• Follow Essays, Opinions and Curated News for the Health Economics, Finance & Business Management Space on WordPress.com
  • Member Statistics

    • 723,143 Colleagues-to-Date [Sponsored by a generous R&D grant from iMBA, Inc.]
  • Our ME-P Channels

  • ME-P Archives Silo [2006 – 2018]

  • CERTIFIED MEDICAL PLANNER® program

    New "Self-Directed" Study Option SinceJanuary 1st, 2018
  • Dr. David Marcinko [Publisher Emeritus]

    untitled

    As a Distinguished University Professor and Endowed Department Chairman, Dr. David Edward Marcinko MBBS DPM MBA MEd BSc CMP® was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; Oglethorpe University and Atlanta Hospital & Medical Center in GA; and Aachen City University Hospital, Koln-Germany. He is one of the most innovative global thought leaders in health care entrepreneurship today.

    Professor Marcinko was a board certified physician, surgical fellow, hospital medical staff Vice President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010, by PM magazine. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics and trade publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Dr. Marcinko is also an early-stage investor with a focus on finance, economics and business IT. He was on the initial team for Physicians-Nexus®, 1st. Global Financial Advisors and Physician Services Inc; and as a mentor for Deloitte-Touche, Accenture and other start-ups in Silicon Valley, CA.

    As a licensed life and health insurance agent, RIA – SEC registered representative, Dr. Marcinko was Founding Dean of the fiduciary niche focused CERTIFIED MEDICAL PLANNER® online chartered designation education program; as well as Chief Editor of the HEALTH DICTIONARY SERIES® Wiki Project.

    Dr. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”. Presently, Marcinko is “ex-officio” and R&D Scholar-on-Sabbatical for iMBA, Inc.

    entrepreneur

    Frontal_lobe_animation

  • PodiatryPrep.org


    BOARD CERTIFICATION EXAM STUDY GUIDES
    Lower Extremity Trauma
    [Click on Image to Enlarge]

  • Most Recent ME-Ps

  • ME-P Free Adverting Sales Consultation

    The “Medical Executive-Post” is about connecting doctors, health care executives and modern consulting advisors. It’s about free-enterprise, business, practice, policy, personal financial planning and wealth building capitalism. We have an attitude that’s independent, outspoken, intelligent and so Next-Gen; often edgy, usually controversial. And, our consultants “got fly”, just like U. Read it! Write it! Post it! “Medical Executive-Post”. Call or email us for your FREE advertising and sales consultation TODAY [770.448.0769]

    Product Details

    Product Details

  • Medical & Surgical e-Consent Forms

    ePodiatryConsentForms.com
  • Hope Hetico RN MS [Managing Editor]

    Prof. Hetico

     

     

     

     

    ME-P SYNDICATIONS:
    WSJ.com,
    CNN.com,
    Forbes.com,
    WashingtonPost.com,
    BusinessWeek.com,
    USNews.com, Reuters.com,
    TimeWarnerCable.com,
    e-How.com,
    News Alloy.com,
    and Congress.org

    Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)

    Product Details

    Product Details

    Product Details

  • iMBA White Papers

    Customized Industry Topics [$1,500 unlimited corporate license]January 1st, 2018
    Medical Clinic Valuations * Endowment Fund Management * Health Capital Formation * Investment Policy Statement Analysis * Provider Contracting & Negotiations * Marketplace Competition * Revenue Cycle Enhancements; and more! HEALTHCARE FINANCIAL INDUSTRIAL COMPLEX
  • Ann Miller RN MHA [Executive-Director]

    iMBA VIRTUAL OFFICES [1.770.448.0769] Atlanta, GA.
    Location doesn't matter. We welcome new long-distance clients and colleagues.

  • ME-P Publishing

  • SEEKING INDUSTRY PARTNERS?

    If you want the opportunity to work with leading health care industry insiders, innovators and watchers, the “ME-P” may be right for you? We are unbiased and operate at the nexus of theoretical and applied R&D. Collaborate with us and you’ll put your brand in front of a smart & tightly focused demographic; one at the forefront of our emerging healthcare free marketplace of informed and professional “movers and shakers.” Our Ad Rate Card is available upon request [770-448-0769].

  • Reader Comments, Quips, Opinions, News & Updates

  • Start-Up Advice for Businesses, DRs and Entrepreneurs

    ImageProxy “Providing Management, Financial and Business Solutions for Modernity”
  • Up-Trending ME-Ps

  • Capitalism and Free Enterprise Advocacy

    Whether you’re a mature CXO, physician or start-up entrepreneur in need of management, financial, HR or business planning information on free markets and competition, the "Medical Executive-Post” is the online place to meet for Capitalism 2.0 collaboration. Support our online development, and advance our onground research initiatives in free market economics, as we seek to showcase the brightest Next-Gen minds. ******************************************************************** THE ME-P DISCLAIMER: Posts, comments and all opinions do not necessarily represent iMBA, Inc. Copyright © 2006 to-date.
  • OIG Fraud Warnings

    Beware of health insurance marketplace scams OIG's Most Wanted Fugitives at oig.hhs.gov
  • Advertisements

The Total Return Trust

Uniform Prudent Investment Standards

ho-journal11

By Dr. David Edward Marcinko; MBA, CMP™

By Tom Muldowney; MSFS, CFP®, AIF®, CMP™

By Hope Rachel Hetico; RN, MHA, CPHQ™, CMP™

The physician-investor dichotomy, income now versus growth for later, is not unique. Trusts; that have the potential to span decades, usually place the interests of the income beneficiary at odds with the remaindermen.

Conflicting Goals

Historically, trustees invested these irrevocable trust assets in bonds so as to generate the necessary income for the income beneficiary.  But this led to conflicts…investing in bonds provides little growth of either the investment asset base or the income generated thereon.  Interestingly, this has also placed the interests of the remaindermen at odds not only with the income beneficiary but with the trustees who have been charged with the duty of stewarding these assets for the benefit of both generations.  This conflict of the generations has led to some surprising results both in practice and in the courts.

“Total Return Trust”

Income beneficiaries want current cash flow, remaindermen want growth and trustees want to minimize the exposure to liability.  Notice the subtle difference … rather than “income” (dividends and interest) income beneficiaries want cash flow. They generally do not care about the source from which the cash flow was generated. Recognition of this subtle but important difference has led to the development of Uniform Prudent Investment Standards and the introduction of the “Total Return Trust.”

Uniform Prudent Investment Standards

The Uniform Prudent Investment Standards (agreed upon by legislatures of all 50 states) identify that for a trustee to be a “prudent investor”, investments that are allocated across a broad spectrum of investment asset classes, provides the greatest protection from investment risk. But; because this allocation across a broad spectrum must – by definition – include stocks, the potential for income in its technical sense (interest and dividends) must be reduced. The use of a “Total Return Trust” addresses and solves this problem.

Combination of Assets

A total return trust thus allows a trustee to manage a portfolio of assets commensurate only with the volatility risk that the trustee identifies is appropriate for the trust.  This gives the trustee the ability to invest in a combination of assets that include stocks, bonds and other investment assets.  The purpose of the total return trust includes safety and protection of the assets with a reasonable growth rate, from which a periodic ‘unitrust’ cash flow may be withdrawn for the income beneficiary.  Unitrust cash flow is based on the recognition that a stated percentage withdrawal from trust corpus, each year, may be made to the income beneficiary without regards to the source of that cash flow, whether it be from income, or from corpus. The Unitrust cash flow recognizes that from time to time volatility in the equity marketplace will cause the trust corpus to fluctuate, sometime below that amount that was originally invested.

Cash Flows

Using this technique, as long as assets of the trust portfolio grow and the long term cash flow withdrawal rate is less than the long term growth rate, several benefits to all of the parties will inure: Cash flow to the income beneficiary will be maintained; cash flow to the income beneficiary will  increase as the asset base increases;  asset growth will satisfy the needs of the remaindermen; the trustee will be secure in knowing that he has satisfied his fiduciary duty to serve both the income beneficiary and the remaindermen.  A substantial side benefit for the income beneficiary is that the cash flow will include not only income (dividends and interest) but will also include distributions of long term capital gains (which enjoy a lower annual tax rate.)

MORE:

https://www.crcpress.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Advertisements

2 Responses

  1. With the recent downturn and turbulence in the stock market, questions arise regarding the wisdom of maintaining a diversified portfolio which includes stocks in a trust whose primary purpose is to provide income.

    After all, the crash of 2008 to 2009 was the worst decline since the 1930’s. The last decade has been called the “lost decade” for investors, as the S&P 500 was actually down 9.1% for the period – the worst market since at least the 1830’s. So what is an investor – or a trustee – to do? A common reaction is that a “less risky” strategy using income-producing bonds is more prudent. But there are important facts to consider:

    A well-balanced portfolio including 60% to 70% equities provided an annualized return of 5 to 6% for this “lost decade”.

    Broad global diversification greatly enhanced returns. Although the S&P 500 was under water for the decade, other asset classes such as international stocks, emerging markets, and even real estate had positive returns.

    Diversifying with both bonds and stocks gives the investor opportunities to rebalance (buy low and sell high) when there is turbulence in the market. Studies show that a disciplined rebalancing strategy adds 0.5% to 0.9% extra annualized return over an extended period of time.

    Income from bonds is currently very low – in the range of 2 to 3%. Moreover, there is a risk that the value of the bonds will decline in the future as interest rates inevitably rise.

    Stocks are cheap. PE ratios and other measures show that the prices are low by historical standards. Moreover, decades with below-average stock returns are most often followed by decades of above-average returns. Stocks may be less risky as an asset class than bonds at this point in time!

    Allocating too much of a portfolio to fixed income investments trades one type of risk for another. The volatility may be less, but inflation risk is higher. With current patterns of government spending and borrowing, inflation is likely to arise at some point in the next few years.

    A total return trust with a balanced approach, broad global diversification, and disciplined rebalancing still offers the best opportunity for both the beneficiary and the remaindermen to meet their goals.

    Brian J. Knabe, MD
    Savant Capital Management, Inc®.
    190 Buckley Drive
    Rockford, IL 61107
    Tel 815-227-0300
    Fax 815-226-2195
    bknabe@savantcapital.com

    Like

  2. Dr. Knabe

    Fine and well but are we heading toward a double-dip recession?

    Nancy RN

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

%d bloggers like this: