Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Avoiding Family Financial Discussions?

Year in review: Enduring  a lot ofvolatility this year, US stocks ended2015 with modest losses, performingpoorer than any year since 2008.  Whilemany actively managed funds werelooking good at the end of June, a poor3rd quarter and a frustrating end to theyear resulted in more ofthese funds being down 5%as opposed to up 5%.  Perfor-mance was less than stellaracross the board and acrossmost major asset classes.Some years investing can bea function of being in theright things, but in 2015 ithas been more of much adoabout nothing for the year as awhole.    I mentioned in the Spring of2014 newsletter  that the S&P 500 ap-peared to have a clear path to the 2,000level, but thereafter I didn't see muchroom for further movement, as indicesoften coalesce near round numbers.  Well, about 20 months later we find

ourselves trading right around 2,000.2015 was reminiscent of 2011, when theS&P 500 ended the year within onepoint of the where it started.  Interest-ingly, that was four years ago, or the lastyear before the Presidential election.  Asyou might recall, the years 2012 to 2014

were largely positive forstocks. There is reason foroptimism going forward,but I see three major head-winds that can explain someof 2015’s results, and maypersist into the future:Lower Oil Prices:  Theprice of oil plummeted 46%in 2015.  Generally, there islittle correlation between oil

prices and stock market per-formance. In other words, oil

losses or gains have no particular coin-cidence with stock market losses orgains.  While the two markets usuallyoperate independently of one another,that was not the case in 2015.  Withoutgetting too technical, (See Jeff on page 10)

Jeff’s Market Watch: Year in Review

Most people are very private abouttheir finances, even with loved ones. Arecent study from Wells Fargo revealedthat people find discussing financeswith others more difficult than discuss-ing death, religion, politics, and person-al health. There are many reasons people don’tlike sharing financial information: fearof judgement, lack of confidence, fear ofbeing taken advantage of, and becausetalking can make it difficult to ignore anissue. For many people, these discus-sions make the issues seem more realand that can be uncomfortable. As you know, the first step in takingcharge of your financial life is creating aplan. Financial planning is a deeplypersonal process that reflects what is

important in your life and provides youa path to achieving your goals. Many ofyou have used our expertise to developfinancial plans and have benefited fromthe peace of mind derived from know-ing where you stand and where you areon the path to where you want to be. What you may not have considered isthe value of sharing that plan with yourloved ones. Wherever you are in life,whether you have a young family andretirement seems far away, or you arealready well past retirement, you aremaking decisions that impact others. Oftentimes the plan or legacy youdesire requires involvement of other fi-nancial professionals, such as attorneysor accountants. These professionalswill ensure that (See Family on page 7)

AnnouncementsWe hope you had an enjoyableholiday season! Thank you toeveryone who participated in ourfirst annual toy drive, your gener-osity is greatly appreciated. Turnto page 9 of this newsletter to readmore about our efforts to giveback to the community.

We have more community eventsplanned for 2016 - stay tuned!

The 2016 IRS tax deadline formost states is Mon, April 18 dueto Washington, DC’s observanceof Emancipation Day. For thoseliving in ME or MA, Patriot’s Dayobservance moves the 2016deadline to Tues, April 19.

The deadline for 2015 contribu-tions to IRAs and other qualifiedplans is April 15, 2016. Pleasecontact us should you wish tomake additional contributions.

______

The highest compliment you cangive us is the referral of a newclient. For those who referrednew clients in 2015 - thank you foryour thoughtful recommendation!

Beyond Stocks and BondsWhat is the FAFSA?The CSS ProfileSmart Phone AddictionInheriting an IRAFirst Real JobTax ReportWinter SectionTime Value of Money

Information for your financial life

PerspectivesFirst Financial Associates Quarterly Newsletter - Winter 2015-16

Jeffrey B. Snyder, CFP®President

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Inside this issue:

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16Perspectives - Page 2

Beyond Stocks and BondsThe Potential of Non-Traded Alternative Investments

ALTERNATIVE INVESTING BASICS

The traditional model of allocating invest-ments to stocks, bonds and cash is widelyavailable to individual investors. However,institutional and high-net-worth investorsoften leverage their wealth in search of diver-sification beyond traded markets and for re-turns from alternative assets and strategies.In doing so, these investors have helped ad-vance a new allocation model that now in-

cludes illiquid and less liquid alternativeinvestments. This model is increasinglyavailable to individual investors. Alternative investments refer to non-tradi-tional investments that fall outside of thecommon categories of stocks, bonds, andcash. Some examples include real estate,loans made to private companies (privatedebt), private equity, infrastructure and en-ergy investments.

Large institutional investors and high-net-worth individuals have helped advance a new asset allocation model - one thatintroduces alternative investments to provide diversification and potential protection against rising inflation. Whileinstitutions have different goals and longer investment horizons, individual investors seeking similar benefits may chooseto access alternative investments via non-traded real estate investment trusts (REITs) and non-traded business develop-ment companies (BDCs).

THE INSTITUTIONAL APPROACH

Institutions often invest under terms and conditions differ-ent from individual investors, particularly with regard to feesand expenses. That said, the alternative investments in insti-tutional portfolios have historically performed well. The Yaleand Harvard endowments are two examples of this strategy

in action. While allocations can vary widely between institu-tions, both portfolios contain a relatively high percentage ofalternative, illiquid and less liquid assets. Though the inclusion of alternatives is only one factor ineach endowment’s overall strategy, and past performance isno guarantee of future results, 10-year historical investmentreturns have been strong, as evidenced by the graph below.

Non-traded alternatives may offer several potential benefits toan investor’s portfolio, such as diversification, low correlation,reduced portfolio volatility and an opportunity for inflation pro-tection.Low Correlation - The cornerstone of portfolio diversificationis the inclusion of low-correlated assets. If asset values have lowcorrelation - or values that do not move up and down in tandemin response to market changes - the portfolio’s overall value isless affected by movements in any one investment.Reduced Volatility - Another potential benefit is reducedportfolio volatility. For investors looking to mitigate some of the

price swings of the stock market, alternative investments areworth consideration. Historically, less liquid alternative assetssuch as real estate and private debt have been less prone to thewide price swings seen in traded domestic and internationalstocks.Potential Inflation Protection - Lastly, alternative invest-ments may serve as a way to mitigate inflation risk. Duringhistorical periods of high inflation, hard assets have typicallyperformed well. In addition, alternative debt instruments mayhave floating rates, which allows interest income to increase asinterest rates rise in response to inflation concerns.

POTENTIAL ADVANTAGES OF NON-TRADED ALTERNATIVES

Sources: “The Yale Endowment 2013 Performance,” 2013 Target Asset Allocations, September 2013. “Harvard Management Company EndowmentReport Message from the CEO,” 2013 Policy Portfolio, September 2013. Stock and Bond Portfolio includes S&P 500 and CITI US BIG. Past performanceis no guarantee of future results. Charts are for illustrative purposes only. CNL Securities is not affiliated with the Yale Endowment or HarvardEndowment.

YALE ENDOWMENTASSET ALLOCATION

HARVARD ENDOWMENTASSET ALLOCATION

10-YEAR HISTORICAL INVESTMENT RETURNS

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16Perspectives - Page 3

Beyond Stocks and BondsThe Potential of Non-Traded Alternative Investments

EXPANDED INDIVIDUAL ACCESSIn the past, access to alternative in-vestments was limited to institutionalor high-net-worth investors. After all,direct ownership of alternative assets,such as a multi-million dollar piece ofcommercial real estate, can be costly.Considerable knowledge is oftenneeded to navigate complex marketsor industries. Plus, the management

of alternative assets typically requiressignificant time and resources. Alter-native investment vehicles such asnon-traded REITs and non-tradedBDCs may provide individuals withretail investment opportunities similarto those available to institutional andhigh-net-worth investors, while reduc-ing some of these barriers to entry.

THE BASICS OF NON-TRADED REIT & BDC

Non-traded REITs and non-traded BDCs pool in-vestors’ capital to make an investment - REITs in realestate and BDCs in the debt or equity of privatecompanies. The REIT or BDC receives income in theform of earnings or interest payments. This taxableincome is then passed along to the investor in theform of distributions. Non-traded REITs and non-traded BDCs, if organized as a Registered InvestmentCompany, must distribute at least 90 percent of theirtaxable income to qualify as a REIT or BDC and avoidcorporate income tax. Both structures have similartransparency and tax treatment.

RISK CONSIDERATIONS

Despite the potential benefits, the in-clusion of non-traded alternative in-vestments in a portfolio is not withoutrisk. These risks include:Limited Liquidity- Non-traded alter-natives offer limited liquidity, and liqui-dations may be less than the originalamount invested. Their redemptionplans are generally subject to suspen-sion, modification and termination atany time, and also early liquidation isoften at a discount to the current shareprice.Complex and Difficult to Evaluate-Non-traded alternative investments

may be more complex than traditionalinvestments and a potential lack of in-dependent ratings may make themmore difficult to evaluate.Values Can Fluctuate- The values ofnon-traded alternative investments canmove up or down, with valuations oc-curring less frequently than traditionalinvestments. In the case of non-tradedREITs, valuations are infrequent andtherefore maintain the established pur-chase price as the share price until theportfolio is valued. This is not to beinterpreted as evidence of stable under-lying asset value, because the value ofthe assets will fluctuate and may beworth less than the original purchase

price. During the initial offering period,the investment's lack of transparencyregarding share price can present chal-lenges in finding a market in which in-vestors can sell their shares. Investors should consult a financialprofessional to determine whether risksassociated with an investment are com-patible with their investment objectives.Non-traded REITs and non-tradedBDCs are not suitable for all investors.Suitability standards can be found inthe offering’s prospectus.

FOR INVESTOR USE. This information does notconstitute a solicitation of an offer to sell/buy anyspecific offering. Such an offering is made only bythe applicable prospectus. A prospectus shouldbe read carefully by an investor before investing.Investors are advised to carefully consider invest-ment objectives, risks, charges and expenses be-fore investing. There are no assurances aninvestment’s stated objectives will be achieved.Broker-dealers are reminded that communica-tions sent to any person relating to specific securi-ties must be accompanied or preceded by aprospectus in accordance with the Securities Actof 1933, as amended.

For additional informa-tion, investors should con-tact their financial advisor.

Contact Jeff Snyder and theFirst Financial Associatesteam at (860) 657-3000.

IN BRIEF: Alternative investments such as non-traded REITs and non-tradedBDCs may provide unique advantages. As access expands beyond high-net-worth and institutional investors, individuals are poised to potentially benefitfrom the diversification, low correlation, reduced portfolio volatility and potentialinflation protection that alternative investments can bring.

Perspectives - Page 4

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

First the FAFSA, now the CSS Profile? Everyone who has gone through thefinancial aid process is aware, oftenpainfully aware, of the FAFSA (for moreinfo about the FAFSA, see What is theFAFSA and How Does it Work).But there is another form that is becom-ing more prevalent and can be an evenmore arduous experience than the FAF-SA: the CSS Profile. The CSS (College Scholarship Service)Profile was developed by the CollegeBoard and is used by nearly 300 colleg-es and universities to help determinefinancial aid packages. It is far moredetailed than the FAFSA and asks aboutmany more income streams and assetsincluding retirement assets and yourprimary residence. The CSS Profile us-es a different calculation than the FAF-SA to determine your Expected FamilyContributions (EFC) and expects a min-imum student contribution. Unlike the

free FAFSA, the College Board chargesa fee for each college or university appli-cation that requires use of the CSS Pro-file. According to proponents of the CSS,the further detail enables colleges tomore accurately distribute financial aidawards to those who truly need themwhile also providing a wealth of infor-mation to assist in making “professionaljudgement” reviews. A professionaljudgement review is how a college fi-nancial aid officer can take into consid-eration unique factors or extenuatingcircumstances to adjust a financial aidaward. If your son or daughter applies to aschool that requires the CSS Profile, beas organized and prepared as possible.Set aside enough time to complete theapplication and do it with plenty of timebefore any deadlines. Accuracy andtimeliness are key.

For Some Colleges, FAFSA Isn’t Enough

For parents of children nearing col-lege-age, the financial aid processprompts strong feelings of dread andconfusion. Deadlines, rules, and thefact that thousands of dollars are atstake create intense anxiety. At theheart of these feelings is the Free Appli-cation For Federal Student Aid, other-wise known as the FAFSA. The FAFSA is the form that the federalgovernment uses to determine a stu-dent’s eligibility for federal assistance(in the form of loans or grants) and isoften used as the basis for financial aidoffers from colleges and universities.The FAFSA process seeks to determineparental income and assets, student in-come and assets, and then generates adollar amount called the “ExpectedFamily Contribution” (EFC). Theoreti-cally, this figure is the amount of moneythat your family can afford to pay forcollege, but of course it has many limita-tions. In addition, colleges and univer-sities may require students to fill outother financial aid forms that can alterthe amount that they expect your familyto pay each year.

How the EFC is Calculated The federal government uses a compli-cated formula to total income and thensubtract allowances for both the parentsand the student, and then determine“non-protected” assets that can be liqui-dated to contribute towards collegecosts. This year’s guide to the formulais 36 pages long. Retirement accounts such as 401(k)s,403(b)s, IRAs, and Roth IRAs are pro-tected assets and do not count towardsthe asset portion of the formula. Butkeep in mind, withdrawals from theseaccounts do count as income so if youuse one of these accounts to help pay forcollege it will affect the income portionof the formula next year. While your house does not count to-wards assets, other real estate does. Sodo savings and checking accounts, tax-able investments, 529 plans, and othertypes of accounts and investments.Once parent non-protected assets aretotaled, they will count up to 5.69% to-wards the EFC. Students are expected to contribute ahigher portion of (See FAFSA on page 5)

What is the FAFSA and How Does it Work?

The Obama administration recentlyannounced two big changes to the FreeApplication For Federal Student Aid(FAFSA) that will improve the overallprocess. The first change is the FAFSA will bemade available in October of the yearbefore a student begins school. Cur-rently families are required to wait un-til January of the year of enrollment tostart the process, despite the possibili-ty that students may have already beenaccepted under early decision or earlyaction programs. So while a studentand her family might be thrilled tohave been accepted, they are unable tofully evaluate the decision becausethey don’t know how much aid hasbeen granted. The second change is that the FAFSAwill use tax information from the lastyear all taxes have been filed (alsoknown as the “prior-prior” year). Thismeans that if a student is applying forfinancial aid for the 2016-2017 schoolyear, his parents will supply informa-tion for their 2014 tax return. The current FAFSA requires familiesto supply financial and tax informationbefore the deadline to file taxes, whichresults in about four million studentsapplying for aid each year before theirfamily’s returns are filed. For exam-ple, using the previous example withthe student applying for the 2016-2017school year, his parents would try toprovide financial and tax informationabout the 2015 tax year even thoughthey would be filling out the formmonths before the April tax deadline.As you can imagine, all this guessingcan lead to incomplete or inaccurateinformation. Besides making the process a littleless stressful and hopefully more accu-rate, this means that the familiesshould organize and plan for financialaid starting in January of a student’ssophomore year of high school. Thatcalendar year will be the new baselineyear (because it will be the prior-prioryear) when she later applies for herfirst year of financial aid. According toexperts the baseline year is the prece-dent-setting year and that financialawards (See Changes on page 5)

Big Changes to FAFSA

Perspectives - Page 5

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

Smart Phone Addiction and Health Risks

We all know someone we recognize bythe top of their head better than theirown face. They are addicted to theirsmart phone. Even when you’re havinga serious conversation, they are scroll-ing and mumbling, “mmhmm” and“yeah, yeah” while you talk. Who knowswhat they actually hear? A recent Cambridge University surveynoted that one in three Americans isoverwhelmed by technolo-gy. Seventy-one percentagree that technology hasimproved their lives, butthat number has decreasedfrom 78% over the past fewyears as we experience techburnout. Our lives are nowrun by technology, and es-pecially smart phones. Wecan’t seem to live withoutthem and we want themfaster, bigger, and more ca-pable. Medical reports show thatthe overload of technologyhas brought chronic stress to our dailylife. This stress makes us susceptible togetting sick because stress attacks ourimmune system. This can express itselfin many ways, including high bloodpressure and arteriosclerosis (harden-ing of the arteries) – both of which can

lead to a heart attack. Stress also is aleading cause of ulcers. Other medical issues more prevalenttoday are eye strain, neck and backpain, and repetitive motion disorderssuch as carpel tunnel. To combat someof these issues, health professionalssuggest using the 20:20:20:2 rule. Ev-ery 20 minutes, look 20 feet away for 20seconds, then close your eyes for up to

two minutes. This can reduce eye fa-tigue and refresh your brain. If you are feeling brave, keep a log oftechnology use for a couple of days justto see how often you pick up your phoneand for how long. Then identify whyyou picked up your phone – were you

bored, curious, anxious, or lonely? Orwas it just out of habit. Check out thechart to see smart phone addiction bydemographics. We all agree that driving and smartphones do not mix. But a recent surveyshowed that 69% of respondents admit-ted talking on the phone while drivingand 33% sent a text while driving in thelast 30 days. There is a 25% probability

that a motor vehicle crashinvolved cell phone use.You can safely look awayfrom the road for two sec-onds but it takes on averagefive seconds to send a text.It’s a pretty sobering factthat 9 people are killed and1,155 are injured each dayin the United States whiledriving and using theirphone. We really are thataddicted. What to do? Try to unplugfor parts of the day. Howabout a phone-free lunch or

no social media after 9 p.m. A gadget-free football Sunday? If that’s not pos-sible, just focus on just one task at atime. Lastly, avoid information dumpslike social media and news feeds. Whoreally needs to know the five celebritieswho cheated with the nanny?

income and assets (up to 20%) thanparents, so it is in the student’s bestinterest if assets are not in her name(unless it is a 529 plan, then it countsunder the parent’s portion of the formu-la). These assets include all the previ-ously mentioned assets such as savingsand investments in the student’s name,including savings bonds. So given a choice, it is always better ifinvestments are in the parents’ nameand not the students’ originally. Whileassets can be moved, there are manypotential pitfalls and ramifications forboth taxes and financial aid that canmake that process less appealing.How the EFC is Used Once the EFC is determined, manyfinancial aid offices will take the annualcost of attendance (tuition, room and

board, fees) and then subtract the EFCto determine the amount of “needbased” aid. While this is the startingpoint for most colleges, there are manythat also require a separate form calledthe CSS Profile. Nearly 300 (mostlyprivate) colleges and universities usethe CSS Profile to delve deeper into afamily’s finances to help determinetheir financial aid packages. For moreinformation about the CSS Profile, seeFor Some Colleges, FAFSA Isn’tEnough on page 4. Whether your school of choice re-quires the FAFSA or the CSS Profile,applying for financial aid is stressful,especially if your are penalized for ill-placed investments. If your childrenare younger, your best option is to pre-pare now and structure assets accord-ingly.

(FAFSA from page 4)don’t vary too much in later years,even though a new FAFSA is filled outeach year. Since there is now a larger gap be-tween filing a tax return and actuallyenrolling in college, families can al-ways use “professional judgement” re-views by college financial aid advisorsto take extenuating circumstances intoaccount in case a family’s financial pic-ture dramatically changes. Havingthis option can often make the differ-ence for a student who is struggling toafford college. For further advice, please call ouroffice and set up an appointment withJeff. He’ll be happy to discuss optionsand help you navigate the FAFSA pro-cess.

(Changes from page 4)

Perspectives - Page 6

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

WINTER PREPAREDNESS Now is the time to prepare for win-ter’s worst – storms that require emer-gency preparedness. The last fouryears in New England have proved tobe especially hard on the power com-panies who have taken up to a week ormore to restore power to neighbor-hoods. Are you prepared for a weekwithout heat, electricity, or showers? The Centers for Disease Control andPrevention has an excellent websitewith helpful information for all typesof storms in every weather. Here aresome larger check-list items to reviewnow so you’re not caught at the gro-cery or hardware store last minute.Have a plan. Your family may not betogether when an extreme event hap-pens, so know what each member isresponsible for and how you will com-municate (if at all) until you can betogether again.Check on neighbors and the el-derly. If you do not live near lovedones of any age, make sure there issomeone local to them who can checkon them in your absence.Start your generator now. Don’twait for the storm to hit to find out youforgot how to use it. Store extra gaso-

line in a safe place and be sure to se-cure your generator from thieves.Always keep your cell phonescharged. Purchase a battery-operat-ed radio and know which station willhave emergency information. Makesure you have extra batteries for theradio.Purchase table-top lanterns tolight more of the house for safety.These are invaluable in the winter –just have enough extra batteries.Locate your extra blankets, sleep-ing bags, hats and warm coats.Stockpile dry wood for your fire-place and fill your bathtub if youwill need flushing assistance.Store a week’s worth of potable wa-ter and food for your entire family.Remember a can opener.Don’t forget a first-aid kit, boardgames, cards, and books. For information on emergencies, visitwww.emergency.cdc.gov/disasters

STAYING FIT INDOORS One of the challenges of winter is tokeep fit during the coldest months.Getting those 10,000 steps a day ishard when our normally active rou-tines like walking and playing good

weather sports disappear. Here aresome suggestions to keep moving andburning calories even while you’rethinking about being bundled up:Walk in the local mall (say no to thefood court!), indoor track, communitycenter, or museum.Try Wii Fit or other active video game.Take multiple trips up and down thestairs in your office building each day.Jump rope or hula hoop in the garage.Check out a workout DVD from yourlocal library – 80’s leggings optional!Crank up the radio and dance.Find a local dance class at a YMCA,community college, or studio.Play board or card games but changethe rules so losers perform physicalactivities (jumping jacks, push-ups,toe touches, windmills, etc.).Visit your library and exercise yourbrain. These ideas will not only keep youphysically fit, but mentally fit as well.To keep yourself motivated, find apartner. Friends help pass the timeand will challenge you. As always, besure to check with your doctor beforebeginning any new exercise or morevigorous routine.

Baby, It’s Cold Outside! Winter Tips to Stay Safe and Fit

When inheriting an IRA there arenumerous potential tax pitfalls to avoid,so the most important step is meetingwith Jeff to discuss your options. Whilean IRA bequeathed to a spouse who wasnamed as a beneficiary is easy andstraightforward, IRAs bequeathed tonon-spouse beneficiaries involve sever-al decisions that can make a big differ-ence at tax time. First, check to make sure your benefi-ciaries are correct and updated. Benefi-ciary forms for IRAs supersede wills soif the wrong beneficiary is listed on yourIRA then money could go to the wrongperson. One example is an ex-spouse: ifyou remarried but forgot to change thebeneficiary to your current spouse, afteryour death the money would be trans-ferred to the listed beneficiary eventhough you are no longer married. Also,

do not name your estate or leave theform blank because doing so will negatetax benefits and open the IRA up toprobate proceedings. If your spouse leaves you an IRA (andyou were properly named as a beneficia-ry) then you will be able to roll the IRAover into an IRA of yours or a new onein your name. This option is unique tospouses and makes the process muchsimpler than non-spouse beneficiaries. If you are a non-spouse beneficiary(and again were properly named as abeneficiary – check to make sure!) thenyou have a few options. Unless you wishto disclaim (or decline to inherit) thefund, you should transfer the funds di-rectly to an inherited IRA beneficiaryaccount directly using a process called atrustee-to-trustee transfer. This pro-cess is the most simple and seamless.

Once the funds have been transferredyou are required to start taking distri-butions and pay taxes on those distribu-tions. Unlike a normal IRA, you don’twait until you are 70 ½ to start takingrequired minimum distributions(RMDs), you have to start taking themnow. This rule also applies to inheritedRoth IRA accounts which are oftenoverlooked because one of the uniqueattributes of a Roth IRA is the lack ofRMDs. But if it is inherited, RMDs arerequired. If the owner was under the age of 70½ at the time of death, then you do havethe additional option of distributing allthe assets in the IRA within 5 years withno penalty. You would still owe taxes ofcourse, so it is important to plan the taxconsequences of the distributions.

Avoid Tax Pitfalls When Inheriting An IRA

Perspectives - Page 7

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

If you have any children or grand-children who recently entered theworkforce for the first time (notcounting those summers working thelocal ice cream shop) you could dothem a huge favor with some timelyfinancial advice. While their part-time job paycheckshad taxes deducted, they are now re-alizing the major difference betweengross and net pay with their new full-time job. Beyond larger bites takenout in taxes they now likely have de-ductions for employer-providedhealth care, insurance, retirementplans, or other benefits. The first piece of advice you can givethe new worker in your life is to fullycomprehend their net pay and how itprovides the framework for their newfinancial life. All too often peoplethink in terms of gross pay and whilethey know that there is a differencebetween gross and net pay, they don’tfully account for how large a differ-ence it can be. Net pay provides the starting pointfor budgeting – a tool that we allknow we should use but unfortunate-ly not enough of us do it. Start young!Build up the habit now to help ensurea more successful future. If he or sheis considering a new living arrange-ment make sure that housing andutilities are no more than 30% of hisor her net pay (not gross!). Beyond budgeting, have him or herthink longer term and how they cantake advantage of different programsto help achieve goals. Health savingsaccounts, IRAs, Roth IRAs, and401(k)s are tax-advantaged ways todo something you should already bedoing: planning for health care andfor retirement. We’d be more thanhappy to assist in explaining thesevarious accounts and how they work,so please feel free to set up a meetingwith Jeff and he can sit down witheveryone. You’ll feel better knowing youhelped a loved one at a critical junc-ture in his or her life, and he or shewill be several steps along the path oftheir financial journey.

According to Visa’s annual ToothFairy survey, American childrenfound an average of $3.19 per losttooth this year. For those of us whoremember when a child was happy tofind a quarter, that amount may comeas a bit of a shock, yet it is actuallydown for the second year in a row.The high was hit in 2013 with an aver-age of $3.70per tooth. Of course$3.19 is justan average.When you digfurther intothe data itgets really in-teresting.While 32% ofrespondentssaid that adollar was leftunder the pil-low by the Tooth Fairy (by far themost popular amount), nearly 20%reported that the Tooth Fairy left be-hind a $5 bill. Even more shocking,5% of households reported that theTooth Fairy left $20 or more underthe pillow! On the other end of thespectrum, 10% of households report-ed that their child received nothingfrom the Tooth Fairy.

Regionally the Northeast reportedthe highest average, $3.63, with 1 in 4children receiving $5 or more, andaround 1 in 13 were left with $20 ormore. Fathers were a more generousTooth Fairy, reportedly leaving be-hind nearly 30% more than moms. Visa’s survey results were based on4,027 telephone interviews conduct-

ed nationallyand have amargin of er-ror of 1.5%. Visa isn’tthe only or-ganizationtrying togauge theeconomicimpact of theTooth Fairy.Another sur-vey conduct-ed by Delta

Dental differed in some of the detailsfrom the Visa survey, but did uncovera few more interesting observations:kids with younger parents receivedmore money, and that the trend inTooth Fairy giving in their particularsurvey has trended with the S&P 500in 11 of the previous 12 years. Accord-ing to their estimates, $255 millionwas left by the Tooth Fairy in 2014!

Tooth Fairy EconomicsYour First Real Job

your plan reflects your wishes, but it’simportant to initiate that relationshipbefore estate or financial planning mis-takes occur. Coordination of those pro-fessionals in line with your plan is yetanother way we can make this processeasier for you. Treating financial discussions as taboocan lead to misunderstandings that dra-matically impact your relationships orlegacy. But how can you overcome thediscomfort and fears we associate withthese discussions? Let us help. As a neutral third partywith years of expertise in this area, wecan help facilitate these conversationsand get everyone on the same page. Wecan help answer everyone’s questions

and help you explain your plan on yourterms. Starting the conversation is of-ten the hardest part. Here are two wayswe have found effective: Make a list ofyour professionals (Attorney, CPA, Fi-nancial Representative, etc.) and give itto your children for safe keeping. Tellthem that you’d like to introduce themto these professionals so that they areaware of your intentions. Another strategy for opening the con-versation is to take advantage of an im-portant life event, such as the marriageof a child or birth of a grandchild, as anatural opportunity to open discussionsabout your financial situation or futuredesires. We will gladly assist you withthese important discussions with yourloved ones.

(Family from page 1)

Perspectives - Page 8

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

Coordinate College Tax Breaks Two commonly used tax breaks foreducation can be a little tricky whenused at the same time. Withdrawals from 529 plans used forpost-secondary education are tax-freeas long as they are used for qualifiedexpenses such as the cost of tuition,books, supplies, and any mandatoryfees. Room and board can qualify if thestudent is enrolled at least half-time. The American Opportunity Cred-it is worth up to $2,500 per student foreach of the first four years of college.Students must be in school at least half-time and the credit is based on the usualeducational expenses except room andboard. The tax credit phases out atadjusted gross incomes over $80,000($160,000 for married filers) and isbased on 100% of the first $2,000 spenton qualifying expenses and 25% of thenext $2,000. If you use both of these tax breaks atthe same time make sure that you don’tuse the same college expenses for bothbenefits. For example, if you take$4,000 from your 529 plan to pay fortuition, you can’t use that $4,000 oftuition to qualify for the American Op-portunity Credit.Giving Stock to a Charity If you are considering donating stockto charity, keep these tips in mind: Giving appreciated stock you’veheld for more than a year is betterthan giving cash. If you donate stockthat has increased in value since youbought it more than a year ago – and ifyou itemize deductions -- you can take acharitable deduction for the stock’s fairmarket value on the day you give itaway. On the other hand, if the

First Financial Associates’

Tax Report

First Financial Associates, Jeff Snyder,and Justin Kelleher do not provide taxadvice and material within this newslet-ter is provided for informational purpos-es only. Please consult a taxprofessional.

stock has lost value over time, it isbetter to sell the stock and thendonate the cash proceeds. You’llstill get the charitable deduction, butalso can take advantage of the capitalloss on your taxes. Timing can matter. If you aredonating your shares directly to a char-ity, ask the charity and your brokeragefirm about the procedure. Usually aletter of instruction or authorization isrequired and it can take some time tocomplete the process. So don’t waituntil the last few days of the year to startthe process because it can take a weekor more.Tax Breaks for Caregivers If you are providing over 50% of arelative’s support and he or she has agross income of less than $4,000 (notcounting Social Security), you can claimthat individual as a dependent, even ifhe or she isn’t living with you. Thatexemption could knock $4,000 off yourtax bill. In addition, you can itemizemedical deductions for dependents tothe extent that they exceed 10% of youradjusted gross income (7.5% if you oryour spouse are 65). Also, if you pay

someone to care for your relative whileyou are at work, you may be eligible forchild and dependent care credit. Justbe careful: you can’t use the same ex-penses for the dependent care creditand the medical expense deduction.Missing Tax Documents? Since the IRS receives copies of allyour tax documents you can requestcopies from them (unfortunately thisonly applies to federal tax information).If you have an accountant, they can doit for you instead. You have three op-tions: 1. Utilize the ‘Get Transcript Online’option available on the IRS website(http://www.irs.gov/Individuals/GetTranscript) and request your Wage andIncome transcript for a specific year. 2. Mail or fax Form 4506-T. To re-quest your income documents check thebox on line 8 for "Form W-2, Form 1099series, Form 1098 series, or Form 5498series transcript." The IRS usuallysends your documents within 10 busi-ness days. 3. Visit your local IRS Taxpayer Assis-tance Center and an IRS agent can printout your transcript for you.

Perspectives - Page 9

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

O

This is my go-to recipe for extendedfamily - and my house is our happygathering place! This is a simple recipewith basic & satisfying ingredients.Can be modified from a small bakingdish to a large tray. I make baked zitiand add salad and rolls if I’m expectinga really large crowd. It’s hard to over-cook and tastes even better the next day!From my family to yours - Enjoy!

2-3 lbs boneless, skinless chicken thighs5 large potatoes - bite sized pieces5 large carrots - bite sized pieces1 onion - quartered2-3 cloves of fresh garlic - minced2 Tbsp of Parsley Flakes1 tsp each pepper & salt (or to taste)1 Tbsp Thyme2 tsp Garlic PowderExtra Virgin Olive Oil

Season chicken with garlic powder,pepper, salt, & thyme and place in over-sized baking pan with room in between.Arrange quartered onion, minced gar-lic, potatoes & carrots around chicken.Sprinkle with seasonings again & driz-zle olive oil over the top. Bake uncov-ered at 350 for at least 1 hour or untilpotatoes and carrots are very tender(turn veggies a few times in pan whilebaking).

I don’t make complicated food - I’mintimidated by too many ingredients!My go-to easy winter comfort meal ispulled pork. I make this in 30 minuteswith a pressure cooker and serve withcornbread, coleslaw, and pickles. Su-per easy and delicious! Perfect for apot-luck and also makes great pulledpork sandwiches. I hope you try it!

3+ lbs boneless pork loin country ribs4 carrots – cut into chunks4 stalks celery – cut into chunks1-2 Tbsp Old Bay or favorite dry meatseasoningFresh ground pepper to taste1 ½ cups waterLarge bottle Sweet Baby Ray’s HoneyChipotle BBQ sauce (or your favorite) —–Place rib chunks over carrots & celeryin pot and season with pepper & de-sired spice. Add water - check pressurecooker for minimum water amounts. Icook in pressure cooker for 18 minutesand quick method cool. Meat can alsobe baked in covered dish at 250 degreesfor appx. 3 hours or until meat is ten-der. Remove meat and shred with fork.Add desired amount of your favoriteBBQ sauce and gently reheat beforeserving.

Warming Winter Recipes From Some Staff Members

We’ve been busy here at First Finan-cial Associates giving back to our com-munity! This fall we organized a FoodDrive for the Glastonbury FoodBank and challenged our employees tobring in non-perishable food items tostock our unique lobby pantry. We ex-ceeded our expectations and collectednine large moving boxes full of food!We delivered the boxes to the Commu-nity Center on November 5th. We willissue this challenge again next year andpick another local food bank in need. On November 17th, we each took turnsworking in pairs at the Food Sharefacility in Bloomfield. We stood outsidein the cold and accepted turkey dona-tions for two and a half hours each -that’s a lot of turkeys! We each receiveda private tour of the Food Share facilityand learned first-hand how food andmonetary donations help those in needall year long. In mid-November, we started a ToyDrive and invited employees, clients,and friends to donate new and un-wrapped toys to our lobby toy box. Wereceived a very generous outpouring of

The Generosity of Our FFA Family During the Giving Season

gifts ranging from board games tobooks, dolls, sports equipment, puzzles,art supplies and more. Every singleitem - over 70 toys, plus cash donations- was greatly appreciated! On Decem-ber 22nd we delivered our bounty toHartford’s We Are the Children.

Perspectives - Page 10

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

there has been a strong bias for stocksto fall as oil has fallen, although on thewhole stocks obviously held up betterthan the oil price.  This is probably atemporary phenomenon, but it doesn’tmake it any less real.  It appears that farmore supply than demand, and a con-tinuing lack of will within OPEC to cutsupply to the market, suggests contin-ued pressure on oil prices into at leastthe first half of 2016.  Plenty of peoplehave offered reasons why lower oil pric-es have impacted stocks negatively but Ifind these explanations unsatisfactory.While I don’t know why this correlationhas existed, it is real, and for now that initself is worth appreciating.

Strong Gains in the US Dollar:  In2015 the  US Dollar Index increased8.3%.  This hurts global companiesbased in the U.S. as they translate theirforeign currency revenues back intodollars and lose an average of 8.3%along the way.  It helps internationally-based companies that do significantbusiness in the U.S., but there are fewerof those companies than the corollary,and many foreign countries have sys-temic domestic issues that preclude ex-citement in companies domiciled there.   A stronger dollar is a good thing whenwe go to Europe for vacation, for exam-ple, but it doesn’t help our stock portfo-lio based in dollars.  A stronger dollarreally hurts emerging markets andsmaller international countries sincemany of those countries conduct theirbusiness in dollars.  Adding insult toinjury for these countries is that manyof their economies are oil or commodi-ty-based, and of course virtually allcommodities were  down - and somedramatically - in 2015.

Threat of Rising Interest Rates: InDecember the Federal Reserve finallyraised rates for the first time in nearly adecade.  Rates can now be described asridiculously low, as opposed to histori-cally low.  The threat of when the Fedwould raise rates helped keep a lid onreturns in 2015.  Higher interest ratesmean higher borrowing costs which es-sentially reduces the speed of the econ-omy’s growth, all else equal.

    It is likely that the Fed would haveraised rates in September had the stockmarket not been roiled in August.  Thereal question going forward: what is theglide path for future interest rate in-creases, now that the first one is out ofthe way?  My thinking is that the Feder-al Reserve will raise rates about twomore times in the first half of 2016, atwhich point they will almost certainlypause.  The pause will be for two rea-sons: 1) they will take some time to seeif the economic data is impacted by therate increases, not wanting to do toomuch to dampen economic growth; and2) The Fed won’t want to be seen asinterfering with the US Presidentialrace in any way. There is mixed literature as to the stockmarket response to rising rates - it real-ly depends upon the time period inquestion, what stocks one looks at, andhow far after the rate increase one ana-lyzes.  What is clear is that rising ratesdo not mean a death knell for equities,and especially not when compared withbonds.   Ironically the primary reason the Fedis raising rates is just to enable them tolower rates in the future as a policy re-sponse to a negative shock to the econo-my.  The Fed’s mandate is to promotefull employment without enabling ex-cessive inflation.  They essentially wantthe unemployment rate at about 5% andthe inflation rate at or below 2%.  Thethinking is that with low unemploymentand low inflation, the economy will bein the best shape to achieve its full po-tential.  Generally, interest rates wouldincrease once the inflation rate eclipsedthis 2% bound - but we are actually wellunder 2% as of now.  Furthermore, eco-nomic growth as measured by GDP ispositive, but tepid.  The rationalizationof the recent increase in interest rates isthat the zero-interest rate policy was atemporary reaction to the 2008-2009economic crisis, and that our economycan now withstand the potential nega-tive of higher rates.  These are strangetimes indeed!

Looking ahead, European and Jap-anese equities are attractive as an offsetto what should probably be a large-capUS-focused stock portfolio.  Smallercapitalization stocks underperformed in

2015, but there is hope for a rebound in2016 and these will be used in our port-folios to some degree going forward.   High yield bonds - partially due to thestark decline in oil - dramatically under-performed  compared to their higherquality bond counterparts this year, butI expect that performance to flip-flop in2016.  Although the entire bond com-plex is likely to be under pressure in2016 in the face of rising interest rates,high yield will likely perform betterthan corporate issues, and corporatebonds should outperform governmentbonds.  Real estate and other alternativeinvestments remain attractive in thisenvironment on a risk-adjusted basisand from a total portfolio perspective.  Client portfolios with alternative in-vestment exposure generally outper-formed those relying only on stocks andbonds in 2015.  On the other hand, I would steer clearof commodities (including gold and oil)indefinitely.  Also, emerging marketsare likely to underperform as they havein 2015, unless the dollar weakens sub-stantially or there is a sustained re-bound in oil - neither of which I wouldcurrently bet on (India is the most ap-pealing of the major emerging markets,incidentally).

Beyond my thoughts on specific assetclasses and sectors, the Chinese econo-my presents a potentially serious risk toglobal markets. I will be monitoringthis situation closely and will considerchanges to our models accordingly.   Of course no one has a crystal ball andpredictions don’t always come true.Looking back, some of the major head-winds from 2015 that I described aboveweren’t even on the horizon a year ago.Likewise predictions now are just that,predictions.  But it is important to lookback and explain where we went in 2015and where we might be headed in 2016,and why.

It is a privilege to work with eachand every one of you, and I wishyou the very best financially andpersonally in 2016 and beyond.

(Jeff from page 1)

Perspectives - Page 11

Registered Representative offering securities through First Allied Securities, Inc. A Registered Broker/Dealer, MemberFINRA/SIPC. Investment Advisor Representative offering services through First Allied Advisory Services, Inc.

Winter 2015-16

We all know that money loses valueover time and that we’d rather have itnow than later. But why is this true? We have covered inflation in pastissues and it certainly plays a role in thisphenomenon. Inflation acts like a dragand reduces the purchasing power ofmoney over time. But there is an even more importantfactor to consider when determining thefuture value of money: op-portunity cost. When youmake any decision (not justfinancial), you are givingsomething up. Perhapsyou are trying to decidewhat to do this evening. Ifyou choose to go to themovies, then you are givingup the opportunity to in-stead read a book, run er-rands, or visit a friend orrelative. Each of those al-ternatives are worth some-thing to you, but we usuallychoose the choice that hasthe most value to us at thattime. Opportunity cost is the value of thenext best choice. For example, the fi-nancial opportunity cost of going to col-lege is the lost opportunity to work andearn wages instead. So when makingthe decision to go to college, you wouldbelieve that ultimately you will earnenough in the long run to offset theopportunity cost of 4 years of wages.

So when comparing a dollar todayversus a dollar in the future, not only dowe need to account for inflation but wealso need to consider what we missedout on by not having that dollar in ourhand right now. If someone offers you$100 today or $100 three years fromnow you would of course prefer it today.We know that inflation will erode someof the value over the three years.

Plus, waiting creates some uncertaintyand certainty has value. Finally, youcould take that $100 today and eitherinvest it or put it into an interest-bear-ing account and theoretically it wouldbe worth more in three years. All ofthese factors drive down the value of the$100 you could receive in three years vs.the $100 you can have right now.

The Time Value of Money (TVM) con-cept attempts to quantify these consid-erations to help us compare financialalternatives. One of TVM’s basic princi-ples is that future cash flows are worthless than present cash flows. How muchdepends on the situation and what as-sumptions are used. The assumed rateof inflation, the interest rate you couldearn with your next best alternative,

and the riskiness of thosefuture cash flows are all ac-counted for and requireyou to make some assump-tions. In the end, withTVM all future cash flowsare either converted into apresent value or a futurevalue so that you can com-pare two financial optionsside-by-side. To use our earlier exam-ple of $100 today or $100three years from now, intu-itively we know we’d ratherhave the $100 now. Buthow much less is the $100three years from now

worth? First we need to make an as-sumption about what we think ourmoney could earn (beyond inflation) ifwe had it for the next three years. Thisis the opportunity cost of not having themoney today. Let’s say that we think our moneycould earn 5% each year over the nextthree years. So what amount of money

in today’s dollars would end upbeing $100 in three years at 5%?$86.38. $86.38 is the present value ofthat future $100. We alreadyknew that we’d rather have the$100 now than $100 in threeyears, but now we know howmuch less that future $100 isworth to us now. You can find calculators onlineto determine present value. Ofcourse we would be more thanhappy to help you or any of yourfamily members analyze any fi-nancial decisions in your lives,so please take advantage of ourexpertise!

GETTING TECHNICAL: Time Value of Money and Opportunity Cost

About First Financial AssociatesFirst Financial Associates is an independent retirement planning firm located in Glastonbury,CT.  We help people plan their financial lives and work with them every step of the way.  Ifyou are interested in learning more about us or how to set up an appointment, please visitour website.

Jeffrey B. Snyder, CFP® President Ann Swain Executive Assistant

Justin Kelleher Financial Advisor Lynda Hickey Underwriting

Rachael Alsdorf Underwriting Devin Buckley Underwriting

Colette Weber Executive Assistant Avis Richardson Office Manager

P: (860) 657-3000 First Financial Associates

F: (860) 659-2956 180 Glastonbury Blvd, Suite 104

http://firstfinancialassociatesllc.com/ Glastonbury, CT 06033

180 Glastonbury BlvdSuite 104Glastonbury, CT 06033