2023 Newsletter – Winter Edition


Our Thoughts about 2022 and The Year Ahead!

2022 concluded a difficult year for stocks and bonds but an altogether manageable year for our clients. As we checked in with clients throughout the year, we often received the following feedback: “Expenses are up, I’m glad we were prepared, we have enough cash and cash flow, is this the right time to invest more, can we lock into higher rates now, can we still retire?” There were very few questions about portfolio performance. 

We are thankful to work with clients who seek advice and follow it. We carry the burden each night thinking about our clients and how they will endure under dynamic conditions and achieve their financial goals. This last year, we spent an enormous amount of time searching for answers about one of the most unique experiences we have had as advisors and investors over the last four decades. Having made the comment in the past, markets turn like a speedboat and are immediately responsive to the environment. Meanwhile, the economy turns like an ocean carrier, bearing the heaviest loads for the long haul, slowly turnins to adjust course and reflect a “new normal.” Well, since Covid-19, the economy has spun 3 times in less than 3 years. Businesses and consumers alike have been impacted. We were confronted with making asset allocation decisions in three fundamentally different environments that would ordinarily occur over 10-15 years.

Fortunately, our clients seeking accumulation were diversified and those approaching or in retirement employed strategies that aligned their portfolios and balance sheets with their cash flow needs. Where appropriate, we made adjustments to some portfolios to mitigate potential decreases in value. With few exceptions, overall, our clients stayed the course and will be okay!

We do expect to continue experiencing uncertainty and volatility until the Fed’s appetite for rate hikes and inflation have been quelled. Liquidity will necessarily tighten with interest rates reaching greater heights, making it difficult for businesses and consumers to spend on wants rather than needs and beyond their means. Business investments and growth are likely to be affected as well. To be clear, this is not to say the market will drop and we need to run for the hills! We encourage you to be prepared and thoughtful about your financial decisions and opportunistic when the payoff is greater than the associated risks. If you are planning to put your kids through school, remodel a part of your home, retire soon, or have other impending wants and needs, please setup time with us.

We spend most of our time focused on wealth management and research for you. Wealth management focuses on wealth creation, preservation, and income. Increasingly, we have engaged our clients in financial planning, which re-orients wealth management to encompass a broader and more comprehensive view of their finances to form a plan. The plan remains in place and evolves for financial advice and guidance. Many of you, particularly this last year, prioritized this meaningful approach to simplify real and potential complexity and meet the challenges of entering a new phase in your lives. It has helped us, and most importantly you, answer the questions “how much should we pay for our kids’ education,” “when can we retire,” “will we be okay if we retire and we experience both poor market performance and health issues in retirement,” and more.

Adam helped many clients plan and prepare for retirement. Some had abundance, and he focused on estate planning and legacy with their professional teams. Others were “right there!” and to retire they needed various forms of insurance to assist with potential financial challenges due to extended longevity risk or adverse market and health conditions. This work was not only valuable to quantify risks and opportunities but defined meaningful strategies for them to achieve their next level priorities.

Barry helped many clients protect their portfolios against longevity risks. He also worked on several complex retirement and comprehensive wealth management cases, structuring retirement plans and real asset investment strategies requiring acute attention to all aspects of the clients’ portfolios. Ultimately, he reduced taxes significantly for them and provided strong guidance for their future well-being.

Tom collaborated with Dan throughout a highly dynamic year, as well. Together, they presented clients with additional risk management, income, and wealth management strategies. These clients were introduced to professionally-managed investment strategies and products crediting higher interest rates,  often reducing overall expenses. They helped numerous clients reallocate older life insurance policies to newer contracts with living benefits, renewing confidence for their futures.

2023 was a year marked with challenges. Our clients’ wants and needs often didn’t change, but achieving them became even more complex. Investment and insurance products became more complex in great part, due to new regulations and new procedures. However, it was a rewarding year for us as we felt honored and gratified to be our clients’ financial planning and wealth management advisors.

On the Personal Side!

Adam – Lisa and I became empty nesters and had a lot of business travel that kept us from fewer moments of staring into our quiet house, wondering how the kids were doing!!! Jadyn is loving her independence, doing really well in school, making friends and joined a service fraternity – busy! Zander spent his first semester as a resident advisor and started research in a lab focusing on regenerative medicine. He’s enjoying a great line-up of independent music throughout the year in Nashville.

Barry – My wife Ruth and I enjoyed traveling and visiting our children and grandchildren that live out of town. We have formed a gourmet dinner club with friends and are enjoying everyone’s delicious cooking.

TomMy wife and I hosted both our entire immediate families at our home for Thanksgiving. It was the first time since before the pandemic that all of us were together. During winter break, my wife and I along with our son Mason (10) went to Universal Orlando and Disney World. We ended the trip (and 2022!) on a high note by spending New Year’s Eve at Magic Kingdom! It was a very memorable trip for us.

Dan – I’ve continued to enjoy the extra time with family since transitioning my practice to MGFS.  It has been a pleasure introducing my clients to Tom, Adam, and Barry. The experience is everything I expected and more.

Cory – In September we went on a wonderful family trip to Yellowstone. It is a magical place where we made a lot of memories. Right now we are looking forward to warmer weather and getting outside more. My son just learned to ride a 2 wheel bike so we are excited for many family bike rides.

Laura – This fall I was able to spend more time with my neice who I had lost touch with over the past decade.  Being able to share old family memories made the holiday season more memorable.  This winter, we got to enjoy a nice birthday celebration with my boyfriend’s Aunt who turned 94. She is still sharp as a tack, still driving, and full of great memories of her own. I will treasure all of the great stories and make sure they are always remembered. 

Mary Pat – My husband and I are looking forward to a family vacation to New Orleans in April with our children and grandchildren. And we are most excited to celebrate our daughter’s wedding in July.  

Planning Opportunity!

Education Planning for Parents, Grandparents and Friends – What comes to mind: “If only we knew then what we know now!” There are conventional and less conventional strategies to save for education. If you plan far enough ahead, you will likely have more choices. They depend on your household income level, how much you’ve saved and invested, your children’s level of assets and their dependent status, and the type of school they wish to attend. If your household income is greater than $200,000 you are less likely to qualify for financial aid. Interestingly, if you make less but have successfully grown non-retirement accounts or have a second home, you may receive reduced aid or be disqualified, altogether. So the big question is: What can you do to financially prepare for the cost of college and potentially minimize the expenses?

College is expensive. You may choose to help your kids pay for school fully, partially, or not at all; or encourage a junior college for a couple years then a public or a private university. Government and private loans are available to the student and parents with different requirements and ramifications.

When you know the amount you want to contribute to your children’s’ education, there are strategies to ensure they value the investments and for the actual investments.

The types of accounts you setup matter. UTMAs or Uniform Transfer to Minor’s Act accounts, and 529 Plans are most frequently used to fund children’s educations. Gifts can be made by parents, grandparents, and others to fund them. Assets held in UTMAs are irrevocably owned by the minor. Therefore, they are protected from parents’ creditors. When the minor turns 21 the money must be transferred from an account where the parent or guardian is the custodian to the minor. Until then, the funds must be used for the benefit of the minor. As such, this “trust” is not required for education purposes and provides flexibility in its use. The 529 Plan, however, is designed for tax-deferred growth and tax-free use with qualified education expenses. Some states even provide a tax credit for contributions. The conventional UTMAs and 529 Plans are included in financial aid calculations, and you guessed it, in different ways!

While there are other relevant strategies, life insurance is one of many less conventional investment for education planning. The insurance serves numerous purposes like a “Swiss Army” knife. The death benefit may be paid at death to cover expenses of your surviving spouse and heirs. Alternatively, the cash value of a permanent insurance policy grows tax-deferred and may be accessible in a variety of ways and for various intended uses. To use life insurance to help finance an education, the concept is to invest a lump-sum or systematically into the policy as a tax shelter, and when needed, access the cash value that grows tax-deferred with tax-free provisions. It is possible to structure a permanent life insurance policy to emphasize cash value growth while minimizing the death benefit and the associated premium expenses. This requires optimization so the policy remains insurance with its tax advantages. Uniquely, the cash accumulation in the life insurance is not considered in the financial aid process for funding most 4-year public universities. Depending upon your income and household assets, the use of a life insurance policy may help your household qualify for aid. If your child is heading to a private school, it may not help qualify for aid as some institutions ask for the cash value balance in your life insurance policies (and the type of car(s) you drive! Really!). Financial aid or no aid, with the right planning, life insurance certainly can help you save for school and other needs with tax advantages.

If your kids or grandkids are going to school or they have graduated and money remains in the investment vehicles intended to fund their education, repositioning the assets efficiently and effectively can be complex. There are many other options and we are here for you.

Great Quote

Mark Twain wrote in his autobiography: “There is no such thing as a new idea. It is impossible. We simply take a lot of old ideas and put them into a sort of mental kaleidoscope. We give them a turn and they make new and curious combinations. We keep on turning and making new combinations indefinitely; but they are the same old pieces of colored glass that have been in use through all the ages.”

Paraphrased – “There are no new ideas, they are just reinvented!” We are energized by new ways to construct and make ideas and dreams real today, and this is how we add our greatest value for your planning and wealth management needs.

It's a Wrap!

Thanks for taking time out of your busy lives to connect with us, knowing we are in this with you, too. We look forward to speaking with you soon!

Adam, Barry, and Tom