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Three Upside-Down Investment Insights

Often, all you need to be an excellent investor is a healthy dose of common sense: A penny saved is a penny earned. Buy low, sell high. Don’t put all your eggs in one basket.

That said, the best way to achieve these simple goals isn’t always as obvious. In fact, many of our favorite investment insights may at first seem counterintuitive. Today, we cover a trio of weird, but wonderful “upside-down” investment ideas.

 

Investment Insight #1: Market volatility is the norm, not the exception.

How often have you thought something like this: “The markets seem so crazy right now. Maybe I should back away, or at least wait until things settle down before I make my next move.”

The problem is, the markets rarely “settle down.” And when they do, we only realize it in hindsight. There are just too many daily seeds of doubt, forever being sown by late-breaking news. We never know which ones might germinate – until they do, or don’t.

We suggest putting market volatility in proper context.

“Being surprised at equities’ ups and downs is like visiting Chicago in January and being shocked by 8 inches of snowfall.” — William Bernstein

In other words, it’s normal for markets to swing seasonally. It’s just part of the weather. For example, in Dimensional Fund Advisors’ commentary, “Recent Market Volatility,” we see U.S. stock markets ultimately delivered positive annual returns in 33 of the 40 years between 1979–2018. But during the same period, investors had to tolerate average intra-year declines of 14%.

 

Investment Insight #2: Market volatility is your frenemy.

What if markets weren’t volatile? What if all the days, in every market, were like November 12, 2019, when the Dow closed at the same 27,691.49 price as the day before?

If prices never changed, traders would become unwilling to trade; they’d have no incentive to do so. In this extreme, markets would no longer be able to serve as a place where buyers and sellers came together and agreed to price changes. Soon enough, markets would cease to exist.

What if there were just far less market volatility? You would probably soon discover how much you missed those same, downward price swings you ordinarily loathe. That’s because, long-standing evidence has informed us: By giving up extra volatility, you also must give up the extra returns you can expect to earn by tolerating the volatility risk to begin with.

 “If you’re living in fear of the next downturn, consider shifting your thinking instead of your investments. Focus on controlling what you can control, such as how much you save, or finding the right stock/bond mix.” — David Booth

 

Investment Insight #3: You can win for losing.

Wouldn’t it be great to hold only top selections in your investment portfolio, with no disappointments to detract from your success?

Of course it would. It would also be nice to hold a $100 million winning lottery ticket. But just as the lottery is no place to invest your life’s savings, neither is speculating on the razor-thin odds that you can consistently handpick which stars are next in line to shine.

Instead, we suggest building a broadly diversified portfolio covering a range of asset classes … and sticking with it over time.

By always being already invested wherever the next big run is about to occur, you’re best positioned to earn market returns according to your risk tolerance. At the same time, spreading yourself across multiple asset classes also means you’ll always be invested somewhere that isn’t doing quite as well. This means you’re unlikely to ever “beat the market” in a big, splashy way.

Here’s a helpful way to think about committing to a mixed-bag (diversified) portfolio:

On a scale of 1-10, with 10 being abject misery, I’m willing to bet your unhappiness with a diversified portfolio comes in at about a 5, maybe a 6. But your unhappiness if you guess wrong on your one and only investment for the year? That goes to 11. — Carl Richards

 

Obvious in Hindsight?

We hope the insights we’ve shared now seem a little more obvious. We also hope you’ll be in touch if we can help you incorporate or sustain these three upside-down ideas within your own portfolio management. Because …

“‘[O]bvious’ is often a long way from ‘really believed and internalized’ and in the gap between those two fortunes are made and lost.” — Cliff Asness

 

Six Financial Best Practices for 2020

What a year it’s been. Remember December 2018? As The New York Times reported at the time, “Stocks plunged in December [2018], posting their worst monthly loss since the financial crisis and the worst December since 1931 and the Great Depression.”

It’s amazing how quickly memories fade and markets move on. Around this time last year, we were busy encouraging everyone to avoid any emotion-driven panic. That’s never bad advice, but in this considerably quieter year-end (at least so far!), let’s turn to a fresh new batch of financial best practices, to help you hit the ground running in 2020.

 

  1. Revisit your tax plans. Old habits die hard. Although the Tax Cuts and Jobs Act (TCJA) is now in full swing, you’re probably still following a few well-worn tax-planning paths that may no longer apply. You (with your tax planner) may want to revisit them. For example:
    • Holding a mortgage is much less likely to offer the tax-deductible advantages it used to. Have you altered your payment plans accordingly?
    • Ditto on charitable contributions. Have you looked at creative new strategies, like establishing a Donor Advised Fund, to continue engaging in tax-favored giving?
    • Unless Congress acts to extend them, TCJA’s lower individual income tax rates will expire in 2026. Have you considered how the current, lower-rate environment might impact your retirement planning? For example, performing a Roth IRA conversion with after-tax dollars may make more sense today than it used to.

 

  1. Set up a password manager. Using a password manager to generate and secure strong passwords for your financial accounts is a widely accepted best practice. And yet, surveys suggests few investors have installed a password manager as recommended. Consider adding this important line of defense against hackers as a holiday gift to yourself. Use it to reset and strengthen all your financial account passwords.

 

  1. Consider rebalancing your portfolio. Have you stayed the course in 2019, with a globally diversified portfolio reflecting your financial goals and risk tolerances? If so, that’s fantastic! But if it’s been a while since you’ve touched your portfolio, you may find some of your strongly performing assets have now overshot their target allocations. Depending on trading costs and tax ramifications, you may want to sell some of your winning asset classes from 2019 (in which you’re now over-invested), and buy recently underperforming ones (in which you’re now under-invested). It may feel counterintuitive to sell “winners” and buy “losers,” but not if you recognize you’re selling high and buying low.

 

  1. Take advantage of $0 trading. If you’ve been watching the financial headlines this year, you may have noticed that many brokers have been competing to lower online trading commissions – often, all the way down to $0 for individual stock and ETF trades. Of course, if it undermines rather than advances your greater investment goals, even a “free” trade can cost you dearly. But zero-commission stock and ETF trades may have opened new cost-saving opportunities when managing your portfolio to reflect your investment plans. For example, now might be a good time to deconcentrate out of any individual stock positions you’ve been hanging onto for no particular reason. Or, next time you’re engaging in tax-loss harvesting, we may be able to reduce the trading costs involved by identifying an appropriate ETF with which to maintain your portfolio’s target allocations mid-harvest.
  2. Keep an eye on your cash. On those “free” trades, there’s a side effect worth noting. Brokerages are businesses, not charities. If they’re not profiting one way, they’ll need to profit somewhere else. One tactic we’ve seen brokers using is slashing interest paid on your cash accounts, charging market-rate interest on loans, and keeping the spread for themselves. In October 2019, The Wall Street Journal’s Jason Zweig observed of one zero-commisson firm: “The firm automatically sweeps idle cash not into money-market mutual funds or other assets that could yield about 2% at today’s rates, but into its own bank, which pays peanuts.”It’s important to maintain enough liquidity for near-term and emergency spending, and to do so in an FDIC-protected or similarly protected institution. But you might consider looking beyond your brokerage accounts to earn market-rate interest on any significant cash reserves.

 

  1. Live a little. You may not have noticed the news, buried as it was in a year’s worth of jittery geopolitical headlines: As of mid-December, investors have earned double-digit year-to-date returns across most asset classes. Not only might this warrant some rebalancing, you might find yourself on top of your financial goals. If so, you may want to be inspired by Benjamin Franklin’s sentiment from his 1736 Poor Richard’s Almanack: “Wealth is not his that has it, but his that enjoys it.” If you were a steadfast investor in 2019 and your portfolio is doing well, consider treating yourself to a bit of a year-end reward. You’ve earned it.

As always, we’re here to assist you in implementing any or all of these best practices – and more. In the meantime, we wish you and yours a most happy and health new year.

 

New Associate “Focus On You”: Susie Hiley

Susie Hiley

What is your role at HHWM?

I’ve joined HHWM as Operations Manager.  In this role I lead process related projects and support back office functions.

What did you do before joining Hiley Hunt Wealth Management?

Most recently I taught kindergarten at Brownell Talbot School, and I remain connected to the school providing services as a Mindfulness Facilitator. Prior to my time in the classroom, I worked as an analyst with Deloitte Consulting in change management, process reengineering, and systems implementation.

Where did you grow up?

I grew up in Blue Springs, Missouri, a suburb southeast of Kansas City.  I attended Rockhurst University in Kansas City where I earned a B.S. in Accounting and an M.Ed. in Elementary Education.

What do you do for fun?

As a family, we love to visit Colorado and explore outdoor adventures in the mountains.  Personally, I love to learn – digging deeper into familiar topics as well as delving into new subjects through reading, podcasts and experiences. I also enjoy cooking, practicing yoga, and connecting with friends and family.

What are your passionate about? 

If this hasn’t already been revealed, I love to learn.  I am passionate about learning strategies, tools and practices we can use to live with greater understanding of others, compassion and empathy toward others, and connection with others.

What’s your secret talent that no one knows about?

Come on now, I don’t share secrets… that’s part of my job description.

Five Financial Adages for Thriving in Volatile Markets

Sometimes the best, most rigorously developed financial advice is so obvious, it’s become cliché. And yet, investors often end up abandoning this same advice when market turbulence is on the rise. Why the disconnect? Let’s take a look at five of the most familiar financial adages, and why they’re often much easier said than done.

  1. If you fail to plan, you plan to fail.
  2. No risk, no reward.
  3. Don’t put all your eggs in one basket.
  4. Buy low, sell high.
  5. Stay the course.

We’ll explore each in turn, how we implement them, and why helping people stick with these evidence-based basics remains among our most important and challenging roles.

  1. If You Fail to Plan, You Plan to Fail.

Almost everyone would agree: It makes sense to plan how and why you want to invest before you actually do it. And yet, few investors come to us with robust plans already in place. That’s why deep, extensive and multilayered planning is one of the first things we do when welcoming a new client, including:

As we’ll explore further, even solid planning doesn’t guarantee success. But we believe the only way we can accurately assess how you’re doing is if we’ve first identified what you’re trying to achieve, and how we expect to accomplish it.

  1. No Risk, No Reward.

In many respects, the relationship between risk and reward serves as the wellspring from which a steady stream of financial economic theory has flowed ever since. Simply put, exposing your portfolio to market risk is expected to generate higher returns over time. Reduce your exposure to market risk, and you also lower expected returns.

We typically build a measure of stock market exposure into our clients’ portfolios accordingly, with specific allocations guided by individual goals and risk tolerances. But here’s the thing: Once you have accepted the evidence describing how market risks and expected returns are related, it’s critical that you remain invested as planned.

There’s ample evidence that periodic market downturns ranging from “ripples” to “rapids” are part of the ride. As a February 2018 Vanguard report described, from 1980–2017, the MSCI World Index recorded 11 market corrections of 10% or more, and 8 bear markets with at least 20% declines lasting at least 2 months. Such risks ultimately shape the stream that is expected to carry you to your desired destination. Consider them part of your journey.

  1. Don’t Put All Your Eggs in One Basket.

At the same time, “risk” is not a mythical unicorn. It’s real. If it rears up, it can trample your dreams. So, just because you might need to include riskier sources of expected returns in your portfolio, it does not mean you must give them free rein.

This is where diversification comes in. Diversification is nothing new. In 1990, Harry Markowitz was co-recipient of a Nobel prize for his work on what became known as Modern Portfolio Theory. Markowitz analyzed (emphasis ours) “how wealth can be optimally invested in assets which differ in regard to their expected return and risk, and thereby also how risks can be reduced.” In other words, according to Markowitz’s work, first published in 1952, investors should employ diversification to manage portfolio risks.

This leads to an intriguing, evidence-based understanding. By combining widely diverse sources of risk, it’s possible to build more efficient portfolios. You can:

Rarely, evolving evidence helps us identify additional or shifting sources of expected return worth blending into your existing plans. When this occurs, and only after extensive due diligence, we may advise you to do so, if practical (and cost-effective) solutions exist.

The details of how these risk/return “levers” work is beyond the scope of this paper. But come what may, the desire and necessity to DIVERSIFY your portfolio remains as important as ever – not only between stocks and bonds, but across multiple, global sources of expected returns.

  1. Buy Low, Sell High.

Of course, every investor hopes to sell their investments for more than they paid for them. Here are two best practices to help you succeed where so many fall short: time and rebalancing.

Time

By building a low-cost, broadly diversified portfolio, and letting it ride the waves of time, all evidence suggests you can expect to earn long-term returns that roughly reflect your built-in risk exposure. But “success” often takes a great deal more time than most investors allow for.

In a recent article, financial author Larry Swedroe looked at performance persistence among six different sources of expected return as well as three model portfolios built from them. He found, “In each case, the longer the horizon, the lower the odds of underperformance.” However, he also observed, “one of the greatest problems preventing investors from achieving their financial goals is that, when it comes to judging the performance of an investment strategy, they believe that three years is a long time, five years is a very long time and 10 years is an eternity.”

In the market, 10 years is not long. You must be prepared to remain true to your carefully structured portfolio for years if not decades, so we typically ensure that an appropriate portion is sheltered from market risks and is relatively accessible (liquid). The riskier portion can then be left to ebb, flow and expectedly grow over expanses of time, without the need to tap into it in the near-term. In short, time is only expected to be your friend if you give it room to run.

Portfolio Rebalancing

Another way to buy low and sell high is through disciplined portfolio rebalancing. As we create a new portfolio, we prescribe how much weight to allocate to each holding. Over time, these holdings tend to stray from their original allocations, until the portfolio is no longer invested according to plan. By periodically selling some of the holdings that have overshot their ideal allocation, and buying more of the ones that have become underrepresented, we can accomplish two goals: Returning the portfolio closer to its intended allocations, AND naturally buying low (recent underperformers) and selling high (recent outperformers).

  1. Stay the Course.

So, yes, planning and maintaining an evidence-based investment portfolio is important. But even the best-laid plans will fail you, if you fail to follow them. Here, we get to the heart of why even “obvious” advice is often easier said than done. Our rational self may know better – but our instincts, emotions and behavioral biases get in the way.

Three particularly important biases to be aware of in volatile markets include tracking-error regret, recency bias, and outcome bias.

Tracking-Error Regret

When we build your portfolio, we typically structure it to reflect your goals and risk tolerances, by diversifying across different sources of expected risks and returns. Each part is expected to contribute to the portfolio’s unique whole by performing differently from its counterparts during different market conditions. Each portfolio may perform very differently from popular “norms” or benchmarks like the S&P 500 … for better or worse.

When “worse” occurs, and especially if it lingers, you are likely to feel tracking-error regret – a gnawing doubt that comes from comparing your own portfolio’s returns to popular benchmarks, and wishing yours were more like theirs.

Remember this: By design, your factor-based, globally diversified portfolio is highly likely to march out of tune with typical headline returns. It can be deeply damaging to your plans if you compare your own performance to benchmarks such as the general market, the latest popular trends, or your neighbor’s seemingly greener financial grass.

Recency

Recency causes us to pay more attention to our latest experiences, and to downplay the significance of long-term conditions. When an expected source of return fails to deliver, especially if the disappointment lasts for a while, you may start to second-guess the long-term evidence. This can trigger what Nobel laureate and behavioral economist Daniel Kahneman describes as “what you see is all there is” mistakes.

Again, buying high and selling low is exactly the opposite of your goals. And yet, recency causes droves of investors to chase hot, high-priced holdings and sell low during declines. Irrational choices based on recency may still turn out okay if you happen to get lucky. But they detour you from the most rational, evidence-based course toward your goals.

Outcome Bias

Sometimes, even the most rational plans don’t turn out as hoped for. If you let outcome bias creep in, you end up blaming the plan itself, even if it was simply bad luck. This, in turn, causes you to abandon your plan. Unfortunately, it’s rarely replaced with a better plan, which brings us back to our first adage about those who fail to plan.

To illustrate, let’s say, several years ago, we created a solid investment plan and IPS for you. At the time, you felt confident about them. Since then, we’ve periodically refreshed your plan, based on your evolving personal goals, perhaps a few new academic insights, and any new resources now available for further optimizing your portfolio.

Now, let’s say the markets disappoint us over the next few years. Ugly red numbers take over your reports, seemingly forever. Before you conclude your underlying strategy is wrong, remember: It’s far more likely you’re experiencing outcome bias (with a recency-bias chaser).

Investing will always contain an element of random luck. From that perspective, in largely efficient markets, your best course remains – you guessed it – to stay the course with your existing, carefully crafted plans. While even evidence-based investing doesn’t guarantee success, it continues to offer your best odds moving forward. Don’t lose faith in it.

Simple, But Not Easy

Let’s wrap with a telling anecdote. Merton Miller was another co-recipient of the aforementioned 1990 Nobel prize. Miller’s portion was in recognition of his “fundamental contributions to the theory of corporate finance.” While his findings were deep and far-reaching, he once summarized them as follows:

[I]f you take money out of your left pocket and put it in your right pocket, you’re no richer. Reporters would say, ‘you mean they gave you guys a Nobel Prize for something as obvious as that?’ … And I’d add, ‘Yes, but remember, we proved it rigorously.’”

Like Miller’s light take on his heavy-duty findings, some of what we feel is our best advice seems so simple. And yet, in our experience, it’s very hard to adhere to this same, “obvious” advice in the face of market turbulence.

Blame your behavioral biases. They make simple advice deceptively difficult to follow. We all have them, including blind spot bias. That is, we can easily tell when someone else is succumbing to a behavioral bias, but we routinely fail to recognize when it’s happening to us.

This is one reason it’s essential to have an objective advisor (and/or a spouse or solid friend) who is willing and able to let you know when you’re falling victim to a bias you cannot see in the mirror. That’s exactly what we’re here for! Let us know if we can help you reflect on these or any other challenges that stand between you and your greatest financial goals.

An Evidence-Based Approach to Sustainable Investing Part III: Sustainable Investing Today

In parts I and II of our series, “An Evidence-Based Approach to Sustainable Investing,” we introduced key building blocks for sustainable investing, and summarized current strategies for building them into your own portfolio. The ground we’ve covered so far may suffice to help you determine if and how you would like to invest more sustainably. But before we wrap, we’d like to dig a little deeper into sustainable investing today.

A Standard Challenge

First the promising news: As we touched on earlier, there already are ways to factor in Environmental, Social and Governance (ESG) ratings – here and now. Practitioners also continue to explore how impact investing (i.e., more direct involvement in corporate governance) may lead to improved outcomes for all concerned. On both fronts, we are optimistic that evidence-based ESG investing can grow increasingly relevant as it matures and melds into our existing best practices.

That said, we face a noteworthy challenge in this still-nascent field: Strong, time-tested company reporting standards remain a work in progress among ESG practitioners.

For example, “Why and How Investors Use ESG Information” suggests one of our biggest decision-making challenges is “the lack of comparability of reported information across firms.” The report further notes, “qualitative comments confirm that a lack of standardization and quantification are the main obstacles to ESG data integration.”

To be fair, strong company reporting standards are a challenge for any evidence-based investment approach. But it can be especially daunting when an approach is relatively new and advancing faster than the rigor of proper academic analysis requires. Let’s explore three of the “standard” growing pains sustainable investing faces: building robust benchmarks, gathering consistent data and cultivating solid research.

Building Robust Benchmarks

As we described in part II, investors, advisors, and fund managers alike have been turning to ESG ratings to “score” various organizations’ sustainable practices. Just as we have standard benchmarks/indexes for other purposes (such as tracking US large companies, global bonds, or emerging market real estate), providers have responded to the burgeoning interest in ESG ratings by offering a growing collection of ESG benchmarks for public consumption. Established providers include MSCI, Bloomberg, Thomson Reuters and others. There also is a plethora of relative newcomers, each offering its own approach and perspective.

Given the assortment, a company’s ESG data may receive widely different “thumbs up” or “thumbs down” scores, depending on who is doing the rating, and to what aim. For example, this Wall Street Journal article explains: “The real complexity comes in the question of what counts as ‘good.’” The article offers an illustration: “[The] global head of ESG research at MSCI, says the aim of its ratings is to highlight financially relevant [ESG] risks; FTSE, by contrast, is more focused on helping investors change corporate behavior.”

It’s not necessarily bad or wrong for different rating companies to rank the same data in various ways. Their varied opinions contribute to efficient market pricing. But it does mean you (and your advisor) will want to understand the differences among various ratings, and what they signify, so you’re not inadvertently comparing your “apple” results with “orange” benchmarks.

This leads us to our next point …

Developing Data Standards

Rating agencies, fund managers and investors face a common challenge: Some of the data used to score a company’s ESG activities may be more or less dependable to begin with.

Some standards exist for how and what a company should report with respect to its ESG practices. For example, as reported in “Sustainable Investing: From Niche to Normal,” a CDP (Carbon Disclosure Project) is aimed at encouraging companies to report their greenhouse gas emissions; the UK requires all its listed companies to do the same. And “GRESB is an investor-driven organization of 250 members who voluntarily report on the ESG performance of real estate portfolios.”

There are many other examples, and growing demand may further accelerate the movement toward more standardized reporting. But for now, ESG reporting remains mostly a voluntary endeavor. As reported in a June 27, 2018 Financial Advisor piece, “Advisors Say ESG Compliance Is Hard To Verify,” Cerulli Associates surveyed more than 400 advisors and asset managers and reported that the vast majority felt challenged by “the fact that companies provide limited or selective information about their efforts to meet environmental, social and governance standards,” and that “the information they are given is too subjective.”

Also, “ESG” is not one thing – it’s three. Not surprisingly, environmental, social and governance standards are developing at different rates, based on various demands and practicalities. As described in the aforementioned Sustainable Investing report, many environmental metrics are becoming increasingly standardized, but investors should be more cautious about social metrics, which often represent “highly qualitative issues.” The authors note, “Governance is the most well-researched factor. The data has been in company filings for decades.”

Some investors may also wish to incorporate or avoid other values-based characteristics in their investments – such as religious or political affiliations. For these, quantifiable reporting standards may take even longer to create, if they’re created at all.

Cultivating Research Standards

There’s one more avenue to explore. How do we balance an investor’s desire to invest “ethically” with our fiduciary duty to advise them according to their highest financial interests?

The goal is simple enough: We’d like to provide both. Existing studies and practical applications suggest we can.

That said, we’re still early in the process. By definition, it takes years, if not decades, to determine whether evidence-based theories test out in reality – through bull markets and bears; here and abroad; and across stocks, bonds and other asset classes. The reality is, evidence-based sustainable investing is too new to have experienced this optimal degree of due diligence.

For example, consider “sin” stocks versus ethical investments. Which have actually delivered better returns under what conditions, and with what risks? To date, we continue to see energetic debates and compelling evidence contributing to our understanding of these important issues. Given the level of investor interest, academics and practitioners alike are working to resolve the various riddles and create the necessary body of evidence to achieve this high standard of excellence.

As such, we will continue to collaborate with other evidence-based professionals and academics. Together, we hope to discover and deliver increasingly effective ways to incorporate sustainable investing into investors’ globally diversified portfolios. We’ve only just begun!

At the same time, we understand that you may not want to wait decades to invest more sustainably. In fact, you may already be unwilling to invest otherwise. You deserve solid advice on how to make the most of today’s existing sustainable investment solutions, come what may as the future unfolds. Whether you’d like to get started right away, or simply remain informed, we stand ready to assist. Call us anytime to continue the conversation.

An Evidence-Based Approach to Sustainable Investing Part II: Degrees of “Doing Good”

As we touched on in our last piece, “Setting the Sustainable Stage,” degrees and kinds of “doing good” are often in the eye of the beholder. How do we measure something that is sometimes so subjective? As described in “Why and How Investors Use ESG Information” (a University of Oxford/Harvard University paper to be published in the Financial Analysts Journal), academics and practitioners alike typically turn to an organization’s Environmental, Social and Governance (ESG) ratings to try to quantify levels of sustainability.

Again, precise labels may vary in the various literature, but following are some of the ways the industry applies ESG ratings into sustainable investment strategies.

Investors currently have access to a range of investment solutions that incorporate these and other strategies to varying degrees.

ESG Investing – ESG investors are more likely to emphasize inclusion strategies, which complement a general evidence-based investment approach. In other words, evidence-based ESG funds should help investors continue to incorporate sound portfolio construction principles (such as asset allocation, global diversification and cost-control), and minimize less-efficient tactics (such as picking or avoiding specific stocks or sectors based on forecasts or popular appeal). ESG fund managers also may engage in active ownership on behalf of their shareholders.

Socially Responsible Investing (SRI) Investing – SRI funds are more likely to use screening strategies that involve making security- or sector-specific judgments or forecasts.

Impact Investing – Impact investors are on a mission to not just invest in a venture, but to become an altruistic partner in it. Say, for example, you donate to a GoFundMe® campaign seeking to create an eco-friendly alternative to plastic water bottles. You’ve just become an impact investor. On a grander scale, high-net-worth investors may take on private equity or debt structures with an eye toward making an impact with their funding.

Finding a Sustainable Fit

None of these possibilities are inherently right or wrong. Which (if any) are right for you? As proposed in this innovative paper, “Sustainable Investing: From Niche to Normal,” it depends whether you are more value– or values-driven. The paper explains that value-driven investors “put financial return first, BEFORE any other issues are addressed,” while values-driven investors will “consider financial return AFTER the investors’ values have been satisfied.”

In this context:

Sustainable investment strategies aren’t mutually exclusive either. For example, you could incorporate ESG investing into the core of your evidence-based portfolio, while participating in impact investing with some of your discretionary income.

Next Up: The Lay of the Sustainable Land

Before sustainable investing existed, investors who were philanthropically inclined had little choice but to seek their financial returns through traditional investing, while separately expressing their personal values by donating to their charities of choice.

Today, solutions are coming into focus for those who would like to begin combining these two, formerly disparate interests. That said, while evidence-based ESG investing holds much promise, it remains a relatively new field of study. Challenges and opportunities abound as we seek to create robust data and enhanced analyses to guide the way – in theory and in practice.

In our next piece, we’ll take you on a fascinating tour of the evolving landscape.

An Intriguing Exit Strategy for Today’s Business Owner

One of the more difficult challenges facing a business owner is the formulation of a viable and economically beneficial exit strategy at retirement. Typically, the main goals of such an exit strategy are: 1) to identify a qualified buyer; and 2) to receive fair compensation for the business, which would, in turn, translate into a desirable retirement income. One obstacle in realizing these goals is the substantial capital gain that is often attributable to the sale of company stock. For some owners, one method of finding a suitable buyer, and at least delaying payment of capital gains taxes, is to sell stock back to the company in the form of an employee stock ownership plan (ESOP). For others, the realization of a significant capital gain proves to be a major psychological stumbling block that delays action, and results in maintaining stock ownership much longer than desired or initially anticipated. In either case, the charitable remainder trust (CRT) can be a practical mechanism for eliminating the capital gains tax issue altogether, while assisting the business owner in meeting his or her goals.

The CRT is a highly effective financial planning tool that can: 1) remove assets from a donor’s estate; 2) avoid current capital gain on the transfer of appreciated assets; 3) provide the donor with a potentially significant charitable deduction; 4) benefit a donor’s charity of choice; and 5) provide the trust beneficiary (usually the donor) with a steady income stream for life or over a term of years (not to exceed 20 years). The minimum income payout from a CRT is 5%, while the maximum is 50% (the payout rate must also satisfy rules under the Taxpayer Relief Act of 1997). Typically, the payout rate is somewhere between 5% and 12%. In addition, the charitable deduction is based on the amount of time the charity must wait to receive payment, the percentage rate payable to non-charitable beneficiaries, and the current rate of return as determined by the applicable federal rate (i.e., a monthly rate based on the interest rate the federal government pays on borrowed funds).

An owner who has already sold stock to an ESOP, as well as an owner who has yet to do so, can equally benefit from using a CRT. However, an owner who has already sold all, or a portion, of his or her stock to an ESOP will face additional technical requirements that merit closer examination.

Understanding ESOPs

ESOPs are defined contribution retirement plans and are subject to the same guidelines imposed on 401(k) and profit-sharing plans. However, ESOPs are designed to invest primarily in the stock of the business in which the employees work. As such, an ESOP gives all employees a vested interest in the profitability of the company—as the company’s fortunes increase, so does the value of each employee-shareholder’s stock.

An ESOP basically functions as a private marketplace, enabling retiring employees to recognize a retirement benefit by selling their shares back to the ESOP. For example, an ESOP is then used to buy out the interest of a retiring owner, providing an alternative to selling the business (or an owner’s share of the business) to an outsider. Frequently, the ESOP borrows from a commercial lender and uses the funds to purchase the shares of the withdrawing shareholder. The corporation is entitled to an income tax deduction for contributions to the ESOP, which are then used to pay both principal and interest payment on the loan.

Another significant benefit is that gain on the sale can be deferred under Internal Revenue Code Section 1042 if the ESOP holds at least 30% of the retiring owner’s company stock after the sale and the seller reinvests the proceeds into qualified replacement property (generally defined as securities of U.S. domestic operating corporations). This so-called “Section 1042 rollover” must take place within a “qualified period” (beginning three months prior to the date of the sale and ending twelve months after the sale), and the ESOP must have no publicly-traded stock outstanding. However, nonrecognition of gain is only allowed if the owner-shareholder has held the shares for at least three years prior to the sale to the ESOP.

While a retiring owner can liquidate his or her interest in the business on a tax-advantaged basis using a Section 1042 transaction, he or she should be aware of some limitations. From an investment perspective, the definition of qualified replacement property is somewhat restrictive. —it does not include mutual funds, real estate investment trusts (REITs), or U.S. government and municipal bonds. In addition, the deferral of taxation ends once the qualified replacement property is sold. Thus, active management of a qualified replacement property portfolio is not possible without incurring capital gains taxes. When these factors are taken into consideration, some estate planners have come to view qualified replacement property assets as ideal for funding a CRT. (Note: There may be a 10% excise tax for the plan sponsor if the ESOP does not hold on to the newly acquired stock for at least three years.)

Timing of the Stock Transaction

While the ESOP does serve a critical purpose (by creating a marketplace for the owner’s company stock), it is not necessary to sell stock to an ESOP prior to funding a CRT. Thus, an owner who has yet to take action may be better served to transfer the stock directly to the CRT, and then allow the CRT to sell the stock to the ESOP (or other qualified buyer). By doing so, the tax reporting and technical requirements for qualified replacement property under Section 1042 become a nonissue. Nevertheless, an owner who has already sold all, or a portion, of his or her stock to an ESOP may enjoy the same benefits of a CRT—the only difference being the reporting and technical requirements under Section 1042.

Since the CRT is a tax-exempt entity, it can sell the funding assets with reduced capital gains consequences. The CRT can then reinvest the proceeds without restrictions—with the ultimate goal of the donor (in this case, the selling shareholder) being the recipient of a steady income stream from the trust assets (in actuality, a portion of the income payout may be a capital gain distribution).

Moreover, there may be additional flexibility if the CRT is designed as a unitrust, as opposed to an annuity trust, because a unitrust can accept additional contributions while an annuity trust cannot. Since there is often a desire to sell company stock to an ESOP (or other buyer) in stages, the opportunity exists for funding the unitrust in stages.

A Viable Combination

An owner planning for withdrawal from his or her business (such as retirement) faces a variety of challenges that can have an impact on both the business and the owner’s estate. While an ESOP assures ownership will remain within the company, the CRT/ESOP combination can be a powerful business liquidation/estate maximization strategy. However, it is important for a business owner to recognize that how assets are transferred to the CRT (either in the form of qualified replacement property or actual company stock), generally, will have little impact on the effectiveness of the CRT. Thus, individual circumstances often play a greater role in dictating the timing of the sale of stock to an ESOP. Regardless of the situation, as is the case with all advanced planning issues, a thorough review of a business owner’s long-term goals and objectives is essential to determine an appropriate course of action.

Charitable Giving Under New Tax Laws An Overview of Sensible Strategies

Now that the 2017 tax season is a wrap for most Americans, it’s time to start contemplating how the 2017 Tax Cuts and Jobs Act (TCJA) will impact your current and future tax plans. One of the frequently asked questions we’ve been fielding is on charitable giving: How can you keep giving, and get a little back on your taxes? Following are four practical possibilities to consider for charitable giving under the TCJA rules.

  1. Stagger Your Giving

Technically, you can still itemize charitable deductions. However, it’s now much more difficult to benefit from doing so annually. The TCJA not only restricts or eliminates several other formerly itemizable write-offs, it essentially doubles the standard deduction to $24,000 for couples filing jointly and $12,000 for single individuals.

As a result, many families who used to itemize and realize tax benefits from their deductible donations will usually decide they’re better off taking the standard deduction instead – even though it means they’ll receive no tax benefit for their charitable giving that year. In February 2018, the National Council of Nonprofits estimated that the higher standard deductions would effectively put the charitable deduction “out of reach of more than 87% of taxpayers.”

A possible work-around is to stagger your giving and other deductible expenses. For example, you may be able to double up your charitable giving every-other year, in an effort to itemize in alternate years. In year one, give twice as much as you normally would if you can combine it with enough other deductibles to itemize and write off the expenses against taxes due. In year two, do what you can to minimize donations and other deductibles, and take the standard deduction instead … and so on.

  1. Unload a Highly Appreciated Holding

If you’re going to be donating anyway, consider doing so with highly appreciated securities like stocks, stock funds, property, or similar holdings that are worth considerably more than when you acquired them. If you sell a highly appreciated holding outside of a tax-sheltered account such as an IRA, you’ll pay capital gains taxes on the difference between its cost and its sale price, less expenses. If you instead donate it “in kind” to a non-profit organization (i.e., without selling it first), you triple its tax-wise potentials:

  1. Within the parameters described above plus a cap based on your Adjusted Gross Income, the holding’s full value is available to you as a charitable deduction in the year you donate it.
  2. You avoid capital gains tax on the unrealized gain.
  3. The charity is free to keep or sell the holding, also without incurring taxable gains.
  4. Do a Donor-Advised Fund

We cover DAFs in more detail in a separate post, but here’s a quick take on how they work:

  1. Make an irrevocable donation to a DAF sponsor, which acts like a “charitable bank.” The full amount of your donation is deductible in the year you fund the DAF. Plus, many DAFs accept in-kind holdings as described above (whereas not all individual charities can).
  2. Over time, you advise the DAF’s sponsoring organization on when and to whom to grant the assets. The DAF sponsor has final say, but you can expect they’ll honor your request unless your intended recipient is not a qualified charity or there are other unusual circumstances.
  3. Until the funds are distributed, the DAF sponsor typically invests the donated assets; any returns or appreciated value grows tax-free, givng your initial donation added impact.

In this manner, a Donor-Advised Fund (DAF) can help you stagger your charitable donation deduction as described above, without having to stagger your usual annual giving. For example, you could fund a DAF with five years’ worth of anticipated donations, and then make annual requests that donations be made to your charities of choice across five years. This should allow you to itemize the entire DAF donation in year 1, and take the standard deduction the rest of the time. Plus, you can fund your DAF using appreciated holdings.

In short, DAFs can be a handy giving tool. That said, they aren’t ideal for every donor, every time. Let us know if we can show or tell you more.

  1. Retirees: Donate Your Required Minimum Distribution

Again, if you’d be making charitable contributions anyway, it may well be tax-wise to donate your Required Minimum Distribution (RMD) as allowed by the IRS, instead of taking it as ordinary income.

During your working years, there are many advantages to funding tax-favored retirement accounts. But, eventually – when you reach age 70½, to be exact – you must begin taking RMDs from your tax-sheltered havens, whether or not you want to. There is a steep penalty if you fail to do so (with Roth IRAs being an exception to this rule).

RMDs are taxed the year you take them at your ordinary income tax rate. You can avoid extra taxes and higher taxable income (which may impact your Medicare premiums and have tax ramifications on your Social Security income) by donating some or all of your RMD to charity. The IRS allows you to donate up to $100,000 annually in this manner.

No New, But Possibly Improved Opportunities

It’s worth mentioning that none of these four tax-planning possibilities are new; they’ve all been available well before the TCJA passed. The difference is, they may be more applicable to you under the new tax codes.

As we always do with tax topics, we recommend touching base with your tax professional before making any big decisions. As a service to our clients, we are happy to arrange a group meeting among you, your accountant and a member of our firm to offer personalized advice and to best coordinate our efforts on your behalf. We’re also available for planning conversations or to answer additional questions you may have about your tax-wise giving goals.

2018 1st Quarter Update

If you were a member of the popular press, you’d probably be happy with 2018’s first quarter performance. At last – some volatility-fueling news in early February, with plenty of enticing “largest,” “fastest,” and “worst” market superlatives to savor after a long, languid lull.

As usual, there are plenty of potential culprits to point to among current events: global trade wars heating up, the arrival of quantitative tightening (rising interest rates), troubles in tech-land over data privacy concerns, ongoing Brexit talks, and some interesting events over in the Koreas. At quarter-end, one hopeful journalist asked, “Is the Bear Market Here Yet?” Another observed: “[T]he number of [Dow Jones Industrial Average] sessions with a 1% move so far in 2018 are more than double 2017’s tally, and it isn’t even April.”

Has the coverage left you wondering about your investments? Most markets have been steaming ahead so well for so long, even a modest misstep may have you questioning whether you should “do something,” in case the ride gets rougher still.

If we’ve done our job of preparing you and your portfolio for market jitters, you might be able to cite back to us why you’ve already done all you can do to manage the volatility, and why it’s ultimately expected to be good news for evidence-based investors anyway. Remember, if there were never any real market risk, you couldn’t expect extra returns for your risk tolerance.

That said, you may have forgotten – or never experienced – how awful the last round of extreme volatility felt during the Great Recession. Insights from behavioral finance tell us that our brain’s ingrained biases cause us to gloss over those painful times, and panic all over again when they recur, long before our rational resolve has time to kick in.

A constructive way to think about recent market performance is as a telling preview of what the next, worse market downturn might feel like. How are you doing so far, and how can we help?

If you noticed the news, but you’re okay with where you’re at, that’s great. If the volatility is bothering you, let’s talk; we may be able to ease your angst. If you continue to struggle with whether you made the right decisions during quieter markets, let’s plan a rational shift to better reflect your real risk tolerances and cash-flow requirements. Not only is your peace of mind at least as important as the dollars in your account, you could end up worse off if you’ve taken on more risk than you can bear in pursuit of higher expected returns.

As Wall Street Journal columnist Jason Zweig said during the February dip: “A happy few investors … may have long-term thinking built into them by nature. The rest of us have to cultivate it by nurture.” We couldn’t agree more, and we consider it our duty and privilege to advise you accordingly and to help nurture that long-term thinking.

You, Your Financial Well-Being, and the Federal Reserve

After nearly a decade of leaving the federal funds rate at zero percent, the time finally came on December 16, 2015: The U.S. Federal Reserve (the Fed) raised the federal funds rate by 0.25 percent. Because it was the first rate increase since June 2006, it was reported as “a historic moment.” Since then, the Fed has made several modest increases. You can find the most recent rate changes reported here.

But what do these rate changes mean to your financial well-being? Is there anything you should “do” to your investment portfolio when they occur? As is nearly always the case for economic events over which we have no control, we typically recommend that you remain informed – but that you act only on factors you can expect to manage within your personal investing.

In that context, let’s take a moment to share some insights about the Federal Reserve funds rate.

What Is the Federal Reserve?

As described on its consumer education site, the Federal Reserve is the central bank of the U.S. It was created by Congress as an independent government agency in 1913 “to provide the nation with a safer, more flexible, and more stable monetary and financial system.” Jerome Powell is its current board of governors’ chair. Before Powell, the chairs were Janet Yellen, Ben Bernanke and Alan Greenspan.

Powell and his board of governors are based in Washington, DC. They also oversee 12 regional reserve branches across the country and are tasked with three main roles:

  1. Monetary Policy – Promoting “maximum employment, stable prices and moderate long-term interest rates”
  2. Supervision and Regulation – Overseeing U.S. banks and gathering information to understand financial industry trends
  3. Financial Services – Serving as a bank for U.S. banks as well as for the country’s monetary operations – issuing currency, managing the government’s bank accounts, borrowing money in the form of U.S. Savings bonds and more

What Is Going On?

While you wouldn’t want to run a country without all three of these roles in place, monetary policy is where much of the headline-grabbing action is often found. The Fed continuously grapples with when, by how much, and how often it should raise the federal funds rate.

The Federal Reserve sets monetary policy through its Federal Open Market Committee (FOMC), which includes the Fed’s board members and a rotating representation of Reserve Bank presidents.

The FOMC holds eight regularly scheduled annual meetings to consider what actions to take (if any). In the days before those meetings, the financial press often reports on expected outcomes as if they were a done deal, and markets often respond accordingly. In reality, until those meetings have taken place, nobody knows what their outcome will be.

Still, while the FOMC has a number of ways to seek balance among the competing demands of the economy, raising or lowering the federal funds rate has long been one of its more powerful management tools. So, it’s no wonder the question becomes the media’s central focus whenever the FOMC is set to meet. It’s also no wonder that investors are bombarded with the usual volume of conflicting coverage on what is and is not at stake, and what may or may not come to pass. Depending on who you heed, higher federal funds rates could be anything from a panacea, to a global scourge, to a non-event in the markets.

What Does All This Mean to You and Your Money?

First, it helps to understand that there is an intricate interplay between developed nations’ monetary policies, global interest rates and the markets in general. Anyone who claims to know exactly what will happen in one arena when we pull a lever in another had best be able to present a functioning crystal ball if he or she is to be believed.

To cite one example, consider this March 2018 column by Wall Street Journal columnist Jason Zweig, in which he chastises various brokers for their still-anemic sweep account yields despite rising interest rates: “The Federal Reserve has driven short-term interest rates up a full percentage point since late 2016; one-month Treasury bills were yielding 1.6% this week. But you’d never know any of that from looking at the returns on the cash in your brokerage account.”

This illustration also demonstrates that the only interest rate the Fed has direct control over is the U.S. federal funds rate, which is the rate at which depository institutions (mostly banks), lend and borrow overnight funds with one another.

The resulting cash flow is the grease that turns the wheels of the country’s federal banking system, so it’s an important factor. But as Zweig illustrates, that doesn’t mean that there is a consistent cause-and-effect relationship between federal funds rate movements and other yields-based financial instruments such as U.S. or international fixed income funds, interest-earning accounts, mortgages, credit cards and so on.

A separate Wall Street Journal article substantiates: “Think all rates would tick a little higher as the Fed tightens? That isn’t how it works. … The impacts will be uneven. Some borrowing costs are likely to rise closely in sync with short-term rates, but others won’t.”

Why is this so? It’s partly the result of those multiple global factors at play, with the Fed’s actions representing only one among many others. A post by “The Grumpy Economist” John Cochrane even suggests that the Fed’s actions may be one of the less-significant factors involved: “Lots of deposits (saving) and a dearth of demand for investment (borrowing) drives (real) interest rates down, and there is not a whole lot the Fed can do about that. Except to see the parade going by, grab a flag, jump in front and pretend to be in charge.”

What Should You Do?  

Whenever you’re wondering how best to respond to a shifting landscape such as that wrought by rising (or falling) interest rates and any related repercussions, begin by asking yourself: What can I do about it?

Unless you are Fed chair Jerome Powell, there is probably nothing you can do to personally influence what the Feds are going to decide about ongoing interest rates, or how the global markets are going to respond to the news. But there is plenty you can do to help or harm your own wealth interests.

First, if you already have a solid financial plan in place, we do not recommend abandoning it in rash reaction to unfolding news. If, on the other hand, you do not yet have a well-built plan and portfolio to guide the way, what are you waiting for? Personalized financial planning is a good idea in all environments.

Next, recognize that rising or falling interest rates can impact many facets of your wealth: saving, investing, spending and debt. A conversation with a wealth manager is one way you can position yourself to make the most of multi-factored influences in unfolding economic news.

Together and through varied interest rate climates, we can help put these and many other worldwide events into the context they deserve, so you can make informed judgments about what they mean to your own interests. The goal is to establish practical ways to manage your debt; wise ways to save and invest; and sensible ways to spend, before and in retirement.

These are the factors that matter the most in your life, and over which you can exercise the most control – for better or for worse. Give us a call today if we can help make things better for you.

The Vital Role of Rebalancing

If there is a universal investment ideal, it is this: Every investor wants to buy low and sell high. What if we told you there is a disciplined process for doing just that, and staying on track toward your personal goals while you’re at it? Guess what? There is. It’s called rebalancing.

Rebalancing: How It Works

Imagine it’s the first day of your investment experience. As you create your new portfolio, it’s best if you do so according to a personalized plan that prescribes how much weight you want to give to each asset class. So much to stocks, so much to bonds … and so on. Assigning these weights is called asset allocation.

Then time passes. As the markets shift around, your investments stray from their original allocations. That means you’re no longer invested according to plan, even if you’ve done nothing at all; you’re now taking on higher or lower market risks and expected rewards than you originally intended. Unless your plans have changed, your portfolio needs some attention.

This is what rebalancing is for: to shift your assets back to their intended, long-term allocations.

A Rebalancing Illustration

To illustrate, imagine you (or your advisor) has planned for your portfolio to be exposed to the stock and bond markets in a 50/50 mix. If stocks outperform bonds, you end up with too many stocks relative to bonds, until you’re no longer at your intended, balanced blend. To rebalance your portfolio, you can sell some of the now-overweight stocks, and use the proceeds to buy bonds that have become underrepresented, until you’re back at or near your desired mix. Another strategy is to use any new money you are adding to your portfolio anyway, to buy more of whatever is underweight at the time.

Either way, did you catch what just happened? Not only are you keeping your portfolio on track toward your goals, but you’re buying low (underweight holdings) and selling high (overweight holdings). Better yet, the trades are not a matter of random guesswork or emotional reactions. The feat is accomplished according to your carefully crafted, customized plan.

Portfolio Balancing: A Closer Look

In reality, rebalancing is more complicated, because asset allocation is completed on several levels. First, we suggest balancing your stocks versus bonds, reflecting your need to take on market risk in exchange for expected returns. Then we typically divide these assets among stock and bond subcategories, again according to your unique financial goals. For example, you can assign percentages of your stocks to small- vs. large-company and value vs. growth firms, and further divide these among international, U.S., and/or emerging markets.

One reason for these relatively precise allocations is to maximize your exposure to the right amount of expected market premiums for your personal goals, while minimizing the market risks involved by diversifying those risks around the globe and across sources of returns that don’t always move in tandem with one another. We are guided by these tenets of evidence-based investing.

Striking a Rebalancing Balance

Rebalancing using evidence-based investment strategies is integral to helping you succeed as an investor. But like any power tool, it should be used with care and understanding.

It’s scary to do in real time. Everyone understands the logic of buying low and selling high. But when it’s time to rebalance, your emotions make it easier said than done. To illustrate, consider these real-life scenarios.

Costs must be considered. Besides combatting your emotions, there are practical concerns. If trading were free, you could rebalance your portfolio daily with precision. In reality, trading incurs fees and potential tax liabilities. To achieve a reasonable middle ground, it’s best to have guidelines for when and how to cost-effectively rebalance. If you’d like to know more, we’re happy to discuss the guidelines we employ for our own rebalancing strategies.

The Rebalancing Take-Home

Rebalancing using evidence-based investment strategies makes a great deal of sense once you understand the basics. It offers objective guidelines and a clear process to help you remain on course toward your personal goals in rocky markets. It ensures you are buying low and selling high along the way. What’s not to like about that?

At the same time, rebalancing your globally diversified portfolio requires informed management, to ensure it’s being integrated consistently and cost effectively. An objective advisor also can help prevent your emotions from interfering with your reason as you implement a rebalancing plan. Helping clients periodically employ efficient portfolio rebalancing is another way we seek to add value to the investment experience.

2017 4th Quarter Update

As the 2017 market analyses have begun rolling in, so too have the reports of long and strong positive performance from almost every corner of the market. One Wall Street Journal (WSJ) year-end report summarized: “Sure, U.S. stocks had solid gains. But investors who bought copper, Argentine stocks, and lumber futures would have also ended the year with hefty profits.”

In particular, the S&P 500 Index has been on a record-busting tear, experiencing positive total returns every single month last year. This is “the first time in records going back to 1970 that’s happened,” reported the WSJ, along with the observation that these returns were delivered in an exceptionally smooth ride, with the fewest up-or-down return swings of 1% or more since 1965.

What are we to make of all this? As always, we turn to evidence-based investing, disciplined rebalancing, and your personal Investment Policy Statement (IPS) to guide the way – whether it’s to enlighten us during dark and scary markets, or to offer a clear lens through which to view the recent rose-colored returns.

Has the smooth ascent lulled you into forgetting what it feels like to be afraid? (Remember 2008?) 2017 market growth has been gratifying indeed. But if your highest-flying holdings have significantly outpaced your planned allocations to them, your IPS tells us when it’s time to get back on target, replacing blind ambition with thoughtful, “buy low, sell high” rebalancing.

Has the unprecedent run left you a little nervous? When it comes to market returns, there’s plenty of evidence to suggest that nothing this good lasts forever. But is there a right way to respond to this rational concern? Again, your IPS informs us on how and when to rebalance back to target in high-rising markets by shifting a portion of past gains away from market risk, without diminishing your desired exposure to future expected growth.

In short, whether current markets leave you enthused and excited, fearful and fretting, or a little bit of both, we remain committed to: (1) applying evidence-based investment theory to your portfolio management, (2) adhering to your IPS as our ongoing road map, and (3) incorporating rules-based rebalancing to help maximize your expected returns while minimizing the market risks involved. No strategy is guaranteed to succeed, but we continue to believe ours is the most practical approach to achieving your financial goals, come what may in 2018.

On that note, we wish you and yours a healthy, prosperous and peaceful year ahead. Please let us know how we can help.