16Aug
How Resonate Provides Value
Economy
Richness of LifeIn case you have not read the first blog in this short series, I invite you to do so.

Since completing it, I have given thought to which of the many client stories I wanted to share with you.

The first story is that of a recent widow who was referred to us.  When I met with Alice, (not her real name, of course), I found her to be very clear and communicative in spite of the recent and sudden passing of her husband.

The stories she told me about her experiences in the financial services world both angered and saddened me.  Assumptions were made that, of course, she would not be able to “handle her own affairs nor make thoughtful decisions” primarily because she was a woman.  On several occasions, male advisors from different companies assured her that “they knew what was best” and even provided “solutions” without bothering to understand the client and her life.

In contrast, I discovered, that when given the opportunity, this woman was quite amazing in how quickly she was adjusting to new life and found her thought process to be remarkably clear.

This included her clarity of thought that the “solutions” provided probably benefited the advisor more than they would benefit her.  Upon discussion and review of the various recommendations, I supported her thinking.

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04Aug
Client Fees & Value
Economy
It seems that everywhere we turn today, the media is emphasizing advisory and product fees.

Common questions are:

“Are you paying too much?”

“Do you know what you are paying for?”

I consider this type question to be one-dimensional and shortsighted.  For example, if one wants to “stay on the numbers’ side”, then where is the question:

 “Are you receiving value for your fees?”

The interesting thing that happens when we insert the word “value” is that we add the possibility for an intangible answer in addition to the one-dimensional tangible answer.

Here are two recent examples of how we have added both tangible and intangible value for our clients:

Example One:

Clients recently came in for their conversation with us, which includes portfolio review. They brought a folder with them and asked: “Will you please look over these estimates for us to pre-pay our funerals?”

This led to a conference call with the clients and the director of the funeral home.  At the end of the conversation in which I asked many questions, the clients said, “Thank you so much.  We understand this now, and are very pleased with the decisions we have made.  Mostly, we feel wonderful that we have taken this burden off of our family.”

Tangible Results: the clients ended up saving $1100 from the original quote.

Resonate Time: 90 minutes

Resonate Fee for this work: $0 

 

Intangible Value Received by the Client: Relief; peace of mind.

Intangible Value Received by Resonate: Knowing we did the “right thing” for aging clients.

 

Another Example…

A client called recently and said: “I’m not sure if these new legal documents prepared by an attorney match our objectives discussed with you.”

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18Jul
IRS on Your Mind? – Here Is What NOT To Try!
Taxes

The subject of taxation is not normally a welcomed topic – here are some “fun” court cases provided by Kiplinger’s.

“A Little Peace and Quiet”

A busy tax preparer ran her business from her home.  During tax season, she felt so harassed from clients calling her at all hours of the day and night that she occasionally booked a room at a local hotel for some peace and quiet.  On her own return, she deducted the cost of this rest and relaxation as a business expense.  Unfortunately for her, the Tax Court ruled that the cost of her good night’s sleep was a nondeductible personal expense.

 

“Billing Mommy”

A wife was sent to jail for killing her husband.  Although she was named as the primary beneficiary of his 401(k) plan, state law barred her from receiving any of the funds because of her crime.  The account was paid to their son instead as the secondary beneficiary.  He claimed that his mother should be taxed on the payout as the intended beneficiary.  An Appeals Court gave him an A for effort but an F in taxation, ruling that he owes tax on the distribution.

 

“Wrecking a Rental Car”

An airline employee needed to get to New Orleans but was stranded by heavy fog.  He worked out a great deal with a rental car company where he paid nothing for a car that the company needed driven to New Orleans.  Unfortunately, he wrecked the auto in Mississippi and had to pay for the damages.  He tried to deduct the payment as a casualty loss, but the Tax Court denied his write-off because he wasn’t the owner of the vehicle.

Now here’s a little good news:

Kiplinger’s recently a report on “The LEAST Tax Friendly States in the U.S. for 2016”.

The good news is that Ohio, Kentucky, Florida, and Indiana are NOT on the list.

Here are the factors that were considered to create the list: income, property, gas and sales tax.

In order from the LEAST tax friendly, here are the top states. (Before reading further, it might be fun for you to see how many of them you could guess.)….  California, Hawaii, Connecticut, New York, New Jersey, Minnesota, Maine, Vermont, Illinois, and Rhode Island!

From our Blogs page, simply search for “tax” to find additional articles of interest.

Please note that, while we are not accountants and cannot provide tax advice, we do work cooperatively with very qualified accountants.  The information that we will share is available to the general public and should not be construed as giving income tax advice.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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11Jul
Are You Paying Too Much In Income Taxes?
Taxes

While we are not accountants and cannot render tax advice, we are very much aware of taxes as we work with our clients.

Based on the information in the Income Level Risks chart, here are some of the questions we review before we make recommendations from where to take income:

  1. What types of investment accounts do you have to work with?  For example, Roth IRA’s offer a tax-free option, taxable accounts, tax-loss harvesting and the opportunity to create capital gain income as opposed to ordinary income.
  2. For clients under the age of 70.5, does it make sense to consider a Roth Conversion?
  3. Will you benefit from holding equities in taxable accounts (due to the possibility of creating capital gain income) and holding fixed income securities in IRA’s?  (Interest from fixed income securities is taxed as ordinary income. Since all income from a traditional IRA is taxed as ordinary income, you may save on taxes by holding equities in taxable accounts and creating capital gain income.)
  4. Are tax-deferral annuities an option?
  5. Do municipal bonds make sense?
  6. Is there is benefit to accelerating charitable deductions?
  7. Can we get your income below the higher Medicare Part B premium threshold?
  8. Can we work to avoid the 3.8% surtax on net investment income?

I am clear that the content of this blog is very technical and complicated.

As always, we welcome a conversation with you and/or your tax advisor.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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05Jul
Bull Market – Is It Time to Get Out of Stocks?
Economy

The U.S. and International equities markets have just given us yet another great quarter end.

How much longer can this continue?

In spite of the fact that this Bull Market is getting to be very long, it’s important to remember that Bull Markets don’t end just because of time.

One of the indicators that a Bull Market is about to end is that the country is entering into a recession.

What are the signs of a recession?

Sam Stovall, chief investment strategist at investment research firm CFRA, looks at four indicators:

  1. Every recession since 1960 has been preceded by a year-over-year decline in housing starts, says Stovall.  The dips have ranged from a 10% decline to a drop of 37%, and they have averaged 25%.  The most recent report on housing starts showed a decline of less than 3%. “So we’re on yellow alert, not red,” says Stovall.
  2. Consumer sentiment is another signpost. Before a recession kicks in, you’ll typically see an average decline of 9% in the University of Michigan’s monthly sentiment index compared with the previous year, says Stovall.  Current reading: up 2.4%.
  3. A drop over a six-month period in the Conference Board’s Index of Leading Economic Indicators means trouble, too, with declines of 3%, on average, registering ahead of an economic downturn. Latest six-month change: up 3%.
  4.  Finally, when yields on 10-year bonds dip below the yields on one-year notes – known as an inverted yield curve – look out, says Stovall. Ominously, long-term rates recently have been under pressure while the Federal Reserve pushes short-term rates higher. “We’re getting a flatter yield curve, but nowhere near an inversion,” says Stovall.  His conclusion: No recession is in sight.

Sometimes people exit a Bull Market too early.

(Source: Kiplinger “When Will the Bull Market End?” by Anne Kates Smith, Senior Editor, June 26, 2017)

Your Resonate advisory team is cautious and continues to follow these important indicators.

If anyone would like to have your current portfolio reviewed or has any questions, we’d welcome a conversation with you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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03Jul
What We’re Thinking About the Rest of the Year – Part 3 of 3
Economy
VIX is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index.  This shows the market’s expectation of 30-day volatility as conveyed by S&P 500 stock index options prices. (www.cboe.com/products/vix=index-volatility/vix-options  and…/vix-index)

As the chart below depicts, the volatility index is currently very low.

Yet, compared to earnings, sales, and other corporate performance measures, stock prices are very high.

The current S&P 500 price-earnings ratio is 25.70 –  above the five-year average P/E of 15 and the 10-year average P/E of 14. (Source: www.multpl.com/  6/2/17)

Based on the chart above, consumers are shaking this off and focused on other factors.

Your Resonate team thinks this could be an example of what is called “home country bias”.  It means that investors’ natural tendency is to be most comfortable with investments in their home country,

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30Jun
What We’re Thinking About the Rest of the Year – Part 2 of 3
Economy
In January, Kiplinger had predicted that the S&P 500 could yield a 6% return in 2017.  In just the first four months of the year, it exceeded that prediction by delivering 7.2%.

Kiplinger’s is now foreseeing a 9% to 11% return for the year—including a 2% dividend yield.  The considerable gains during the first half of the year may foreshadow subpar results for the second half of the year.

According to Burt White, chief investment officer of LPL Financial Research, investors should think beyond a portfolio of U.S. stocks and bonds.  Investors could score big in this market by venturing overseas.  Your Resonate team agrees with this and have been increasing our international exposure in investment models since third quarter of 2016.  Before making international investments, please have a conversation with us regarding risks and strategies that would be suitable for you.

It appears that investors can benefit from this rare, synchronized, economic expansion across the globe.  For the first time, all three major global regions (the U.S., Europe, and Asia) are all growing at the same time.[i]  The International Monetary Fund forecasts world economic growth at 3.5% in 2017, the highest growth rate in five years and up from 3.1% in 2016.[ii]   With consumer confidence at a decade high, consumer spending makes up for about 70% of the U.S. economy.[iii]

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27Jun
What We’re Thinking About the Rest of the Year – Part 1 of 3
Economy
Many of you are asking how much longer the bull market can last.

While no one can answer the question, I thought that the information in this three-part blog might be of interest.

 The Current Bull Market

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19Jun
Did You Know about This New Charitable Deduction?
Retirement

Pet therapy for children and the elderly is now considered a charitable purpose by the IRA’s standards.  An organization that has others take their therapy dogs on visits to hospitals and nursing homes at no cost to the patient or facility, now qualifies for tax exemption as a 501 (c)(3) charity.  These pet therapy sessions are intended to improve the well-being of patients, lessen distress and encourage socialization.  Donors can now deduct contributions made to the group.

(Source: The Kiplinger Tax Letter May 19, 2017)

In the same Kiplinger Tax Letter, Knight Kiplinger suggests that things are looking up for the housing market.  As home prices rise, underwater mortgages are falling steadily.  Currently 10% of homeowners owe more on their mortgages than their homes are worth, however this statistic is projected to be 8% by year-end and even fewer next year.  Having fewer folks upside-down on loans means more homes hitting the market.

And finally, Kiplinger warns us to expect more destructive cyberattacks to strike in the coming months.  Recent U.S. intelligence agencies data breaches have exposed hidden security flaws to criminals and other nations.

Microsoft urges Uncle Sam to quickly reveal such security holes so they can be covered.

Although future attacks will be more difficult to stop as malware becomes more sophisticated, there are ways to help fend off hackers.

  • Spend money on anti-virus / anti-malware software and keep it up-to-date with virus definitions
  • Install software updates often and quickly to plug security holes – especially on your operating system such as Microsoft Windows.
  • Back up data regularly with an external remote local hard drive.  Keep it disconnected from your computer between back ups.  Also take advantage of web-based back up storage.
  • Don’t click on suspicious email hyperlinks or unknown attachments without proper vetting.

Your Resonate team continues to increase our security measures on a regular basis.  For example, our broker-dealer, Valmark Securities requires all Resonate employees to undergo ongoing cybersecurity training.  We also back up our files daily.

Of course, we still know that hackers continue to increase their sophistication as well.

As always, we would love to hear from you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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09Jun
What is Really Going On with Health Care Reform?
Health Care Costs

Knight Kiplinger shares some interesting information in the May 19 Kiplinger Letter and Kiplinger Tax Letter:

Kiplinger does not believe we should expect quick resolution on replacing Obamacare in the Senate.  GOPers are setting aside the controversial House bill and starting over.  He believes there are great problems in this effort: Senators will have to deal with arcane procedural rules to get a bill passed by a simple majority.  This will involve scaling down the bill, with a result unlikely to satisfy House conservatives. Congress will be bogged down with the controversy over Trump’s firing of the FBI director, therefore passing a major bill in such an inflamed environment will be tough.  Overall, a signed bill is a long way off and any final legislation will look significantly different from the House version.

Next, Kiplinger predicts the annual ceiling on deductible payins to Health Savings Accounts (HSAs) will increase in 2018 to $3,450 for account owners with individual coverage and to $6,900 for those with family coverage.  Those born prior to 1964 can put in an additional $1,000.

Limits on out-of-pocket costs, such as deductibles and copayments, will increase to $13,300 for those with family coverage and to $6,650 for self-only coverage.

Minimum policy deductibles will increase to $2,700 for families and $1,350 for singles.  Proposed changes include the ceiling on deductible contributions nearly doubling, HSA funds being able to be used for the purchase of over-the-counter medicines and the fine for payouts made for nonmedical costs being cut in half.

If you, or someone you know needs it, Resonate can provide excellent independent references for navigating the multitude of health insurance choices.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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