Few people enjoy thinkingabout their insurance needs,shopping for coverage, or read-

ing through a policy’s fine print.Once they do buy a policy, many peo-ple rarely think about it again. Butthat tendency to avoid thinking

about insurance can lead to mistakes.Below are some of the most commoninsurance mistakes:

Expecting the best — Some peo-ple may think they can skip varioustypes of essential insurance, becauseit won’t happen to them. Or they may

buy a bare-bones policy thinkingthey won’t ever need to make aclaim. But the reality is that accidentsand injuries can happen to anyone.

Not shopping around — Ifyou’re in the market for a new policy,shop around and compare prices toget the best deal. But make sureyou’re comparing equivalent policiesand coverage.

Buying too much insurance —While insurance is a valuable part ofyour overall financial plan, there issuch a thing as being overinsured. Ifyou’re paying high premiums forinsurance coverage you don’t reallyneed, you’re wasting money. Whattypes of insurance might you skip?Extended warranties, cell phoneinsurance, insurance that covers spe-cific diseases (like cancer), rental carinsurance, and mortgage life insur-ance are usually not worth the premi-um you pay.

Not negotiating on insurancerates — The premium price you’requoted isn’t set in stone. Dependingon the type of coverage you need,you may be able to get discountsbased on your profession, the age ofyour car, installing an alarm systemin your home, choosing a higherdeductible, and more. Bundling —

FINANCIAL CONCEPTS DECEMBER 2017

Avoid These 10 Insurance Mistakes

Continued on page 2

Copyright © 2017. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends tooffer factual and up-to-date information on the subjects discussed, but should not be regarded as a complete analysis of these subjects. The appropriate professionaladvisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions orreliance on or use of this material.

Wells Fargo Advisors375 Park Avenue, 10th FloorNew York, NY 10152(212) 214-3350 • (212) 214-3342 Fax(877) 773-6847 • 877-PRENTIS

Peter D. Prentis, CFP®

Managing Director – Investments

www.prentiswmg.competer.prentis@wfadvisors.com

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, MemberSIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company.Investment and insurance products:

NOT FDIC-Insured No Bank Guarantee MAY Lose Value

We at the Prentis Wealth Management Group want to take this opportunity toexpress our best wishes for your health and continued success.

Turning to the current financial environment, we find that the world’seconomies have been strengthening, unemployment has been declining, and infla-tion has been quite tame. In fact, many markets are now near all-time highs, reward-ing our steadfast optimism. Of course, investing is only easy in hindsight! One ofour favorite sayings is: “Now” is always the hardest time to invest.

To that end, we have a few observations:1) Market pullbacks or “corrections” are normal and to be expected. A typical cor-

rection can be in the range of 10% to 20%. The unusual aspect here is that “theS&P 500 has now gone 62 weeks without a drop of 2% or more, the longest suchstreak since 1965.” (Source: Barron’s, November 18, 2017) At some point, the markets will fluctuate again.

2) One of the most important jobs of an advisor is to manage client emotions andexpectations as they pertain to investing. Working together, we strive to find andbe prepared to make opportunistic purchases when the inevitable volatilityreturns.

These observations are in line with our ongoing attention to each client’s port-folio, vision, and personal goals. We value your role in these decisions and urge youto consider sitting down with us to review your plans as needed.

As we approach the holiday season and the New Year, you, our friends, and fam-ily, are in our thoughts. We have shared multiple celebratory milestones together.Several of you are now enjoying robust retirement (Yes, our plans worked!). Two ofyou celebrated your 100th birthday! Unfortunately, we also had to mourn the pass-ing of some who were very close to us. All of these life moments give us pause to leteach of you know how much we value you and appreciate your being in our lives.

Thank you. Please enjoy a peaceful, healthful, and happy holiday season andNew Year!

Peter, Mike, Joe, and Edita

Season’s Greetings To Our Clients, Friends, And Family!

goes on and on. Not researching an insurance

company before you buy — Notevery insurance company is createdequal, and what looks like a greatdeal today may be less appealingtomorrow when you are strugglingto get a claim processed quickly.Before you buy, get multiple quotes,read the policy’s fine print, reviewthe insurer’s complaint record withthe state department of insurance,and check the company’s ratings

with agencies like Fitch, Moody’s,and A.M. Best.

Not thinking about insurance aspart of your overall financial plan— Insurance isn’t something youshould think about in isolation. Infact, it’s an essential part of youroverall financial plan. A solid riskmanagement strategy protects yourhard-earned wealth and your fami-ly’s future. Please call if you’d like todiscuss insurance in more detail.mmm

How to Raise Financially Responsible Children

Most children don’t getmuch exposure to per-sonal finances until they

get to college. Raising children who are financially smart can be a real challenge. To them, moneyjust automatically comes out ofmachines, and they are bombardedwith marketing messages. Here are some key strategies to help with these valuable lessons:

Money isn’t free, it has to beearned. While some may disagree,paying your child an allowance forchores teaches that money is earnedfor hard work and also begins theprocess of teaching money manage-ment. The key here is to be consis-tent. Once you’ve decided on anallowance policy, stick with it for atleast a year, so your children cansee the full benefits and the pitfallsof managing their allowance. Don’tbe tempted to give them extramoney for something they want.

Help them save when theyreceive or earn money. If as adultswe spent every dime we earn, we’dbe in big financial trouble. Kidsneed to learn this, too. You shouldhelp them understand that it is nor-mal behavior to save a portion ofwhat they earn or money theyreceive as gifts.

Help them establish goals. Weknow the start to any financial planis setting goals, so we need to teachour children this as well. Help them

determine both short- and long-term goals for their money.

Teenagers need a hands-onapproach. In school, teenagers aretaught financial concepts, which aremore esoteric than real. They needto understand the day-to-day ofhow adult finances actually work,such as working for income, payingbills, budgeting, saving for retire-ment, and so on.  

A good place to start is to showthem your financial plan, includingyour goals and budget. If you arenot comfortable with letting themsee the dollar amounts, just save acopy of your budget with fictitiousdollar amounts. Go through the lineitems on your budget to explain allthe bills you pay monthly, as well aswhat is set aside for short- andlong-term savings. And even sim-ple things we take for granted needto be taught, such as how to paybills online or even how to fill out acheck. They also need to under-stand how bank accounts work,such as what a minimum balancerequirement is and the fees that areincurred when it’s not maintained.

Don’t stop there. Anothermajor issue to discuss is how loanswork. Understanding debt is equal-ly as important as understandingsavings. They need to know thatborrowing money costs money andhow long it may take to pay thatmoney back. mmm

2Avoid These 10Continued from page 1

buying several policies through thesame carrier — can also lead to pre-mium price breaks.

Forgetting to pay the premium— Missing premium paymentscould cause your policy to lapse,leaving you without coverage.Reduce the risk of this happening byautomating your payments.

Dropping coverage to savemoney— When your budget is tight,dropping insurance coverage mayseem like a good way to save cash.But while you may save money inthe short term, you could end upworse off in the long term. If premi-um payments are straining yourbudget, consider raising yourdeductible or asking your insurer ifyou’re eligible for any discounts.

Forgetting to update life insur-ance beneficiaries — As your lifechanges, so should the peoplenamed as beneficiaries on your lifeinsurance policy. Divorce, remar-riage, the death of a spouse, or thebirth or death of a child are all timesyou should update these designa-tions. If you fail to take this simplestep, your life insurance may not doits job when you need it most. Afterall, do you want your insurance ben-efits to go to your ex-spouse or haveone child receive a generous insur-ance payment while the otherreceives nothing? Keeping your ben-eficiary designations up to date canhelp you avoid those outcomes.

Having coverage gaps —Everyone faces different risks and,thus, has different insurance needs.Sometimes, it’s easy to overlook arisk until it’s too late. For example, ifyou live in an earthquake-pronearea, you likely need separate earth-quake insurance. If you serve on anonprofit board of directors, youmay need personal liability cover-age. If you own ATVs, snowmobiles,or other vehicles, you may need spe-cial policies to protect yourself incase of damage to the vehicle or alawsuit. The list of possible risks

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FR2017-0515-0081

Tactical Allocation and Market TimingIf you miss these spurts, you

could be missing the bulk of the ben-efit of any upturn.

The table to the right illustratesthe benefits of remaining in the stockmarket and risks of being out of it,even for relatively short periods oftime.

It shows returns from a portfolioentirely invested in the Standard &Poor’s 500 Index for all 5,038 tradingdays from the first day of 1997through the end of 2016, compared tothe returns that an investor wouldhave had if he/she had been out ofthe market for its five, 10, 20, and 40best days.

The differences in return are

striking.Average Annual Total Return:

1997–2016Invested…All 5,038 days 7.68%Minus five best days 5.49%Minus 10 best days 4.00%Minus 20 best days 1.57%Minus 40 best days -2.42%Source: Index Fund Advisors, 2017

What’s the main message here?Your best strategy is to invest yourmoney in a diversified portfolio, real-locating periodically to maintainyour strategic balance.

Need some help with yourstrategic asset allocation? Please call.mmm

Your investment strategyshould include a long-termplan for dividing your port-

folio among the major asset classes:stocks, bonds, and cash.

The term for this is strategicasset allocation, and it entails anannual review to bring your portfo-lio into alignment with your strategy.Over time, some asset classes per-form better or worse than others,causing your actual holdings in eachclass to be larger and smaller thanyour strategy calls for.

You can resolve this discrepancyby selling off some assets that grewto be more than the plan calls for and use the proceeds to buy assetsthat ended up a smaller portion thanthey’re supposed to be. In this way,you maintain the risk level that’sneeded to meet your objectives.

But there’s another way to goabout managing your portfolio thattakes a different approach.

It’s called tactical asset allocationand involves making changes inyour portfolio to take advantage ofemerging up trends in one asset classand avoiding damage a new downtrend in another asset class couldcause. If you’re successful, you canachieve higher returns than by stick-ing with your strategic allocationplan.

Notice, however, the word “if.”It’s extremely difficult even for pro-fessional money managers to suc-ceed in tactical asset allocation, andthe consequences of being off onyour timing can be devastating.

As most financial advisors telltheir clients, the best portfolioreturns are often achieved not bytiming the market, but by how muchtime your money is in the market.

Even though market up trendscan last for months if not years, stud-ies show that the biggest returnscome in spurts of short periods oftime.

Encourage Estate Planning

Parenting is a never-endingjob. Even when your chil-dren are grown, there will

probably be lessons you’ll want toteach them, such as the need forestate planning. Some items toinclude in that lesson are:m Explain why estate planning isimportant. Your role is not todictate what they should dowith their estate, just to empha-size the need for estate planning.When your children encountermajor life events, such as mar-riage, divorce, or a child’s birth,remind them to review theirestate plans.

m Make sure all important estate-planning documents are in

place. At a minimum, all adultsshould have a will, a durablepower of attorney, and a health-care proxy. A durable power ofattorney designates an individ-ual to control their financialaffairs if they become incapaci-tated, while a healthcare proxydelegates healthcare decisions toa third person when they areunable to make them.

m Coordinate estate planningacross generations. If you havea substantial estate, you maywant to coordinate your estateplanning efforts with those ofyour children. A coordinatedeffort can help minimize estatetaxes. mmm

4

Financial Rules of Thumb

Financial rules of thumb aredesigned to provide quickguidelines for your finances.

However, you shouldn’t blindly fol-low them without giving thought toyour personal circumstances. Someof the more common financial rulesof thumb include:

Save 10% of your gross income.While this rule will give you a goodstart, it’s typically the minimum, notthe maximum, you should be saving.Analyze how much you’ll need foryour financial goals, and then workbackward to calculate how much youshould be saving.

Plan on spending 80% of yourpreretirement income during retire-ment. This may be true if you don’tplan to be very active during retire-ment, but more and more peopleexpect retirement to include extensive travel and hobbies. On theother hand, if you’ve paid off yourmortgage and your children have fin-ished college, you may need less thanthis.

Set the percentage of stocks inyour portfolio to 100 minus yourage. With increased life expectancies,this can result in a portfolio that is tooheavily weighted in income invest-ments. Set your asset allocationbased on your risk tolerance and timehorizon for investing. Stocks shouldbe considered for long-term financial

goals of 10 years or more. Keep 3–6 months worth of

income in an emergency fund.While an emergency fund is a goodidea, how much you keep in thatfund will depend on your circum-stances. You may need a larger fundif you are the sole wage earner in thefamily, work at a seasonal job, ownyour own business, or rely on com-missions or bonuses. A smaller fundmay be required if you have morethan one source of income, can bor-row significant sums quickly, or carryinsurance.

Pay no more than 20% of yourtake-home pay toward short-termdebt. Once considered a firm rule bylenders, you may now be able toobtain loans even if you exceed thisamount. However, don’t becomecomplacent if you meet this rule ofthumb, since a large percentage ofyour income is still going to pay debt.Try to reduce your debt or at leastreduce the interest rates on it.

Keep your mortgage or rent pay-ment to no more than 30% of yourgross income. While you can obtaina mortgage for more than that, stay-ing within this rule will help ensureyou have money to devote to otherfinancial goals.

Refinance your mortgage ifinterest rates decline by 2%.

This rule of thumb assumes you’llpay significant refinancing costs,including points, title insurance, appraisal fees, and other fees.However, many lenders now offerrefinancing deals with significantlylower costs. Thus, you should assesswhether it makes sense to refinancewhen mortgage rates decline by aslittle as half a percent.

Obtain life insurance equal tosix times your annual income.Different individuals require vastlydifferent amounts of insurance,depending on whether one or bothspouses work, minor children arepart of the family, or insurance isbeing obtained for other needs, suchas to fund a buy/sell agreement or tohelp pay estate taxes. Thus, youshould determine your precise needsbefore purchasing insurance. mmm

FR2017-0515-0081

Business DataMonth-end

Indicator Sep-17 Oct-17 Nov-17 Dec-16 Nov-16Prime rate 4.25 4.25 4.25 3.75 3.503-month T-bill yield 1.05 1.02 1.29 0.56 0.4910-year T-note yield 2.26 2.33 2.37 2.55 2.2620-year T-bond yield 2.57 2.61 2.62 2.86 2.66Dow Jones Corp. 2.97 3.08 3.11 3.17 3.16GDP (adj. annual rate)# +1.20 +3.10 +3.00 +2.10 +3.50

Month-end % ChangeIndicator Sep-17 Oct-17 Nov-17 YTD 12-Mon.Dow Jones Industrials 22405.09 23377.24 24272.35 22.8% 26.9%Standard & Poor’s 500 2519.36 2575.26 2647.58 18.3% 20.4%Nasdaq Composite 6495.96 6727.67 6873.97 27.7% 29.1%Gold 1283.10 1270.15 1280.20 10.4% 8.7%Unemployment rate@ 4.40 4.20 4.10 -10.9% -16.3%Consumer price index@ 245.50 246.80 246.70 2.2% 2.1%Index of leading ind.@ 128.80 128.90 130.40 5.2% 4.7%# — 1st, 2nd, 3rd quarter @ — Aug, Sep, OctSources: Barron’s, Wall Street Journal

Joseph Bennett, Peter D. Prentis, CFP®, Michael P. Knuff, CFP®, and Edita Mertira

Wells Fargo Advisors is not a legal or tax advisor.However, I will be glad to work with you, youraccountant, tax advisor and/or attorney to helpyou meet your financial goals. Wells FargoAdvisors did not assist in the preparation of thisreport, and its accuracy and completeness are notguaranteed. The opinions expressed in this reportare those of the author(s) and are not necessarilythose of Wells Fargo Advisors or its affiliates. Thematerial has been prepared or is distributed solelyfor informational purposes and is not a solicitationor an offer to buy any security or instrument or toparticipate in any trading strategy. Unless other-wise stated, this material was written by IntegratedConcepts. (12/17)