Latest Newsletter - July 2006

15 Years of Silver Oak

Silver Oak Advisory Group, Inc. was started in April 1991, so this year is our 15th year in business. Thank you to all of our clients and friends over the years who have made it possible for us to provide fee-only financial advising and portfolio management services to individuals, small businesses and non- profits. We look forward to our next 15 years with anticipation!

Spring is the season of new beginnings, and we are working on some of our own at Silver Oak.

Ben and Jessi have spearheaded the development of new in-house software to use for our financial blueprints. We will now be able to do retirement projections that incorporate Monte Carlo analysis, which attempts to address some of the unpredictability in long range forecasts of risk and return. The software will also have a feature that can show historical performance of an asset allocation so clients can be better prepared for the good times as well as the bad.

We will soon have a new website, also thanks to Ben's energy and skills. An increasing number of potential clients are using the website information to learn about our firm and services, as well as prepare for their initial meeting. The website will be at the same address as before,, and we hope you take the time to look it over after it goes "live."

Congress has also been busy this spring, approving the Tax Increase Prevention and Reconciliation Act of 2005. According to the CCH Tax Briefing of May 11, 2006, the new law extends the controversial dividend and capital gains tax rate cuts for two more years beyond 2008, gives taxpayers some immediate relief from the alternative minimum tax (AMT), extends small business expensing thresholds, and allows higher income taxpayers a Roth conversion opportunity, and makes a change in the "kiddie tax," among other changes. We will highlight the last two items.

Roth IRA Conversions: Under prior law, only those taxpayers with less than $100,000 in adjusted gross income were allowed to convert traditional IRA money into Roth IRA accounts. Beginning in 2010, the ceiling is eliminated, so anyone can convert.

The advantages of having money in a Roth IRA as opposed to a traditional IRA are these:

A conversion is treated as a taxable distribution (subject to ordinary income taxes), but is not subject to the 10- percent early withdrawal penalty. Taxpayers who convert in 2010 can elect to recognize the conversion income all in 2010 or average it over the next two years.

A key factor in whether you should consider converting is whether you can pay the income tax bill on the conversion from other funds rather than needing to take a distribution from your IRA proceeds. That distribution would be subject both to income taxes and the early withdrawal penalty if you are under age 59-1/2.

Kiddie Tax: The "kiddie tax" requires a child's unearned income (such as dividends and interest on an UTMA account) to be taxed at their parents' tax rate (which is usually higher) if they are under age 14. The Tax Reconciliation Act raises the age limit to under 18, so the child's investment interest will be taxed at a higher rate for four more years.

Unfortunately, this provision is effective immediately so even if your child is over age 13, there is no opportunity to sell assets now before the change takes place.
As always, consult your tax advisor to see whether any of these new tax regulations apply to you and what planning opportunities are still available.

Client Survey Results

THANK YOU to everyone who took the time and effort to respond to our first-ever Client Satisfaction Survey. The responses were overwhelmingly positive and are summarized on the chart below.

SOAG Customer Satisfaction

The survey questions were:

Q3 My financial advisor understands my situation
Q1 Contact with staff is professional and courteous
Q9 I would recommend Silver Oak Advisory Group to a friend or colleague
Q2 My work is handled on a timely basis
Q4 I have benefited from my financial planners advice
Q7 Reports contain all the information I need to make quality financial decisions
Q8 Planning advice is timely and appropriate
Q5 I receive good value for the fees paid
Q6 I would like to hear from my financial advisor more often

We plan to take action based on your direct feedback from the survey and in appreciation of your help, Silver Oak will be making charitable donations of several thousand dollars to local organizations.

Summer Hours

We will be reducing our office hours during the month of August this year, but will be regularly checking messages. This is typically our slowest month of the year for client work so we are taking advantage of that to rejuvenate and refresh ourselves – except for Ben and his wife Carrie, who will be welcoming their first child at the end of July and will probably be exhausted!

Staff News

Deborah was elected President of the Portland Women's Union Foundation board for the fiscal year 2006-2007. The local non-profit Foundation gives annual grants of approximately $150,000 to local non-profits with programs that benefit women in the areas of housing and education for self-sufficiency. Founded in 1889, the Portland Women's Union has been helping women in the tri-county area for almost 120 years. Find out more by visiting their website at

Steve traveled to Egypt in March for two weeks, including a cruise down the Nile River. In addition to the cruise, he said the highlights for him were the Egyptian museum, pyramids and Sphinx, and snorkeling in the Red Sea (and of course, a camel ride).

Jessi completed and passed the exam for her first of six courses in the Certified Financial Planning education program.

Ben passed the Series 65 exam and is now a Registered Representative for Silver Oak, in compliance with the Registered Investment Advisor Act.

Have A Great Summer!

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