Q3 2013

“SCIENCE CAN PREDICT THE NEXT ECLIPSE OF THE SUN YEARS IN AD-VANCE, BUT CANNOT PREDICT THE WEATHER FOR THE WEEKEND.”

- ANONYMOUS

3rd Annual Holiday EventDecember 5th, 2013

Please join us at 6pm at the Alley Theatre for a catered reception followed by a presentation of Charles Dickens’ “A Christmas Carol - A Ghost Sto-

ry of Christmas”

INSIDE THIS ISSUE

Looking Back inShock and AweBy Mike Booker, CFP®, ChFC, CFS®

Remember 2008? Yes, I know. Thinking back on the traumatic market downturn evokes memories of anxiety and uncertainty. But after every dark night, a sunrise. In fact, since the “darkest night” of the Great Recession (March 9, 2009), investors who stayed the course have not only recovered their losses, but they have stacked up impressive gains as the S&P 500 has staged a meteoric recovery of 173.98% (3/9/09 – 9/30/13). Sadly, many investors cashed out in the first quarter of 2009. With the benefit of hind-sight, this was clearly a very bad move.A study earlier this year from Fidelity highlights what happened to those who went to cash in the first quarter of 2009 and those who stayed the course. As you might imagine, the disparity of results were quite dramatic. Pre-retirees (age 55 and older) who dropped stocks from their 401(k) by the first quarter of 2009 and never rebalanced saw their balances grow by just 25.9% through the first quarter of 2013. Their average balance rose during this period from $80,200 to only $101,000. Those who stayed put are doing better…much better.The average pre-retiree 401(k) balance has nearly doubled since the recovery began in March of 2009, rising from $130,700 to $255,000. According to the president of Fidelity Investments’ Workplace Investing, James MacDonald, “There is a valuable lesson to be learned from the minority of pre-retirees who abandoned eq-uities altogether and experienced significantly less progress. It underscores the combined importance of a proper asset allocation and savings behavior as they planned for retirement within all that life entails.”For those who endured the market downturn and were rewarded with the subsequent recovery, the bad news is that the average 401(k) balance of $255,000 is only about enough to pay for health care expenses alone in retirement. But for those that took their 401(k) accounts to cash and waited until “things looked better”, things couldn’t look worse.

� LOOKING BACK 1 � HOLIDAY EVENT ANNOUNCEMENT 1 � WORST CASE SCENARIOS 2 � YOUR OUTSIDE ASSETS 2 � HOUSTON IS THE PLACE TO BE 3 � IS NOW A GOOD TIME TO INVEST? 4 � FOUR WAYS TO INCREASE LIFE

EXPECTANCY 5 � OTHER ANNOUNCEMENTS 6

Save the Date!

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“DIRE PREDICTIONS ARE A DIME A DOZEN THESE DAYS”

Worst CaseScenariosBy Mike Booker, CFP®, ChFC, CFS®

Negativity has permeated our society of late. Predictions of disastrous consequences from the federal debt ceiling impasse abound. Some pundits worry that inflation arising from dramatic increases in the monetary supply will surely diminish our future lifestyles. Euro-pean sovereign debt crises will eventually contaminate the American banking system, and global warming will cause our coastal cities to flood, etc.

Not everything is wonderful, I admit. But it is pretty clear to me that the dire predictions we read every day may, like so many previous dire predictions, turn out to be laughably wrong. A few of my favorites:

· 2011 - Japanese Tsunami will cause breakdown in world supply chains, economic calamity and total market collapse.

· 2005 - Asian bird flu to trigger 1930s-style economic catastrophe.

· 1974 - Jimmy Carter warns that we will use up all the proven reserves of oil in the entire world by the end of the next decade. In 1970, the world had 550 billion barrels of proven reserves. Between 1970 and 1990 we actually used 600 billion barrels, so theoretically, we should have already run out. Instead, actual U.S. crude oil production is expected to exceed Saudi Arabia’s somewhere out in 2015 or so.The list goes on and on, but you get the point. Dire predictions are a dime a dozen these days and most are overblown or just wrong.

In an article written in Advisor Perspectives this past August by Bob Veres, advisor to financial advisors, he notes that “Clients and the world at large give inordinate attention to downside scenarios, and nobody is calling our attention to the much larger upside of our business and investment landscape. The human brain amplifies this effect, because it is hardwired to notice threats much more than opportunities.” He notes how important it is for investors to look beyond the negative headlines to see the positive economic stories out there.

For example, Veres quotes David Sterns of Sterns Financial Services in the article, “The natural gas situation could hardly be more favor-able. Within three to five years, the U.S. will become the largest natural gas exporter in the world. It is estimated that the U.S. will be totally energy-independent within five years, perhaps sooner.”

Sterns believes this will lead to other beneficial effects that are the exact opposite of the discouraging projections you see in the papers. “Manufacturers are quietly bringing their plants back into the U.S., and using natural gas to run them,” says Stearns. “This gives them a more stable energy footprint, and in some cases even a lower-cost footprint. I sit in on a lot of those meetings with companies,” Stearns adds, “and I can tell you, they want stable even more than they want cheap.”

So, while there is always something to wring our hands about, let’s not forget to notice the beneficial economic forces that are building while we are hand wringing. There is a lot of good stuff coming our way. Sometimes you just have to look for it.

In today’s fast paced world it’s easy to neglect outside accounts like your 401(k) or deferred compensation plan. We are pleased to announce that we now have the ability to help you manage your 401(k) (or any investment account) held outside of Charles Schwab for a nominal fee. We believe that a comprehensive understanding of our client’s financial lives is essential when providing sound advice. We’ve always offered our clients asset allocation recommendations for these “held-away” accounts. However, only now do we have the technology in place to help our clients with the ongoing management of accounts held outside of Charles Schwab & Co.

In addition to making investment recommendations, we can also provide detailed performance reporting, assistance with trading and rebalancing, daily account monitoring, and online access through finsyn.com, just as we do now for your managed Schwab accounts.

We strive to provide our clients with cutting edge service offerings. If you would like ongoing professional guidance with your 401(k), 403(b) or any other account held outside of Charles Schwab & Co., please feel free to give us a call.

Are your outside assets getting the attention they deserve?

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By Mike Minter, CFP®, CFS®

It is probably no surprise that Houston’s economy is strong, but sometimes I take for granted how blessed I am to live in such a prosper-ous city. The U.S. economy is clawing its way back to normalcy and there are plenty of reasons for optimism, but there are still parts of the country where things look bleak, e.g. Detroit. And here I am in Houston, TX where the future has never looked brighter.

Houston has become an undisputed leader in domestic and international business, with economic ties reaching across the globe. The city benefits from a highly skilled workforce and has one of the largest concentrations of engineering talent generated from its energy, aerospace, and medical industries. People from around the globe are flocking to Houston to fill the growing needs of the region.

“I LOVE THIS CITY”

Strong GDP Growth

According to the U.S. Bureau of Economic Analysis, Houston’s economic activity accelerated last year. Adjusted for inflation, the city’s gross domestic product (GDP) grew by 5.7% in 2012. In 2011 GDP grew by 3.7%. In both years Houston’s growth rate was more than double the U.S. growth rate.

As illustrated below, Houston’s GDP growth for 2011 - 2012 was second fastest among the nation’s major metro cities; topped only by San Francisco.

Energy Industry Dominance

Obviously a major contributor to Houston’s economic success is the energy industry. Houston is the coun-try’s energy headquarters and the international center for every segment of the oil and gas industry including exploration, production, transmission, marketing, and technology.

More than 3,700 energy-related companies are located in the Houston Metro area, including 40 of the nation’s 145 publicly traded oil and gas exploration and pro-duction firms. Houston simply dominates the energy industry, and there is not a more promising sector of the U.S. economy.

The people

And beyond the strong economy and job market, the people of this great city are the icing on the cake. We meet with clients and business associates from all over the country and they all have one thing to say about Houston – everyone is just so nice!

I cannot think of anywhere else in the world I’d rather call home. I love this city.

*Source: Greater Houston Partnership

Houston IsThe Place to Be

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For instance, in 2009 many investors felt the market was too risky and chose to sit on the sidelines until the financial crisis subsided. In 2010, it was the recession. In 2011, investors held cash because of the Japanese nuclear disaster & turmoil in the European bank-ing system. In 2012, the crisis du jour was the election and fiscal cliff. Today, the primary reason that some people prefer to hold cash rather than stocks is the government shutdown and the ongoing debt ceiling debate.

Some investors have been waiting to buy at the “right time” for several years. Sadly, waiting to invest their portfolios has cost them dearly. Here’s what the S&P 500 has done over the last 5 calendar years:

Year 2009: +26%

Year 2010: +15%

Year 2011: +2%

Year 2012: +16%

2013 YTD: +20%

Total Compounded Return from 2009 – 2013, 3rd Quarter: 106.49%*

History lessons aside, the question is always the same… “Is now a good time to start investing?” Rather than trying to predict how the market will react to the latest political whirlwind (which is impossible to do), I’d rather answer the question by reframing the conversation. Here’s how the conversation typically goes…

Client: I’m really worried about this (insert latest crisis here) that I saw on the evening news last night. Do you really think that it’s a good time to start investing? It’s scary out there!

Advisor: That depends on how soon you might need this money. Do you plan on investing it to fund your long term goals like retire-ment, or do you plan on needing this money over the next 1 – 5 years to buy a car, take a vacation, etc.?

Client: My objectives are long term and my primary goal is to make sure that I don’t outlive my money. I need this money to grow over the long term so that it can produce an income for me when I retire. I don’t plan on touching it until then and I hope to supple-ment my income from the portfolio once I’m retired. I’m just spooked by all of the talking heads on the news. You’d think it was Armageddon every single night!

Advisor: That’s a great point. The nightly news can be quite dramatic; however, it’s important not to lose sight of your long term objectives. In your case, it really doesn’t matter what the market does in response to the (insert latest crisis here). What matters more is where the market is when you need to sell. Do you think the market will be higher or lower when that time comes?

Client: I suspect it will be higher since we’re talking about 5, 10, or even 15 years down the road. I’m only 60 years old, so I might need my portfolio to support my living expenses for another 30+ years.

Advisor: I agree. Over the long term markets tend to go up. Rather than basing your investment plan on unpre-dictable short term market movements, let’s design a diversified portfolio around your specific long term goals and objectives. And remember, we also tailor the plan to minimize your risk exposures to the (insert latest crisis here) by diversifying into multiple asset classes like stocks, bonds, hard assets and alternatives. As time goes on, we’ll make changes to the portfolio as your investment time horizon and risk tolerance change.

Client: That makes sense.

Is Now a Good Time to Start Investing?

What matters more is where the market is when you need to sell.

By Heath Hightower, CFP®

“Is now a good time to start investing?” It’s a simple question, but it’s almost impossible to answer because it requires a market predic-tion. Most people agree that trying to predict the market is impos-sible, but it’s human nature to try to buy at the “right time.”

Of course, waiting to invest your money has an opportunity cost. Over the last several years, some investors have kept their portfolios in cash, waiting for things to look better. Unfortunately these inves-tors missed out on one of the greatest market recoveries in history.

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By Bryan Zschiesche, CFP®, MBA

At a recent event, I was introduced to a book called Living to 100. The book explores many of the factors that contribute to longevity and is based on research performed by the New England Centenarian Study. As you probably know, a cen-tenarian is a person who has lived beyond the age of 100. The subject of longevity interests me for a couple of reasons. First, as a financial advisor, life expectancy plays a major role in the planning process and is a critical factor to consider when planning for the distribution phase of one’s life.

The second and more personal reason is that longevity runs in my family. My father’s paternal grandmother (“Granny Zschiesche”) lived to the age of 100, and my mother’s paternal grandmother (“Nana”) lived to 94. We often asked both of these incredible women to what they attributed their long lives. My favorite response always came from Nana, a devout Catholic, who credited her long life to her daily consumption of two glasses of red wine: one during her “happy hour” and one during her “holy hour.”

The New England Centenarian Study originally began in 1995 with all centenarians living in eight towns in the Boston area. According to the latest data on Boston University’s website, the study now includes approximately 1,600 cente-narians, including 107 “supercentenarians” (people age 110 and over). The study focuses extensively on genetic and behavioral drivers of longevity. Given that we have no control over our genes, my interest today lies in the behavioral factors that contribute to a long, healthy life.

Here are four factors which, according to the study, have the potential to increase life expectancy:

Flossing your teeth daily adds 1 year. I must admit, this one surprised me. According to the study, “Recent scientific evidence reveals that chronic gum disease leads to the release of inflammatory, toxic substances and certain bacteria into the bloodstream, which leads to plaque formation in arteries and ultimately to heart disease.”

Taking one 81 mg aspirin daily adds 2 years. It probably goes without saying that you should consult your doctor before taking any medication, but studies have shown that low doses of aspirin improve heart and brain health and can reduce the likelihood of heart attack or stroke.

Limiting your consumption of red meat adds 3 years. Keeping your weekly consumption of red meat to 1 – 2 days limits your iron intake. Evidence suggests that elevated iron levels can lead to the formation of arterial plaque.

Quitting smoking adds 22 years. I debated whether or not to even include this one since the effects of smoking are so widely known. But more than any other lifestyle habit, smoking has the highest chance of reducing life expectancy. Approximately 400,000 deaths annually are attributed to smoking.

This is just a sampling of some of the behavioral changes that have the potential in increase longev-ity. Keeping your weight at a healthy level, exercising frequently and checking blood sugar, cho-lesterol and blood pressure regularly can all have an impact. If you’re interested in completing a questionnaire to estimate your own life expectancy and see which factors may benefit you, visit the site www.livingto100.com.

And if you were wondering whether or not the study mentions anything about the effect of “holy hour,” you may be interested to know that, “Moderate alcohol consumption has been associated with decreased heart disease risk.” Our dear Nana may have been on to something.

Four Ways You Can Increase YourLife Expectancy

Our Speaker Series at Hofheinz HouseThanks to all who came out for our most recent event at the Hofheinz House. On Septem-ber 4th Financial Synergies entertained clients and a guest speaker, Andres Garcia-Amaya, Global Market Strategist at J.P. Morgan Funds.

Above are some of the highlights from the evening.

Congrats Marie!

Marie Villard graduated Cum Laude with a Mas-ter of Arts Degree in New Media Journalism from Full Sail University on October 4th, 2013.

For more information, please contact us at:

Financial Synergies Asset Management 4265 San Felipe, Suite 1450 Houston, TX 77027

Phone: 713-623-6600 www.finsyn.com

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