A Message from the CEO
Gordon B. Fowler, Jr., President and Chief Investment Ofﬁcer Strategic Hires
A key and formative advantage of its sound capital position Howard E. N. Wilson,
experience for my to invest in opportunistic endeavors Executive Vice President and
parents, and many in their and expand our geographic footprint. Director of Client Services
generation, was the Great The strength of
Depression. These were Investing at an Opportune Time
difﬁcult times, and very As we move forward, increasingly independence
few individuals or families escaped we find there is a growing interest continues to distinguish
unscathed. But, surprisingly, some from prospective clients and talented our ﬁrm and enables us
professionals who want to be part to recruit exceptionally
people will actually recount how
of our company. This trend further talented professionals:
their family experienced a “good
Depression.” By this, they mean that validates our commitment to remain • Jason Pride, CFA, joined Glenmede
while times were tough, and despite independent and solely focused on as Director of Investment Strategy,
the belt-tightening, family members investment and wealth management. a newly created position. Jason
will be responsible for formulating
came through the period stronger,
While other firms reduced their and, along with Chief Investment
more united, and with a greater sense Ofﬁcer Gordon Fowler, directing
workforce, we took the opportunity
of conﬁdence and purpose. investment policy and strategy for
to tap into the availability of
I feel, with a certain amount of key investment and relationship
professionals who share our values • With the establishment of our
pride, that the same can be said of New York ofﬁce, we are pleased
Glenmede over this last year. The and were attracted to our collaborative
to welcome Lee Miller as a
volatility in the markets that started culture. Our most noteworthy Senior Trust Administrator and
in 2008 and continued into 2009 was initiative, which continues our Glenn Switzer as a Senior Portfolio
an intense challenge for our clients. organic growth strategy, came with Manager. Together, they represent
the opening of a new, full-service an average of more than 30 years
Many wealth management companies of expertise, and both will serve
were forced to retreat from business office in New York.
as primary contacts as we further
pursuits while also resorting to severe Although the barriers to entry of develop a presence in the
cost-cutting tactics. New York City metropolitan region.
this marketplace are formidable,
Glenmede’s strength and stability • William (Bill) Robb joined
Unlike these firms, we walked Glenmede’s Morristown ofﬁce
into this period better prepared offer a compelling value proposition
as a Portfolio Manager with over
to withstand the headwinds of a to a population stricken by changing 11 years of experience providing
collapsing market and faltering market dynamics. Against this investment counsel and wealth-
economy. By diligently assessing backdrop, Glenmede stands out as advisory services to high-net-worth
an attractive alternative for current individual and institutional clients.
and streamlining our operational
expenditures, Glenmede avoided mass and prospective clients who have an
We believe this momentum will
employee layoffs and other maneuvers increased interest in fostering a more continue, and Glenmede is prepared
that would have compromised the intimate, trusting relationship with to opportunistically hire skilled
integrity of our culture and how their wealth advisor. individuals who share our priority to
serve clients from a platform that
we conduct our business. We chose
focuses exclusively on investment
instead to carefully control our and wealth management.
expenses. As a result, Glenmede took continues on page 2
Glenmede Perspectives Winter 2010 1
“A Message from the CEO” continued from page 1
As the number of independent with a narrower recovery gap when 2. Simplify the ﬁnancial world of our
wealth management firms big the market rose during the later part clients. Provide clients with a level
enough to provide broad and of last year. of financial advice and service that
sophisticated advice shrinks, we have improves the quality of their lives.
the opportunity to make inroads The Next Phase of
Glenmede’s Growth 3. Sustain our independence.
and not only establish a complete
2009 was a time of transition for Maintain financial strength
regional footprint from New York to
Glenmede. After 35 years of service, through periods of economic
Washington, but also reinforce our
Al Piscopo retired as Glenmede’s CEO. stability and turmoil so that
growing national presence.
My colleagues and I are indebted to him. Glenmede remains a reliable,
A Year of Considerable Activity Under Al’s stewardship, Glenmede independent organization focused
with Clients made the necessary investments and on the needs of current and future
An important effort during this ensured the stability of our foundation generations of clients.
volatile year was our intense campaign while preserving our long-term
to reach out to our clients to ensure commitments to our clients and These strategic goals will last beyond
that our best ideas, from investment employees. He is why we are positioned 2010. They are intended to serve as
strategy to financial planning, were today to confidently move ahead. an underlying charter for long-term
shared at a time of great uncertainty. initiatives, and bring us closer to
In turn, client contact levels were As part of the transition to new reaching these objectives.
greatly increased during the most leadership, we engaged our
management team and Board of Closing Thoughts
stressful months of market declines I am very excited about Glenmede’s
and instability. Directors to develop a new set of
strategic goals for Glenmede. These future. We have a unique and
Account performance during this goals represent big-picture concepts competitive advantage in the
period held true to our mission to that, if executed successfully, should investment and wealth management
participate in market growth on the lead to a richer client experience, market, and an excellent opportunity
upswing and protect client assets on profitable growth for shareholders, and to build from here. If we approach
the downturn. This mindset serves rewarding careers for our employees. this opportunity with the same
the best interests of our clients in They are: values that have guided us in the
varying economic climates. During past—a commitment to service,
the steepest part of the declines, we 1. Produce superior investment thoughtful collaboration, a disciplined
earned the greatest level of relative results. Exceed our clients’ business focus, and a high level of
performance, cushioning our clients’ expectations for investment integrity—I am quite confident that
investments and leaving portfolios return and risk management. we will achieve our intended results.
Time to gather those tax materials and send them off to your tax preparer. And
while you are at it—what can you throw away or shred? Our recommendations:
Keep forever: Copies of tax returns, canceled checks and receipts for all
records to support nondeductible tax deductions, including deductions
traditional IRA contributions, and gift for charity, real estate taxes, tax
tax records. preparation, and investment
expenses; and year-end statements
Keep until at least three years after
from investment advisors.
the asset or home is sold: Cost-basis
records for investments, including Shred: Monthly investment statements
dividend reinvestment plans, (but keep the year-end statement)
partnership K-1s, and receipts for and paycheck stubs (if they match
home purchase and major home the W-2).
improvements. Shred: Credit card and utility bills
Keep for 10 years: All 1099 and W-2 unless they relate to tax deductions.
forms; supporting documents, such as
Glenmede Perspectives Winter 2010 2
An Overview of the State of the States
Shifting valuations require active monitoring and a disciplined investment approach
Laura LaRosa, Director of Fixed Income
States and municipalities its payments, if this were to occur,
have long issued debt as a government administrators would be
way to fund the programs forced to act as quickly as possible to
and initiatives that remedy the problem.
enable governments and
communities to function State and local municipalities
and thrive. Yet the recent economic can also improve their financial
recession has hit many governments conditions through many cost-
exceedingly hard, leaving them short cutting methods under their control.
of cash and with limited options. Although unpleasant, libraries and
recreation centers can be closed,
Unfortunately, there is little cushion trash collection can be reduced to
for budgets facing diminished revenue once a week, and cutbacks in the
streams and a significant rise in form of forced employee furloughs
administrative costs. Of particular can be initiated. These tactics may be
concern, California, Illinois, Nevada, painful for constituents to bear, but
and New York are struggling under such measures have been used in past
severe financial pressures. We expect recessionary times.
that this downward trend will extend
into 2011 and possibly beyond, For those investors who find
depending on the nature of the the stream of negative news too
uncomfortable, pre-refunded or For those investors who
economic rebound. This is especially
escrowed municipal bonds offer ﬁnd the stream of negative
important given that, until now,
municipal debt has been viewed as one the ultimate safety. These bonds, news too uncomfortable,
of the most trustworthy investments. which are tax-exempt, are created pre-refunded or escrowed
The question that remains unanswered when municipalities issue new debt municipal bonds offer the
is this: Will governments initiate and to refinance previous debt issued at ultimate safety.
then stick with the necessary reforms higher interest rates. The issuer uses
they need to enact? the proceeds from the new bond
issue to purchase U.S. Treasuries
At Glenmede, we continue to invest as collateral. The U.S. Treasury receive noticeably more media
in states with healthy cash flows and collateral is then used to pay interest coverage. Nevertheless, we believe
ample capital reserves. The most and principal on the bonds when that municipal securities remain an
powerful financial tool available to due. A pre-refunded bond therefore appropriate and important investment
states and municipalities is their provides an investor with a tax- for our clients to consider, provided
ability to raise taxes. Municipal exempt municipal bond backed by that such investments are made using
General Obligation debt, a secure form U.S. Treasuries. a disciplined investment approach and
of debt issuance, enables a state to thoughtful due diligence. Glenmede
raise funds while providing investors It remains to be seen how and when continues to navigate the changing
with the municipality’s full-faith- certain states will emerge from landscape and identify opportunities,
and-credit guarantee to pay interest their current crisis. The housing and we will keep you, our clients and
and principal at maturity. For the market collapse along with high colleagues, informed.
majority of states that remain above unemployment rates could take
the fray, these bonds continue to be many years to correct. We expect
a viable source of funds. While it is further deterioration of state and
rare for a municipality to default on municipal financial conditions to
Glenmede Perspectives Winter 2010 3
Conversion of a Traditional IRA to a Roth IRA:
A Good Opportunity for Some, All, or Nobody?
Melissa L. Burke, Director of Personal Income Tax
Charles M. Aulino, Director of Financial Planning
Beginning in 2010, owners of traditional Studies suggest that conversions operating losses that offset taxable
IRAs (Individual Retirement Accounts) (and payment of related income income caused by the conversion.
have the right to convert to a Roth IRA tax) are most efficient when Similarly, owners may have
regardless of income. Conversions may the funds remain intact for a Alternative Minimum Tax (AMT)
occur in any year in the foreseeable long period. This means that credits available for use if the
future, but there is a potential tax conversion is beneficial primarily conversion income pushes them
advantage to making the conversion to young owners (under age 40) out of AMT.
in 2010. Owners must pay income tax or those who intend to pass IRAs
on the value of the traditional IRA at intact to heirs. 5. What is the future of income tax
the time of the conversion, but income rates? Future tax rates affect the
taxes payable on 2010 conversions 2. Will the IRA owner pay the decision of whether to convert
may be deferred over two years (2011 income tax on the conversion from all now or in pieces over time.
and 2012). Conversion by a beneﬁciary financial resources other than the For example, if in the future the
of an inherited IRA is not permitted. IRA itself? If the income tax is paid government changes policy and
from the converted IRA, much or decides to subject Roth IRAs to
Traditional IRAs and Roth IRAs all of the long-term advantage of income tax, then, despite all the
differ in three fundamental ways. conversion may be lost. planning, will conversion have
First, withdrawals from traditional been a detriment?
IRAs are subject to income tax, 3. Will the beneficiaries of the
while withdrawals from Roth IRAs converted IRA be individuals or For older IRA owners, the decision to
are not. Second, traditional IRAs are charities, and how soon will they convert a traditional IRA ultimately
usually funded with tax-deductible need to use the funds? Conversion comes down to an analysis of long-
contributions, while Roth IRAs are of a traditional IRA to a Roth IRA term financial security. Will you
funded with after-tax dollars. Third, seems unwise when a charity is need to rely on these funds for living
traditional IRA owners must make the designated beneficiary because expenses? Glenmede’s financial
annual minimum withdrawals after charities pay no income tax on planners can help clients parse this
age 70, while Roth IRA owners need a traditional IRA. Alternatively, decision-making process. For younger
not do so during their lifetimes. if the heirs draw down the funds IRA owners, a careful analysis of the
soon after the owner’s death, will time required to recoup the income
Variables to Consider Before the amount of time that has passed tax is an important factor.
Converting a Traditional IRA be sufficient to recoup the income
The decision to convert a traditional taxes previously paid? For a more complete analysis of this topic,
IRA into a Roth IRA is complex and visit your Glenmede WebView account for
not determined solely by reference to 4. Are there any specific attributes in our white paper on this subject or contact
income tax rates or dollar amounts. the IRA owner’s tax profile that your Glenmede Relationship Manager.
Some questions to consider include: might create an advantage to
conversion? Although the
1. Can IRA owners foretell, with conversion creates taxable income,
reasonable confidence, that owners may have excess charitable
they will never need to draw on contribution carryovers or net
the IRA as a financial resource?
Philadelphia • Cleveland • Morristown • New York • Princeton • Wilmington
www.glenmede.com Please email your questions or comments to email@example.com.
Glenmede Perspectives Winter 2010 4