TRP Outlook
Situation/Analogies
Sales Ideas/Know Trustee
(No Clint)
Retirement Planning
Stuff you should know
100
Domestic Stock Market Outlook: The Federal Reserve's expansive monetary policy, coupled with a variety of fiscal stimulus programs, has succeeded in pulling the economy back from the precipice and onto more stable ground. In anticipation of an eventual recovery, _________ have staged an impressive rally from their March lows. The question now is just how strong an economic rebound is likely to be. We are _________ about the long-term prospects for U.S. equities. Investors who remained committed to their basic investment strategies, with an allocation to equities reflecting their risk/tolerance profile and time horizon, were able to participate in the market upturn during the past six months.
Equities Optimistic
100
Client is looking for a better return then her CD. Discuss the other options available and what would TRP suggest?
Need to have discussed: Risks associated with (CDs, MM, STB) Time Horizon (what is the goal?)
100
What is the Recency Effect? How does it affect our clients?
whats most recent in our minds sticks out effects clients like being stuck in traffic...when they are in a traffic jam thats all they think about is being stuck in that traffic jam, never going to move etc, but as soon as they start moving again they completely forget the feelings/emotions they had while stuck in traffic. Client think "this is the way it is now" whether good or bad
100
You are in a meeting with a Novice client and running an assess analysis. Explain the difference between Growth Investments and Value Investments so the Sally Novice can understand.
Value: stocks that are deemed to be undervalued in price and that are likely to pay dividends. This can due to a merger, aquisition, bad press, sector corrections, etc. "Mercedes on sale" Growth: higher potential capital appreciation but usually at above-average risk. Growth funds are more volatile than funds in the value and blend categories. The companies in a growth fund portfolio are in an expansion phase and they are not expected to pay dividends. Investing in growth funds requires a tolerance for risk and a holding period with a time horizon of five to 10 years.
100
What is the average Mutual Fund Expense Ratio in the industry? What is TRP average mf expense ratio for retail funds? (aprox)
Mutual Fund Average Expense Ratio: 3% TRP: aprox 1%
200
Domestic Bond Market: The credit markets have made enormous progress since their collapse a year ago. The recovery has perhaps been most evident in the difference in yields between riskier bonds, such as corporate issues, and Treasuries. After peaking at record levels in late 2008, such credit spreads have narrowed considerably, driving yields on riskier issues down sharply and resulting in substantial price gains. With spreads now back at more normal levels, buyers of investment-grade and ________ ________ bonds should ____ ______ the dramatic gains to continue. Nonetheless, we believe __________ bonds continue to offer good long-term values.
High-yield Corporate not expect corporate
200
Novice Client: "I am a very conservative investor and dont feel comfortable in the market at all." Help this client understand the risks associated with inflation and diversification using an easy to understand analogy.
Discuss the price of a home vs recent car purchase putting all your eggs in one basket
200
What are the 4 components of the Consultative Sales Interaction Model:
(1) Establish rapport and credibility, (2) Conduct discovery, (3) Offer needs-driven solutions, (4) Gain commitment and close
200
Financial experts recommend that retirees plan on replacing between _______and_________of preretirement salary in order to enjoy a standard of living similar to that experienced before retiring.
60% and 80%
200
This tool can help differentiate between the BCG and GSF
Fund comparison in fund book
300
International Markets: The global economy is functioning _____ than what might have been expected earlier this year, and recent data are encouraging. Improved liquidity in the credit markets has made a big difference, but an enduring economic recovery will likely come _____ and unevenly. Some countries and regions are already showing signs of sustainable growth. Others are lagging. A few months ago, investors were well compensated for taking bold risks, but we believe that the investment landscape has changed.
Better slowly
300
Novice Analytic Client: "I am looking for 4-5 star funds, I only want the best performing MFs in my portfolio" Help this client understand the difference between a good product vs. a good strategy. Also explain Mstar star ratings and why that may not best way to evaluate a fund.
Clints Car Analogy Discuss mstar using 3 years of past performance and no indication of future results. Comparing apples to apples...some funds are unique in the strat and its not appropriate to compare them to funds that are not similar.
300
Explain the difference between bottom-up and top-down investing What does T. Rowe Price use and why?
Bottom-up investing: looks at the fundamentals of companies, and whether companies are healthy, profitable, well run, etc Top-down investing: looks at the industry and tries to time the industry itself based on trends. TRP uses bottom-up investing and we believe it is better since markets are efficient and it is very hard to try and time random trends.
300
Consider that there's a better-than-even chance these days that one spouse in a 65-year-old couple will live to ____, and a ___ percent chance that one will make it to 95.
90 yrs old 23%
300
Name the: T. Rowe Price President/CEO _____________? Chairman ________________? Vice Chairman ______________? (need all 3 but no points deducted for mixing up Chairman and Vice Chairman)
Pres/CEO: Jim Kennedy Chairman: Brian Rogers Vice Chairman: Ed Bernard
400
Emerging Market Outlook: Emerging markets equities have generated solid gains in 2009. We remain ______ on the asset class for investors with medium- and longer-term investment time horizons, while acknowledging that the pace of gains is ________ and volatility could hurt _______ results.
Bullish unsustainable short term
400
Why TRP: Client: I have been shopping around different firms and banks to find a financial advisor. The manager at my local bank wants to be my financial advisor. There is also this guy that came to my house and talked about this product that gives me 3% guaranteed for life! What analogy/statement would you use? (Provide at least 2)
-Client focused vs. Product Focused -Would you go to the Dentist if you broke your ankle? -Whats important to you when looking for a financial advisor? -What was that person incentive to help you? -Did you ask these folks how they were compensated?
400
In the article we reviewed last week from Kiplingers Magazine they discussed "Herd Behavior". How does this effect our clients and what two emotions stick out most? (Double Jeopardy)
Fear: When the market is dropping investors want out...majority of those get out of the market that rely on emotion to drive their decisions. Eventually there is a collective buzz among investors and it feels right bc "everyone else is doing it". Greed: When you stick to an appropriately diversified plan you might miss out on the gains that performance chasers are fleeing to in Emerging markets or a hot sector. Client’s emotions get the best of them "if they can do it why cant I?" they drop the logical boring AA strategy and go to market timing...."everyone else is doing it".
400
On October 1, 2009, T. Rowe Price began phasing out the current prospectus format and introduced two new types of prospectuses: ___________ (sometimes called full prospectus) and ________ Prospectus. Please note that the literature order process has been impacted by this change and that "PPRO" or "STAT" should be used for prospectus requests. Use "STAT" only when the investor specifically requests a Statutory or "Full" Prospectus. (Double Jeopardy)
Statutory Prospectus Summary Prospectus
400
Margos coming.... Retail Sales has a goal of Maximizing Sales Results. Name 2 out of the 3 initiatives that are in place in 2009 to accomplish this goal?
-High Value Strategies (SPOC, APS HV Routing, RPS Retention Efforts) -2 new LEADs campaigns (IC Capabilities and Retirement Readiness) -Increase IC Referrals
500
While the financial markets and the global economy remain troubled, T. Rowe Price Chairman and Chief Investment Officer Brian Rogers believes the overwhelming crisis of fear gripping the markets is overshadowing a brighter long-term outlook. In fact, in contrast to the irrational exuberance that propelled the late 1990s bull market, Mr. Rogers thinks we may have entered a period of “______ _________ ” that could present opportunities for long-term investors.
Irrational Pessimism
500
Client loves TRP and really believes in the buy and hold strat to investing. They recently had 50k CD mature and want your advice, they are looking to invest it all into the GNMA fund bc bonds are doing well right now. You run assess and determine they are appropriatly allocated prior to the CD maturing. (meaning the CD was not in the analysis prior...NEW $$$) Keeping the TRP philosophy in mind, what would you bring up in your meeting regarding bonds?
We do not believe in market timing. However bc the portfolio is already appropriatly allocated it may not be in the best interest to increase IG bonds due to the current interest rate environment. Discuss the interest rates history going back to the 70s and how they have only decreased from 15% to almost 0. -Explain the 1:7 (interest rates: total return) -Kids playing soccer analogy -Recency effect
500
ETFs are the recent buzz in the finance industry. What is T. Rowes stance on ETFs. Also, from a cost perspective why would some of our clients not benefit from this product using our philosophy regarding dollar cost averaging?
T. Rowe Price is exploring the idea of utilizing ETFs but no plans in the immediate future. From a cost perspective ETFs are generally much cheaper then low cost Mutual Funds on an annual basis, however, clients are charged commissions with every trade. If a client is utilizing dollar cost averaging such as the AAB service and the monthly deposits are not substantial the client may pay much more in fees/expenses, especially if the investment is not being held for more then 10 years. For example a client purchasing into 10 funds with 100 each month, the client will pay aprox 100 per month in commissions for the ETF vs. a low expense ratio in a mutual fund.
500
Examining the market performance of rolling 10-year periods beginning in 1926, Ritter says stocks have beaten bonds 82 percent of the time. Stocks have averaged ___ percent annual returns, even after 2008, versus __.5 percent for intermediate-term, investment-grade bonds.
10 6.5
500
Margos coming... Retail Sales has a goal of Building Sales Capabilities. Name 1 initiative that is in place in 2009 to accomplish this goal? (Double Jeopardy)
Introduction of Decision Stages! Evolution of the Consultative Sales Interaction Model (CSIM) – Integrated DS, EN and Vue as enhancers to the process