That’s a wrap

Year-end trends and tips on banking, investments and taxes

Faster, easier and tech-friendly. That’s what customers want when it come to their banking options, according to a recent customer satisfaction survey from J.D. Powers & Associates.

In response, financial institutions are expediting transactions and offering more online banking options. They’re also making interactions more convenient while maintaining personal relationships with their customers.

Bank on it

Locally, AnchorBank has conducted some of their own research into banking trends and customer satisfaction. “We strive to ask questions, listen to our customers, and provide smart financial solutions,” CEO Chris Bauer says. “That’s why we recently commissioned a team of experts to research checking products; customers across the board told us three things: simplicity wins, avoid surprise fees, and give us value-added services.”

After reviewing the research, AnchorBank simplified its checking lineup in order to offer a variety of straightforward products, flat monthly fees (with options to waive fees), and a host of value-added services. “AnchorBank’s new products are designed to be simple, practical and packed with value,” says Bauer.

Greg Dombrowski, president of Johnson Bank, has also applied customer insights to his company’s methodology. “We work hard to create a client experience that recognizes that time is our clients’ most precious commodity,” he explains. “So our goal is to manage their other precious commodity — their financial resources – in the most efficient manner. We want to help remove some of the time burdens from our clients’ daily life so that they can concentrate on what matters most to them.”

Online trends

For its part, Park Bank has been emphasizing technology-driven services that make it easier for their clients to bank anywhere and anytime – while working to keep information safe and secure. They were one of the first banks in Dane County to offer a remote deposit service, which allows clients to deposit checks with a smartphone. In addition to virtual services such as online bill pay, e-statements, and email or text alerts, Park Bank also offers a personal service called PopMoney, which allows customers to pay a friend or colleague instantly (and for free!) from a mobile phone or through online banking. They also provide a money-management tool to help with budgeting and tracking expenses. If bank customers need personalized help, they can reach out in a variety of ways, using a variety of technology. For instance, they can ask questions about their accounts by calling, emailing, or even participating in Live Chat on Park Bank’s website (www.parkbank.com)

As Park Bank President/CEO Jim Hegenbarth explains, “It’s a technology-driven world. Many of these trends will allow more flexibility for consumers and businesses. It’s about embracing change and providing better and safer options in the virtual world of banking. At the same time, banks need to remain visible and active in the community – and provide services that their clients need. The future of banking is exciting – ranging from digital wallets, voice and facial recognition technology, and easier ways to pay bills, to the increasing role of websites and social media in banking transactions.”

Jim Tubbs, president and CEO of the State Bank of Cross Plains, says it’s important to balance the opportunities presented by technology with the need to provide personal service to customers. “Of course we offer an array of online services,” he says. “For example, our customers can apply for a home loan through their computers. They have the convenience of filling out the online application anywhere, at any time. But we find that, before taking a big step like that, before initiating a really large transaction, people want to come in and sit down and talk with us, face-to-face. They want someone to assure them that they are making good decisions. They want to interact with someone they trust. That’s what we try to provide – ultimate convenience along with the reassurance that our banking professionals are close by when people have questions or need expert financial advice.”

Caring for customers at the local level

As more banking functions become automated, one point of differentiation between financial institutions will continue to be the connection that community banks forge with the individuals and cities they serve. Just as “buy local” has become the marketing slogan of many independent grocers, specialty stores and restaurants, it’s also becoming a mantra for banks.

“The definition of a community bank – beyond having a full-service physical presence in the towns we serve – is that as an institution we are truly embedded in the community,” says Tubbs. “We’re smaller than national companies, of course, but we’re also more locally focused. We’re much more in tune with helping stimulate the local economy. We want to finance hockey rinks, restaurants, hardware stores and churches, right in our neighborhood. Those are the pillars of our community, and that’s the kind of infrastructure that we want to capitalize. Our customers appreciate that local deposits are reinvested locally.”

Park Bank’s Hegenbarth echoes that sentiment. “‘Caring before calculating’ is more than just a promise for us, it’s our way of doing business,” he says. “We celebrate the fact that we do right not only for our clients but for our community. We show our support through our business practices, and also through volunteering and sponsorships, so that tomorrow is a better day in Dane County.”

Get investments organized for the future

Just as the banking industry is evolving, the investing landscape is also constantly changing. As the country emerges from the most recent recession, political uncertainty can translate into an unpredictable stock market and hesitant investors. Matthew Ruppe, director of UW Credit Union’s Investment Services, believes that when making the decision to invest, the most important first step consumers can take is to seek advice from an expert they can trust.

“There are many good financial consultants available,” Ruppe says. “Find someone who has the tools and knowledge to help you learn about insurance protection, investment solutions and full financial planning. Don’t be afraid to shop around for a good consultant, or [to] get a second opinion.”

Once an individual chooses a financial advisor, it’s important to determine goals and start the planning process,” Ruppe adds. “Driving blind and hoping to reach your financial goals will not just happen,” he explains. “Procrastination only lessens the likelihood of financial success.”

Ruppe says that having an expert look at your finances is important, and notes that UW Credit Union provides this service at no charge to members. “We can look at someone’s long-term financial health and make sure they are headed in the right direction,” he says. “This could be as simple as some allocation changes, changes to savings strategies, or developing an income plan; it does not need to be complicated, and getting help can make a significant difference in long-term success.”

Lori Huston-Dinga, of Goldstein & Associates, agrees. “You’re never too young or too old to take stock in your finances and work within a budget,” she says. “In our practice, we offer comprehensive advice in the areas of investment and money management, as well as tax and estate planning, customized to your personal situation.”

Huston-Dinga says that sometimes clients say they’re embarrassed that they don’t have the time or know-how to manage their money. “My answer to them is this,” she says, “I hire a personal trainer to stay in shape, and I never cut my own hair. I leave these things to the professionals. What could possibly be more important than your financial future? Work with a professional, it’s never too late.”

Insights into the market

Richard Sals, Johnson Bank’s senior vice president of wealth management, concurs that it’s important for individuals to find a trusted financial advisor, someone who can tailor a financial plan for the investor’s unique needs. “Some clients want to save for their children’s education, some are investing for retirement,” he says. “Maybe they have philanthropic projects, or even want to plan for the education of their grandchildren. That’s why we try to completely understand the needs of each client – their objectives and their emotional ability to tolerate risk – so we can match a financial strategy with their goals.”

 Sals offers some guidelines for those who are new to investing:

•  Don’t panic. While we now have access to  instant information on financial markets and geopolitical events, both here and around the world, it is important to not get caught up in the frenzy of the moment. Recently there was a great deal of uncertainty about Congress raising the debt ceiling. We knew our clients. They didn’t panic. They didn’t call to liquidate their portfolios. Everyone understood the risk, and they stayed with their investments.

• Save for a rainy day. Have some money set aside for short-term needs. You need a certain amount of liquidity – funds that will sustain you for up to a year, so you are not liquidating your portfolio at an emotional time.

• Understand the role of bonds, or fixed income securities, in light of monetary conditions today. At current interest levels, high quality bonds are more risk mitigaters than growth producers. High quality bonds are there to lower the volatility of a portfolio, not necessarily to generate substantial interest  income or capital appreciation.

• Turn off the TV. Don’t spend a lot of time listening to television pundits when it comes to financial advice. They are entertainers. It’s fine to listen to them, but understand at day’s end, they are there to attract attention. They don’t necessarily provide long-term value.

A checklist to wrap up the year

As 2013 draws to a close, it’s natural to look back on the accomplishments of the last twelve months, and also look ahead to new challenges, or even make resolutions for the new year. Goldstein & Associates’ Huston-Dinga has these recommendations for assessing your financial situation:

•  It may seem simple and redundant, but make sure you have funded your retirement plan at work, and your traditional or Roth IRA, as much as your income allows. Some plans encourage contributions made before April 15th to be allocated to the previous year, but time/value analysis says funding sooner is better.

• December is the season of giving, which often includes more charitable donations. Start thinking about how much you might want to give and to which organizations.

• The contribution deadline for the Wisconsin section 529 educational saving plans is December 31st. Make sure you’re aware of this deadline.

• Finally, think about meeting with your financial advisor or accountant for year-end tax assessment.

Best bets for businesses

Beth Korth, senior vice president at First Business Bank, has additional advice on investment strategies for businesses – and
a prediction for the coming year.

“The interest rate yield curve has been very flat for the past five years and, as a result, many individuals and business have had few options to enhance the yield on investment for their cash reserves,” Korth says. “But many economists are projecting that short-term interest rates will begin to rise in 2015. As interest rates rise, banks will be able to work with clients to build an investment strategy that offers greater variety and enhanced yield opportunities. Investors should watch for changes in interest rates and discuss new investment options with their financial advisors during the course of 2014.”

First Business Bank holds a unique place in the area’s financial landscape as the first bank in the Midwest to devote itself exclusively to serving businesses. Taking an individual approach to servicing the needs of business and business owners, Korth notes that First Business Bank offers a full line of financial services including: commercial lending, treasury management, private banking, retirement plans, investment management services, trust services, specialty lending, and equipment finance and leasing.

Protecting digital assets

As you make year-end decisions about banking and investing, you will probably be prompted to create online accounts that are password protected. As more and more financial business – and a myriad of other types of transactions – are conducted in cyberspace, both individuals and businesses need to think about protecting their digital assets.

Gini L. Hendrickson, an attorney with Murphy Desmond, asks the question that many tech-savvy consumers and business owners may not have considered: “What happens to these accounts after the user’s death?” And to answer this question adequately, says Hendrickson, people should give it serious thought. “Sit back and think for a moment about all of the ways you access Internet accounts – bank, credit card, utilities, business websites, social media (Facebook, Twitter, LinkedIn), photo management sites (Instragram, Flickr, Shutterfly), music/video accounts (iTunes, YouTube) and blogs (personal and professional),” she advises. “The list goes on and on, comprising everything from financial digital assets to personal heritage digital assets; even the family photo album has been replaced with a digital photo account.”

For the small business owner, the problem of managing these digital assets can be more complex if systems are not in place to document who manages the online accounts and business website – who has access to the information and how often it is updated. Hendrickson explains: “The very nature of these Internet-based accounts provides security preventing anyone other than the creator of the account [from having] access to it. This presents problems when an individual dies or experiences a life-changing event.”

Although this is an evolving area with little controlling law to govern it, Hendrickson and her colleagues at Murphy Desmond can assist with planning options. “Over time there will be clarification regarding digital assets and the rights of beneficiaries, authority of personal representatives, and terms of service agreements issued by Internet sites,”
she predicts.

Finally, a word about taxes

As 2013 winds down, it’s time to investigate changes in the tax code that may affect your finances. Doing so will help you plan for next year’s April filing deadline.

“One of the most discussed changes has been in the area of taxes and same-sex couples,” says Hendrickson. “In August, the IRS announced that it will recognize the marriage of same-sex individuals who were married in a state where it is legal. This means the couple can file a joint federal tax return even if the state where they live, like Wisconsin, does not recognize their marriage.”

However, these couples cannot file a joint status Wisconsin tax return. A same-sex couple validly married in another state must file separate single status Wisconsin tax returns – head of household, if qualified. Additionally, the couple will not be able to file electronically; only paper filing is permitted under these circumstances. Lastly, the IRS permits federal tax returns to be amended, changing the filing status to married. However Wisconsin will not permit amended returns for the purpose of changing the filing status.

Huston-Dinga says health care reform will also have tax implications. “Another big change for this fall and next year is the new health care bill; several clients have had questions about their current health coverage, and whether it is still their most cost-effective option,” she says. “We can help them make an ‘educated decision’ instead of a ‘best guess.’ Also, we always get questions about retirement plan contribution limits, changes to gifting limits, estate tax limits and marginal tax brackets. Helping our clients understand how these limits can be used to their benefit is always rewarding.”

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