As the year comes to a close, let us take stock of what we’ve accomplished thus far. At MMBB, we believe that education is key to financial wellness. Therefore, we strive to provide you with the information that will help you to meet your financial goals and set new ones. Remember, never stop learning. In this final issue of 2019, we’ve included articles on a variety of topics that will increase your financial knowledge.
First, we bring you The Strategic Pastoral Excellence Program: Looking Back at the First Three Years. As the first cohort prepares to graduate, we thought it would be appropriate to provide you with a review of how SPEP has met our initial goals and some of the learnings that have evolved over the life of the program.
Next, Meet the CIO introduces MMBB’s new Chief Investment Officer, Noradeen Farlekas. In this story we meet Noradeen and learn about her career and what drew her to MMBB, as well as her initial goals for improving the member investment experience.
Everything You Need to Know About Estate Planning, Part 1: Your Role as an Executor is an important article. In it we learn that being named an executor is not a task to be taken lightly; it may involve a lot of time and effort depending upon the size of the estate.
In Think Before You Share… Using Social Media Wisely, we outline the steps that you should take to protect yourself when posting to social media platforms.
Finally, Is a Vacation Club the Right Investment for You? discusses the pros and cons of investing in a vacation club membership. It’s an option for frequent vacationers who want to worry less about planning and more about enjoying their trips.
It is our privilege to serve you and your ministry. We look forward to guiding you on the path to financial wellness.
Wishing you a healthy, blessed and prosperous New Year.
Louis P. Barbarin, CPA
Chief Executive Officer
By now, many readers are familiar with MMBB’s Strategic Pastoral Excellence Program (SPEP), one of the initiatives launched under the auspices of an Economic Challenges Facing Pastoral Leaders (ECFPL) Grant we received from Lilly Endowment Inc. in 2015. In addition to helping participants gather tools and engage strategies for developing personal financial wellness, the program also focuses on working with pastors and their lay leadership to cultivate healthy conversations about church financial issues. As members of the first SPEP cohort prepare to graduate 3 years after their first meeting in January 2017, we thought it was a good time to review how the program has met our initial goals and some of the learnings that have evolved over the life of the program.
There are 6 SPEP cohorts currently moving through the curriculum. In addition to the first cohort which will complete the initiative in December with their final quarterly conference call, the cohort which first met in October 2017 will finish the cycle in September 2020. Participants across all cohorts have been able to accomplish so much not only by learning the financial and management concepts as well as best practices that we share, but by applying and putting them into practice. The dedication and commitment of each person/couple to the program along with the tools received and the individualized guidance and support from their MMBB CERTIFIED FINANCIAL PLANNER® professionals has allowed them to:
A total of 83 pastors are currently part of the program and there have been 55 spouses who have joined the sessions, a factor we consider critical to establishing long-term financial well-being. Spousal participation has often led to greater transparency and willingness to honestly discuss the financial challenges the households are confronting. The level of transparency continues to be a game changer for attendees and one of the qualities we are most proud of. Rev. Dr. Perry Hopper, Associate Executive Director, and part of the team who designed the curriculum notes that, “Transparency is important to the goals of the program. We encourage an environment of ‘safe-space’ and ‘no-judgment.’”
Often, couples bring completely different childhood experiences about money to their relationships and helping them understand and navigate these differences is essential. Working with couples to unpack their money stories has been part of the curriculum from the start, but it has emerged as one aspect that allows couples to speak more frankly about their perspectives and emotional triggers surrounding money. This has led to real breakthroughs for many clergy couples. One spouse noted that “she was able to make a real connection within the private conversations between she and her husband.”
One of the most notable changes in the curriculum from the early SPEP sessions is the addition of Clergy Taxes and New Tax Law Highlights. Clergy Taxes in particular, was added in the second year in response to questions from attendees. It has since been included for all groups and was added to the second year of the earlier cohorts, to be sure that all participants received the information. As SPEP Director, Ania Norori indicates, “Clergy tax education continues to be a huge area that is a source of confusion which they are desperately seeking clarity about. As a result, content is offered on this topic during all three years of the program.” Staff has also learned to build in extra time for discussion when Clergy Taxes is scheduled to accommodate the volume of questions and “what ifs.” As one pastor put it, “I want to make sure I am tax compliant in all matters.”
In the second and third years of the program, each pastor and spouse can invite a lay leader of their choosing when the focus includes compensation and retirement planning. “Lay leader participation has been a huge plus for the SPEP structure and has proven to be a key element of this program,” Norori notes.” Over and over we hear feedback and amazing testimonies of how these offsite gatherings have built advocacy bonds between pastors and lay leaders. “We know that at times pastoral leaders and congregational leaders can communicate at cross purposes when it comes to financial matters,” Dr. Hopper points out. “The goal is to learn to have healthier conversations that are honest and yield results for both pastors and lay leaders.” We have found that the presence of lay leaders does not hinder transparency or vulnerability and has yielded very productive conversations. One pastor shared how his lay leader rebuilt the pastoral budget after attending a SPEP event so that he received a substantial increase in pay. When the lay leader was challenged by another member about the size of the increase, the lay leader was able to explain the change in compensation and mentioned how they were still under funding the pastor. The pastor was relieved to know that he had an advocate.
When CEO, Louis Barbarin requested we move toward a green solution that would rectify the massive amount of written material we were distributing to our SPEP cohorts, staff developed a customized SPEP App. As a result, we witnessed the engagement level of participant interaction soar. Participants embraced this new technology and regularly posted to our group feed and connected on a 1-to-1 level using this tool. They shared valuable resources as well as the occasional funny picture. One of the most exciting
benefits of the SPEP App was that it also provided a solution for attendees that were not able to carry a heavy load of valuable resources, giving quick and easy access to all information that was needed and making it possible to take notes seamlessly.
Although our first cohort will graduate at the end of this year, the journey is just beginning. We will track their progress and the progress of all SPEP attendees as they continue to walk toward financial wellness. This will occur via longevity studies that measure participant progress over time, particularly surveying their debt level, which is one of the key indicators of financial wellness. This will take place 3, 5, and 10 years after completing the program. We are excited about the ways the SPEP program has grown and adapted since the first cohort gathering to witness how many participants have been able to change their circumstances and capitalize on their learnings.
Noradeen Farlekas, LP.D., CFA, recently joined MMBB Financial Services as Chief Investment Officer (CIO). Noradeen spent most of her career with the IBM Retirement Fund as a senior member of the Investment Team. As Head of Global Equities for IBM’s Defined Benefit Plan, she was responsible for over $14 billion in global equity investments, including all internally and externally managed portfolios, transition management, operations and trading. In addition, she was the Senior Portfolio Manager of six in-house passive portfolios, as well as the externally managed active international portfolio. During her tenure, Noradeen also served as Head of Global Equities for IBM’s Defined Contribution Plan. Prior to IBM, she co-managed Entergy Corporation’s defined benefit and defined contribution plans, where she had oversight responsibility of external investment managers.
When asked why she decided to join MMBB, Noradeen replied, “I really appreciate the organization’s history and path and the fact that MMBB is a non-profit service organization trying to fulfill a need for our members.” Noradeen recently completed her doctorate in law and policy at Northeastern University. Her research focused on combining impact investing and philanthropy to increase educational equity in the U.S. Noradeen has consulted and advised in the impact investing, foundation and nonprofit spaces. She feels that her studies broadened her outlook and gives her a better appreciation of the importance and impact of policy changes, thus drawing her to the CIO position at MMBB.
In her new role as CIO, Noradeen will initially focus on three broad areas to improve the MMBB member investment experience:
1. Long term investment approach, with dual focus on fiduciary responsibility and liability framed investing
2. Reducing and mitigating operational risk
3. Fee and cost minimization
Of the three items, aligning asset allocation and liability framed investing is a hallmark of the investment process and will be an initial area of focus. Additionally, prudently reducing costs will be of keen importance.
To accomplish this, she feels the following must be addressed:
“Our goal is to be successful in the long term.” This will require adding new products and investment choices that will help our members meet their retirement needs.
In addition to her corporate experience, Noradeen has taught undergraduate and graduate courses, including global capital markets, impact investing, sustainable economics and environmental economics. Noradeen continues to leverage her deep institutional investment experience and research regarding her interest in racial justice investing; socially responsible investing; and social, education and economic justice issues.
Noradeen is on the Board of Directors and Investment Committee for the Norwalk Community College Foundation and serves in an advisory capacity for JUST Capital, the Daniel Trust Foundation, and the University of Scranton.
With this article MMBB begins a two-part series on what you need to know about Estate Planning. In this first article, we’ll examine the role of the executor. The second article will provide information about preparing a will.
You have recently been named the executor of an estate but, like many people, you may not be familiar with the scope of the task that you are undertaking and the important information you need to know. An executor is the person responsible for managing the administration of a deceased individual’s estate. No matter the size of the estate, there are still important duties that must be carried out correctly such as settling of the estate, paying any debts or taxes on behalf of the estate, and making sure that the people named in the will receive their inheritances. Your chief responsibility is to ensure that the instructions in the will are properly followed.
The average estate administration takes one year; however, you will not need to work full time on it. Here are some of the specific tasks that must be completed.
Locate important documents required to settle the estate. If there is a will and you do not have it or it has not been brought to court, you may need to find it among the deceased belongings. If you only have a copy of the will, you may need to obtain the original from the attorney who drafted it. The executor will also need to obtain the original or a certified copy of the death certificate. Most states charge a fee for the original death certificate as well as for certified copies.
It may be necessary to hire an attorney. You are not required to do so, but mistakes can be costly. The executor may be personally liable if an error is made with the estate or payment of taxes. An attorney experienced in estate planning can provide guidance and ensure that deadlines are met.
Apply for probate. The executor must file the will with the probate court and receive letters of testamentary. A letter of testamentary is a legal document issued by a probate court that gives an executor the power to act in a fiduciary manner on behalf of the estate. A key task for the executor is presenting the letter of testamentary along with the death certificate in order to handle estate business and show that you have the authority to act on the estate’s behalf. If there is no will, you receive letters of administration providing legal authority to act on behalf of the estate.
Set up a bank account. The executor is required to keep the estate’s money separate from their own. This account will be used for any money that is owed to the deceased and delivered after death as well as to pay any ongoing expenses.
Notify all interested parties. You will need to notify the beneficiaries of the will as well as any potential heirs (such as children, siblings or parents who may or may not have been named in the will). You will also need to place an advertisement for potential creditors in the local newspaper. In addition, the executor is responsible for canceling or closing accounts that are still open. If the deceased was receiving Social Security benefits, the Social Security Administration needs to be notified as well.
Manage the deceased’s property. You will need to take inventory of the deceased assets and liabilities. As executor, you may want to enlist the help of a neutral third party to avoid potential disagreements among family members or other heirs. Another responsibility of the executor is to protect any property from loss, so you may need to hire an appraiser to determine the property value should you be required to sell it.
Pay debts and taxes. Once creditors have been determined, the executor must pay the deceased’s debts from the estate funds. The estate usually pays any reasonable funeral expenses first. Other debts may include probate and administration fees as well as any valid claims filed by creditors. Tax returns must be filed within the time frame required by law. Taxes due will include estate taxes and income taxes.
Distribute assets and property to beneficiaries. After the estate debts and taxes are paid, the executor is responsible for making sure the beneficiaries receive what they are entitled to according to the will. And, as executor you may also be obligated to set up any trusts required by the will.
Retain accurate records. It is extremely important for the executor to keep accurate records of everything you do regarding the estate. You will have to create a final accounting, which the beneficiaries must review before the distribution of the estate can be finalized.
File the final accounting with court. After the final accounting has been approved by the beneficiaries and the court, the court will close the estate.
Serving as an executor can involve a lot of work and requires you to recognize the responsibility which has been entrusted to you. However, you are entitled to compensation for your services subject to approval of the court. Remember, that any compensation you receive is considered income, so you will need to declare it on your tax return.
To determine how to use social media wisely, first we must define it. Merriam Webster defines social media as forms of electronic communication (such as websites for social networking and microblogging) through which users create online communities to share information, ideas, personal messages, and other content (such as videos). Some familiar examples of social media websites and applications include Facebook, YouTube, Twitter, Instagram, Pinterest and LinkedIn.
Social media provides many tangible benefits such as a platform to stay in contact with geographically dispersed family and friends, communicate with like-minded people, and join online communities to support favorite causes. It’s also a great business tool for networking, communications and marketing. While social media offers many benefits, there is also risk involved, primarily from criminals who use social media to commit and promote crimes. Posting about an upcoming family vacation may seem innocent enough, but it can make your home vulnerable to criminals who target unsuspecting individuals. There is also reputation risk because social media posts cannot be entirely deleted.
It is also important to schedule regular audits of your social media accounts to ensure you are aware of any changes or updates to applications. And, take the time to review your privacy settings, especially if you are signing up for new accounts.
Once you have mastered the safe use of social media, use its power for good. There are many ways you can make a difference and help change the world.
Here are just a few ideas:
Keep in mind that you control your social media exposure; how much or how little you choose to share is your decision. Some people decide to limit their social media presence to professional networking sites such as LinkedIn and not share any personal information. Others decide to modify their social media environment by making their presence known to only their closest friends and family and liking only reputable news, information, and entertainment sources. The choice is yours. The dangers of social media are not going away. Platforms are not always readily transparent when they change their policies or entice users with new services and you may be unaware when personal date is being collected. So, it is up to you to be vigilant and choose wisely when using these platforms for personal or professional promotion. Remember to use common sense and think before you post.
A vacation club membership allows you to reserve, plan and take future vacations within the club’s network of properties. Essentially a variation on the timeshare, with a vacation club you buy into the program for an initial fee, once enrolled you select the resort and pay for each stay. You may also be required to pay annual maintenance or membership fees. Unlike a timeshare, you may not have a specific week or location set each year. Where and how long you stay depends on how much occupancy or time you purchase. Stay options are not limited to one-week intervals and some clubs will allow you to visit for as few as one or two nights.
Some vacation clubs will permit you to sell or transfer your membership, similar to a timeshare. With others, your membership is not transferable, so make sure to read the entire contract before you buy. A very few, high-end vacation clubs will promise to buy back your initial investment at full value or at a set partial value. With most mid-priced and inexpensive vacation clubs you are locked into the contract and on your own to recoup your investment on the resale market should you decide that the vacation club is not for you.
Vacation clubs fall into three general categories:
(1) Major hotel/resort chains: Many of the well-known worldwide resorts and hotels operate vacation clubs, including Disney, Hilton, Hyatt, Marriott, Starwood, Westin and Wyndham. With this category, your choices are often limited to locations that are affiliated with the chain.
(2) Condo/resort chains: Vacation facilities that are owned and operated by the vacation club and not affiliated with any large hotel chain. Properties may range from conventional condos for mid-price programs to separate villas for higher-end programs. Most are in major resort areas, but some are in large cities, and higher-end programs may also include cruise options.
(3) High-end ownership programs: These operate as associations of individuals that own expensive properties around the world. Club members buy into an equity position in which they share actual ownership of the participating properties. The cost to buy into these programs is steep. These programs are also known as “Destination Clubs.”
There are pros and cons with vacations clubs.
A vacation club may be an option for frequent vacationers who want to worry less about planning and more about enjoying their trips. A membership is an investment of your hard-earned money; it may sound great at first, but you need to ask yourself a few questions to ensure that you are making a wise decision.
As with any major purchase, buyer beware. Make sure to research the vacation club program and read all the fine print before signing the contract. Safe travels!
Most of us save each year for our vacation. We set aside money every pay check so when the time arrives, we’ll have the funds available to take a vacation to our desired destination. Some prefer to visit the same place each year, while others may choose to travel to new destinations. If your preference is to visit a new location each time you vacation, then a vacation club may be a worthwhile investment. However, you may need to save a little more to join a vacation club.