Fleming Financial Services Blog

At Fleming Financial Services, Inc., our role is to assist our clients in defining and realizing their financial objectives and goals. We work with our clients to implement personalized plans designed for their unique situations. Our areas of concentration are: Retirement planning, Estate and Wealth Transfer strategies, and Business Continuation planning. We emphasize the importance of conducting our business with integrity and professionalism. As a member of PartnersFinancial, an independent national financial services company, we are able to provide access to sophisticated resources for the benefit of our clients. Some of the professionals with our firm are currently registered to conduct business through NFP Securities, Inc. With those additional resources in place, we help facilitate the complex corporate and personal financial decisions our clients must make.

Emergency Action Plans for When the Unthinkable Happens

Author thomas-joseph-fleming-financial , 8/31/2015

No one expects the worst to happen, but sometimes it just does. Whether it is a complete power outage or a fire breaking out in your break room, preparing for the unexpected should be part of your overall safety program.

While prevention should always be your first priority, preparedness may reduce the severity of the event and help maintain your employees' safety.

Emergency Planning is Your Responsibility

Every company should have a published, well-communicated and practiced emergency preparedness and life safety plan.

The National Fire Protection Association and the Occupational Health and Safety Administration (OSHA) provide codes, regulations and guidance on emergency action and fire prevention plans, including minimum standards. OSHA, in fact, requires a written emergency action plan for workplaces with 10 or more employees. Employers with fewer than 10 employees must still have an emergency action plan, but they may communicate the plan orally to employees.

Of course, a plan is only as good as its effectiveness, when put into action. How would your plan fare in a real emergency? Do your employees know what to do? These are questions to ask before an emergency happens.

Communicating, training and drilling are all essential elements to include in your emergency action plan, and can help make the critical difference in life safety outcomes.

Effective Planning Can Save Lives

In the first critical minutes of an emergency, taking the right steps can help save lives. Planning ahead and maintaining a well-trained emergency team can help make the critical difference.

  • Appoint, organize and train designated staff with their emergency response duties and responsibilities.
  • Document and distribute emergency procedures, including how to notify the fire department, evacuate employees and provide accommodations for those with special assistance needs.
    • Publish instructions for the use of emergency equipment, such as the voice communication system, the alarm system or emergency power supply system.
    • Post procedures for confining, controlling and extinguishing fires.
    • Post procedures for assisting the fire department in accessing and locating the fire.
  • Communicate your evacuation plan to all employees, visitors, vendors and contractors.
  • Distribute the plan to emergency personnel who will be responsible for taking actions to maximize the safety of building occupants, including the fire department and designated emergency management and supervisory staff.
  • Post your evacuation/floor plan exit diagram in clearly visible locations. Assign locations away from the building or job site for employees to gather.
  • Practice drills on a regular basis. Monitor and evaluate drill performance to consider improvements.
    • Include full, partial and shelter-in-place evacuations, designed in cooperation with local authorities, to familiarize employees with procedures.
  • Develop a roll call system to account for all persons and notifications to the fire department of any missing person.

Travelers safety professionals see a broad spectrum of businesses and facilities and understand the plans used to ensure emergency preparedness. Every day, we share our insights with our customers to help keep their businesses, and most importantly, their people, safe.

Scheduling for the 2015 – 2016 onsite flu clinic program begins soon

It may be the middle of summer, but it's never too early to start planning for flu season. Encourage employers to help reduce the number of working hours that are lost due to illness by hosting a worksite flu clinic. Beginning September 14, 2015 through January 29, 2016, Independence will be offering on-site flu clinics to our customers. Details to remember:
  • There is a new coordination fee of $175 for each client group, regardless of the number of flu clinics scheduled.
  • Any covered Independence group can schedule a clinic as long as they meet the minimum requirement of 35 participants per clinic (per date and location).
  • Any employee can participate in a group's clinic, even if the employee is covered by another health insurer, and the group can be invoiced.
Please feel free to share the attached flier, which provides information on the benefits of worksite flu clinics as well as a list of participating off-site providers.

When Do You Need an Irrevocable Trust?

Author thomas-joseph-fleming-financial , 6/25/2015
Fleming Financial Services, PA, Irrevocable TrustBecause irrevocable trusts cannot be changed once they have been established, many people are hesitant to include these trusts in their estate plans. However, in spite of the obvious drawbacks of creating a trust that cannot be modified or terminated, some situations still warrant their use. Tax Reduction One of the most notable benefits of irrevocable trusts is tax reduction. The assets held in an irrevocable trust are not part of your taxable estate, so they can reduce estate taxes after you die. Irrevocable trusts can also reduce personal income taxes. However, the trust itself must still pay tax on any income it earns, and the tax brackets for trusts are less generous than those imposed on an individual's income. Thus, this tax-saving strategy is appropriate only when the income earned by the trust is low enough to prevent it from incurring a higher tax rate than you would pay if it were included in your annual income. Medicaid/VA Benefit Planning When drafted and funded properly, an irrevocable trust can be used to maximize your eligibility for Medicaid or VA benefits by allowing you to exclude the assets owned by the trust from your countable resources. However, keep in mind that Medicaid will count any transfers made to the trust against you for five years. This waiting period does not apply to VA benefits. Protection from Creditors and Liens Because the grantor is no longer the legal owner of property transferred to an irrevocable trust, all property contained in the trust is safe from the claims of creditors. Thus, irrevocable trusts are a wise choice for individuals who want to protect their assets from such claims. Irrevocable trusts can also be used to keep property safe in the event of a lawsuit against the grantor. Asset/Income Preservation Irrevocable trusts are ideal for protecting property and/or income you wish to give to a person who either cannot manage the assets on his or her own or is disabled. When drafted appropriately, an irrevocable trust can provide a reliable source of income for a beneficiary without allowing the beneficiary direct access to the contents of the trust or affecting the beneficiary's eligibility for government assistance. Content provided by Transformer Marketing.

Five Keys to Investing For Retirement - Key #5 Don't put all your eggs in one basket

Fleming Financial Group, PA, Retirement PlanFleming Financial Group, PA, InvestingDon't put all your eggs in one basket Diversifying your retirement savings across many different types of investments can help you manage the ups and downs of your portfolio. Different types of investments may face different types of risk.  For example, when most people think of risk, they think of market risk--the possibility that an investment will lose value because of a general decline in financial markets.  However, there are many other types of risk.  Bonds face default or credit risk (the risk that a bond issuer will not be able to pay the interest owed on its bonds, or repay the principal borrowed).  Bonds also face interest rate risk, because bond prices generally fall when interest rates rise. International investors may face currency risk if exchange rates between U.S. and foreign currencies affect the value of a foreign investment.  Political risk is created by legislative actions (or the lack of them). These are only a few of the various types of risk.  However, one investment may respond to the same set of circumstances very differently than another, and thus involve different risks.  Putting your money into many different securities, as a mutual fund does, is one way to spread your risk.  Another is to invest in several different types of investments--for example, stocks, bonds, and cash alternatives.  Spreading your portfolio over several different types of investments can help you manage the types and level of risk you face. Participating in your retirement plan is probably more important than any individual investing decision you'll make. Keep it simple, stick with it, and time will be your best ally. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.

Five Keys to Investing For Retirement - Key #4 Integrate retirement with your other financial goals

Fleming Financial Group, PA, Key for RetirementIntegrate retirement with your other financial goals Make sure you have an emergency fund; it can help you avoid needing to tap your retirement savings before you had planned to.  Generally, if you withdraw money from your retirement plan before you turn 59½, you'll owe not only the amount of federal and state income tax on that money, but also a 10% federal penalty (and possibly a state penalty as well).  There are exceptions to the penalty for premature distributions from a 401(k) (for example, having a qualifying disability or withdrawing money after leaving your employer after you turn 55). However, having a separate emergency fund can help you avoid an early distribution and allow your retirement money to stay invested. If you have outstanding debt, you'll need to weigh the benefits of saving for retirement versus paying off that debt as soon as possible.  If the interest rate you're paying is high, you might benefit from paying off at least part of your debt first.  If you're contemplating borrowing from or making a withdrawal from your workplace savings account, make sure you investigate using other financing options first, such as loans from banks, credit unions, friends, or family.  If  your employer matches your contributions, don't forget to factor into your calculations the loss of that matching money if you choose to focus on paying off debt.  You'll be giving up what is essentially free money if you don't at least contribute enough to get the employer match. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.

Five Keys to Investing For Retirement - Key #3 Consider your risk tolerance

Fleming Financial Services, PA, 5 Keys to RetirementConsider your risk tolerance Another key factor in your retirement investing decisions is your risk tolerance--basically, how well you can handle a possible investment loss.  There are two aspects to risk tolerance.  The first is your financial ability to survive a loss.  If you expect to need your money soon--for example, if you plan to begin using your retirement savings in the next year or so--those needs reduce your ability to withstand even a small loss.  However, if you're investing for the long term, don't expect to need the money immediately, or have other assets to rely on in an emergency, your risk tolerance may be higher. The second aspect of risk tolerance is your emotional ability to withstand the possibility of loss.  If you're invested in a way that doesn't let you sleep at night, you may need to consider reducing the amount of risk in your portfolio.  Many people think they're comfortable with risk, only to find out when the market takes a turn for the worse that they're actually a lot less risk-tolerant than they thought.  Often that means they wind up selling in a panic when prices are lowest.  Try to be honest about how you might react to a market downturn, and plan accordingly. Remember that there are many ways to manage risk.  For example, understanding the potential risks and rewards of each of your investments and its role in your portfolio may help you gauge your emotional risk tolerance more accurately.  Also, having money deducted from your paycheck and put into your retirement plan helps spread your risk over time.  By investing regularly, you reduce the chance of investing a large sum just before the market takes a downturn. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.

Five Keys to Investing For Retirement - Key #2 Invest based on your time horizon

Author thomas-joseph-fleming-financial , 5/28/2015
Fleming Financial Group, PA, Retirement PlanInvest based on your time horizon Your time horizon is investment-speak for the amount of time you have left until you plan to use the money you're investing.  Why is your time horizon important?  Because it can affect how well your portfolio can handle the ups and downs of the financial markets.  Someone who was planning to retire in 2008 and was heavily invested in the stock market faced different challenges from the financial crisis than someone who was investing for a retirement that was many years away, because the person nearing retirement had fewer years left to let their portfolio recover from the downturn. If you have a long time horizon, you may be able to invest a greater percentage of your money in something that could experience more dramatic price changes but that might also have greater potential for long-term growth.  Though past performance doesn't guarantee future results, the long-term direction of the stock market has historically been up despite its frequent and sometimes massive fluctuations. Think long-term for goals that are many years away and invest accordingly.  The longer you stay with a diversified portfolio of investments, the more likely you are to be able to ride out market downturns and improve your opportunities for gain. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.

Five Keys to Investing For Retirement - Key #1 Don't lose ground to inflation

Author thomas-joseph-fleming-financial , 5/26/2015
Fleming Financial Services, PA, Retirement 5 KeysMaking decisions about your retirement account can seem overwhelming, especially if you feel unsure about your knowledge of investments. However, the following basic rules can help you make smarter choices regardless of whether you have some investing experience or are just getting started. Don't lose ground to inflation It's easy to see how inflation affects gas prices, electric bills, and the cost of food; over time, your money buys less and less.  But what inflation does to your investments isn't always as obvious.  Let's say your money is earning 4% and inflation is running between 3% and 4% (its historical average). That means your investments are earning only 1% at best.  And that's not counting any other costs; even in a tax-deferred retirement account such as a 401(k), you'll eventually owe taxes on that money.  Unless your retirement portfolio at least keeps pace with inflation, you could actually be losing money without even realizing it. What does that mean for your retirement strategy?  First, you'll probably need to contribute more to your retirement plan than you think.  What seems like a healthy sum now will seem smaller and smaller over time; at a 3% annual inflation rate, something that costs $100 today would cost $181 in 20 years.  That means you'll probably need a bigger retirement nest egg than you anticipated.  And don't forget that people are living much longer now than they used to.  You might need your retirement savings to last a lot longer than you expect, and inflation is likely to continue increasing prices over that time. Consider increasing your 401(k) contribution each year by at least enough to overcome the effects of inflation. Second, you need to consider investing at least a portion of your retirement plan in investments that can help keep inflation from silently eating away at the purchasing power of your savings.  Cash equivalents may be relatively safe, but they are the most likely to lose purchasing power to inflation over time.  Even if you consider yourself a conservative investor, remember that stocks historically have provided higher long-term total returns than cash equivalents or bonds, even though they also involve greater risk of volatility and potential loss. ©2013 Broadridge Investor Communication Solutions, Inc. All rights reserved.

Today’s Long-term Care Coverage: The Fine Print

Author thomas-joseph-fleming-financial , 5/12/2015
Long- Term CareAlthough at first glance these two rider options seem relatively similar, there are some key differences and important details that advisors and clients must be aware of before choosing one of these LTC solutions. Qualifying Length of Chronic Illness With an LTC rider, the qualifying condition may be fully recoverable; it does not have to be considered a permanent chronic illness. Examples of a recoverable condition are a mild stroke, knee surgery, hip replacement and back surgery.  Overall, these are temporarily disabling conditions that would lead an insured to be unable to perform at least two ADLs (such as bathing, eating, transferring), but over time would heal, allowing the insured to return to their normal activities and lifestyle. With an Accelerated Death Benefit for Chronic Illness rider, it is generally required that a physician certify the chronic illness as permanent, meaning that it is a non-recoverable condition that will more than likely last for the rest of the insured’s life. It is very important that clients understand this difference, as aforementioned guidelines for the Accelerated Death Benefit for Chronic Illness rider may be a limitation that some clients are not comfortable with. Covered Benefits/Expenses Both LTC and Accelerated Death Benefit for Chronic Illness riders have limitations on what is considered covered or qualified care. To accelerate the death benefit, the client must first qualify for the benefits by meeting the aforementioned definition of chronic illness (two ADLs or severe cognitive impairment). And in most cases, there must be documented evidence of the insured’s illness or impairment, and a detailed description of any care and services received by the insured (e.g., medical records, service providers’ notes on care, itemized bills). Most insurers also require a “Plan of Care,” a written plan for services designed specifically for the insured. The plan must specify the type, frequency and providers of all the services the insured requires and be approved by a licensed health care practitioner. Once these requirements are met and the elimination period satisfied, the rider benefits are available to the client to help cover the costs of qualified care. Most insurers have specific guidelines as to what they consider qualified care. These generally include:
  • Nursing home care
  • Home health care
  • Adult day care
  • Respite care
  • Hospice care and other qualified long-term care facilities
Qualified care generally also includes expenses related to room and board at any one of these facilities. However, there is no standard across the industry of what an insurer must consider qualified care, and each insurer may have varying stipulations to these general guidelines. For example, one insurer may cover home health care provided by a family member of the insured, while another may require that home health care be provided by a licensed health care practitioner, such as a registered nurse employed by a licensed home health care agency. With an indemnity plan, the insured has more flexibility with the rider proceeds after they qualify for the benefits. Excess funds not needed for qualified care can be used to cover other expenses, such as physician charges, hospital and laboratory charges, prescription and non-prescription medicine, medical supplies, medical equipment, transportation, home improvements to help the insured with their disabilities and limitations (e.g., wheel chair accessibility) and any other incurred expenses. With the reimbursement plan, the insured will only be reimbursed for the actual charges they receive for qualified care provided by an approved facility or provider. Insurers typically also have specific exclusions for which they will not provide benefits, such as: care for intentionally self-inflicted injury, care required as a result of alcoholism or drug abuse, care due to war injuries and care required as a result of an insured’s participation in a crime. Insurers will also typically not provide a benefit if there has been a “duplication of benefits,” which occurs when expenses are covered under other plans, such as certain government programs, workers’ compensation, employer’s liability, another LTC insurance policy or a health insurance policy.   Copyright © 2013 NFP. All rights reserved.

Today’s Long-term Care Coverage: Understanding the Fine Print

ElderlyMost advisors and clients understand the need for long-term care (LTC) coverage as part of a well-rounded financial plan. However, they are becoming more selective with the type of LTC coverage they want to invest in, looking for more flexibility than traditional LTC policies offer. As a result, insurers are offering alternative solutions to traditional LTC policies that meet the needs of today’s expanding and diverse LTC clientele. But with these new LTC solutions comes the need for proper due diligence so their functionality and intricacies are clearly understood.   Pressures on Traditional LTC   LTC planning is a trending topic of conversation in the financial services industry for several reasons. In the traditional LTC space, several large insurers and major LTC players recently exited this market due to challenging economics, such as low interest rates, and the decision to redirect their focus and resources to other product lines. According to the insurance consulting firm LIMRA, 10 of the top 20 individual LTC writers exited this market over the last five years.1 Another pressure leading insurers to exit the LTC market is increased life expectancies. Due to advances in health care, people are living longer and, therefore, increasing the percentage of LTC insureds that ultimately utilize policy benefits. According to the Centers for Disease Control, in the 1980s, when insurers began writing traditional LTC policies, the average life expectancy for men was age 70 and for women was age 77.2 In 2013, the average life expectancy for men is age 76 and for women is age 82.3 Additional strain has been brought about by the fact that when these policies were originally designed, insurers failed to correctly project the cost of future LTC expenses surrounding the various covered maladies and disabilities. Insurers also anticipated and priced their products based on a certain assumed percentage of policy lapses, but over the past few years, lapse rates have been significantly lower than projected. This means that more insureds than expected have held their policies and made claims, and, therefore, insurer payouts have been higher than what was estimated when the pricing of these products was calculated. All of these factors resulted in the availability of underpriced LTC products for many years. But there came a point at which insurers could no longer support that pricing and had to decide to either increase rates on new policies and, in some cases, for existing policyholders, or completely exit the market. The majority of insurers that decided to stay in the traditional LTC market dramatically raised rates, and these rate increases can continue to occur throughout the life of a traditional LTC policy. It is also expected that rates for women will significantly rise as early as 2013, as insurers begin to charge gender-specific premiums (versus the unisex pricing methodology used thus far). Insurers have generally had worse claims experience with females, because they live longer and often have no caregiver, therefore being more likely to utilize LTC benefits. Even with the limited availability of traditional LTC policies and the rapidly increasing rates, advisors and clients are more aware than ever of the need to plan ahead for LTC and the financial risk associated with not having it in place. It is estimated that 70 percent of people over age 65 will need long-term care during their lifetime.4  And it is not only an older person’s need. About 1 in 7 people living in nursing home facilities in the U.S. are under age 65.5   Footnotes: 1. Allison Bell. “Prudential Drops Individual LTCI.” LifeHealthPro. March 7, 2012. 2. 3. Data360. “Life Expectancy- United States.” 4. National Clearinghouse for Long Term Care Information. “Will You Need LTC?” 5. Centers for Medicare & Medicaid Services. “Nursing Home Data Compendium 2010 Edition.”   Copyright © 2013 NFP. All rights reserved.