|
|
|
|
July, August and September 2016
Q3 eNewsletter
President's Note
|
|
|
It’s hard to believe that we are midway through 2016 with our eyes set on a busy second-half of the year. It is easy at the start of a new year to be hyper-focused on our business goals and objectives, but as we reach the summer months our attention is diverted to family vacations and beautiful weather.
While a nice break can provide the much-needed re-charge, you can also use this halfway mark as a time for a self-assessment of your business’s midterm success. A quick evaluation can ensure you are charting a path to reach the goals and objectives set forth at the start of the year or provide the opportunity to adjust your strategies for improvement.
In this issue of the FSI newsletter you will find content centered on the financial success of your business. Our team has developed a white paper focusing on the newly implemented Unitrust distribution method for perpetual care cemeteries. This resource provides a comprehensive look at how this updated distribution method can impact the financial sustainability of your business and how it replaces current, outdated methods.
Whether you are looking to gain insight on the latest trends in the death care industry, better understand regulations or build a preneed program that supports positive cash flow our team of experienced death care professionals is ready to help you.
Sincerely,
Bill Williams
President and CEO, Funeral Services, Inc.
|
|
Unitrusts - are you ready?
For years’ perpetual care cemeteries have used an endowment care trust to pay for the ongoing upkeep and maintenance of their grounds. However, the low-interest environment has meant a decline in distributions creating a hindrance in the cemetery’s ability to fulfill its responsibilities to its patrons and local community.
July 1st will bring a viable option for Florida’s perpetual care cemeteries to find financial sustainability - the Unitrust distribution method, a financial technique common with large financial endowments to universities and charitable organizations, and is somewhat foreign to those in the death care industry. Perpetual care is currently operating under laws that were written two or three generations ago. Industry professionals should be excited to welcome this new sophisticated technique to improve the financial security of perpetual care.
FSI President, Bill Williams, and his team authored the latest white paper from FSI, “Unitrusts: Perpetual Solutions for Perpetual Care Cemeteries,” to help foster understanding of the new investment models that will benefit the cemetery and its interment owners.
Click here to access the white paper.
|
|
Jim Atwood, Infinity Management Advisors CEO and FSI board member, outlined the relationship between your preneed trust’s investment strategy and the financial success of your funeral home in the May issue of American Funeral Director. The article reviews preneed trust investment strategies, their impact on cash flow, key indicators of investment performance and provides important questions to ask your financial advisor.
|
|
|
This eNewsletter includes excerpts of Jim’s article,
How to Get the Best Returns from Your Preneed Trust Fund Investment.
For the full version, visit fsitrust.com.
Investment Strategies
Three general investment types a trust will use are:
- Equity investments: the use of stocks.
- Fixed income investments: government or corporate bonds, mortgage-backed investments and securities.
- Liquid investments: readily available funds left to pay fees and distributions from the trust.
The balanced approach is a typical combination of the three investment types:
- Equity investments: 50 percent.
- Fixed-income investments: 47 to 48 percent.
- Liquid investments: 2 to 3 percent.
Appropriately named, this approach closely balances the funds distributed to equity investments and fixed-income investments, balancing the risk and the return of the preneed trust. The death care owner and key stakeholder, based on a number of factors, determines the percentage of cash necessary in the trust to pay fees and disbursements. The size of the trust will impact the percentage of cash required – larger trusts will require less where smaller trusts will require more.
Cash Flow and Performance
A death care firm’s preneed trust will see an influx and outlay of cash as the business sells preneed contracts, and as contracts become at- need and services are provided. Proper management of this flow directly impacts overall cash flow and trust performance.
Like any business, death care firms require a certain amount of cash on-hand for daily operations, vendor payments and employee salaries. Timely distributions of trust funds are key to positive cash flow. Un- timely distributions not only adversely impact cash flow, but could also be a warning sign of a performance issue. The selling of investments to make distributions may also be a warning sign your trust is underperforming.
The performance of the trust, or the rate of return on the investment, can have a direct impact on the firm’s cash flow. A higher percentage of liquid investments may result in overall lower return on investment, therefore stunting the growth of the trust. Liquid investments have the lowest rate of growth. Managed appropriately, the percentage deposited or maintained in this investment type should be kept at the minimum level required by the investment policy statement.
On the flipside of the coin, if there is insufficient cash to distribute for preneed fulfillments, the trustee/investment manager may be required to sell off a portion of the investments. This can potentially create two problems: 1) the trust may be required to liquidate a larger investment position than desired, reducing the total investment and again increasing cash to an undesirable level, and; 2) the selling of the investment could potentially create a capital gain tax liability. Both of these possibilities can lower the overall return on investment.
Death care firms may not be aware of these changes until they review their monthly trust statements.
Understanding the relationship allows the firm and key stakeholders to be more cognizant of the health of their trusts and overall business.
|
|
|
Tommy Settles, LFD
FSI is made up of a dedicated team of experienced professionals who work each day to provide you with unparalleled service. Each individual brings an important skillset that assists us in powering your trust. To help you get to know the FSI team better we will shine a spotlight on one employee each quarter.
|
|
|
Meet Tommy Settles, LFD, FSI Client Services Manager
Mr. Settles began his career in 1987 working as a Licensed Funeral Director and Embalmer. He has experience in operating and managing multiple funeral home and direct disposal operations, and managing at-need and preneed personnel.
Tommy joined FSI in June 2005 focusing primarily on client relations - assisting clients with current and upcoming products and services offered by FSI. Tommy travels across states to meet face-to-face with clients and attend industry events. With his nearly 30 years in the industry Tommy has seen first-hand the evolution of trends, services and industry regulations.
|
|
A Look Back at ICCFA Convention
|
|
In April the FSI team traveled to New Orleans for the International Cemetery, Cremation and Funeral Association’s Annual Convention. Although the crowds were light on the show floor, the convention led to meaningful conversations and the opportunity to interact with other death care industry professionals from across the country.
The 2017 convention will be held April 5-8 in Nashville, Tennessee. Mark your calendars now!
If you didn’t have the opportunity to attend in person, visit ICCFA’s website for the
2016 Annual Convention Recordings. Share them with your colleagues and staff. These resources are a great way to stay on top of key topics in our profession.
|
|
The April issue of Southern Funeral Director features Paul White, LFD, FSI Vice President of Client Development and Marketing, as a contributor with his article, “Preneed Funding Options: Insurance, Trust or Hybrid.” This piece offers a comprehensive look at preneed funding options to help empower funeral home directors and management to choose the appropriate funding method to provide their customers with a service that will maximize the business’s success – today and tomorrow. Read the full article here. |
|
|
|
Hiers-Baxley Funeral Services Provides Ocala Community with a Memorial for Orlando Victims
|
|
|
|
Hiers-Baxley Funeral Services gave their local community in Ocala, Florida, the opportunity to remember and mourn the victims of the June 12 Orland shooting at Pulse Nightclub. A candlelight vigil was held in the Ocala downtown square, but Justin Baxley of Hiers-Baxley said their organization “wanted to offer an additional means to remember the victims.” The memorial will stay in place through June 30. Read the full article share by Funeral Business Advisor here.
FSI would like to recognize Hiers-Baxley for their commitment to serve the Ocala community during this time of great loss. As death care professionals it is our duty to serve our community throughout all seasons of life – Hiers-Baxley sets a great example of how the industry can do just that.
|
|
Calendar
July 4, 2016 Independence Day
FSI office will be closed in honor of Independence Day.
July 28 – 30 Florida Cemetery, Cremation & Funeral Association
Annual Convention & Trade Show, St. Petersburg, Florida
FSI Booth #14
September 5 Labor Day
FSI office will be closed in observation of Labor Day
the national tribute to the contributions workers have made
to the strength, prosperity, and well-being our country.
October 23 – 26 National Funeral Directors Association
International Convention & Expo, Philadelphia, Pennsylvania
FSI Booth #4025
|
|
|
|
|
|
|
|
|
|
