The Fragasso Blog

Tough Times: Nonprofits Will Not Survive On Well Wishes Alone

Posted on May 8, 2012 by Dotti Bechtol

Our region has a long, storied history of charity work. Nonprofits continue to be an integral part of our community, improving the quality of life for so many of us in so many ways. Yet today, with so many in need, nonprofits are facing serious financial challenges that jeopardize their existence.

Fragasso Financial Advisors, individually and as a company, realizes the important role nonprofits play in making Pittsburgh and the surrounding area one of the best places to live in the country. Many of us are closely connected with myriad nonprofits in the region, serving as board members and volunteers. As a firm, we also give back to these great organizations through financial support. We’re also fortunate to have some of them as clients.

Although we realize the critical work they do, the harsh reality is that well wishes simply aren’t enough today. Most people in the community can appreciate the good work nonprofits do, but the economy has donors and grantors turning conservative and more selective in their giving, meaning there’s less money available. If nonprofits do not preserve capital and generate income, they cannot continue to fulfill and sustain their mission, and the community will suffer for it.

Now more than ever, nonprofits must take a holistic approach to investment management. Having worked with clients to help achieve their financial goals for more than 40 years, Fragasso Financial Advisors has honed an effective process that does just that.

We’ve learned that it’s critical to understand the mission, culture and goals of the organization, where its money comes from, how it uses that money, including short- and long-term plans, and its risk tolerance.

Working from a plan that clearly outlines client expectations and what we can do to help meet those is critical. Ensuring clients understand their obligations to us – letting their financial advisor know when organizational goals and strategies change, for example – is a must. With that understanding, our financial advisors can help develop an investment policy and guidelines statement for nonprofit clients and begin to analyze and allocate all of an organization’s assets, segregating funds for day-to-day operations, putting in place a plan for short-term projects and investing surplus funds in a way that will help meet expectations and sustain the charity.

In our experience, we’ve identified 10 points of vulnerability that may keep nonprofits from meeting their investment objectives, which you can download for free from our site.

As a community, we should each do our share by supporting nonprofits that provide such necessary and valuable services. Our firm has made it part of our culture. Our financial advisors serve on boards and donate their time and money, as does our firm, because a healthy nonprofit sector is necessary to make our community a better place to live, work, and raise our families. Call us to learn more about how Fragasso Financial Advisors can help you ensure your nonprofit continues to do the work that is so needed today.

Dotti Bechtol is Fiduciary Asset Business Development Officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Bob can also be reached for comment at 412-227-3200.

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Higher Taxes Won’t Affect the Stock Market, But Will Affect Your Financial Goals

Posted on April 24, 2012 by Robert Fragasso

Definitive historical research demonstrates that higher tax rates do not disrupt the stock market, but they may unsettle your financial goals if you don’t have proper financial management. Higher tax rates directly impact earnings meant for investment.

Let’s look back to see how taxes and the stock market have evolved through the years.

In the 1950s to early 1960s – a period of generally good market performance – the top income tax rates were more than 90 percent, the estate tax rates topped at 77 percent and the capital gains were at 25 percent. In the strong economic period from 1982 to 1986, the top income tax rate was 50 percent, estates capped at 65 percent and capital gains were at 20 percent. During the wildly up-and-down 10 years from 2003 to now, the income tax rate was a historically low 35 percent, capital gains at a low 15 percent and estate taxes varied from 49 percent down to zero. Thus, there was seemingly no contributory action by tax rates for market action.

In the following short video, I discuss how higher taxes can affect your financial goals and ways we can mitigate those effects.

Want to see how much you could be losing from higher tax rates? Download our free tax investment calculator today and contact us to discuss a tax management strategy that will help you reach your financial goals.

Robert Fragasso, CFP®, is chairman and chief executive officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Bob can also be reached for comment at 412-227-3200.

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Nonprofit community has a friend in Fragasso Financial Advisors

Posted on April 18, 2012 by Ray Amelio

We were pleased to once again be a “lead” sponsor for the Animal Friends telethon broadcast live on WTAE last month, donating a substantial amount of funding, time and effort to this worthwhile cause.

Anyone who knows Fragasso Financial Advisors knows how near and dear this organization is to our founder, Bob Fragasso. He sits on its board of directors and intimately understands how precarious the long-term stability of a nonprofit like Animal Friends can be.

The 7th annual telethon kicked off on Saturday, March 24, under rainy skies at the Caryl Gates Gluck Resource Center. However, the weather didn’t dampen anyone’s spirits, nor did it diminish the excitement among all in attendance after Animal Friends officially announced a 40-acre expansion project.

In addition to sneaking a peek at the Channel 4 media machine in action, those in attendance were treated to raffles, pet food giveaways, cupcakes and pet photo stations. The Animal Friends staff took the opportunity to extend its heartfelt thanks to those who have helped support the organization throughout the years, in times both good and bad.

Perhaps most touching, 30 (now former) residents found permanent homes. Thanks to Pittsburgh comedian Jimmy Krenn, the fun was extended an extra week. Through April 1, Jimmy’s dog Gizmo Krenn sponsored a special event in which pets age 2 and older could be adopted for just $5.

Overall, this year’s telethon raised $152,495 for homeless animals. This funding helps ensure the well being of our future pets while also helping to curb overpopulation.

Animal Friends, of course, is just one example of Fragasso’s commitment to Pittsburgh’s tremendous charitable landscape. Other members of our firm are also involved with similar nonprofits, offering their guidance and support as volunteers, donors or board members.

Aiding and contributing to the overall sustainability of the region is one of the most important things we do as a firm. That’s what makes our involvement with events like the Animal Friends Telethon so rewarding.

We’d love to know more about your favorite nonprofit or charity.

Drop us a note telling us why it’s so special and what our great community can do to support it.

Ray Amelio is Managing Director and Chief Marketing Officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Ray can also be reached for comment at 412-227-3203.

Posted in Charitable Gifting, Charity, non-profit | Comments Off

Advising for life, not just assets

Posted on March 12, 2012 by Robert Fragasso

I’ve been fortunate to have some diverse and substantive conversations with a number of different media about the financial landscape recently, including Investment News, which wrote an interesting piece about financial advisors providing employment-related advice to clients who had lost jobs during these turbulent economic times.

Our firm was included in the article because at the height of the recession, we offered free financial advice for unemployed professionals and talked about career transitions at local outplacement centers.

Based upon our long experience in working with personal portfolios in good economic times and bad, we wanted to get two messages out to professionals who were out of work: Talk to a financial advisor right away and think outside the box when it comes to looking for a new job.

During this period, one client in his 50s came in for an informational session 10 months after he lost his job. He had two more months of unemployment insurance and health care coverage, and he was afraid of losing his house. Understandably, he was at the end of his rope. We were able to assist him and others in similar situations by helping them expand their search to related careers. However, we could have done much more if he had come in 10 months earlier.

Another unemployed hospital administrator visited us during the peak of the downturn. As an example of thinking outside the box, we suggested he consider consulting for plaintiffs in medical malpractice lawsuits. The client soon began offering his services to law firms and continues to work as an expert witness.

Regardless of your specific career experience, here are a few general ways you can prepare for a potential change in careers, whether by mandate of your employer or of your own volition. Some are common sense, such as cutting spending, saving more from each paycheck or performing a continuous assessment of your job security.

These next two might not seem so obvious.

First, pay the absolute minimum on all your bills. Although it seems like human nature to immediately want to start paying off credit card and other high-interest debt, this limits your options in the long run. Having cash allows you the flexibility of making choices, and the luxury to discriminate between job opportunities.

Also, be sure to stay sharp mentally and physically. Baby Boomer job hunters need to be in good condition to remain marketable. That’s just reality.

I share this with you because there seems to be a general feeling within the investment management community that we are primarily financial advisors. The truth is, for our clients, we really see ourselves as life advisors. We have an obligation to help our clients make good decisions that impact their overall family security. The more we act from this perspective, the greater chance we have to build a better business.

Although the long-lasting effects of the recession can be defeating, our experience shows us that with some outside perspective and good advice, those who where once on top of their game can get back to the top. Give us a call to discuss a strategy for getting you there.

Posted in Advisor, Recession, Unemployment, retirement | Comments Off

Politics Will Largely Determine the Economic Course for 2012

Posted on January 26, 2012 by Robert Fragasso

I recently had the privilege of sharing my outlook for 2012 with the Pittsburgh Business Times. Although the last several years have been very challenging economically, we are slowly recovering. In fact, the latest U.S. Bureau of Labor Statistics’ report shows 200,000 jobs were added to the economy in December 2011, and the unemployment rate, currently at 8.5 percent nationwide, continues to trend downward.

If we add half that many jobs – 100,000 – every month throughout 2012, we’ll shave the unemployment rate even further to 7 percent. So how do we do that? The political stalemate in Washington, D.C., must be broken. The volatility of the market can be directly tied on most days to whether the European Union has got a viable plan to come together and overcome its parochialism. How the world moves politically in 2012 will determine the speed and shape of the economic recovery.

Part and parcel with politics in 2012 are taxes. Although the debate has centered on who should be taxed what amount, how those tax dollars are ultimately used will be a significant factor in determining how the economy fares this year. If we tax people more to maintain nonproductive areas and levels of spending by the federal and local government, the economy will continue to lag.

Although our vote gives us some level of political influence, much of what will happen in 2012 to affect the economic recovery is beyond our control. As investors, it’s important to understand what we can and can’t control. What we can control are the decisions we make. As I’ve said many times, the market’s behavior over the last few years is no different than past cycles. Knowing that, it’s important to make the decision to stay the course you’ve set to reach your financial goals.

We may not be able to control the market, but we’ve learned from it, and we can control how we react to it. Look beyond today to the opportunities you will have after this messy system finds its way through to a solution. And if you need someone to help you make those good decisions to achieve your financial goals, give us a call. We’d be happy to chart a course for 2012 with you.

Article based on in interview with Bob Fragasso in Whirl Magazine, October 2011.
Robert Fragasso, CFP^®, is chairman and chief executive officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Bob can also be reached for comment at 412-227-3200.

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“Pittsburgh’s Day of Giving”: Sharing Our Good Fortune With Our Neighbors

Posted on November 14, 2011 by Ray Amelio

Pittsburgh is a great place to live for many reasons. It provides us with sports teams filled with iconic players to cheer, world-class dining to please our palates and a beautiful overall setting in which to work and live. In Pittsburgh, we care about the well-being of our neighbors and those from throughout the region, which also makes it a wonderful home.

The employees at Fragasso Financial Advisors have happily planted roots in Pittsburgh, and we wouldn’t want to be anywhere else. Our Chairman and CEO Bob Fragasso, who regularly gives back to the community through his volunteer and philanthropic efforts for organizations including Animal Friends, the Rivers Club, Amen Corner, Entrepreneuring Youth, La Roche College and Duquesne University, has set a great example for other FFA employees.

Our firm has been a part of the Pittsburgh community for four decades and regularly lends a hand to our neighbors. It’s simply the right thing to do. We appreciate what we’ve achieved, and we want to help those who are not as fortunate. Our most recent effort to help others in our region came during the recent “Pittsburgh’s Day of Giving.” Every year, the Pittsburgh Foundation hosts the event and matches all donations made to local charities. The Fragasso employees decided to capitalize on the Foundation’s generous offer to match our donations.

Philanthropy is extremely important to our employees, and 100 percent of them participated in “Pittsburgh’s Day of Giving.” In collaboration with LPL’s Invest in Others Foundation, a charity devoted to supporting the philanthropic and volunteer efforts of financial advisors, we donated a total of $500 to the Greater Pittsburgh Community Food Bank.

Giving back to the community that gives so much to us is a small expression of our gratitude to the region, our clients and our friends. In these tough economic times, we’re grateful for what we have and happy to help those who we can.

Posted in Charity, Fragasso staff | Comments Off

Financial Planning for Our Four-Legged Friends

Posted on October 31, 2011 by Robert Fragasso

We all know the importance of financial planning for the future of our family, but what about financial planning for our pets? For many of us, our pets are family. As a long time supporter and board member of Animal Friends, an organization devoted to the well being of companion animals, I have had the pleasure of adding several cats and dogs to my family throughout the years. The joy and affection they’ve provided to me have added a wonderful aspect to my life. And because of that, I want to be sure they’ll get the care and love they deserve for as long as they live. As a Certified Financial Planner^®, I’ve thought a lot about the financial considerations that should be part of pet ownership.

If you’re contemplating pet ownership or already are a pet owner, there are a few things to consider that will help ensure you are providing the same unconditional love your pets will always give to you.

End-of-life Planning
Most pet owners overlook end-of-life planning. Yes, we often consider a guardian and a trust in relation to our children, but making similar plans for your pets is just as important. Think about an individual trust for your pet or leave money to a no-kill shelter like Animal Friends. Did you know a $5,000 deposit to Animal Friends ensures your animal will be placed in a loving home and not euthanized?

Affordability
A question many consider before adding a new animal to the family is, “Can we afford it?” You first need to thoroughly evaluate where you’re getting the animal. Most breeders are great, but do your research. Make sure he or she is responsible and the animals are living in the most humane conditions – not part of a “puppy mill” or similar abusive, neglectful environment. The price of an animal from a breeder can get high, into the hundreds and even thousands of dollars – and that doesn’t include the other essentials you will eventually need to guarantee the pet’s future health. A more affordable option is often available at your local shelter. You can get an animal that has been thoroughly evaluated and vaccinated by a veterinarian and other animal experts, and spayed or neutered – all for about $75.

Pet Insurance
Finally, inquire about pet insurance the next time you visit your vet. Vets will be able to tell you which plans are reasonable and can be used at their office. Typically, policies cost as little as $16 a month, which is a huge difference compared to a $1,000 emergency vet bill.

Simple steps like the ones mentioned above will ensure your pets are cared for properly and affordably. Great no-kill shelters like Animal Friends can help you make good decisions about pet ownership.

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When We Achieve Our Goals, We Win and So Do Our Clients

Posted on October 3, 2011 by Loriann Ostermueller

: Loriann Ostermueller Assistant Manager, Marketing

As part of employee incentives for meeting company-wide goals, Fragasso Financial Advisors (FFA) recently rewarded the staff with an afternoon at PNC Park, one of Major League Baseball’s most beautiful parks. We took the afternoon to enjoy the park and the company of our co-workers while taking in the Pirates game. The weather was perfect, and it turned out to be a great day all around (except for the fact that the Buccos lost the game!). As you can see from these photos below, the Fragasso team truly enjoyed the day.

Since I joined the firm in 2005, FFA has provided many incentives for the firm to meet goals, and we’ve often been rewarded for our hard work throughout the years. When the team meets the company-wide goal set for that quarter, we are rewarded with a company-sponsored perk. Each quarter, employees are asked how they’d like to be rewarded if they meet their goal, and this year we chose a Pirates game.

While we all enjoy working together, it’s important for us to spend time together socially as well. Studies show that company outings can boost employee productivity and job performance. In our case, it’s a win-win: the company shows us how much it appreciates us and values our hard work, so we work that much harder, which ultimately benefits our clients. We win, and our clients win.

The fact that Fragasso appreciates its employees is not lost on us, as illustrated by our firm having been named a Best Places to Work. An employee survey determines which companies earn the recognition, so it’s evident that we all truly enjoy working here!

Loriann Ostermueller is the Assistant Manager, Marketing at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. If you would like to contact the author, please email us at blog@fragassoadvisors.com.

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3 History Lessons from Past Recessions That Should Drive Investment Strategy Today

Posted on September 8, 2011 by Andrei Voicu

A once unthinkable downgrade of U.S. government debt became a reality earlier last month, triggering weeks of uncertainty among investors and daily market swings. The downgrade provoked a slew of deeper questions for many investors. You may be wondering how you’ll pay for your children’s college or whether you will be left with enough to retire comfortably. These are good and very valid questions. Let’s break it down as I share our strategy for managing investments during a volatile time.

1. Diversify
You’ve likely heard this before and it’s more important than ever as the financial market pendulum swings back and forth. In early 2011, we were concerned with unsustainably high levels of government debt combined with historic low interest rates. In response, we positioned our clients’ portfolios away from what we perceived as higher-risk, low-return Treasuries. While we have adjusted portfolios, we won’t ever try to time markets. That’s because our research has proven that most often, investors hurt their portfolios in the process. At Fragasso, we use time-tested principles of diversification and covariance to mitigate risk. Quite simply, by not putting all your eggs in the one proverbial basket, you can potentially reduce the risk of severe consequences when the market turns.

2. Don’t Overreact
While it’s important to keep an eye on what’s happening with your portfolio, our best advice is to remain focused on long-term investment objectives while maintaining sufficient liquidity for immediate needs. Be sure to discuss any changes you are considering with your financial advisor, who should have sufficient research and resources to help you make an informed decision.

3. Learn from the past
Our advice during the 2007-2008 recession worked well for our long-term clients and we continue to stand by the fundamental strategies of diversifying, focusing on long-term goals and not trying to time the markets by jumping in and out at the wrong times. Current events, in our opinion, are nowhere near as severe as what we experienced just a few years ago. Markets recover and make progress, which is all part of the evolutionary cycle.

While none can predict the future, we see this as an understandable reaction to the uncertainty fostered by the ongoing budget and tax policy debate and the striving of the national and world economies to find equilibrium.

To learn more about Fragasso Financial Advisor’s wealth management philosophy, click here.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Andrei Voicu is Managing Director and Chief Investment Officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Andrei can also be reached for comment at 412-227-3200.

Posted in Congress, Economy, Financial Advisor, Financial Planning, Investing, debt, debt ceiling | Comments Off

Bob Fragasso meets with Congress members

Posted on August 31, 2011 by Robert Fragasso

In May 2011, 20 members of the Financial Advisor Council from the Financial Services Institute went to Washington to advocate for changing the new Department of Labor (DOL) rules that would redefine fiduciary definitions in the management of retirement plans. The ruling, as it is currently written, includes Individual Retirement Accounts (IRAs) and would, if adopted as is, dramatically change many Americans’ access to retirement advice.

As part of the Ohio/Pennsylvania team, Bob Fragasso met with four members of Congress, including two on the House Financial Services Committee. “It was imperative that we alert members of Congress about the unintended consequences of the DOL decision. In my opinion, the abbreviated and erroneous assumptions used to arrive at the fiduciary standard ruling will have a major impact on the investing public. It’s well documented that many American households are woefully underprepared to meet the challenges of planning for retirement. If the DOL ruling is not amended, lower-net-worth households will be cut off from receiving comprehensive investment advice at a time when the public is more confused than ever about where to turn for sound advice,” said Fragasso.

Bob stated, “The Financial Services Institute is 100 percent dedicated to representing investment advisors in Washington. It’s the only central voice for our community. If we can convince the government to focus more on creating standards for disclosure and transparency, then the public will be able to make more informed choices.” FSI, founded in 2004, is the only advocacy organization working on behalf of independent broker-dealers and independent financial advisors.

Original interview was published in the FSI Voice, September 2011.

Robert Fragasso, CFP, is chairman and chief executive officer at Fragasso Financial Advisors, a Pittsburgh-based investment and financial planning firm. Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at blog@fragassoadvisors.com. Bob can also be reached for comment at 412-227-3200.

Posted in Congress, Regulation, retirement | Comments Off