KEY CONCEPTS

ASSET ALLOCATION: The process of determining how much of your investment portfolio belongs in stocks --historically the higher risk-higher return asset class-- and how much belongs in bonds and cash equivalents --historically the lower risk-lower return asset classes. Despite the historical performance of an asset class, however, it is always possible that these results will not continue in the future. Appropriate allocations therefore depend on the gains needed to achieve specific investment objectives, the time frame available for investing, and the level of risk acceptable to achieve the investment objectives.

INDEX: A figure that represents the performance of some underlying set of data. For liquid investments, indexes measure the performance of groups of stocks --e.g., Dow Jones Industrials (30 very large stocks), S&P 500 (500 large stocks), and NASDAQ Composite (1,000s of stocks)-- and bonds of various issuers and maturities. Indexes serve as benchmarks to compare the results of active investments using a similar style or methodology.

INDEXED INVESTING: An investing approach that accepts the results of the index of choice, rather than trying to "beat" the index by actively picking certain stocks and/or bonds to the exclusion of others. Also referred to as "passive" investing in contrast to "active investing."

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FINANCIAL ADVICE

In addition to investment advice, PPA also provides advice on other financial matters. This additional advice often involves working closely with clients¹ attorneys, accountants, and other professionals. These services are included in the overall asset management fee (see the "Fees" tab on the website for additional information). Examples of such services include:

• Preparing hypothetical illustrations of the amounts of money a client might need to accumulate prior to retirement, coupled with projections of how long the accumulated funds are likely to last in retirement. Such illustrations are based on historic information and assumptions that may differ from actual experience.
• Consulting with tax advisors regarding annual contributions to tax-advantaged accounts, and tax loss selling.
• Educating clients about ways to transfer assets to spouses, children, grandchildren, and charities. We also work with clients' attorneys in the implementation of such estate planning strategies.
• Analyzing the financial implications of loans for the purchase and refinancing of real estate. PPA also has an affiliation with VerticalLend, a mortgage lender, which allows us to offer mortgage financing directly to clients.
• Preparing hypothetical illustrations of the various ways to save and invest for higher education, including tax-advantaged Section 529 Plans and Education Savings Accounts.
• Working with non-profit Boards of Directors to draft and implement investment policies for non-profit clients.
• Finally, as licensed life and health insurance agents, Victor and Nick provide analysis regarding how much and what type of coverage would best protect our clients and their families. Our insurance work also involves consulting with attorneys on estate planning issues related to policy ownership. We work with a full-time life insurance specialist ‹ who has 40 years' experience in the industry and access to products from all the major life insurance companies ‹ to obtain the best combination of price and terms for each client's insurance needs.