Transcript Slide 1

Entaire Program Overview
Jon A. Scaman
Manager, Business Development
NetworkingMFG.com Meeting
December 16, 2008
Today’s Agenda
•
Who are Entaire Programs for:
• Business Owners
•
What the Programs are:
• Personal Retirement Planning
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How the Programs work:
• Overview of the Program
•
Case Study:
• Paul Smith
Not for use with the public - for education and training purposes only
Who are Entaire Programs for:
Business Owners
Not for use with the public - for education and training purposes only
The Business Owners’ Challenge
• 47% of Business Owners surveyed
indicated that they do not believe that they
are financially prepared for their retirement1
• 68% of Business Owners believe that they
will live below their current lifestyle when
they retire2
So, what’s the challenge?
1 Harris Interactive on behalf of Sharebuilder 401(k)
2 LIMRA, 2006
Not for use with the public - for education and training purposes only
Phases of the Entrepreneurial Business
Maturity
Expansion
Growth
Startup
Limited
Excess
Money
Excess
Money
Reinvested
Excess
Funds
Available
Not for use with the public - for education and training purposes only
Cashing
Out
Phase
Selling the Business: The Perception
Most Business Owners believe that
they will sell their business
to fund their retirement –
if they retire, that is
Unfortunately…………
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Selling the Business: The Reality
Approximately 1.2 million
viable businesses go on the
market for sale each year
Nearly 3/4 of these fail in their
efforts to sell
Most of the businesses sold
end up selling for much less
than their expected Market
Value, and in many cases,
below their Asset Value
Not for use with the public - for education and training purposes only
Source:
2005 Business Reference Guide, 13th Edition (West)
The Entrepreneur’s Dilemma: Restrictions
Government Mandated Restrictions
Retirement
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Health
The Answer
• A program designed solely for the Business
Owner
• A program that uses the business checkbook
• A program that allows for large sums of
money to grow tax deferred
• A program that is tax efficient and cost
effective
• A program that will create less risk and more
stability in their portfolio
Not for use with the public - for education and training purposes only
What the Programs are:
Personal Retirement Planning
Not for use with the public - for education and training purposes only
Rule of 72
The Rule of 72
How long does money take to double?
Divide 72 by the assumed rate, the result is
the number of years until a sum doubles.
$4M
$2M
$1M
$500K
$500K
0 Years
Assumptions:
$500K
10 Years
$500K
20 Years
Net Book Value of Business - $500K
Note:
Hypothetical results for illustrative purposes only and not a representation of past
or future results.
Not for use with the public - for education and training purposes only
$500K
30 Years
Interest Rate – 7.2%
Compressed Time Frame Concept
Accelerated Funding
Choice 1 - $ 16,667 per year X
Choice 2 - $ 50,000 per year X
Choice 3 - $500,000 only once X
30 years = $500,000
10 years = $500,000
Today
= $500,000
$16,667
$1,684,584
$50,000
$2,860,393
$500,000
$3,808,127
Today
30 Years
Note:
A hypothetical crediting rate of 7%. Represents approximations and should not be relied upon as tax or investment
advice. The performance of financial products fluctuate over time. The actual time to achieve any result cannot be
predicted with certainty.
Not for use with the public - for education and training purposes only
Compounding with Real Estate
7%
average annual growth
over 20 years
Asset Value = $500,000
$500k Mortgage
Point A
Asset Value = $1,934,842
7%
Interest-Only
$35,000 annual cost
$500k Mortgage
Point B
$1,434,842 gross gain - $700,000 interest cost = $734,842 Net Gain
This is a hypothetical example, not indicative of
actual results. Actual results will vary.
The Stability of Equity Indexed Products
• Allows client to participate in market upside
• Limited downside risk
Annual Crediting
0%
Annual
Crediting
8%
$1,000,000
Annual
Crediting $1,134,000
5%
$1,080,000
Market Down Turn
- 8%
$993,660
Needed to
Catch Up
14.12%
Keep in mind…
If you received the 5% as shown in this example on the $993,660, you would
have a total of $1,043,343. That is a $90,657 difference because of the
guaranteed floor.
Not for use with the public - for education and training purposes only
How the Programs Work:
An Overview of the
Entaire Programs
Not for use with the public - for education and training purposes only
Program Structure
Step 1
Step 2
Step 3
Commercial Loan
Transfer Strategy
Asset Funding
Universal Life
and/or
Annuity
Products
Client Business
Client Business
Global One Financial
Global Gateway
Not for use with the public - for education and training purposes only
Recent Manufacturing Cases
Industry
Case Size
•
•
•
•
$200,000
$600,000
$2,400,000
$1,000,000
Furniture
Machining
Plastics
Nuts & Bolts
Case Study: Paul Smith
Case Study – Paul Smith
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•
•
•
•
Manufacturing Company
25 Years in Business
Current Age – 50
Desired Retirement Age - 63
Annual Budget to Fund Personal
Retirement Plan - $41,000
Summary – Paul Smith
•
•
•
•
•
•
Age:
Years Until Retirement:
Desired Annual Income:
Number of Payout Years:25
Personal Tax Bracket:
Company Budget:
50
13
$115,000
35%
$41,000
Paul needs a lump sum of at least $1,340,162 at
retirement to support an income of $115,000 per
year for 25 years.
Solution – Paul Smith
Paul’s company implements a leveraged
program in the amount of $600,000.
The $600,000 is placed into an Equity
Indexed Annuity, hypothetically earning
7% per year.
Paul’s company makes interest payments of
approximately $40,500 annually (assumed
Interest rate of 6.75%).
After 13 years, Paul’s annuity value has grown to
$1,445,907, which gives Paul an income in the amount of
$115,957 per year for 25 years.
(This example assumes that the loan is repaid at retirement using assets that are not part of the program’s
financed product, preferably assets with the then-current lowest yielding performance.)
Equivalent Yield – Paul Smith
Paul’s company makes interest
payments for the Entaire Program of
approximately $40,500 annually.
If the company were to distribute this
amount to Paul directly, he would have to
pay income tax at 35%, leaving him with
$26,325 per year to invest.
Paul’s investment of $26,325 per year for 13 years
would have to earn an annual rate of return of 19.26%
in order to provide the same annual income of $115,957
for 25 years.
Entaire’s Value Proposition
• Provides Alternative to Traditional
Retirement Plans
• Allows Catching up on Retirement Planning
• Provides Asset Protection Opportunities
Not for use with the public - for education and training purposes only
Q&A
Not for use with the public - for education and training purposes only
The Next Step
For more information,
Jon Scaman
678-218-1225
[email protected]
www.financedplanning.com