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In this issue:
ITA Conference A Great Success
2009 Legislative Issues Preview Meetings
Keeping Perspectives in Today's Economy: Recovery Rates After Major Market Declines
FDIC Simplifies Coverage Rules for Revocable Trust Accounts
Working for Seniors - How's Your EQ (Ethical Quotient)?
Broker Dealer Financial Services
TrustCompare
Contribute to Iowa Trust Association

ITA Conference A Great Success

A special thank you to all who helped make the 2008 ITA Annual Conference a great success. Over 70 trust professionals attended this year's event featuring sessions on regulatory updates, issues facing investors, life insurance policies, relationship management, business development, malpractice cases and behavioral finance. Special sessions were also held this year for operations personnel discussing compliance and other industry hot topics. This year's event was approved for 7.75 hours of CLE credit, 10.25 hours of CTFA credit and 10 hours of CFP hours.

Thirteen exhibitors were present at this year's event. Thank you to representatives from these companies for sharing their products and services with attendees.

Accutech Systems Corporation - Bob Darby Broadridge - Brandon Kelly Broker Dealer Financial Services - Kate Juelfs Federated Investors - Shawn Knutson HWA International, Inc. - Laura Morine INFOVISA, Inc. - Trasha Schwendener Insurance Trust Monitor, Inc. - Leon Wessels Main Street Advisors - Katherine Montegue, John Sajdak Nothern Trust - Frank Judisch ProxyTrust - John Jansing WB Capital Management - Brian Rolland, Jenni Hanselman Resource Insurance Consultants - Holly Higgins, Gil Nelson Home Instead Senior Care - Steve Habernicht, Bob Stricker, Anne Peters

Thank you also ProxyTrust for their sponsorship of the conference.

Mark your calendar for next year's ITA Annual Conference. The event will be at the Marriott Courtyard in Ankeny on October 8-9, 2009.

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2009 Legislative Issues Preview Meetings

The Iowa Bankers Association will be holding its annual Legislative Preview meetings across the state in November. These issues are on the agenda to discuss with elected officials. The Iowa Trust Association is invited and encouraged to attend these meetings. The dates and times of a meeting near you are listed below.

The meetings are a forum for discussion for bankers and legislators.

Week of November 10, 2008
Monday, Nov. 10 • 4:00 p.m.
Group 11
Catfish Bend Casino
Jct. of Highways 61 & 34, Burlington
(877) 543-2386

Wednesday, Nov. 12 • 5:00 p.m.
Group 5
Great Western Bank
501 Pioneer Ave., Oakland
(712) 482-6457

Thursday, Nov. 13 • 5:00 p.m.
Group 7
Elmwood Country Club
1734 Country Club Lane, Marshalltown
(641) 753-8111

Week of November 17, 2008
Monday, Nov. 17 • 4:00 p.m.
Group 6
Iowa Bankers Association
8800 N.W. 62nd Ave , Johnston
(515) 286-4300

Tuesday, Nov. 18 • 5:00 p.m.
Groups 1 & 12
Western Iowa Tech - Cherokee
200 Victory Drive , Cherokee
(712) 225-0238

Wednesday, Nov. 19 • 5:00
Group 2
Willow Ridge Golf Course
1788 Madison Ave, Ft. Dodge
(515) 576-5511

Wednesday, Nov. 19 • 4:00
Group 3
Holiday Inn
2101 4th St. SW, Mason City
(641) 423-1640

Thursday, Nov. 20 • 4:30
Group 8
Holiday Inn Conference Center
I-80 at Exit 242 (North Side of I-80 - 1220 lst Ave.), Coralville
(319) 351-5049

Week of November 24, 2008
Monday, Nov. 24 • 4:00
Group 4
Cedar Lodge Steakhouse
205 S. 12th St., Manchester
(563) 927-9200

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Keeping Perspectives in Today's Economy: Recovery Rates After Major Market Declines

One of investors' most frequently-asked questions in the current environment is: "How long might it take to recover the large losses that investors have incurred in the recent severe market downturn?"

In an effort to address that question, CLS Investment Firm, LLC ("CLS") took a look at stock market data for the Dow Jones Industrial Average (DJIA) since 1896. The DJIA was used because it contains the largest amount of historical data, which is important because the size of decline in the current bear market requires one to look back a century to find more than one or two prior occurrences. Also, rather than look at all market declines regardless of size, the analysis focuses on prior stock market declines similar in size to the current decline.
In looking at prior recovery rates, most analysis merely looks at how long it took the DJIA, for example, to reach a new high, which can be very misleading. So instead, each cycle in this set of data is broken out based on how long it would take the DJIA to recover 50 percent to 100 percent of the prior decline. This provides investors information about how long different recovery periods took, how quickly the various recoveries occurred, and where they tended to stall.

Some observations from the information below:

• Through Friday, October 24, the DJIA declined 41 percent. The median decline for all observations in the table was 42 percent.
• A 50 percent recovery of a prior market decline has historically taken a median of 9.3 months. The shortest recovery period was 5 months in 1974, with the longest being 12.4 months in 2002.
• A 60 percent recovery rate was only modestly longer, a median of 9.8 months. The shortest amount of time was 6.8 months; the longest, 14.6 months. (The 2002 decline may have taken longer due to the buildup and start of the second Gulf War in early 2003.)
• A 70 percent recovery rate of the prior market loss has taken a median of 13.1 months, with the shortest recovery taking place in 8.1 months and the longest taking 15.4 months, again in 2002.
• Recovery times tend to be reasonably tight, from 50 percent to 70 percent. Beyond these 50 percent to 70 percent recovery rates, we start to see either a "new" bull market or a market that stalls out below its prior high.
• Recovery rates of 80 percent to 100 percent begin to vary widely with regard to recovery times. They seem to either occur quickly (less than 18 months) or become much more drawn out affairs that can take years.
• This analysis is structured to look at different percentage recovery rates over time. For example, in 1974, few investors recall that the DJIA recovered 90 percent of its bear market losses in just under 16 months. What most investors do recall about 1974, however, is that it took almost 100 months to reach a new high. Investors had plenty of opportunity to make portfolio adjustments - if they desired to do so - during that 16-month period when the DJIA had recovered 90 percent of its losses.
• So, back to the original question: "How long might it take to recover the large losses that investors have incurred in the recent severe market downturn?"
• Markets historically have recovered from market declines of similar size to what has been experienced recently.
• Market recoveries of 50 percent to 70 percent of prior declines are not unusual. Recovery periods have taken anywhere from 5 to 15 months in this recovery range.
• Recovery rates of 80 percent to 100 percent have occurred, but the length of time it takes can vary widely. Each situation is unique.
• Today's market is extremely volatile, unpredictable, and somewhat unprecedented. That means that it's now more important than ever that financial professionals ask their clients: "Are you a trader or an investor?" Not only does the answer to that question help define "who" they are, it also identifies time horizon. Knowing time horizon helps identify what and when portfolio changes are appropriate. This, coupled with clear identification of long-term goals and risk tolerance, should always be the foremost considerations when building an investment portfolio.
• Remember, asset allocation is one of the most important decisions investors make. Their selection of individual securities is secondary to their allocation (or a professional money manager's allocation on their behalf) to stocks, bonds, and cash. These three main asset classes have different levels of risk and return, so each will behave differently over time.

That's why outsourcing portfolio management to a professional third party money manager is extremely worthwhile, as they are monitoring the market and each client's portfolio on a daily basis. Since there is no simple formula that can determine the right asset allocation for every individual, retaining a team of portfolio managers who focus on identifying the most attractive asset combinations based on trend analysis and fundamental research and combine this with a set of quantitative inputs focused on risk management to create portfolios is valuable.

Although staying the course is an important part of an investment strategy, a professional money manager also strives to take advantage of investment opportunities. And there are always opportunities, even in a down market. According to CLS Chief Strategist Scott Kubie, CLS is currently staying fully invested and seeking assets with high risk/reward potential. "We use cash; we don't go to cash," he said. "We take a broader - and what we believe to be more robust - view of risk management. When market risk raises a client portfolio above budget, the risk reduction required to return the portfolio to its budget can come from moving a bond to cash or by moving a high-risk equity to a moderate-risk bond. It can even come by moving to a slightly less risky emerging market. This is why Risk Budgeting's flexibility is one of the key advantages of the CLS Methodology."

CLS Investment Firm, LLC, (www.clsinvest.com) is a professional money management firm and an SEC registered investment advisor. CLS partners with bank trust officers, financial advisors, retirement plan sponsors, and countless other financial professionals to help individual investors achieve their financial goals.

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FDIC Simplifies Coverage Rules for Revocable Trust Accounts

The FDIC's Board of Directors adopted changes to simplify the rules for determining the coverage available on revocable trust accounts – commonly called payable-on-death accounts or living trust accounts. The interim rules, which are effective immediately, eliminate the concept of qualifying beneficiaries, so that coverage is based on the naming of virtually any beneficiary.

Under the revised rules, coverage for the vast majority of account owners generally is based on the number of beneficiaries named in a depositor's revocable trust account(s). The insurance limit will still be based on $100,000 per named beneficiary. For revocable trust account owners with more than $500,000 in such accounts naming more than five beneficiaries, the coverage is the greater of either $500,000 or the sum of all the named beneficiaries' proportional interest in the trusts, limited to $100,000 per different beneficiary.

"We believe the interim rule will not only result in faster deposit insurance determinations after bank closings, but will help improve public confidence in the banking system," said FDIC Chairman Sheila C. Bair. "We strongly encourage owners of revocable trust accounts to make certain that the names of their beneficiaries are included in the bank's records."

The new rules are effective as of September 26 and apply to all existing and future revocable trust accounts at FDIC-insured institutions.

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Working for Seniors - How's Your EQ (Ethical Quotient)?

by Ed Pittock, President Society of Certified Senior Advisors
Most everyone understands what IQ stands for. You may even have taken an intelligence test at some point in your life. When it comes to ethics, however, there's no commonly accepted test even though our EQ or Ethical Quotient can have as much bearing on how we do in life as our IQ.

A high "EQ" is especially important for anyone who markets services or products to seniors. Several years ago, the National Center on Elder Abuse estimated that nearly one out of every three elder abuse cases involved financial exploitation. As a group, seniors are highly vulnerable to financial abuse and exploitation by people who sell unwanted, unnecessary or inferior products or services and steal seniors' savings, security and self-esteem.

It's not surprising that a 2004 Time/CNN poll revealed that 72 percent of Americans believed that business executives were engaging in an intentional pattern of deception. Given recent headlines, it is unlikely those numbers have declined. Scandals at Enron and Tyco and questionable behavior on the part of prominent politicians have left us wondering what's happened to our collective understanding of the Golden Rule.

Before casting stones, we should be sure to take a look at our own behavior. Self-evaluation is a critical component of business ethics. We should spend as much time looking in the mirror as we do watching and judging how others behave. A periodic review of our own behaviors is one way to ensure we are staying on track.

We've created a quick EQ test that covers some common situations. Answer the questions quickly and honestly, then check the answers to see how your "EQ" stacks up.

TEST YOUR "EQ"

1. You meet with a prospect whose assets you estimated to be $250,000 but learn they are closer to $2.5 million. Do you suddenly see dollar signs in terms of increased sales or are you more concerned about the complexity of their financial picture?

a. See a bigger sale
b. See bigger issues

It's difficult not to be motivated by the size of the prospective account. At this stage what matters most is to think about how to best handle an account of this size. Do you have the expertise and team to manage it? Would it be in the best interest of the client to take it on? Your focus here should be on obtaining enough information to make an honest presentation of your capabilities. If you can't handle the entire account, why not refer part of the project to a trusted peer? In the short term you may lose some revenue but end up with a good long-term client.

2. In the process of getting bids for a brochure you discover that you can't fit your disclaimers into the amount of space allowed. Do you decide to delete them and provide them at a later date or add another page?

a. Add a page
b. Delete the disclaimers

Of course it would be cheaper and faster to simply delete the disclaimers and provide them at a later date. If you take that route, you'll be skirting the truth with less than open and honest disclosure. Seniors are afraid that salesmen will try to pull the wool over their eyes. That's why it's best to be completely up front in presenting your products and services. The very fact that you are willing to outline the risks in your materials and discuss them in depth with your client will serve you in good stead over the long run.

3. As a committee member at the local Methodist church you have access to the Membership Directory. Do you use it to create a prospect mailing list?

a. Use the mailing list
b. Don't use the list

It's very tempting to use a list that you have access to but the answer is no, don't use the list unless you've cleared it with your pastor. Membership lists are off-limits unless the organization has approved release of the list for solicitation purposes.

4.Your business is financial planning but you are not an accountant. Do you describe yourself as a full-service firm that can handle all of your client's financial needs even though you use a free-lance accountant for tax preparation?

a. Call yourself a full-service firm
b. Indicate you partner with a CPA

This is an issue of transparency.You can describe your firm as a full-service firm but must communicate, both in writing and verbally, that you do not have an accountant on your staff but use a licensed CPA. You don't need to pretend to be more than you are to make a sale. You do need to be what you say you are. Provide the credentials of your accountant and let your prospects be the judge of whether or not your arrangement will work for them.

5. The daughter of a client calls and wants to discuss concerns about her father's life insurance policy. Do you listen to her concerns or tell her you would like to speak with her father first?

a. Listen to concerns
b. Call the client

It's easy to get caught off-guard by unanticipated calls. We think it would be wise to immediately indicate that you would like to call and obtain your client's permission to have the conversation. If the daughter persists, listen without comment, explain you will present her concerns to her father, and contact your client. If your client has legally designated the daughter to manage his finances you can have the conversation and discuss options but should still make sure that your client is informed before proceeding any further. The bottom-line is always to protect the confidentiality of your clients and security of their assets.

6.It is getting close to 6 p.m. and you have had a long first meeting with your prospective client. Do you arrange a second appointment to review what you've discussed and sign financial documents or do you encourage your prospect to sign the documents before you leave?

a. Schedule a second meeting
b. Close the deal

Schedule a second meeting. The hardest words for anyone to say are: "I don't understand." No one likes to feel inadequate, seniors most of all. After a lifetime of learning, they would like to think they're pretty savvy. That doesn't mean they understand everything that's presented to them. Financial products and instruments are complex and filled with foreign terminology. Hearing and cognitive loss may further impair a senior's ability to comprehend what's offered.

You can stand apart from the crowd by spending the time necessary to ensure your client understands every aspect of every transaction. Your willingness to take the time to explain, ask, and answer questions is a good indication of what kind of commitment and service your client can expect in the future.

7. At a Rotary luncheon you sit with a couple who lives in the same retirement community as your clients, Mary and Susan. Do you tell the couple that you recently prepared a financial plan for Mary and updated life insurance for Susan?

a. Discuss Mary and Susan
b. Keep mum

In this situation it is certainly appropriate to let the couple know that you are familiar with their retirement community and are working with Mary and Susan. It is not appropriate to discuss more specifically what you are doing for your clients. Use the luncheon as a great opportunity to introduce yourself and your knowledge of their community. If Mary and Susan have told you they would be happy to act as references for you, encourage the couple at your table to talk to them.

8. Every month you send your elderly client an account summary. Do you indicate the value of the account month against month, year-over-year and spell out fees, commissions and net gains or losses?

a. Detailed accounting with net gains/losses
b. General accounting

Your clients deserve to know exactly how you have performed for them. Hiding fees, commissions or losses is totally unacceptable. Providing clients with clear, easy-to-understand invoices and reports demonstrates accountability and increases your credibility.

9. Your company provides you with numerous brochures and flyers on the products you sell. Do your materials contain a glossary that defines industry terms and clearly differentiates the level of risk of each product?

a. Brochures contain a glossary of terms
b. No glossary

Including a glossary of terms seems like such a small thing but it can make a big difference when marketing to seniors. Every industry has its own form of "industry-speak," or language whose terms are foreign to outsiders. You can ensure you and your senior prospects are speaking the same language by providing a glossary that explains what the various terms in your industry mean and how products are differentiated from one another. If you take the time to "teach" your prospects you will not only increase your value to them but also build trust with them.

9. During a client meeting, your client mentions that she has seen an advertisement for an annuity or heard about one offered by one of your competitors and is interested in learning more about it. What do you do?

a. Tell her your product is superior
b. Listen and respond

Listen first. Talk later. It's only natural to want to immediately counter that what you offer is a better choice but stop first and listen to what your client has to say. Be thoughtful. Ask why the ad caught her attention. Sometimes there's an unspoken reason why she is bringing the subject up. Perhaps she feels she hasn't taken a good look all her options and is feeling pressured to buy before she is ready. If you don't know about the product, say so and tell her you'll come back to her with more information. Remember that listening is as important to communication as talking. Be sure you hear what seniors tell you and are attuned to the fact that there may concerns that are unspoken.

If your EQ is between 7 and 10, congratulations. If your EQ is 6 or below, it's time to take another look at your priorities and business practices. If you'd like to learn more about issues and ethics in doing business with seniors, contact Society of Certified Senior Advisors at 1-800-653-1785.

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Broker Dealer Financial Services

There was a misprint in the Fall Conference Final Program for Broker Dealer Financial Services. The corrected listing is below. ITA regrets the error.
Broker Dealer Financial Services
8800 NW 62nd Ave. Johnston, IA 50131
Ph. 515-727-6763 www.bdfs.com
BDFS provides trust departments with customizable full service brokerage services, including a wide variety of fixed income offerings and low-cost equity execution, as well as economical custodial solutions.

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TrustCompare

If you were asked to demonstrate how your organization's Trust Department is performing, how would you answer? In addition to the broad "assets under management number," how are you measuring the growth, profitability, resource efficiency, and success of your Trust Services?

TRUSTCOMPARE is the industry's leading performance comparative solution to help you accurately assess and improve your performance, profitability and productivity. It is the only comparative, comprehensive ratio system for measuring trust performance, allowing you to compare your core metrics to a peer group and to the universe of subscribers.

How Does It Work?

Trust information is collected from subscribers, then analyzed to provide comparative trend and benchmarking tools and management information reports. Product and service results are measured by asset, income, expense and profit. And, growth in income, fees, expenses and profit are measured at both the departmental and product level. We also offer an advanced business analytics level to provide line of business and product line profitability comparisons.

If you'd like to learn more about TRUSTCOMPARE, visit www.trustcompare.com. When you subscribe, please be sure to check the box on the subscription form that indicates state association membership. As an Iowa Trust Association member, if you elect to use TRUSTCOMPARE , you'll receive a 10% subscription discount. In addition, if enough subscribe from our state, you'll also receive an additional peer comparison at no extra charge.

If you have questions, you may contact Loyd Pohl, at elpohl@pohlconsulting.com, or 800-677-7432 ext. 225.

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Contribute to Iowa Trust Association

As a reminder, the Iowa Trust Association (ITA) welcomes contributors to their quarterly newsletter.If you would like to comment on recent activities in the industry or let us know about an upcoming event that would be of interest to our readers, please feel free to contact Darcy Burnett, at (800) 800-2353 or dburnett@iowabankers.com. Thank you for your interest in our publication and we look forward to hearing from you!

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