We partner with our clients through the financial planning process to support them in making more intentional decisions to live life to the fullest. We guide our clients like we would our family. Understanding that financial planning is truly more than just a financial plan. Throughout your life, countless choices must be made about how to save, spend, invest, and protect your wealth. Your decisions and approaches must align with your values and optimize what you have.
Our Areas of Focus
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Making the case
● Have you thought about how you pay yourself? Seems like a simple enough concept…. Right?
● Purposeful savings strategies account for a range of variables including:
What do your inflows look like? Do you have a salary? Are you bonus-eligible? Commission-eligible? What types of equity compensation do you have? And if you own your own business, that adds a whole new level of complexity.
What benefits are available to you through your company? What are the details of those plans? Should you be using them? How do you take advantage of the benefits offered to you?
Is your paycheck being sent directly to savings? How are you automating your savings process?
……And these types of questions still apply if you are retired:
How much guaranteed income do you have? How does that compare with your expenses? How does that mean that your other assets should be invested?
What sources of funds do you have? How are those treated for tax purposes? Do you have a plan in place to withdraw in a way that keeps the money in your pocket?
What do you use your money for? Are there potential efficiencies that can be created by aligning different spending goals with sources of money?
How we help
● Perform a thorough analysis of your income, expenses, goals and personality to best understand how to customize a savings approach.
Example: many of the sales executives that we work with are paid on commission. Some months will be large checks, and others small. Oftentimes, managing a fixed budget can be tough for someone in that situation. We can help create a direct deposit strategy to turn your irregular income into a fixed salary.
● Review any benefits information that you may have through an employer to determine the highest and best use of those resources.
Example: your company gives you an incentive to buy company stock every 6 months. As a reward, they will allow you to buy the stock at a discount. This discount effectively creates a pay raise that can add thousands to your bottom line annually.
● Discuss optimal withdrawal strategies while drawing down pensions, social security, and investments.
Example: You have just retired at 65 years old. You’ve heard that you “should” wait until 70 to take your social security. You are wondering how to best draw from your investments to supplement your income for the time being. Mathematically, drawing from the correct account first can make hundreds of thousands of dollars of impact over time and can significantly influence the long-run outcomes of the plan. We implement a plan to take withdrawals, in conjunction with Roth conversions, in order to take advantage of the growth offered through social security, as well as the handful of years at lower tax rates before required distributions.
Making the case
● Investing is about putting yourself in a position to weather the storm, and play offense at the same time in the appropriate areas. Determining how much money you have in stocks, bonds, and cash will drive how much growth you see during good years, and how much you may lose in bad years. It is important to make sure that the uses for your money and the current allocation of your money are well aligned.
● Markets are constantly changing and require a tactful approach to take advantage of opportunities when they arise, and stay away from investments that don’t make sense.
● Did you know that the type of account you hold an investment in matters?
For example, a dividend stock produces taxable income. If held in a taxable account, the tax bill created every year can weigh on your returns. Holding these types of stocks in your IRA can shelter those dividends and make your tax bill more manageable.
● Furthermore, different types of investment strategies are required to handle their gains differently, and can result in differences on your tax bill.
For example, mutual funds are required to distribute capital gains every year. These capital gains can be triggered in down years if other investors are selling, thus forcing the funds to liquidate holdings and take gains. This can lead to significant tax surprises during down years on the back of longer bull market uptrends.
How we help
● We design portfolios to balance your short-term needs with your long-term objectives. By holding the right amount of cash for your imminent needs, bonds for longer-term needs, and stocks to provide the growth needed to fight inflation over time.
For example, a client who plans to purchase a home in the next 12 months may want to consider setting that money aside in something secure. Any yield that they generate should be a secondary concern to the preservation of principal, unless they are willing and able to push the goal further out if the markets don’t cooperate.
● Markets are constantly changing and require a tactful approach to take advantage of opportunities when they arise, while staying away from investments that don’t make sense.
For example, in the 2020 and 2021 fallout from Covid-19, bond yields were at near-zero. During this time, the flexibility of cash was worth more than the interest on bonds.
Another example, in 2022 as the federal reserve was hiking rates, savings interest rates skyrocketed. Clients who were able to redirect their required cash reserves to treasury bonds or money markets were able to increase yield considerably.
● It’s important to invest with proper “asset location”, which refers to holding the right investments in the right accounts. We work with clients to determine the goal for each account, what that means for the risk profile, and then go one step further to determine what other considerations may need to be made around the type of investments that make the most sense.
For example, a client may have a Traditional IRA that grows tax-deferred and won’t be needed for many years. They also have a taxable brokerage account that they may need in the next 10 years. This person may want to consider putting their income investments in their taxable account for current income and stability, while holding growth assets in their IRA for long term growth potential.
Conversely, another client who does not plan to use either account for a long period of time may want to consider putting the income investments in the IRA to shelter the income, while leaving growth assets in the taxable account for growth with only a small amount of taxable income being recognized.
Making the Case
● In addition to investing in a tax-aware manner, we also look more broadly for tax-planning opportunities.
What is tax planning?
Tax planning refers to our review of your tax return to identify potential planning opportunities - both now and in the future - to keep your lifetime tax liability as low as possible. This is different than tax preparation (usually done by your CPA or an online service like TurboTax), which is focused on keeping you compliant with what the government thinks you owe each year.
Making the case
Why is tax planning important?
Taxes touch every part of your financial life. Your tax return is a financial fingerprint: it's completely unique to you, complete with valuable clues and information, all of which is buried in dozens of pages and hundreds of numbers. Understanding your return equips us to have more valuable and actionable conversations with you. Additionally, we can demystify the world of income taxes and help you understand this important piece of financial picture.
How we help
● It’s benefits enrollment time and you are offered access to your companies deferred compensation plan. The plan allows you to contribute a percentage of your salary to be paid after you retire. You plan to retire in 10 years at 65 and plan to defer your social security income to 70.
Through proper analysis, we can identify the right amount to defer to bring the client into the next lowest tax bracket, identify key phase out thresholds that may be relevant, and control income during the last decade of work. Elections can then be made to have those funds paid out during the 5 year “gap” between retiring and social security, when the client is likely in a lower tax bracket.
● A couple is donating 10k/year to their college. They donate the money as a cash donation periodically throughout the year. Outside of their 10k to charity, they do not have many other eligible expenses that could be itemized on their tax return. For this reason, they take the standard deduction annually. Their charitable deduction is providing them no incremental benefit.
Instead, we built a strategy to open a donor advised fund, which allows you to advance-fund your charitable donations. They were able to pre-fund 5 years' worth of donations using stock that had significant appreciation. This achieved two advantages: 1 – the couple gets the ability in year 1 to take a 50,000 tax deduction (almost 25k more than they would have over the 5 years donating 10k/year); and 2 – they were able to avoid paying the capital gains tax on the 50k of stock.
All in, the estimated tax savings in this situation was in the tens of thousands of dollars.
Making the case
● Estate planning is the process to ensure that in the event you are unable to make your own decisions, you have appointed and established a process to be followed.
● Estate documents include trusts, wills, living trusts, medical and financial powers of attorney, etc.
● Without these documents, there are a number of challenges that can arise:
How we help
Without a medical power of attorney, if your loved one is incapacitated, you are not able to speak on their behalf. This generally leaves doctors to make the hard decisions that you may otherwise make.
Without proper asset titling, your assets can end up in probate. Probate is a complex, time-consuming, and expensive process. It can create a high amount of family stress and tarnish the benefit of your hard-earned money.
Making the case
● Insurance should be a part of the financial plan, not the entire plan itself
● Many advisors are interested in selling insurance as a focal point to your investments, while we believe that insurance should be used as catastrophic protection to ensure the plan is not derailed by a high frequency, low severity situation.
● Typically, this comes in the form of term life insurance, disability insurance, and long-term care insurance
How we help
These things should be purchased with a couple of questions in mind:
• If I or a family member passed away, what would be the financial impact on others?
• If I or a family member could not do their current job for some reason, would we be able to support our expenses?
• What are your plans for living as you move through retirement? The long term care conversation is more complex and requires a handful of other considerations related to you, your family situation, and your wishes.