30-40% in some parts of the market. We said, “Hey, your portfolio has got to do a lot of work here over the next few years until you go ahead and claim social security. We’ve had good returns in the stock market, why don’t we go ahead and reduce the stock allocation a little bit?” So they were around 50% when we first started working together in stocks, and then when the portfolio really started doing some of that work and after the market had become much more expensive in 2013, we reduced the target down to 40%. So at 40% in stocks, 60% in bonds and basically when you think of that, that 60% bonds if all they did was spend down bonds first, it could have bridged the gap until when John was going to start social security at age 70. That’s really important.
Kevin Kroskey: When you go through a financial planning process, a lot of the tools we use, you’ll hear something called a Monte Carlo simulation. And ours looks like a speedometer and basically, simply put, you want to be in the green zone. You don’t want to be in the red zone. But you want to be in the green zone or better. Mathematically, the simulation is a great way to go ahead and model uncertainly in the future and give a client advice as to, “Hey, is that lifestyle, is that spending sustainable?” But it’s still a little complicated. I like to break it down even further and just use that bond bridge analogy that I just made.
Kevin Kroskey: “Hey, you’ve got 60% of your money in bonds. Here’s how much we’re projecting you’re going to spend each of the next years until, say, social security kicks in and then obviously the portfolio is going to have to do a lot less work at that point in time.” So as long as we can build this bridge into when this big income stream is going to come in down the road, then you don’t really have to worry so much about any gyrations in between. And we have several clients where we’ve been doing a similar strategy. It’s not boilerplate, everything’s customizable, but this is what made the most sense for John and Jane and what we’ve been executing for years. So when you look at what they were pulling out, so in 2015 they pulled out more than 9% of their portfolio. It went up to as much as 10-11% in a year. Even with the best-laid plans, there are still some unforeseen expenses that may pop up from time to time.
Kevin Kroskey: One or two years were higher than what we were planning; another year was a little bit lower. But in aggregate, they were really pretty much in line with what we were expecting. So we had done a good job upfront understanding their lifestyle, modeling what it was going to cost. And they did a good job keeping with it. Even though those things ebbed and flowed a little bit in their life as it does in all of our lives. They were really on track when you looked at it over a period of years. And when you hear a 9%, 10% withdrawal rate, Walter, how does that strike you?
Walter Storholt: That sounds a little high.
Kevin Kroskey: Yeah. So one of the retirement rules gone awry that we did was about the 4% withdrawal rate. And it’s simple. It’s a good starting point to think about what is a sustainable amount that you can spend? Pull out 4% and increase it with inflation each year. But for most clients and something that we talked about in that prior episode is it falls short. There are different ways you can go ahead and work in a social security deferral strategy like we’re talking about here, but for most of our clients, it doesn’t really apply. For maybe a handful or two, it does, but we just find that it falls short. So they’ve had more than twice the rule-of-thumb withdrawal rate for many years, and they’re going to be fine.
Kevin Kroskey: Their allocation was about 50% stocks while they were working. As stock prices got higher, and they got closer to using the money for retirement, retirement stress tests became more severe. When you look at retirement and say, “I’m not going to be contributing to these accounts. I’m actually going to be using them to live on. And oh, by the way, I’m deferring social security.” When you start stress-testing this type of financial plan, what you’re going to find is the higher risk portfolios are going to look pretty bad. It’s not uncommon to see that there’s this dynamic nature to the client’s capacity for risk and, thus, a dynamic nature to how their portfolio needs to be allocated. They’ve done a good job saving to get to $900,000. Frankly, they have a pretty healthy lifestyle too. So while there’s some safety margin in their plan, it’s not like there was a ton of it, so we had to be pretty darn precise and really had to execute well in terms of their financial planning and so in 2014, again, we lowered their stock allocation, lowered their risk.
Kevin Kroskey: And as the market continued to go higher, 2014/2015 weren’t necessarily great years in the stock market, but when we had tax relief in 2017, it gave another boost. We had good returns, particularly in ’17 and 19′. But as things kept going higher and got more expensive, we trimmed that stock allocation even further. We reduced the target to about 35% in stocks. So, again, if we think about the dynamic nature here, retirement planning is always a continuous thing. It’s that present participle that we talked about. And then the investing process is always dynamic as well; inputs are always changing. And then you get into the income planning, same thing there. Plus, we may need to go ahead and change our spending. It could be a good adjustment, maybe things worked out really well, and you can afford to spend more. It could be the other way too.
Kevin Kroskey: So we’ve got to keep our eye on all these balls. So John and Jane entered 2020 with, I’m just giving you round numbers, it was a little bit more, but around 600,000 dollars in their account. 35% of that in stock or about 210,000. And roughly about 65% in bonds so just under 400,000 in bonds. So this year, they’re going to pull out about another 70,000 dollars from their account. And so if all that they were going to do is pull that from the bonds, they’re still going to have more than 300,000 dollars in bonds in their account at the end of 2020. John goes ahead and starts social security; 42,000 dollars starts coming in from social security. Jane is actually going to get a little bit of a bump as well because her spousal benefit is going to be a little bit more than what she’s currently receiving on her own. So collectively, they’re only going to have to take out about 20 or 30,000 dollars from their portfolio next year and for the foreseeable future. So let’s just call it 30.
Kevin Kroskey: All right. So let me just recap. 600,000 dollars going into 2020. Only a little bit more than 200,000 of that in stocks and the rest in bonds. So they pull down roughly about 70,000 this year. Certainly, stocks have sold off this year, so we’re not selling stocks. Frankly, we’re buying more of them that we did in March. But they should end 2020 with somewhere around 300,000 dollars in bonds. Social security kicks in, they’re getting about another 50,000 from there, and they need about 30,000 dollars from the portfolio going forward. So if they do end the year with 300,000 in bonds and they need 30,000 per year going forward. Then 30 into 300 is ten times. So basically, they have their next ten years of spending in bonds.
Kevin Kroskey: So whenever they look at their retirement plan, quite frankly the results, the Monte Carlo results don’t look all that fantastic right now. The market just sold off. It was down more than 30%, but it’s bounced back a good bit here over the last couple of weeks. It certainly may go down some more, but when we actually look within their plan and look how we’re actually going to manage their distribution plan, well we’re going to have this dynamic nature, and we’re going to go ahead and use the bonds and not only that, now that they’ve made that bridge to social security and the social security benefits are going to be providing a majority of what they need for their spending, frankly we may actually go ahead and increase our percentage in stocks. We may say, “Okay, hey, we made it through these really risky years.”
Kevin Kroskey: We made it through with flying colors even though we had a 9, 10, 11% distribution rate for many of those years. We’ve gotten through those crucial early retirement years, and social security is providing a lot more. Now your portfolio has to do a lot less of the work. We can actually be a little bit more aggressive with stocks. And oh, by the way, they just went down by 30% so rather than having, say, ten years in bonds, maybe we go ahead, and we reduce that to, say, five years in bonds that we’ll leave in there. And we’ll buy the rest in stocks and take a little bit more risk in a smart way after stocks sold off.
Kevin Kroskey: We’re not really putting their lifestyle at risk, we’re just opportunistic in light of the new information that we have, in light of the changing expectations, in light of the dynamic nature of their planning. And as well as their investment allocation. So what does this mean for them? Well, it could mean any number of things, but first and foremost, if they have five years of additional spending in bonds, we’ve already taken a big hit already this year. Most people are saying that this is going to be a time-bound thing, that, “Hey, once this vaccine is out there, then certainly we’re going to be coming out of this.” And probably sooner, who knows how quickly life is going to get back to normal. But we don’t know, but it does seem to be temporal.
Kevin Kroskey: So if you have five years, personally, I feel quite comfortable. We’re going to have this conversation with them. If they don’t feel comfortable and they want to play it closer to the vest, then just stay where they’re at. That’s completely fine and a great option to have. Bonds have, generally speaking, done well and forward-looking we can expect less from them. Stocks have gone down quite a bit, and so, by and large, we can expect more from them. Vanguard just came out earlier in the week. They do a ten-year forecast for expected returns every year. And when you looked at that expectation last year, they said U.S. stocks would do somewhere around 4%. Well, they revised that expectation in light of what’s happened recently, and they said, “No. In light of this because stocks went on sale, now over the next ten years, we think you can probably expect around 6-6.5% from U.S. stocks.”
Kevin Kroskey: So, again, you don’t know the path it’s going to take in the short term. You need to have safe money to go ahead and build that bridge, to go ahead and make sure that your lifestyle is protected but we need to have a dynamic, we need to have an ongoing and continuous nature in what we’re doing from a planning perspective, from an investing perspective, and from a retirement income generation perspective. And I was looking over this for John and Jane, I mean, we’ve been in the thick of it now for several weeks. Bad news all over the place, certainly we’ve been incredibly busy. I use a time tracking app, and I see how much screen time I’m putting on the computer. I’m like, “Oh, that’s why I feel this way.”
Kevin Kroskey: And then I’m preparing for our conversation this morning, Walter, and looking back over what we’ve done for John and Jane for the last ten years, and I just couldn’t be happier. It’s worked out incredibly well for them. We had a plan, we executed the plan, all this stuff that we talked about, we’ve performed, and I think we’ve performed quite well. And even though things are bad right now, John and Jane are fine. It’s our job to remind them of all these things that we’ve done for them, all the smart decisions that they’ve made. We provided the advice, but they made the decisions. It’s their plan. And we’ve gotten through this far, and they’re out of the red zone. They’re going to be fine. They can go ahead and continue to spend on down the bonds if they want, or we can be a little bit more opportunistic and actually take a little bit more stock risk now, but frankly, they don’t have anything to worry about.
Kevin Kroskey: And that and seeing that and seeing all this come out in practice and not just theory going through and having the experience and then having the wisdom to go ahead and not only design it but then guide them through it and execute it, I mean, it just put a big smile on my face. And so just coming into the call today, not only was I excited to talk with you, Walter, but I was just really happy and excited to share the story with John and Jane and about the work that we’ve done for them. And most importantly that they frankly don’t even have to worry about anything.
Kevin Kroskey: They’re still going to be concerned, health is a concern for everybody, particularly for the age group that most of our clients are in. But they can focus on what they can control. They can stay in the house. They can stay with their family. They can be healthy. But they don’t have to worry about their money, because they did the proper planning. We executed. Now they have a lot more opportunities going forward.
Walter Storholt: It’s funny to me that you are obviously very excited about how things have turned out for them and where they stand and how the plan, all the pieces came together pretty much perfectly to weather this storm, to keep them in a good position, all the things, right? But this isn’t a unique story. You have done this for many, many, many people over the years. So it’s neat to see that you still get enjoyment seeing the plan come together.
Kevin Kroskey: For me, it’s easy always to continue to look forward. I think particularly in times like this, you have to look back. You have to be grateful for what we have. Being trapped in a house with our families certainly is not the worst thing in the world. I think we’re pretty fortunate if that’s the biggest worry that we have.
Kevin Kroskey: And then looking back from a professional standpoint on, “Hey, this is what we thought made sense,” and looking back and really being critical of our work and seeing it play out in practice has worked really well. So hopefully, this story has been helpful and illustrative of what this dynamic nature of retirement planning, investment planning, retirement income generation looks like, and connects some of the dots. My goal is to share other stories that are like this, get into a little bit more of the nuts and bolts on the retirement income generation. Talk a little bit more about maybe somebody who’s earlier in retirement or still working and just show, “Hey, this isn’t theory. This is practice. And this is how it needs to be executed,” particularly through times like this when things are so challenging, and the markets and things are changing so quickly. So that’s what we’re going to be getting into in the next few episodes.
Kevin Kroskey: But the other thing I’ll mention is we did have a lot of people, we continue to have a lot of people, just with questions reaching out to us. We do have four certified financial planners on staff. We do have capacity. A lot of my time is really dedicated to portfolios and to certain client work. But, again, we have four CFPs on staff, and this is the time where people can make really big and bad mistakes and frankly cause themselves to have to work longer, maybe go back to work, spend less. None of those things are good. And none of this is a panacea, it’s not a silver bullet, but we do have a prudent process that you can follow. And then we need to execute.
Kevin Kroskey: If you’re doing that blind, if you’re flying blind, it’s just not a good way to fly. But if you have questions, we’re here to help. And I mean that sincerely. Yes, we’re in business, we’re in business to make a profit. But first and foremost, we’re here to help. It has to be a win/win. And this is the time where people really, really need help and so that’s why we stepped up doing the podcast weekly. We’re having an all hands on deck approach, but we are here to help.
Walter Storholt: If you need that assistance, need that help, a couple of different ways that you can tap into it, you can call the team at True Wealth Design. The number is easy to remember 855-TWD-PLAN. That’s 855-893-7526. And online at truewealthdesign.com. Click on the “Are we right for you?” Button to schedule a 15-minute call with the experienced advisor on the True Wealth Team. Again, that’s truewealthdesign.com and click on the “Are we right for you?” Button. And we’ll put all the contact information in the show notes of today’s episode.
Walter Storholt: So feel free to go check that out, read it, learn about it and go back and listen to some of the old episodes that we talked about at the beginning of the show today for more background on proper planning techniques, making sure that you’re viewing your financial and retirement planning in the proper light. So much great content on this show, so do invite you to go back and listen to some of the older episodes.
Walter Storholt: All though the world has certainly changed around us, Kevin, a lot of the things that we’ve talked about on previous episodes continue to apply today and will continue to apply in the future as well. Some basics, some solid planning techniques, and thought processes that won’t change just because we’ve had a market downturn and are in the middle of this crisis. So go stand by that great advice and tap into it today. Just go check out all the previous episodes and listen to your heart’s content. We’re on Apple podcast, Spotify, Google Podcasts, and many other of the… several other popular apps that are out there. In fact, if you see us not on a particular app, let us know, and we’ll get the show on there for you. Kevin, thanks for the help this week, always enjoy the conversation with you, the show and tell went well. Thanks for showing us how the planning all comes together, and we’ll talk again next week.
Kevin Kroskey: Thanks, Walter.
Walter Storholt: All right. We appreciate it. That’s Kevin Kroskey. I’m Walter Storholt. Thanks for joining us. We look forward to talking to you next time right back here on Retire Smarter.
Outro: Information provided is for informational purposes only and does not constitute investment tax or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.