President’s Message – August 5th, 2014

I’ve been contemplating our membership statistics; one in particular points out a great opportunity. Over 80% of our members are “Family” businesses while less than 20% are “Entrepreneurs”, like myself.  Why is that?  Could it just be our name?  Could it be that is our intent?  Or could it be that we just don’t think about marketing our great opportunity to that group of entrepreneurial business owners as aggressively as we do to family businesses? In thinking about the people you’d like to have join us, do some of those folks come to mind? If so, let me know and I’ll be very happy to talk with them.

It is my second month in office and I already have another honor. We are very pleased and excited to announce Prism Insights as our newest Strategic Partner focusing on marketing. Patty Rioux is President. Thanks to the CFBC team who worked on the intricate process of finding, vetting, interviewing and choosing our new partner.  Welcome to the Prism team and thank you for your commitment to the CFBC.

My final thought for the month: I’m lamenting the disappearance of boredom.  What do you think when you see virtually everyone around you paying total attention to their smart phone?  Music, phone calls, texting, email, internet, games, etc.  When conversation stops, the phones come out. Sometimes they don’t even wait for the conversation to stop.  At a stop light yesterday, I observed nine people, some of them couples, standing at all four corners of this intersection.  ALL staring at their smart phones, not one of them engaged with the situation or the beautiful day.  You’ve all seen it, we’ve all done it.  At the crosswalk, at dinner, maybe church.  So what?  Well, it bothers me and I just realized why.  I suspect that no one really gets bored any more.  No one gets to say, “I have nothing to do, I’m frustrated and I wonder what I should do now.”  Maybe I’m saying that the skill and practice of thinking is being traded in, abandoned for iTunes.  No boredom, no thinking, no invention/creativity?  Is it concerning enough to do something about?  Maybe thinking isn’t so important?  What do you THINK?

“If you want to go fast, go alone.  If you want to go far, go together.  CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

Posted in News | Tagged , , , , , , , |

Taxpayer Identity Theft: Avoid Becoming a Victim

Each year, millions of consumers have their identities stolen.  Simple everyday transactions, such as applying for a credit card, writing a check, or using a credit card online or in a store provide opportunities for identity theft.  While we often hear of bank and credit card fraud as results of identity theft, taxpayer identity theft is unfortunately becoming more prevalent.

What is Taxpayer Identity Theft?  Typically, an identity thief uses a legitimate taxpayer’s identity to fraudulently file a tax return and claim a refund.  This is often done early in the filing season, as the thief is trying to gain access to your prepaid tax dollars before you can file a return.  You will generally be unaware that this has happened until you file your return later in the season and discover two returns have been filed using the same social security number.  If you electronically file your tax return, or have it electronically filed by a tax preparer, you will know within hours if this has occurred, as your return will be rejected and the reason will be duplication of social security numbers.

How does identity theft happen?  Thieves use both high-tech and simple methods to steal identities.  Some methods include:

  • Phishing – The act of sending an e-mail to a user and falsely claiming to be a legitimate company or organization in an attempt to trick the user into providing private information.  The e-mail may also lead victims to false websites that are used for identity theft.
  • Trojans and spyware – These are programs that can attach to your computer when downloading software from the internet or when clicking on a link from a malicious e-mail.
  • Dumpster diving – Thieves sort through garbage cans looking for personal information.
  • Stealing your wallets or purses containing identification cards, credit cards and bank information.
  • Taking personal information you share or post on the Internet.
  • Completing a “change of address” form to redirect your mail.

How can we prevent identity theft?  While it is impossible to eliminate the possibility of becoming a victim, we can take steps to minimize the chances.  Some steps include:

  • Do not carry your social security number or card in your wallet or purse.
  • Don’t give your social security number to a business or anyone else just because they ask; always challenge the request.
  • Protect financial information in your purse or wallet while at work.
  • Check your credit report every 12 months.  Every U.S. resident can get one free report from each of the three major credit reporting bureaus per year.
  • Shred bills or other documents that provide personal information.
  • Password protect personal documents when sending through e-mail.
  • Use a password on your smartphone.

If you believe you’re a victim of identity theft

  • If you have not yet received an IRS notice, contact the IRS Identity Protection Specialized Unit at

800-908-4490 immediately so that they can take steps to secure your tax account and match your social security number.

  • If you receive a notice from the IRS that indicates fraudulent activity, respond immediately to the number on the notice.
  • Fill out Form 13049, Identity Theft Affidavit.  This affidavit requires that you also file a report with the local police and obtain a copy of the report for your records.
  • Report incidents of identity theft to the Federal Trade Commission at the FTC Identity Theft Hotline at 877-438-4338.
  • Contact the fraud departments of the three major credit bureaus

o    Equifax – 800-525-6285

o    Experian – 888-397-3742

o    TransUnion – 800-680-7289

  • Report misuse of your Social Security number to the Social Security Administration

Be vigilant!  The IRS does not initiate contact with taxpayers by email, telephone or social media tools to request personal or financial information.  The Chicagoland area in particular has reported a large uptake  in fake IRS calls and emails.  Remember to always guard your personal information and trust your instincts.

We hope this information is helpful.  If you’d like to discuss this information, or feel you have been a victim of identity theft and would like our assistance in working with the IRS, please contact Karen Snodgrass or Deanna Salo from Cray, Kaiser Ltd. (630-953-4900), a strategic partner with the Chicago Family Business Council.


Karen Snodgrass CPA
Cray, Kaiser Ltd.

1901 S. Meyers Road
Suite 230
Oakbrook Terrace, IL 60181
Phone: (630) 953-4900 x248
Fax: (630) 953-4905


Deanna L. Salo CPA
Cray, Kaiser Ltd

1901 S. Meyers Road
Suite 230
Oakbrok Terrace, IL 60181
Phone: (630) 953-4900 X210
Fax: (630) 953-4905

Posted in Cray, Kaiser Ltd. | Tagged , , |

Traditional Fixed Term Borrowing vs “Synthetic Fixed Rate” Term Borrowing

What is “Synthetic Fixed Rate Borrowing”?: A creative way of obtaining fixed rate borrowing at desired terms with lower overall fixed rate costs.  Rather than borrowing with a traditional fixed rate term note, commercial borrowers can borrower on a VARIABLE RATE basis and then use an INTEREST RATE SWAP to fix the rate.

Among the most popular of derivative hedging instruments, interest rate swaps are used by corporations, government entities, and financial institutions to manage interest rate risk. Swaps can be applied to a wide range of hedging needs and can be easily tailored to match a specific risk profile. Their simplicity and flexibility have made them the workhorse of the risk manager’s toolbox.

What is a “swap”?: A swap is an agreement to exchange interest payments for a stated time period (the borrower pays a fixed rate of interest, the bank a floating rate). The swap agreement is a separate contract from the loan and its terms are customized to meet the borrower’s specific risk management objectives (terms include start and end dates, settlement frequency, the notional amount on which swap payments are based, and reference rates on which swap payments are determined.

How is it used?: Generally commercial borrowers will use the swap agreement to hedge against rising interest rates and reduce borrowing costs. Among other applications, swaps give commercial borrowers the ability to:

  1. convert floating rate debt to fixed
  2. cap a floating rate
  3. lock in an attractive interest rate in advance of a future funding

Benefits of the “Synthetic Fixed Rate” strategy: The primary benefits to borrowers of the synthetic fixed-rate loan compared to a traditional fixed-rate loan are:

  • Lower fixed rate. Variable-rate borrowing with a swap frequently costs less than a traditional fixed-rate loan.
  • Longer term: The synthetic fixed rate strategy allows banks to commit to longer terms vs the traditional term note (e.g. 10 years vs 5 years)
  • Flexible structuring. Borrowers can choose to fix a portion of their debt (e.g. fix 80% of borrowings, float on the other 20%)
  • Two way prepayment provision. Prepaying a traditional fixed-rate loan often requires paying a yield maintenance prepayment penalty, which can be significant even when market interest rates do not change. Prepaying variable-rate debt does not involve a material yield maintenance prepayment penalty, but prepayment may require a swap termination payment, which can be either a cost or a benefit to the borrower based on market rates. Some borrowers prefer to take swap termination risk since it relates to market interest rate changes without an extra payment to maintain a yield.

    Swap rates higher = benefit to the borrower
    Swap rates lower = cost to the borrower

Common Swap Structures
The most basic swap is an exchange of floating-rate interest payments for fixed-rate payments. For example, a company which has cost-effective floating rate bank debt can use its floating rate borrowing power to create fixed rate debt. To do so the company enters into a swap to the target maturity (e.g. five years), agreeing to exchange floating-rate payments based on LIBOR for a five year fixed rate. Through the swap the company avoids the costs of issuing long-term debt, gains the protection of a fixed rate, and retains the cost advantage its bank debt enjoys.

Other Typical Swap Applications Include:

Fixed-for-floating swaps which allow a company (generally larger corporations that issue bonds or private placements) to lock in liquidity through issuing long-term debt, but to pay a floating rate. The swap positions the company to gain from a decline in short-term interest rates.

Forward-starting swaps to lock in the rate today for an asset or liability to be created or sold in the future. A company that plans to borrow  at a future date can use a forward-starting swap to hedge the future funding. Forward-starting swaps allow companies to take advantage of favorable rates when the market offers them – not just when coming to market. Locking in the forward financing costs or investment yields allow the hedger to accurately budget cash flows and expenses related to future projects.

Swaps with imbedded options to fit unusual financing structures. For example, borrower may anticipate possibility of an early debt repayment and may choose to include a “call feature” into the swap.

Other swap structures can be created to meet different needs. This flexibility is why many companies find interest rate swaps are an invaluable tool in managing the financial balance sheet.

Posted in Uncategorized |

President’s Message – July 3, 2014

I’m honored to have this opportunity to share my thoughts with you. Today, our CFBC is in great condition. Membership is growing  as planned. New forums are showing great strength and commitment. Satisfaction and excitement with our events is continuing to rise. Our financial condition and strength is healthy. Appreciation is due to our wonderful staff, all the folks that have chosen to be involved in our committees and to our Strategic Partners. We are all moving in the same direction.

Membership-driven and this strong after 20 years is nothing less than a glowing testament to the fundamentals that we’ve all adopted. If there is to be a time for celebration, it’s now. Next week you’ll be receiving a few messages from the CFBC containing details about our plans for this anniversary year. I hope it gives you as much pride and good feeling as it does me. One of the jewels that we’ve acquired is the Microsite specifically for this year.  It’s loaded with our history and strong evidence of our resolve to continue improving and understanding. It’s a joy, please take advantage of it. The microsite can be viewed here.

You’ve been learning about our Celebration Gala to be held on October 10, 2014. Please make plans to share that evening with us all. What a great way to express ourselves and kick off the holiday season with a bang! This celebration party is self-funded. Other than the time our teams are putting into it no CFBC funds are being used.

My Dad told me the best way to make and keep a friend is to ask them for help, for a favor. I believe that. So I’m asking each of you this favor. Two or three MINUTES of your thinking. Don’t you agree that there is no one better to know who should be members of CFBC than you? The power of our forums and the positive life changing things that happen to us all- we each know them. Who of your associates should be a part of this? Who do you know that should come and share their experiences with us? We’ve developed a program to help prospective members understand what we do, to answer the single biggest question that they rightly have: “What’s forum all about, what happens, how does it work?”. The “We’re In This Together (WITT)” programs are working well for this. Through these programs, qualified candidates are getting a solid vision of just how forum works and, from that vision, have been able to join us more quickly  than our previous pace.

We need your involvement in WITT.  It is a panel discussion evening. Three or four of us are interviewed by Deanna Salo in a forum-like way. We really want you to come to be on that panel. Don’t be selfish, share!  Please consider it and if you will, send me a note.

It’s already an exciting time, the rest of this year is poised to be fantastic. I’m honored and very lucky to be in this position  this year. Thank you for giving me this opportunity to serve. I couldn’t be more proud. I’ve adopted this phrase when thinking about us:

“If you want to go fast, go alone. If you want to go far, go together. CFBC, 20 Years Deep”

Bob Carmody President Signature 2014

Posted in News |

Top 5 Things That Are Bugging Your Employees And How They Directly Affect Your Retention Rate

Are you interested in discovering your employee’s most serious complaints?  Knowing what makes employees unhappy is half the battle when you think about employee retention, work satisfaction, morale, and motivation.

Organizational issues such as training time and investment; lost knowledge; insecure coworkers that are left behind and an expensive replacement candidate search is costly. Various estimates suggest that losing a middle manager costs an organization up to 100% – 200% of the individual’s salary.

Employee retention is critically important for a second reason.  Over the next few years while Baby Boomers (ages 40 to 58) retire, the upcoming Generation X population numbers 44 million people (ages 25-34), compared to 76 million Baby Boomers available for work.  Simply stated:  there are going to be a lot fewer people to work in an already challenging talent landscape.

From my experience I have learned that the list below are the top 5 reasons why employees leave companies or causes them to peer over the fence to see if the grass is really greener.

  1. Lack of Clarity from Management – People leave managers more often than they leave companies.  It is not enough that the manager is well liked or a nice person.  Managers need to set clear expectations for each employee. There has to be clarity about job expectations, earning potential, performance feedback, and a framework which the employee perceives they can succeed.  When all these items are in place, it gives employees hope for a brighter future and a desire to do more for the company.
  1. Cultures That Do Not Encourage Open and Honest Communication – Does your organization solicit ideas and provide an environment in which people are comfortable providing feedback?  If so, employees will offer up ideas, feel free to criticize and commit to continuous improvement.  If not, they bite their tongues or find themselves constantly in trouble – until they leave. 
  1. Internal Pay Equity – Employees are quite concerned about pay compression, the differential in pay between new and longer term employees.  In organizations, with the average annual pay increase for employees around 3%-4%, employees perceive that newcomers are paid better – and often they are because the renewed hiring boom is making it increasingly more difficult to find great candidates and stay competitive.
  1. Mediocre Benefit Programs – Most employees feel their health insurance costs too much, especially prescription drug programs, when employers pass part of the rising costs to employees.  That is when health/dental insurance, retirement and Paid Time Off plans can make a difference to an employee when they are considering the pros and cons of staying at your company.
  1. Human Resource Department Response to Employees – HR Departments need to be more responsive to employee questions and concerns. In many companies, HR is perceived as policy making, policing arm of management.  In forward thinking HR departments, responsiveness to employees needs is one of their cornerstones which can make or break someone’s career.

The desire to leave, or the temptation to do so, is at the heart of the problem. You can pay people to do a piece of the work but that does not automatically buy passion or loyalty.

A PowerPoint presentation in the boardroom will not remove the problem of people retention.  Success has to do more with the each line manager and how they engage and develop their employees.  This attitude must start at the very top of the organization and be projected and persistently pursued.

Ultimately, these issues are not that complex and can be overcome.  During my daily work as an executive coach I am convinced that there is huge potential and great opportunities for every business leader to conquer these challenges.

Posted in Kiara |

President’s Message – May 6, 2014

I have been wondering what my life would have been like had I not joined the Family Business Council (now, CFBC) 18 years ago. I had been drafted into a 50-year-old business at the age of 44, with a young family and no prior business experience (I had been practicing poverty law and computerizing law offices.) My business day was then filled with learning to manage two distribution businesses and one manufacturing business. I was dealing with my family in a business situation, learning my own style of management, managing fifty people, dealing with supply chains, customers, vendors and banks. I needed help.

Had I not joined the Family Business Council I would have missed entering the atmosphere where new strangers trusted me with their business and personal information and issues in such a way as to encourage me to do the same. Had I gone to business school instead, I would have learned from books of general experience, rather than from people who were becoming friends, who reported their shared experiences and offered insights that books would never reveal.

At one point, my father asked why I was spending “so much money” on my FBC membership. When I explained the value of the peer groups, my ersatz board of directors, and the value of the presentations at the large group functions, he was satisfied with that answer. Other organizations were much more expensive and, most likely, I would have been forced to quit. Other organizations also saw turnover in their peer groups to the point where the lack of continuity would likely have moved me to quit. I think FBC was a strong fit.

At one point, most of the customers of one of our divisions were moving production to the Pacific Rim. It was devastating our business. Had I not been in the FBC, I would have drifted alone with only “stay the course” advice from our long-term trusted advisors. Sigma forum members met at my office ad hoc, asked questions, asked for reports, and then directed me to specific help to save the company. Without FBC, my company might have failed at that time and I would be back practicing law.

I have had a number of employee issues ranging from behavior problems to supply availability to customer service. Knowing how to listen, ask clarifying questions, share my experiences, set expectations, and respect the opinion of others has empowered me within my business. My employees enjoy our meetings. That carries over to their contact with our customers. Without FBC, my people (and I) would never have elevated our emotional intelligence. PDEI has also passed from me through my employees to their families as well. Without FBC, our interpersonal skill set would have been distracted, disorganized and dysfunctional.

I am a lucky man. And CFBC is one of the treasures in my lucky life.

JF - signature_cvent

Posted in Uncategorized | Tagged , |

Illinois’ Concealed Carry Act

Implications for Business Owners and Employers

While Illinois’ enactment of the Firearm Concealed Carry Act (“Act”) has important implications for business owners, and at first blush appears to offer them clear choices, a closer look reveals the Act does not provide a simple way for most business owners to prohibit the carrying of handguns within their shops, offices or other workplaces by their employees, customers and visitors.

We believe the rights of business owners and employers under the Act have been widely misinterpreted in the news media and by legal commentators, who have incorrectly made sweeping statements such as “businesses or (private employers) may prohibit firearms.”  In fact, the Act appears to give no rights to business owners who lease their spaces and is silent on the rights of employers to control whether their employees carry handguns while at work inside or outside the workplace.  We will explain the Act’s failure to address these issues, make some suggestions on how a business owner can take steps to make up for some of the Act’s deficiencies and offer some thoughts on how business owners can make decisions that carry legal weight and minimize liability.

Overview of the Act

The Act entitles an individual meeting certain qualifications to obtain a license to carry a loaded, concealed handgun.  A licensee is prohibited from knowingly carrying the handgun into certain clearly defined prohibited areas, namely: day-care and pre-school facilities; elementary and secondary schools; any venue under the temporary or permanent control of a college or university for any purpose; courthouses and other buildings or portions of buildings under the control of a unit of government; hospitals; public libraries; airports and other public transportation facilities; buses, trains and other public transportation conveyances; special events open to the public and public gatherings for which a governmental permit is required; property used for special events for which a special events liquor license has been issued; public playgrounds and parks; Cook County forest preserves; gaming facilities; professional sports arenas; amusement parks; zoos; museums; nuclear energy facilities and any areas where federal law prohibits firearms.  These prohibitions do not depend on whether the activity is being conducted on owned or leased property.  They are clear and apply to each category without qualification.

The Act requires the standardized 4-inch by 6-inch sign shown below that is prescribed by the Illinois State Police to be clearly and conspicuously posted at the entrance of a building, premises or real property specified as a prohibited area, unless the building or premises is a private residence.

Prescribed Sign - Illinois Concealed Carry Act







Rights of Private Property Owners and Tenants

In contrast to the clear definitions applicable to the prohibited areas described above, the single provision of the Act addressing the rights of private business owners cryptically states:

“The owner of private real property of any type may prohibit the carrying of concealed firearms on the property under his or her control.  The owner must post . . . [the standardized] sign [at the entrance of the building, premises or real property] . . . indicating that firearms are prohibited on the property, unless the property is a private residence.”

What does this language mean?  It gives the “owner” of the real estate the right to prohibit firearms on the property but also requires the property to be “under his or her control,” establishing a two-part test, ownership plus control.  The problem is that in a typical landlord/tenant situation, based on traditional legal principles of “possession” and premises liability, it’s the tenant, not the landlord, who is deemed to be “in control” of leased property.  Therefore, while the Act plainly states that the property owner is the only person empowered to impose the prohibition and post the sign, and implies business owners who lease their space have no rights at all, the two-part test strongly suggests that in the typical landlord/tenant situation neither the property owner nor the tenant has any rights under the Act without the cooperation of the other, which is a very impractical result.

This means that a business owner who leases a store, factory or office from which he or she wants to ban handguns must request in writing that the landlord post the required sign at the property entrance, so the posting is, in effect, the joint act of the “property owner” and the person in “control” of the property.  If the landlord is unwilling to post the sign, the business owner’s second -best choice is to get the landlord’s written “authorization” to the tenant to post the sign at the tenant’s entrance, so the posting comes as close to being the property owner’s own act as possible.  If a landlord rejects both of those options, a third option is for the tenant to post the sign on its own (since the Act does not prohibit unauthorized posting), understanding that the posting will probably not be enforceable under the Act if challenged.  Tenants choosing the third option should check their leases first to avoid a lease default, as many leases provide that posting any sign requires prior landlord approval.

One problem with the second-best option described above is that the single provision of the Act dealing with private property does not address whether one portion of a property can be designated as a prohibited area (e.g. an office suite in a high-rise tower or a store in a shopping center) when other portions of the property are not so designated.  Because other sections of the Act defining other prohibited areas use descriptions like “a building or portion of a building,” making it clear that the prohibition can apply to one portion of a building without the others, the Act’s private property provision makes no such distinction and leaves the question unanswered.

Can Employers Prohibit their Employees From Carrying Handguns While at Work?

The Act says nothing at all about the rights of employers to regulate employee conduct.  As shown in the discussion above, in dealing with private property, the Act refers only to property owners and persons in control of real estate, which are purely real estate law issues.  The Act does not address whether a private business employer as a term of employment may prohibit its employees from bringing handguns into the workplace or carrying them outside the workplace while conducting the employer’s business, which raises employment law issues as well as an employer’s common law liability for the acts of its employees when they act within the scope of their employment.

Does possession of a license to carry under the Act trump an employer’s well-established common law right to control lawful employee behavior in the workplace?  Unlike similar laws in other states, the Act is silent on this point and provides no guidance as to whether it alters an employer’s right to impose workplace controls on its employees.  We believe the rights of a licensee to carry a handgun under the Act will ultimately be ruled subordinate to the rights of employers to control working conditions and their employees’ conduct while on the job within or outside of the workplace, but we also believe the Act’s failure to deal with the issue explicitly will give rise to years of uncertainty and costly litigation between employers and employees before it is resolved, which is bad news for business owners.

Liability Risks of Allowing Concealed Carry

Unlike states such as Wisconsin, Illinois’ passage of the Act did not include an immunity provision to protect private property owners (and/or business owners) who decide to allow concealed carry in their premises. Property owners, employers and/or business owners who control the decision to permit concealed carry and decide to allow it face an increased risk of liability for, among other things, premises or workplace liability for bodily injury and wrongful death.  Therefore, regardless of whether a business owner favors or opposes concealed carry from a personal viewpoint, prohibiting firearms from workplaces and enforcing the prohibition is probably the safest practice from a liability standpoint.


The ambiguities in the Act have put business owners and employers in a difficult situation, with no statutory immunity for the consequences of their decisions one way or the other.  Business owners and employers need to understand the Act and decide how to address its important implications and effect with regard to their customers, visitors, and employees.  Here are a few suggestions for dealing with the choices:

  • Business owners who want to prohibit their employees from carrying handguns while on the job inside or outside the workplace should develop a clear written employment policy on workplace safety, including a ban on handguns and other weapons, and deliver a copy to, and obtain a signed receipt from, each existing and new employee.  Because this action is based on an employer’s common law right to impose conditions on the employer/employee relationship, and not the Act, it would not depend on the posting of any sign under the Act but neither would it affect the rights of customers, vendors and other visitors who are licensees to bring handguns into the workplace
  • Business owners who own their places of business and want to prohibit their employees, customers and other visitors from bringing handguns into their places of business should post the standardized sign prescribed by the Act at the entrance to their property in addition to developing an employment policy
  • Business owners who lease their places of business and want to prohibit their employees, customers and other visitors from bringing handguns into their places of business should ask their landlords to post the standardized sign prescribed by the Act, or as a second-best choice, obtain their landlords’ written authorization to post the standardized sign at the entrance to their premises
  • Business owners who do not own their places of business and want to prohibit handguns in their places of business should remember to ask for provisions addressing the posting of signs under the Act when negotiating new leases or amendments to their existing leases.

Although space limitations do not enable us to deal with all of the issues and questions raised by the Act, it should be obvious from this discussion that the Act is neither simple nor clear and that business owners should exercise care in planning and implementing their decisions relating to “concealed carry.”

The article was prepared by Jeff Warren and Alex Marks, partners at Burke, Warren, MacKay & Serritella, P.C.  Jeff advises and represents business owners and their enterprises in a variety of matters.  He can be reached at 312 840 7020 or  Alex is a commercial litigator handling a wide array of disputes in both state and federal court with a special focus his practice on labor and employment issues. Alex can be reached at 312 840 7022 or

Posted in Burke, Warren, MacKay & Serritella, P.C. | Tagged , , , , |

Simplifying Retirement

Brought to you by Darrin J. Shallcross
 In conjunction with Lincoln Financial Advisors, a registered investment advisor.

Retirement planning can seem complex and intimidating, which explains why some people delay doing it. However, with the appropriate help from a knowledgeable financial advisor, preparation can be a straightforward process that produces a sound strategy and a sense of security. To simplify your planning, consider pursuing these 10 steps:

1. Shift your viewpoint.
In retirement, you must go from accumulating wealth to providing a lifetime income stream while preserving wealth. If you accept this focus early in the retirement planning process, then you can go from being a great saver to being a great saver with a rational retirement income security plan.

2. Review your anticipated incomes needs.
Calculate all the necessary expenditures required in retirement as well as the unnecessary but desirable ones. Be inclusive so that you can gauge the scope of expenditures accurately. This is the most critical step in the process because it provides the foundation for all other financial planning.

3. Conduct a comprehensive revenue review.
Start by collecting information on any pensions you may receive. That includes pensions paid by corporations, governments or other organizations. Know the amounts due to you and the methods of payment – and especially at what age you can begin drawing benefits. Do the same thing for other accounts, whether they are savings or defined contribution plans, like an IRA, a 401(k), a SEP or an annuity.

4. Know your Social Security benefits.
Social Security could be an income source in retirement, so it should be included in a revenue review. Because of its complexities, Social Security calls for a level of diligence and understanding beyond that required with other revenue sources. The Social Security Administration can provide information on what you’ve paid into the system and what you can expect to receive. It is important to know what your spouse’s benefits will be as well. Also, make sure you understand the impact that divorce or remarriage may have on benefits.

5. Factor in inflation’s impact.
It’s important to understand the impact long-term inflation will have on retirement investments. Unfortunately, many people fail to include calculations for inflation in their retirement planning preparations. Even low levels of inflation can erode the buying power of the dollar. For example, 3% inflation over a 24-year period will double your income needs. So, you need to create a retirement plan that has the potential to increase your income over time.

6. Prepare for health care costs.
Good medical care is vital in retirement, and figuring the costs now ensures it will be available when needed. Those costs could amount to as much as $1,000 monthly. A comprehensive study of medical benefits and costs should include consideration of long-term care insurance, supplemental health care insurance and a review of any medical benefits for which you may be eligible. For the latter, be sure that you understand coverage and co-payments.

7. Develop a tax management strategy.
Retirees need to convert the appropriate assets to income. Every conversion choice carries a tax implication. Wise choices can minimize taxes thus boosting income. It is important to compare your current tax bracket with the one you probably will occupy during retirement.

8. Understand market volatility.
All markets, including those for stocks and bonds, rise and fall due to a variety of circumstances. An individual’s ability to tolerate these changes will have a huge impact on the composition of his or her retirement portfolio. Recognizing the inevitability of market fluctuations (and knowing your tolerance level) allows you to create a strategically balanced portfolio. That means you can tolerate the changes as they occur. Financial planners know of many strategies that can help meet your needs and ensure a sense of security.

9. Get important documents organized.
Everybody should have some basic documents prepared, including a will, a living trust, a health care power of attorney and a financial power of attorney. These basic legal tools can ensure that inheritance matters are handled in an orderly and timely fashion. They also help loved ones make important decisions and gain access to needed funds if you become incapacitated.

10. Review your retirement plan.
Regular meetings with your financial planner give both of you the opportunity to check that your retirement plan’s goals are being reflected in its performance. They also allow timely refinements to the plan required by major changes in your life. Annual reviews can be devoted to strategic issues, while quarterly meetings can cover tactical matters, like rebalancing portfolios.


Darrin  J. Shallcross is a registered representative and investment advisor representative of Lincoln Financial Advisors Corp., a broker-dealer (member SIPC) and registered investment advisor, 568 Pennsylvania Ave Glen Ellyn, Il 60137 630-469-752, offering insurance through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances. The content of this material was provided to you by Lincoln Financial Advisors for its representatives and their clients



Posted in Shallcross Financial Planning | Tagged , , , |

EAPs: Taking Emotion Out of Work

Written by Bernie Dyme – A friend of Marcus Newman and GCG Financial.

The other day, I heard about an interesting study by Duke University researchers. It found that doctors often make different recommendations for their patients than they do for themselves.

In a nut shell, when trying to determine a course of treatment for themselves, physicians let their emotions get in the way.

And why wouldn’t they? It is hard to separate your own emotions from something that very directly affects you and/or your loved one.

Well this got me to thinking about the workplace and managing employees. No matter how good we are as managers, it’s hard to separate our personal and professional roles with respect to employees. We are only human and our emotions often get involved in making tough employee decisions.

How often for instance have you or any of your managers been confronted with an employee with job performance issues who offers that problems outside of work are causing them? And how often have you or your colleagues “given the employee the benefit of the doubt” or gotten really angry at her “excuses”?

Be honest.

Of course you’ve had one of these reactions. We are all human and, like the physicians in the Duke University study, we are all affected by our emotions.

That’s why an employee assistance program (EAP) is so valuable. It helps take the emotion out of an encounter and allows you, the manager, to deal very specifically with the performance and workplace behavior.

You can still be compassionate, but you can leave the emotions to the EAP and, in essence, be of greater help to the employee by offering him or her confidential help by a professional.

I’ve been in the EAP field for 30 years and have always counseled managers to see the disciplinary process as something that runs parallel but not in lieu of any emotional issues.

When performance issues and emotional issues are treated by these two separate but parallel means, the employee has all of the tools to get better in both his work and personal life. He can’t use work or home to avoid dealing with whatever it is that is causing him pain which usually leads to a successful outcome in both areas.

Also, consider using EAP before, during and after any constructive confrontations with an employee. Long term success comes from this close collaboration between managers or HR and the EAP which can only occur if you have an EAP that is highly accessible and visible.

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Questions or comments? Please call Marcus Newman RHU, CBC at GCG Financial, Inc.  847-457-3058.

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1099s: A little form with a painful bite

When Congress tried unsuccessfully to expand the Form 1099 filing requirements a couple of years ago, at least one thing was accomplished. It raised awareness of an important IRS business reporting rule. And at $100 per infraction, the penalty for ignoring this regulation can be painful.

That’s right; the IRS can fine you $100 for each 1099 form that you fail to file, up to a maximum penalty of $1.5 million.

The most common Form 1099 is the 1099-MISC, which is used to report payments of $600 or more to vendors who provide services to your business. Examples include payment for repairs, accounting services, consulting fees, and legal advice. Normally if the vendor is incorporated you do not need to send them a 1099-MISC, but there is one important exception. All payments to attorneys must be reported, whether they are incorporated or not.

Timely filing of the Form 1099-MISC is also critical. The form must be filed with the IRS by February 28 (unless you file electronically). But you must provide the vendor a copy of the form by January 31. Electronic filing is optional if you file fewer than 250 forms. If you have 250 or more forms to file, you are required to file electronically. The deadline for electronic filing is March 31.

There are a few more twists. If you pay a vendor for parts and services, you must include the total of both of these on your form as long as the parts or materials were incidental. Reporting is also required if you provide non-employees taxable fringe benefits or pay fees to your board of directors.

Correct reporting requires you to confirm the vendor’s tax identification number.  Before you make a reportable payment to any of your vendors, the vendor should provide you with a Form W-9 (Request for Taxpayer Identification Number and Certification).  The IRS also has a Taxpayer Identification Number Matching Program that allows for the matching of vendor TIN’s with IRS records before submitting information returns to the IRS.

There are other types of Form 1099 to watch for. A Form 1099-INT is used to report interest payments of $10 or more to an individual in the course of a trade or business. Form 1099-R is used by investment companies to report distributions from retirement accounts and annuities. And businesses that make loans are required to disclose canceled debt on Form 1099-C if the amount is $600 or more.

Transmitting the Forms 1099.  Copy A of all paper Forms 1099 (as opposed to forms transmitted electronically) must be submitted to the IRS along with Form 1096.  Each type of Form 1099 must be transmitted with a separate Form 1096.  For example, if a business files Forms 1099-MISC and 1099-INT for a given year, the Forms 1099-MISC must be transmitted with one Form 1096, and the Forms 1099-INT must be transmitted with another Form 1096.

If these reporting rules leave you uncertain of your responsibilities, give us a call. A little attention paid now might help prevent a painful penalty later.

We hope this information is helpful.  If you’d like to discuss the new Act and its effect on your situation, please contact Karen Snodgrass or Deanna Salo from Cray, Kaiser Ltd. (630-953-4900), a strategic partner with the Chicago Family Business Council.


Karen Snodgrass CPA                                      Deanna L. Salo CPA

Cray, Kaiser Ltd.                                             Cray, Kaiser Ltd.

1901 S. Meyers Road                                      1901 S. Meyers Road
Suite 230                                                         Suite 230
Oakbrook Terrace, IL 60181                           Oakbrook Terrace, IL 60181
Phone: (630) 953-4900 x248                           Phone: (630) 953-4900 x210
Fax: (630) 953-4905                                        Fax: (630) 953-4905

Email:                  Email:

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