By Frank Jersey
General Manager for 2050 Systems, LLC

fjersey[at]someonesgottadoit.com

Frank Jersey © 2005

There seems to be a problem with all financial institutions in America today in that they do not take the time to understand the information needs of people in retirement. After a person retires, that person wants information with regard to financial performance, quarterly taxes, income and activity. Just about all of the institutions provide some level of the needed information, but most fall short in one or all of these areas.

First, lets focus on financial performance. The investor would like to have investments tracked according to how the investment is performing. In this respect, the investor wants to know when an investment reaches a certain point either by dollar value or by percentage above purchase price. Likewise, an investor would want to know when an investment drops to a certain point either from the highest value that the investment reached and/or from the purchase value of the investment. The major deviation here for most institutions is that they do not offer the ability to track investments to the highest value attained and most do not allow for tracking by an up or down percentage. These features would be most desirable for the individual investor in that the investor can closely monitor performance in a timely manner.

Next, the topic of quarterly taxes is an area that not many financial institutions interact with their individual investors. The individual must report and pay, if due, estimated quarterly taxes to the various jurisdictions that require estimated quarterly taxes. These can be Federal, State and Municipality taxes depending on where the individual investor lives. The individual investor needs to know things like dividends, gains/losses from investment sales, and income generated from investments. The investor needs to know if the proceeds are taxable and whether the proceeds are considered short term or long term. The individual gathers all this information, then the individual needs to figure out the tax rate applicable and file the estimated quarterly returns.

Third, the individual investor needs to know what income is being produced and how to gain access to that income. When an investor retires, the investor will probably utilize the income produced by the investments to pay for living expenses. Not all institutions have the ability to electronically send funds from their institution to the individual investors' personal bank. Sometimes, an institution needs to "cut a check" in order to get the funds into a usable available place for the individual investor.

Lastly, the individual investor needs to track all activity associated with each investment. Since investors may have accounts at different institutions, the individual investor must bare the burden of collecting data and formulating all considerations on behalf of the investor. This means that gains and losses of the same kind from different institutions can offset each other and only the individual is capable of bringing this all together.

It is unfortunate that the financial institutions do not offer many of the processes and reports that could be of benefit for the individual retired investor. However, in many cases, the institutions are only focused on that business which the individual investor has with that institution and has no way of knowing what the potential impact of other investments at other institutions might have on the individual investor. The end result is that the retired individual investor needs to be much more proactive in managing finance issues in the future.

Mr. Jersey is the General Manager for 2050 Systems, LLC. 2020 Systems, LLC is a provider of Income Management Applications Software for Consumers. For more information visit www.2050systems.com or visit Mr. Jersey's retirement information site at www.someonesgottadoit.com.

Published - November 2005