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Business and Estate
ADVISER
A Publication of Business & Estate Advisers, Inc.

VOL. 18, NO. 1WAYZATA, MINNESOTA Spring 2003

Wisconsin Office: 738 N. Wilson Avenue, Rice Lake, WI
Wisconsin Office: 738 N. Wilson Avenue, Rice Lake, WI

Wisconsin Office Opening in Summer…
By E. Dennis Zahrbock, CFP

The above picture is our new Rice Lake Office. We know it doesn’t look too impressive in this rendition but by the time we open it will be totally restored to it’s original splendor.

Due to the significant demand for our services in Northwest Wisconsin we felt it prudent to open a permanent office. We located this building last summer, put in an offer but upon Title Search found problems were present. In December we purchased the building at a Sheriff’s auction on the steps of the Barron County Courthouse. Interior remodeling is currently underway with exterior redo, landscaping and parking added as soon as the weather allows. Our Wisconsin address is 738 N. Wilson Avenue, Rice Lake, Wisconsin 54868. Our P.O. Box is 379 and our phone number is 715- 434-0440.

Major Change at Business & Estate…

As most of our readers now know, we’ve changed our Securities Business relationship. In February we moved our registration (brokerage licenses) from ValMark Securities to ValMark Securities. Those of you that have gone through the change know that it involved a lot of paperwork so I’m sure you’re wondering why we made the move and what benefits it will provide.

Well, we made the move to improve our services to our customer base by affiliating with an “elite” securities firm. ValMark has limited its registered associates (brokers) to the top end of the Insurance/Financial Industry. We are honored to have been asked to associate with this great firm.

We chose them over at least a dozen others for three reasons: 1) As registered representatives we are required to “comply” with SEC and NASD rules. Some of these rules are “black and white” and some are “interpretive”. All firms strickly enforce the “black and white” side and on the other hand “write their own rules” for the “interpretive side”. The larger the firm the more restrictive the “interpretive side” becomes as they must establish rules based on the lowest common demoninator (the raw recruit). On the other hand a smaller firm like ValMark pre-selects established professionals and can thus be somewhat less restrictive on the “interpretive side”. This allows us to continue to operate on an independent basis and provide services to our customer base in the way we feel is best. 2) Since ValMark only selects seasoned professionals (and I might add some of the best known individuals in the industry) we gain the opportunity to rub shoulders with these other pros. We see this as a way to gain new and valuable ideas that we can then share with our clientele. 3) ValMark clears its stock trades through RBC Dain Rauscher. Since we headquarter in Minneapolis and RBC Dain Rauscher headquarters in Minneapolis, we felt this “midwest access and attitude” would greatly benefit our clients.

As most of you also know we have preferred to use General American Life as our preferred Life Insurance Carrier for many years. Our reasoning was we could have a great deal of “clout” and thus get the job done for our clients. This isn’t going to change but through ValMark we are provided “instand clout” to several more major insurers. Minnesota Life, ManuLife, Mass Mutual, Jefferson Pilot, First Colony to name a few! This will allow more options when they are best for our clients.

We are excited about the opportunities ValMark brings to our entire operation and feel it will propel us into the next level of financial services. A level that is dreamed about by many but will become reality for our family of clients.

And soon the long awaited money will arrive…

Finally, after over three years, the money each General American policyholder is due is to be paid out. The original buyout (MetLife buying General American) was for 1.2 billion with potential contingencies! The 1.2 billion has now grown to about 1.4 billion but contingent claims are in the .2 to .3 billion range. It now appears that 1 billion will be paid out in the summer of 2003 with the remaining .1 to .2 billion to be paid at a future date. We are told that 305,000 policyholders will share in the payout. We are further told that approximately 65% will receive $1,000 or less, 25% between $1,000 and $5,000, 9.8% receiving between $5,000 and $100,000 and .2% over $100,000! This money is being paid to policyholders as the “old” General American was a policyholder owned company and the owners must be paid! Even though policyholders will receive this one billion plus in dollars it does not change the values of their policies. This is a once in a lifetime benefit and benefits those “that were the right policy owners at the right time”!

E. Dennis Zahrbock, CFP

WHAT'S HAPPENING?

By E. Dennis Zahrbock, CFP

November and December brought warm weather and no snow to Minnesota and Northern Wisconsin. This caused little or no use for the John Deere snow removal equipment. As most of you know this was a sad time for E. Dennis…..he felt as though his tractor was rusting in place!



My sister Mona’s cancer has gotten worse. She’s only 53 years old and now has colon, liver and bone cancer. She’s doing the best that she can but in her words knows she has the “death sentence.” She’s an ordained Lutheran Minister and is very comfortable with her future but those of us left behind will miss her dearly.



Daughter Rachael is currently in Costa Rica at a 4-month “Spanish Language” school. Her goal is to become even more fluent in Spanish. This will greatly assist in her work with the Colorado Christian School where she is one of two Spanish-speaking social workers. And, to top it off, she just received word that she is the recipient of a $10,000 Scholarship toward her Masters degree. Now let’s hope that the University of Colorado accepts her into the program.



And good news from daughter Stephanie and son-in-law Greg. We’re going to be grandparents in June to a second grandson. That makes the score two and two!



In January we hosted the second annual Jamaica Chili Open out in front of our Lake Home. We planted over 65 Christmas Trees and created two nine-hole courses. The day was a financial success, raising over $5,000 for Mission Jamaica. Our actual Mission Jamaica Sixth Trip took place in mid-February with contact made with the Jamaica Life Underwriters. We’re now hoping to get the MDRT Foundation involved in an International Service project.



Steve has successfully completed 3 classes for his CFP certification. He has only 2 left to complete before he sits for the final test. Sarah will complete her last test for her CLU certification in June! She will have just as many letters as Dennis. Way to go you two!

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BULLETIN BOARD OF CURRENT EVENTS

JANUARY 2003
E. Dennis spent five days in Las Vegas (first time for EDZ in the city of lights) attending the annual meeting of the International Forum. Late January found a quick trip to Tampa for a Committee meeting of the Global Gift Fund attached to the MDRT Foundation.

FEBRUARY 2003
Early February found the annual trip to St. Louis for the General American product line. Dennis also conducted a one day educational seminar for the field associates of Sons of Norway Fraternal organization. Mid-February found Dennis and Sue in Jamaica for Mission Jamaica project six.

MARCH 2003
March finds Sarah and Dennis doing three all day sessions on the “Nuts & Bolts of 401(k) Plans.” One each in St. Cloud, Minneapolis, and Rochester. Lorman Educational Services sponsor the events and Dennis and Sarah are the guest lecturers. Steve and Lori will spend some time in Palm Springs for some R & R. In late March, E. Dennis and Sue will spend 10-days in Palm Springs.

APRIL 2003
Dennis and five of the six members of his National Study group will meet in Palm Springs for a day. Sarah and Darvin will head to Deadwood for some R & R. Jules and Lisa will attend the School of Excellence for three days in Cleveland with ValMark Securities. Later in April, Dennis and Sue will fly to Missouri to spend a weekend with long time friends Ron and Carol Hollis.

MAY 2003
Don’t forget to register for Skip-A-Day XIX! Your invitation is enclosed. Business & Estate will be sponsoring Jules in her annual Race for the Cure Breast Cancer 6 mile run!

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Newest Advisory Board Members
Kris Maser
KRIS MASER, Partner/Attorney -
Maser & Amundson P.A.

Q. How did you first become acquainted with Business & Estate Advisers? Through a mutual acquaintance.

Q. During your association, what has Business & Estate Advisers done for you? Expanded my contacts with competent caring business professionals, increased my business base and opened my eyes to new friendships.

Q. What has your service on the Advisory Board meant to you? Enables me to step outside my role as a business manager and lawyer and provide input to another business.

Q. What topics would you like to see added to our Agendas? Business generation in a down market.

Q. What, in your opinion, makes Business & Estate Advisers different from other financial services firms? The personal service.

STELLA AWARDS
  • Kathleen Robertson of Austin, Texas was awarded $780,000 by a jury of her peers after breaking her ankle tripping over a toddler who was running inside a furniture store. The owners of the store were understandably surprised at the verdict, considering the misbehaving, little toddler was Ms. Robertson’s son.
  • A Philadelphia restaurant was ordered to pay Amber Carson of Lancaster, Pennsylvania, $113,500 after she slipped on a soft drink and broke her coccyx (tailbone). The beverage was on the floor because Ms. Carson had thrown it at her boyfriend 30 seconds earlier during an argument.
  • Nineteen-year-old Carl Truman of Los Angeles won $74,000 and medical expenses when his neighbor ran over his hand with a Honda Accord. Mr. Truman apparently didn’t notice there was someone at the wheel of the car when he was trying to steal his neighbor’s hubcaps.
  • This year’s favorite could easily be Mr. Merv Grazinski of Oklahoma City, Oklahoma. Mr. Grazinski purchased a brand new 32-foot Winnebago motor home. On his first trip, having driven onto the freeway, he set the cruise control at 70 mph and calmly left the drivers seat to go into the back and make himself a cup of coffee. Not surprisingly, the R.V. left the freeway, crashed and overturned. Mr. Grazinski sued Winnegabo for not advising him in the owner’s manual that he couldn’t actually do this. The jury awarded him $1,750,000 plus a new motor home. The company actually changed their manual on the basis of this suit, just in case there were any other complete morons buying their recreation vehicles.
Skip-A-Day XIX
Don’t forget to send in your registration for Skip-A-Day XIX! Mark your calendars for May 19, 2003!
Business & Estate Adviser's
"Tips for Teens"

Volume 8 Issue 1

Edited and Revised by Business & Estate Advisers, Inc. as an insert to our newsletter
By: Sarah K. Kaelberer, CFP, ChFC

In the last edition, we likened investing to baking a cake. Here I will take that one step further. I will give you the actual ingredients used for the various “flavors”.

Remember, to get a cake that is better than a Twinkie, you need to have the right ingredients and you need to let it bake. Investing is just like this. You need to get the right mix of ingredients (cash, stocks, bonds, mutual funds, real estate, etc.) and based on the return (cake) you want and the time (bake time) you have, you and your advisor can select the appropriate investments (ingredients). Let’s cover the five general investment objectives from least risky to most risky.

But before we embark on this, let’s establish a few general rules. Why would an investor take more risk? To earn more! What is needed when more risk is taken to increase the probability that one will earn more? More time! So, to earn more, one would agree to take risk. In doing so, an investor must understand that additional time is required. Risk + Appropriate Time generally equals Higher Rewards.

Please keep in mind that as the various time horizons are detailed below, this does not suggest that an investor with a certain period of time invest only in that category. Even those already retired often have some money they will not need for 10 – 15 years. So, in most portfolios, there is room and reason for a range of investments within each category. This will further depend on how much the client wants to earn and how much risk is acceptable.

Without further ado, here are the “flavors”…

FIXED INVESTMENTS
Fixed Investments will buy long term debt obligations, such as mortgages and corporate and government bonds. These investments often commit to a minimum interest rate and may credit at a current rate that is the same or slightly higher than the minimum rate. Bake time on these is 0 – 5 years. Now, that does not mean there is no place for these in a 30-year old’s portfolio (everyone can use a good foundation), it simply means if you know you need this money in the next 5 years, this is the only place you will have comfort knowing it will not be worth less than what you invested.

BALANCED INVESTMENTS
Balanced Investments usually buy between ¼ and ½ bonds and ½ to ¾ in stocks. When the stock market goes up, the bond market goes down. This inverse relationship means this investment will not take as much risk as one in all stocks as it is “playing both sides”. In an investment such as this, historically a time range of 5 – 7 years gives an investor a pretty good chance (over 90%) that they could earn more than they would in a fixed investment over that same time period.

EQUITY INVESTMENTS
Equity Investments usually buy all stocks, and those of large companies. A good mix will include both value and growth oriented stocks or mutual funds. Without any bonds, there is more risk. Remember, more risk needs more time. Here our bake time increases to 8 – 10 years. Historically, this time period has shown that investors in the Equity markets have outperformed those in many fixed investments.

AGGRESSIVE EQUITY INVESTMENTS
Aggressive Equity Investments will buy all stocks as well. Only here the stocks will be of mid- and small-sized companies. Keep in mind that about 98% of all new companies are out of business within 2 years. Because these funds focus on the smaller and newer companies, especially those looking to develop new products or services, it stands to reason they do indeed take more risk. Provided you have another few years to bake, the risk could be worth the return. Here our bake time is increased to 10 – 12 years.

INTERNATIONAL INVESTMENTS
Investing itself bears risk. Now add currency rate fluctu-ations and political environments to the already imminent risk of stocks and bonds, and you have international investments. International investments will buy stocks and bonds in foreign countries. Worldwide investments have the right to buy those in the U.S. in addition to those overseas. These are typically referred to as Global Investments. In either event, adding more variables adds more risk. Adding more risk, we need to add more time. International or Global investing takes an investor with 12 – 15 years.


Today's Quiz:

  1. When you need the money is not an important factor in investment decisions. T F
  2. Balanced Investments buy ¼ to ½ in bond investments. T F
  3. Equity Investments should buy only growth-oriented stocks/funds. T F
  4. Aggressive Equity Investments are more risky than Balanced Investments. T F
  5. International Investments are a great way to make a quick buck! T F

ALL CORRECT ANSWERS WILL RECEIVE A PRIZE! PLEASE MAIL OR FAX RESPONSES TO P.0. Box 679, WAYZATA, MN 55391 OR FAX (952) 475-0816.

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Business and Estate
ADVISER
Business & Estate Adviser, published periodically, is composed on a personal computer utilizing Microsoft Word 2000 and Times New Roman typeface. Camera-ready copy is generated on a Hewlett-Packard LaserJet 4050 printer. Gray-shades and printing by Wallace Carlson Company, Minnetonka, Minnesota. For additional copies or information, please contact Jule Kingren at (952) 475-0440. Copyright © 1990-2003 Business & Estate Advisers, Inc. All rights reserved.

BUSINESS & ESTATE ADVISERS, INC.
www.business-estate.com
282 East Wayzata Boulevard
Wayzata, MN 55391
(952) 475-0440
738 Wilson Avenue
Rice Lake, WI 54868
(715) 434-0440

Fee Based planning offered through B&E Investment Advisers, Inc.
Securities offered through ValMark Securities, Inc., Member NASD/SIPC www.NASD.com
130 Springside Drive Suite 300 Akron, Ohio 44333-2431 1.800.765.5201
Business & Estate Advisers, Inc and B&E Investment Advisers, Inc. are separate entities from ValMark Securities, Inc.

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