Looking Ahead to 2012

Happy New Year! And this will be about as cheery as we will be as we take a moment to take a quick look at investing in 2011 and more importantly in 2012.

2011 proved to be another challenging year as economies, plagued by debt, continued stress on real estate markets, low production, tight credit, etc. ended up yielding little to negative returns. The S&P 500 returned just over 2% for 2011 including dividends. This return was earned with a lot of anxiety as investors witnessed a lot of volatility throughout the year (not to mention those that decided to invest abroad as several international markets have been in a bear market since 2010). For those that chose to stay away from the anxiety of equity investing yet still seeking returns, fixed income instruments did not yield much better as a whole. The safer-haven type of debt did well while the higher yielding bonds for the most part underperformed.

So here we are in 2012, a political year, with European markets struggling, unemployment barely moving, baby boomers looking to retire, interest rates at historic lows and folks wondering how they will earn money on their investment portfolios.

We hate to say that due to all of the above conditions, 2012 will prove to be yet another challenging year for investors. Historically, election years, where the incumbent has a good chance of losing, have proven to be very challenging years in the U.S. equity markets due to the inherent uncertainties. Add to that the global fiscal pressures in the US and European economies and the increasing real estate and leveraging patterns developing in the emerging markets, resemblant of the US economy before the bubble burst, and we are looking at a challenging year, especially for those seeking immediate income or return from their portfolios.

In the US, we are experiencing a secular bear market (a long-term stagnating trend that historically has averaged 13-16 years, consisting of sharp up and down trends in between but with negative to flat returns from beginning to end). Since 2000, the S&P 500 is basically flat point to point. However, while dull in ultimate return, the investing experience during these years has been quite nerve racking as we have witnessed extreme volatility throughout. This is expected to continue for another 1-2 years if history repeats itself.

Global economies are faced with fiscal issues as increased spending along with insufficient revenues has led to increasing deficits. While the problem seems fundamental to fix (decrease spending and increase revenues), political interests make it difficult to pass laws to change these patterns as someone is ultimately affected with such behavior changes (where does the government cut?).

Emerging markets are witnessing different challenges. Economies such as Brazil, China and India are following the trend established in the US a few years ago. Consumer debt is rising, real estate is booming, showing unsustainable double digit growth rates, all supported by looser institutional credit standards. This has created a euphoric consumer similar to the U.S. in 2007. In the meantime, their equity markets have been in a bear market since 2010, some showing drops of over 30%. The combination of these elements will surely lead to the busting of the existing economic bubble as occurred in the US and other Global economies in 2008.

So as we have just listed several challenges facing investors in 2012…what would be our strategy moving forward?

As has been the case historically, buy and hold is not effective during secular bear markets as you can hold on to a market for 13 years and end up with little to no return. Such markets warrant a more proactive approach to investing where economic, fundamental and technical indicators are considered in order to pick and choose the appropriate defensive sectors and know when cash is the best place to be. While we agree that perfect market timing is impossible, market trends do occur and repeat themselves. Knowing and understanding these trends, whether investing for long term returns or immediate income, enhances the odds of holding an effective portfolio.

As such, Allgen’s focus in 2012 will be on preserving portfolio values by managing all of the above mentioned risk, holding high levels of cash, safe haven assets and non-cyclical assets when appropriate in order to avoid major losses when markets drop and conversely positioning assets for what we believe will be a strong post secular bear market run. Historically, the markets have produced double digit returns for an extended time period following secular bear markets. As such, proper positioning and timing of market reintegration will prove to be of great value for our client’s portfolios into the extended future.

Investing for income in this low interest rate environment will require specific strategies to balance the management of interest rate sensitivity risk, economic risk, credit and market risk with the need for increased returns and higher yields. Rather than relying solely on bonds for income there is a need to look at other avenues such as high dividend yielding, stable, non-cyclical stocks that have a long term record of increasing dividend payouts.

Although these types of markets are very challenging, history has shown that those who persevere come out on the other side stronger and well positioned for the prosperous times that follow. We are excited to continue to overcome such market environment challenges with diligent market monitoring, positioning and purposeful client communication.

Have a great 2012!

DISCLOSURE:
Allgen Financial Services, Inc. (Allgen) is an investment advisor registered with the State of Florida. Allgen does not provide personal financial advice via this web site. The purpose of this site is limited to the dissemination of general information regarding the services offered by Allgen. It is not intended to be a solicitation or offer to sell investment advisory services to residents of any state in which Allgen is not currently authorized to do so, nor is the information given meant to be a recommendation to buy or sell any security. The Disclosure Brochure, Form ADV Part II, which details the business practices, services offered, and related fees of Allgen’s, is available upon request. The information contained herein, including any links or charts from third party web sites, has been obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.

Blogs, Videos & Web Site Content:
The information on this website is of a general nature and is not intended to answer any individual’s financial questions. Do not rely on information presented herein to address your individual financial concerns. Your receipt of information from this website does not create a client relationship and the financial privileges inherent therein. If you have a financial question, you should consult an experienced financial advisor. Moreover, the hiring of a financial advisor is an important decision that should not be based solely upon blogs, articles, videos, interviews, or advertisements. Before you hire a financial advisor, you should request information about the financial advisor’s qualifications and experiences.

Birmingham, Alabama, September, 30, 2011 – Allgen Financial Services, Inc. (Allgen Financial) is excited to announce the establishment of its newest office located in downtown Birmingham. Allgen is a registered investment advisory firm that predominately serves families and businesses in southern states east of the Mississippi.

Allgen Financial believes its presence in Birmingham will provide the community a unique team-based and client-centric method of financial advising. As a fee-based registered investment advisory firm, Allgen Financial has the freedom to offer a vast array of investment options since it custom designs its own portfolios based on each client’s particular situation and needs.

James Bruno, a Birmingham native and seasoned executive will be representing Allgen Financial as an investment advisor representative. Mr. Bruno will be leading and managing the Birmingham branch office on behalf of Allgen Financial. Mr. Bruno says, “I am excited to reach out to all the wonderful members of the Birmingham and Alabama community at large in order to serve them with the attention and care only a firm like Allgen Financial can provide.”

As a way of embracing the community, Allgen Financial Services, Inc. is offering the first 50 prospective clients a complementary investment portfolio evaluation to help educate the Birmingham community on the healthiness of individuals and company portfolios.

Paul Roldan, CEO of Allgen Financial says, “We are excited about our new office in Birmingham as we believe this tightly knit community will be able to benefit from our proactive approach to investment and financial management, especially during the challenging economic times we currently face.
We anticipate a warm welcome from the Birmingham community because its rooted culture mirrors Allgen’s philosophy of building up its local community.”

Allgen Financial specializes in active and strategic money management as well as financial planning. Allgen Financial strives to successfully navigate the markets during periods of prosperity and decline. The company constantly researches and studies the markets to find the next emerging area. Allgen’s ultimate goal is to assist clients in defining and reaching their personal financial goals.

Location: Short Hills, NJ

Job Title: Vice President

Job Description
Allgen Financial Services, Inc. (www.allgenfinancial.com) is looking for an established financial advisor to join our team and operate a new branch in select cities around the United States. Allgen’s entire business model revolves around helping entrepreneurial advisors who want to be independent, but would like to have hands-on support to build an office. The goal of the Vice President is to grow a new office that will specialize in managing retirement related investments. Allgen Financial Services, Inc. is the perfect place to continue building your career in the financial services industry. Why?

As an Allgen Vice President, you will receive the following benefits:
• All necessary resources to build, manage, and operate a branch office
• Hands-on marketing, technology, and business development support
• Compliance & insurance support
• A vast array of investment options to offer clients with sophisticated needs
• Access and utilization of in-house portfolio managers for investment strategy development and implementation
• As a Schwab-supported firm, access to Charles Schwab Institutional support team

As an Allgen Vice President, you’re responsible for helping to build community relationships primarily through face-to-face interaction. You will help develop large client opportunities, grow a new office, and manage a team of advisors. As a manager, you will spend most of your time nurturing strategic relationships. Our entrepreneurial atmosphere allows you the room to grow with unlimited income potential. We help you reach your goals through our proven business model. In addition, we are well positioned to meet the needs of the 78 million in the baby boomer generation entering retirement in the next 15 years.

Competitive Compensation
The unique structure of our operations allows us to provide higher rates of compensation to our advisors. In most cases, Allgen is able to provide 20%-50% higher compensation to its advisors compared to other financial institutions. Financially, we provide a compelling argument for why someone would want to be a financial advisor with Allgen.

Activities & Responsibilities
• Prospecting for large client opportunities
• Creating strategic relationships with potential professional
• Strategic business planning and implementation
• Mature existing client relationships and develop new relationships
• Manage and train other advisors
• Capture the majority of market share in branch location

Qualities of a Successful Candidate:
• Relational with a desire to build a business
• Performance driven
• Well organized
• Marketing & sales aptitude
• Natural interpersonal and communication skills
• Strong analytical abilities
• Self-confidence, persistence, initiative, and persuasiveness
• Passion for learning
• Required federal and state licenses and registrations for securities (i.e. Series 65 or 66)
• $20 million+ under management preferred
• Four-year college degree required
• Graduate degree a plus

Please send your resume to careers@allgenfinancial.com to be considered for this position

Paul Roldan, CEO of Allgen Financial Services, Inc. says, “We are excited about sponsoring the Greater Orlando Scavenger Hunt. As we advise individuals and organizations on their retirement financial needs, we realize there is a great need for emotional support as well. People need confidence, fun, and encouragement. The Greater Orlando Scavenger Hunt will draw our community closer together by providing a critical morality boost to the people of Central Florida.”

A portion of the events proceeds will be used to support the fight against MS. James Zimbardi, CEO of Zynergy says, “Along with a number of other organizations in Central Florida, we are planning on making this event the highlight of 2008 for those who live and work in our community. People need fun right now. The Greater Orlando Scavenger Hunt is designed to be an exciting way to share in a community building activity while growing closer to friends, family, and coworkers. Fun and excitement is exactly what we plan on providing. We will use creative thinking and technology to captivate and engage the participants of the event. This is an event you will not want to miss!”

For more information about the event, please visit http://scavengerhunt.ning.com

About Allgen Financial Services, Inc.
Allgen Financial Services, Inc. is an independent fee-based Registered Investment Advisory (RIA) firm committed to helping individuals and businesses better manage their retirement related assets. Allgen’s service offers personal retirement planning and employee retirement benefits to organizations. For more information visit http://www.allgenfinancial.com.

About Zynergy
Zynergy is a business consulting firm specializing in helping senior executives with their global business marketing and innovation challenges. Since 1997, Zynergy has been helping organizations to reinvent themselves by creating new ways on how to conduct business. For more information visit http://www.zynergy.com.

About the National Multiple Sclerosis Society
MS Stops people from moving. The National MS Society exists to make sure it doesn’t. We do this through our home office and a 50-state network of chapters by funding more MS research, providing more services to people with MS, offering more professional education and furthering more advocacy efforts than any other MS organization in the world. The Mid Florida Chapter of the National MS Society is honoring their 50th year of providing these services to the community. Join the movement at JoinTheMovement.org or http://flc.nationalmssociety.org.

For the benefit:

National MS Society

According to a study sponsored by U.S. Trust, owners of ultra-high-net-worth (UHNW) family businesses remain exposed to business succession, asset protection and estate planning issues.

“Owners of ultra-high-net-worth family businesses often have a team of advisors focusing on an array of needs such as wealth management, tax strategies and succession planning, without addressing the bigger picture,” said Chris Zander, managing director and head of the Multi-Family Office (MFO) Group at U.S. Trust. “Given the near-term and long-term complexities with managing a successful family business, it is crucial that these families think about the wealth tied to their business and their personal fortune in a holistic, strategic manner.”

The study revealed that while a large majority of owners of UHNW family businesses have wealth transfer plans in place, most of these plans – both professional and personal – have lapsed.

– While over three quarters (76%) of owners have succession plans, only 38 percent implement them, inadequately addressing issues of succession
– Most individuals with succession plans in place are not focusing on tax-mitigation issues (73%), even though nearly all participants (93%) report a desire to lower the tax burden associated with transferring the business

Asset Protection Strategies Missing

A significant portion of owners of UHNW family businesses desire to maintain control of the business and are concerned with protecting their wealth, yet fail to create asset protection plans, which provide wealth structuring strategies that maximize tax efficiencies and mitigate risk.

– Almost nine out of 10 (89%) business owners were “very” or “extremely concerned” about protecting the family’s wealth
– However, nearly three quarters (73%) of them do not have asset protection plans in place

“Most owners of ultra-high-net-worth family businesses don’t implement strategies for asset protection in large part because no one has educated them about such options,” Rosenthal noted.

Estate Plans Outdated

The treatment of estate planning mirrors that of succession planning, with the majority of owners creating estate plans without updating them often enough to keep them viable.

– Over three quarters (78%) of owners have personal estate plans; however, 89 percent have not updated them after a life-changing event such as marriage, birth or death rendering the plan obsolete
– More than half (54%) of participants lacking estate plans reported difficulty dealing with their own mortality, and one quarter (25%) cited a lack of time as reasons for not creating a plan

With the upcoming elections and the tax-fallout many professionals are expecting, and with the already-enacted estate and gift tax sunset approacing, updating and implementing business succession plans, personal estate plans, and asset protection plans take on a new significance.

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com

1) Stock Selection
There are a couple different schools of thought when it comes to picking stocks. The two basic camps are the 1) Fundamental approach and 2) Technical Analysis. The fundamental approach focuses on various financial ratios, earnings, revenues, etc. in order to determine which companies are fairly or undervalued with regard to their current stock price. Warren Buffet and Peter Lynch are notable fundamental style investors. Technical analysis has a different approach. This approach uses an underlying premise that investor behavior tends to repeat itself and can be traced based on certain stock chart patterns. This technique is not so concerned with the value of the stock but rather with the price movement, volume, industry trend, etc. Charles Dow and William O’Neil are notable technical analysts or investors.

The two different approaches and their underlying premises have created a divide among investing professionals with regard to picking stocks. The purpose here is not to establish one method or approach over another. In fact, there are investors that see the value in somehow incorporating both methods into their investment approach. Needless to say, it is important to familiarize oneself with such approaches and determine which style, if not both, is best suited for ones personality and philosophy on the market. Either way, both styles require extensive studying and research in order to ensure an efficient approach to picking stocks.

2) Portfolio Composition
Once you have chosen a strategy for choosing stocks, it is critical that one has a basic understanding of portfolio dynamics. To coin an old phrase, “Do not put all your eggs in one basket.” This principle in investing is called “Diversification,” and it plays a critical role in the performance of a portfolio. A study conducted by Brinson, Singer and Beebower demonstrated that proper diversification or “asset allocation” accounted for over 90 % of a portfolios return over a 10 year period. However, even this rule needs to be understood as it is often misapplied.

Diversification does not mean holding several different stocks in a portfolio. That is the first step towards diversification. But the follow up to that entails having stocks of different sectors (ie , retail, telecommunication, real estate, etc.), market capitalizations (sizes ie large cap, small cap, etc), and countries (domestic, international, emerging markets, etc). The next step is also determining how much of each is appropriate for one’s level of risk tolerance. Many online risk tolerance questionnaires assist in helping to determine such factors.

3) Discipline, Discipline, Discipline
Once the above factors have been considered and employed, the element of discipline becomes the ultimate determinant of an investor having success. It is important to assess oneself and create an investment approach or strategy that fits one’s style. Once this has been developed, it is critical to implement the strategy with consistency and discipline. This has been the area that has led many to have disappointments in the world of investing. Investment decisions cannot be emotionally based. A consistent, disciplined approach to investing should eliminate the emotion out of investment decisions. But this has not been the case historically. A study by Dalbar showed that the average mutual fund investor attained a 2.57% annual return over a 19 year period while the S&P increased by 12.2% during the same timeframe. A lot of the reasoning behind the findings were attributed to investors getting in and out of the market at the wrong times due to emotionally charged events. Even conservative investors who invested in fixed income (ie bonds) instruments fared poorly. Such investors averaged 4.2% annually versus the long term government bond index that averaged 11.70% during the same time period.

So Should I do this myself?
This becomes the critical question. And the answer truly lies in the ability to commit to the above mentioned elements. Many investors have made the determination to become avid students of the market in order to qualify themselves in an arena where they will compete with institutional experts. However, for those that may not have the time, desire or ability to make such a commitment, a marketplace of financial advisors is available to provide assistance in this area. Of course, choosing the right one is important and should be based on some basic tenets. Here are a few quick questions to ask before hiring an advisor:

1) How long have you been doing this?
Financial Advisors have a high turn over rate when first coming into the industry. A typical rule of thumb is that a financial advisor with at least 5 years experience will probably be around for the long haul.

2) How do you get paid?
Some advisors get paid via commissions while others get paid via fees. There is an extensive debate over which is more advantageous. Typically, the fee based approach tends to be more favorable as such advice may lean towards more objectivity, without the influence of how much commissions are paid.

3) How do I get serviced?
One major complaint in the industry is that many clients get sold a bill of goods when first signing up and then never hear fro their advisor. This is typically true among commission based advisors as such compensation structure is based upon new sales and not ongoing service. Will you be serviced by the advisor, his assistant, some call center? Determine which way feels more comfortable for you.

4) How often do we review my portfolio?
Portfolios should be reviewed annually, at a minimum. But some advisors will provide quarterly reviews.

5) What is your retention rate?
One good indication of how well the advisor performs is the satisfaction of existing clients with the service provided. This is usually marked by clients not leaving.

These are just a few questions that provide some criteria for choosing a financial advisor. Of course, intangible elements come into play such as personality and connection.

The decision to be a “do-it-yourself” investor or use the services of a professional is one that many are facing, especially in light of many baby boomers retiring and having to manage their retirement funds. Which ever decision one decides, plan thoroughly as time is money, and making the wrong decision can be costly. In conclusion, personally assess which approach is right for you, prepare as you move in that direction and happy investing!

About Allgen Financial Services, Inc.
Allgen Financial Services, Inc. is a fee-based retirement and estate planning firm assisting individuals and organizations better manager their assets. Allgen services clients both domestically and internationally. Allgen’s service offerings include: personal retirement planning and investing, employee retirement benefits, estate planning for executives, estate planning for foreign investors, and business succession planning for entrepreneurs.

Written By:
Paul Roldan
Senior Partner at Allgen Financial Services, Inc.
Harvard University Graduate

Executive Summary: June 2008
America’s Baby Boomers have dominated the U.S. economy for more than a quarter-century. MGI research shows that the nearly 79 million Baby Boomers have earned record levels of income, generated great wealth, and spurred economic growth. But they have also spent at record levels, failed to save, and accumulated unprecedented levels of debt. Now, as the oldest Boomers near retirement, MGI estimates that almost two-thirds of early Boomer households, who are aged 50 to 63, are financially unprepared for retirement that is, they have not accumulated enough savings to maintain their lifestyle as they age.

The Boomers’ aging also will be felt throughout the economy. As the Boomers grow older, they will work and spend less, slowing real U.S. GDP growth to a more modest pace than in recent decades: from the 3.2 percent average annual rate enjoyed since 1965 to 2.4 percent over the coming three decades.

MGI research also shows that these challenges can be met. Enabling the Boomers to work later in life would significantly benefit both individual households and the broader economy. By increasing the median retirement age by about two years from 62.6 today to 64.1 by 2015 the share of unprepared boomer households could be halved from 62 percent to 31 percent. And the additional workers would boost real GDP growth.

MGI’s survey of Boomers’ attitudes on retirement shows that 85 percent expect to work later in life. However, there are significant legal and institutional barriers that need to be overcome. They include a variety of disincentives for both employers and older workers, including the costs of America’s health care system, the unintended consequences of labor laws and pension regulations, and corporate attitudes toward older workers. The research highlights several areas for action for policy makers and businesses to prevent the Boomers’ retirement from becoming a multidecade-long drag on U.S. growth.

For more information and the full report go to:

http://mckinsey.com/mgi/publications/Impact_Aging_Baby_Boomers/index.asp

For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com