Dividends are useful part of an investment strategy

The Aug. 9 Investment Insights column, “Dividend investing is too good to pass up,” was excellent, especially the last point about reinvested dividends taking advantage of market lows.

Because we reinvest our clients’ dividends, they took advantage of the 2008-09 lows and have made out very well.

Whether dividends are taken in cash and used for living expenses or reinvested as a part of a total-return portfolio, they certainly prove useful as part of an investment strategy.

Steven M. Elwell

Financial adviser and investment management coordinator

Schroeder Braxton & Vogt Inc.

Amherst, N.Y.

Attacks not warranted on retained-asset accounts

I found the article “Death benefits flap has advisers on alert” (Aug. 9) intriguing.

Several of the largest life insurance companies in the United States are suddenly under fire for their “practices” with regard to death benefit proceeds. I agree that many life insurance company practices need to be scrutinized.

However, what they are doing with death benefit proceeds isn’t one of them.

I think this attack on retained-asset accounts is a complete misconception of a financial adviser’s fiduciary responsibility.

Within the last year we had a death claim situation with a client who lost her spouse.

The insurance company that paid the death claim had a guaranteed interest rate of 4% within its retained-asset account. That is 4%, net of all fees.

With the national average of non-Federal Deposit Insurance Corp.-insured money market funds hovering below 0.2%, I felt pretty comfortable with my advice. In fact, I had my client inquire about adding more money to the account.

Unfortunately, the insurer wouldn’t allow it. I would have placed my own liquid assets into this type of account if possible.

The article stated that Prudential Financial Inc. paid 1% interest on its proceeds — again, more than five times the national average for a similar money fund. Considering today’s interest rate environment, 1% doesn’t seem like too bad a deal.

Money held in a retained-asset account isn’t protected by the FDIC. However, it is covered by the state guaranty funds, which in New Jersey is $500,000 (twice the amount of FDIC coverage).

It disturbs me that only one paragraph is left to the adviser who at times advises his or her clients to hold on to the retained-asset account because the brokerage’s money fund is earning 0.01% interest (with no FDIC coverage).

It is essential for clients to take the necessary time and properly plan when losing a loved one.

The death of a spouse is a major life event that will require a completely renovated financial plan. The client will have new goals, objectives and even legal issues to address during the process.

In the meantime, they can access the money they need for funeral expenses, outstanding-debt payments or any other expenses that occur during the grieving process.

Finally, retained-asset accounts are simply an option for beneficiaries. They still have the capability to receive the death benefit in a lump- sum payment if desired.

This recent “flap” shouldn’t be the cause behind an adviser’s recommendation to cash out his or her client’s death benefit claims.

Every situation is different. There are times when a lump-sum payment may be in the best interest of the client.

However, a guaranteed interest rate with state guaranty fund protection has a higher yield and greater protection than most money market accounts.

What am I missing?

Mark Cortazzo

Senior partner

Macro Consulting Group

Parsippany, N.J.

Art succession planning value-add for investors

I really enjoyed the article “Financial advisers sculpt rare opportunities from clients’ collectibles” (Aug. 9).

I am hearing more about the concept of art succession planning lately and how this service is a great value-add for collectors/ investors. I am also learning more about it from Ralph Adamo, whom you quoted, and his marketing and public relations team at Integrity Wealth Management.

I also enjoyed the Short Interests article “Inside clients’ minds” about the client behavior tool from John Hancock Funds LLC. It is about time that a firm offered advisers some help in this area.

Sydney LeBlanc

Co-publisher

Transitions Magazine

San Diego