Blog   2014

Kids’ college vs. retirement: where to save?

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In a perfect world, you could save for your retirement AND your children’s higher education. But what if it comes down to a choice between the two…which one should be the priority? Loving parents may not love our answer.

Of course, launching your college-graduated children into the world debt-free is an admirable goal and the topic of an upcoming blog post. However, doing so at the expense of your own retirement goals is not advisable.

Parents are starting to move their focus more toward retirement savings and less toward their children’s education costs, according to a report from Fidelity Investments. The survey reported among long-term savers, 55 percent are saving for retirement while 33 percent are saving for their children’s college tuition. That split was closer to equal last year, but many parents are realizing that their children have several options to help pay for college—loans, scholarships and grants—options that simply don’t exist when saving for retirement.
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How to save for retirement

You may not realize that savings anxiety exists at several different income levels. The lack of retirement preparation in the $20,000 to $30,000 income range (with nearly nine out of 10 individuals reporting they were not prepared) was surprisingly close to those making $100,000 to $150,000 (with nearly eight out of 10 giving similar answers).*

So how do you take charge of your financial future? If you’re in your 20s or 30s, you have more time to ensure a comfortable retirement. Just make sure you start right away. If you’re older than 40, we have a blog post next month that will offer specific advice for saving in your 40s, 50s and 60s. Regardless of your income, the best way to start is by taking the simple advice: determine what you can put away starting right now and do it. The sacrifice now will be worth it later.

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*Source: American Consumer Credit Counseling survey

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Bryan Joiner is a Financial Center Manager for UMB Bank, N.A in St. Charles, Missouri. He is responsible for managing a team that advises consumer and small business clients on financial decisions, such as how to lower debt and save more. He joined UMB in 2011 and has three years of experience in the financial services industry.



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Financial Words of the Week: Back to School – Joint Accounts & Online Banking

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FWOTW

Back to School Series

When a high school graduate moves away from home, an adjustment period inevitably follows. Paying bills, maintaining jobs and making sure their checking accounts remain positive, can cause college freshmen and new-to-the-work-force employees to struggle with finding a balance.

Whether you’re in this situation yourself or you have a child who is adapting to this new life, opening a joint checking/savings account and online banking can be helpful tools for a smooth transition.

Many banks offer free accounts for college and high school students that do not charge a monthly fee for maintaining an account. The minimum balance requirements are often more flexible since many students don’t have the income to satisfy typical account requirements. By opening a joint account, a parent or guardian can easily track spending and transfer money.  One of the best ways to do this is by utilizing online and mobile banking, which is free at most banks. You can see full transaction history and statements, transfer money from one account to the next, or see how much you have saved … all from your computer or smart phone. Many banks even have options for those who do not have smart phones that utilize text messaging commands.

By working together with your family’s bank, you can ensure you and your student have the right foundation for great educational and fiscal responsibility.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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Export-Import Bank charter: what you need to know

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What is the Export-Import Bank?

The Export-Import Bank of the United States (Ex-Im) is the official export credit agency of the United States. ExIm fills gaps in the trade finance market by working with lenders and brokers to ensure that U.S. businesses get what they need to sell abroad and be competitive in international markets.*

Here’s an example of a business that would use Ex-Im: ABC Company realized to grow their international sales, they needed protection against foreign buyers who might fail to pay them, or non-payment risk protection. Ex-Im approves a small business export credit insurance policy. A few months later, ABC Company sold $500,000 of products to China. Ex-Im had mitigated ABC’s fear of non-payment since the policy covered 95 percent of the commercial and political risks.

Both Democrats and Republicans are working to present a bill to renew the charter while other lawmakers would rather let the charter expire. Those against renewing the charter argue that the bank is a form of “corporate welfare.” Lawmakers who encourage renewal assert that Ex-Im helps U.S. exporters compete against foreign companies, which are backed by their government sponsored Economic Consulting Associations. This results in the generation of 2 billion government-funded dollars for U.S. taxpayers, but with zero cost to the U.S. taxpayer.

Who is affected?

Supporters of the bank charter include large companies such as Boeing, General Electric and Caterpillar.

However, the smaller businesses who use the ExIm services could also be impacted, possibly even more than the larger ones. Take a look at the below chart and facts showing a snapshot of ExIm Bank throughout the last five years.

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Source: Ex-Im website

Current Status

The Ex-Im Bank Charter was set to expire on September 30, however the House and Senate passed a continuing resolution which will extend it through June 30, 2015. During the next nine months, supporters and detractors will lobby for merits of Ex-Im and potential reforms. UMB will continue to monitor the progress and update you on what you need to know.

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*source: ExIm.gov

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Jarrett is the senior vice president, director of international services and sales for UMB. He is responsible for the overall leadership and product strategy for foreign exchange, trade finance and Canadian cash management. He joined UMB in 2013 and has 15 years of experience in the financial services industry. A native of Quito, Ecuador, Paul earned a Bachelor of Science – Accounting degree, from Palm Beach Atlantic University in Palm Beach, Florida.



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Talk is not cheap when it comes to family money

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The most important concept to understand when transferring wealth is the communication plan. It may be difficult, but here’s why you need to focus on it.

Click “continue reading” for more a more in-depth look at this topic.

 

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How to broach the subject of transferring wealth to your children and grandchildren

Money used to be a taboo topic—one your great-grandparents and grandparents would never consider discussing with the next generation. However, times have changed—and so has the thought on these conversations. People want to talk about it while they’re still able to, and there are many benefits to that.

Why the big shift? New wealth, complicated investing vehicles and legacy desires are a few reasons. Many people have seen the challenges that come with unexplained inheritance parameters and instructions. However, discussing your strategies with beneficiaries ahead of time can eliminate confusion, frustration and hurt feelings.

With money comes responsibility and expectations

Educating your beneficiaries on the responsibilities that come with inheriting wealth is important, particularly if you would like your wealth to live beyond the next generation. As you formulate strategies to leave your hard-earned assets to loved ones, you may wish to structure a plan that provides financial security for not only your immediate heirs, but theirs as well.

Start the conversation early

Your children need to be old enough to understand the information, but you can begin talking with them about areas like philanthropy as early as grade school. For example, if your family makes an annual donation, you can involve your children in choosing recipients. Discuss causes that are important to them. Maybe they love pets or want to help give other kids presents for the holidays. Talk about it and let them help pick who you support.

As your children enter the high school years, you can work with your financial advisor to help introduce fundamentals like budgeting and personal cash flow management. Then during their early to mid-20s, you can begin conversations about your estate plan.

Share the strategy

Wealth advisors, or financial planners, generally start the conversation with the older generation about how to share their estate planning details. This is one of the most significant services these advisors provide, because they assist in explaining the estate plan structure, and many times will facilitate the conversation about the strategy.

Inheritors have a lot of questions when discussing their trusts and the strategy behind them, sometimes misunderstanding the intent.  Wealth advisors are neutral parties who explain that securing assets until a certain age is a strategic step. Whether it’s done to ensure measured wealth disbursement or to enable the inheritor to mature before accessing funds, these decisions are made from a comprehensive planning standpoint.

Intergenerational wealth transfer is an extremely complicated process—it can be complicated to execute and emotions are always a factor. Talk with your wealth advisor—they can proactively counsel and assist in both building your strategy and communicating amongst generations. Having these conversations can be the difference in you leaving a gift and establishing a legacy.


Mr. Clyne is a Vice President, Wealth Advisor for UMB Private Wealth Management. He is responsible for delivering customized financial planning with an emphasis on the areas of risk management, investment and wealth transfer. He joined UMB in 2011 and has 11 years of experience in the financial services industry. He serves on St. Louis University Finance Department Advisory Board and Volunteer Lawyers and Accountants for the Arts.



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Financial Words of the Week: Back to School – Student Loans / FAFSA

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FWOTW

Back to School Series

There are different types of student aid that come from various sources. Aid can be in the form of grants (money that is not required to be paid back) that come from schools, private organizations or even from the state and federal government. Some students enter work-study programs that allow them to earn money towards their education as another type of aid. The most common form of aid comes from student loans.

Student loans are funds that are made available for students and guardians to pay for education expenses. It is important to note that, like all other loans, student loans are required to be paid back. However, many student loans offer a deferment period that eliminates the need for payments while a student is in school. There are some loans that are subsidized, so that while a student is in school, the loans don’t accrue interest that the student will have to pay. The federal government is actually paying that interest, not the student.  There are also unsubsidized loans in which the interest accrues while the student is still in school. There still may be the option to utilize in-school deferment, but the interest adds up the entire time the loan exists.

Sometimes it can be difficult to know where to start and which form of aid you may be eligible for. That is where Free Application for Federal Student Aid (FAFSA) comes in. The FAFSA is a form developed by the federal government that helps determine what types of aid students qualify for. Most colleges require that you complete the FAFSA when applying for financial aid. Visit FAFSA’s websiteto find out more details.

Remember to also work with a bank partner or trusted financial advisor, your high school guidance counselor and your college admissions office to understand if there are any additional resources for your education expenses.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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American Royal Parade & Military Pancake Breakfast

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Who doesn’t love a parade? The American Royal Parade will be marching down the streets of downtown Kansas City next Saturday, and if you’re in the area, I hope you join the 10,000 attendees and 4,000 participants in this great tradition. We’ll be honoring U.S. military—past and present. Here are just a few things to look for:

  • 2,000 Boy Scouts
  • 150 horses whose riders include leaders like Neal Patterson (Cerner), Cindy Circo (Kansas City Mayor Pro Tem) and even me!
  • The 50th reunion of the Marine Echo 7 Company

The first half of my year as Chairman of the Board of the American Royal has been wonderful, but this fall is sure to be filled with my favorite moments. UMB is aligned with the American Royal in wanting to honor our veterans. To do that, we’re hosting a pancake breakfast before the parade for current and former service members and their families. Be sure to RSVP soon at American.Royal@umb.com!
pancakes

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Kemper is the chairman and chief executive officer of UMB Financial Corporation and UMB Bank, n.a. He joined UMB in 1997. Mr. Kemper is active in both civic and philanthropic endeavors. One of the causes he is most passionate about is the arts. He currently serves as a trustee and executive committee member for the Denver Art Museum and is a past board member for The Arts Council of Metropolitan Kansas City.



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Business Banking for Dentists

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Should new dentists purchase their first home or buy their practice? Watch to find out our recommendation and some pitfalls to avoid when financing a dental practice.

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Dave Bauer is a Vice President / Region Manager for UMB Business Banking. He is responsible for leading the Business Banking teams in the St. Louis and Oklahoma City regions. He joined UMB in 2011 and has eight years of experience in the financial services industry.



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Financial Words of the Week: Back to School – Coverdell ESA/529 Plan

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FWOTW

Back to School Series

Parents—do you know all of your options when it comes to saving early for your children’s education? Here, we’ll discuss two of our recommended options for saving funds for education well in advance of your first child going off to college: the Coverdell Education Savings Account and the 529 Plan.

The Coverdell Education Savings Account (ESA) allows for a family member to deposit funds into an account that grows tax-free until funds are distributed. It is a great vehicle to start growing funds for both K-12 and college tuition. You can even direct how you want to invest the funds yourself to offer a high level of control over rates of return. There are a few restrictions to this plan such as income limitations and an annual contribution cap of $2,000. After the beneficiary turns 18, you can’t contribute unless special exceptions are granted.

As with the Coverdell ESA, the 529 Plan is a savings account that will allow your contributions to grow tax-free. Unlike the Coverdell ESA, however, the 529 requires that your distributions be used for college expenses only. With the 529 Plan, you are not restricted to an income or age limit, and there is a much higher annual contribution limit: $14,000 per year or nothing that exceeds the education expenses, whichever is lower. In some situations, your state might even offer additional tax benefits for using their 529 Plan. While not offering the same kind of control over investments as the Coverdell ESA, the 529 Plan still offers great value and benefit to parents and students only concerned with college expenses.

Which is right for you?

Work with your local bank partner or financial advisor to review the pros and cons of each option to create an individualized savings plan. You can also check out IRS.gov for more information.

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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 

 
DISCLOSURE AND IMPORTANT CONSIDERATIONS:

UMB Private Wealth Management is a division within UMB Bank, n.a. that manages active portfolios for employee benefit plans, endowments and foundations, fiduciary accounts and individuals.  UMB Financial Services Inc * is a wholly owned subsidiary of UMB Bank, n.a. UMB Bank, n.a., is an affiliate within the UMB Financial Corporation. Banking and trust services offered through UMB Private Wealth Management, a division within UMB Bank, n.a.

This report is provided for informational purposes only and contains no investment advice or recommendations to buy or sell any specific securities. Statements in this report are based on the opinions of UMB Private Wealth Management and the information available at the time this report was published.

All opinions represent our judgments as of the date of this report and are subject to change at any time without notice. You should not use this report as a substitute for your own judgment, and you should consult professional advisors before making any tax, legal, financial planning or investment decisions. This report contains no investment recommendations and you should not interpret the statements in this report as investment, tax, legal, or financial planning advice. UMB Private Wealth Management obtained information used in this report from third-party sources it believes to be reliable, but this information is not necessarily comprehensive and UMB Private Wealth Management does not guarantee that it is accurate.

All investments involve risk, including the possible loss of principal. This information is not intended to be a forecast of future events and this is no guarantee of any future results. Neither UMB Private Wealth Management nor its affiliates, directors, officers, employees or agents accepts any liability for any loss or damage arising out of your use of all or any part of this report.

“UMB” – Reg. U.S. Pat. & Tm. Off. Copyright © 2012. UMB Financial Corporation. All Rights Reserved.

*Securities offered through UMB Financial Services, Inc. member FINRA, SIPC, or the Investment Banking Division of UMB Bank, n.a.

Insurance products offered through UMB Insurance, Inc. You may not have an account with all of these entities. Contact your UMB representative if you have any questions.

Securities and Insurance products are:

NOT FDIC INSURED * NO BANK GUARANTEE * NOT A DEPOSIT * NOT INSURED BY ANY GOVERNMENT AGENCY * MAY LOSE VALUE


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



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4th step to buying a home: searching & making an offer

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Have you:

Good! Then it’s time to start house hunting. As a mortgage loan officer for the last 10 years, I certainly have a lot of knowledge in real estate, but still always refer to experienced realtors for this next step. Their knowledge of the housing market, along with expertise in real estate contracts, are the key to making the best selection of the property in which you could spend at least 5 years (but for some of you, potentially the rest of your life). I referred to Anita Trozzolo, a Kansas City realtor to give us some guidance for this next step.

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Create a priority list

You are making perhaps the biggest purchase of your life, and you deserve to have that purchase fit both your wants and needs.

Your priority list should include the basics, such as:

  • neighborhood and size
  • number of bedrooms and bathrooms
  • basement (finished or unfinished)
  • a kitchen that comes with appliances

If you can’t get a home at your price with all the features you want, then what features are most important?  Start prioritizing.  For instance, would you trade fewer bedrooms for a finished basement?  A longer commute for a larger home and lower cost?

What type of home best suits your needs?

You have several options when purchasing a home from a traditional single-family home, duplex, townhouse or condo.  Each option has its pros and cons, depending on your wants and needs, so you need to decide which type of property is best for you. You can also save on the purchase price in any category by choosing a fixer-upper. Keep in mind, though, the amount of time and money involved to turn a fixer-upper into your dream home might be much more than you expected.

Regardless of your choice, it’s important to target your search. By using options such as general location and affordability, you can refine your search and focus on homes that offer the most desirable features. However, based on my experience with the hundreds of first time home buyers for whom I successfully found and negotiated their first home, it is imperative to nail down location first.  The majority of buyers purchase homes from their choices in their most desired location.

Here are some more tips for your search:

  • Make sure your realtor understands your wants and needs.
  • Your agent must be patient, and show you as many homes as you would like to see. This is most likely the largest purchase of your life!
  • Have your agent set you up on an automatic home search program. This is an efficient way to guide you in your search.
  • Drive through neighborhoods on your off time to check out the area.
  • Choose your favorites before submitting an offer, and tour as many times as you feel comfortable.  Oh, and don’t forget to bring parents and friends. The more eyes the better!

Submit an offer, and most importantly understand the sales contract.  Your agent will assist you with the following:

  • To determine how much to offer, your realtor will show you a market analysis of all the recent sold properties comparable to the home or homes you’re interested in.
  • Obtain all material defects known from the seller through the seller’s agent.  
  • Discuss types of insurance that is required.
  • Counsel you on what price to offer the seller.
  • Make sure closing costs are explained and negotiated.
  • Make sure home warranty is explained and negotiated.
  • Explain the sales contract and all other forms associated with the contract.
  • Present your offer to the seller.
  • Negotiate your offer and counteroffers.
  • Set up inspections.
  • Provide the contract to the lender and closing company.
  • Stay in constant communication with the lender.
  • Arrange and attend the closing.
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When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.




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UMB Insights: Commercial Lending in St. Louis

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The current lending environment in St. Louis is cautiously optimistic. Find out more about what industries are seeing the most growth this year.

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Mr. Peter Blumeyer is President of the St. Louis marketplace for UMB. He is responsible for overall commercial growth in the St. Louis metropolitan area and works closely with other lines of business leaders to drive overall growth in the region. He joined UMB in 2006 and has 10 plus years experience in the financial services industry. He currently resides in Glendale, MO with his wife and two small children.



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