Bringing 365 Days Into Focus

by Kevin Rigg, Director of Financial Life Planning, CPA, CFP®

Have you ever taken a perfect family photo, except that one energetic kid (you know the one) is somehow always blurry? It’s hard to show someone else a true picture of what matters most to you, if everything (or everyone) is not in focus.

For that very reason, the SoundView Planning Team is already hard at work preparing for 2020 Annual Review meetings. In early January we will be sending all clients (yes, including you!) a request for 2019 cash flow information, as well as year-end values of non-portfolio assets and loans. Basically, we’re asking for an in-focus snapshot of your full financial picture.

The primary objective of the Annual Review meeting is to accurately assess your financial situation and track your progress toward meeting long-term goals. In order to do this well, we’ll need timely and accurate financial data.

For example, in order to provide a complete net worth and cash flow statement, we’ll need year-end bank account balances — otherwise some of our assessments could just be a shot in the dark. While we already track flows within investment accounts, we don’t see that activity in your personal bank accounts.

Armed with the necessary financial information, it’s much easier to produce more accurate reports for the meeting. We’ll also sit down and review important life changes, or any important decisions you made in the last 12 months. Ultimately, we want to increase the chances of you achieving your life (and financial) goals — so if changes to your plan need to be made, this meeting is where we’ll talk about it.

The Annual Review meeting brings the focus back to long-term planning while keeping our eyes on the path you’re walking today. That way, we don’t miss important changes that may have a big impact down the road.

We’re here to help you keep EVERYTHING in focus, and we’re glad to do it. We’ll see you in 2020, clearly.

2019 Tax Planning: Tips & Deadlines

by Kevin Rigg, Director of Financial Life Planning, CPA, CFP®

As 2019 draws to a close, I want to pass along some tax planning tips and a reminder of upcoming tax-related deadlines.

1. Fourth-quarter tax estimates are due soon. To avoid penalties, be sure to have your payment in the mail no later than January 15, 2020.

2. Review your pay stubs. If cash flow allows, make sure to maximize contributions to your tax-qualified accounts before year-end (e.g., 401(k)/403(b)/401(a)). Contributions to IRAs (including Roth’s) can be made up until April 15, 2020.

3. Fill up lower tax brackets with Roth conversion income. Roth conversions must be completed by December 31st and can no longer be recharacterized in the following year.

4. Consider the timing of state/local tax payments, medical expenses, and/or charitable contributions in order to maximize your itemized deductions and bring them above the new, higher standard deduction ($12,200 for singles and $24,400 for marrieds).

5. Utilize a Donor-Advised Fund to take an immediate tax deduction for current contributions while maintaining the ability to distribute funds to your preferred charity at a later date. These are great tools for accelerating deductions as discussed above.

6. Use a Qualified Charitable Contribution (QCD) to contribute directly to a charity out of an IRA. A QCD is only available for those subject to a required minimum distribution (RMD). The QCD goes towards fulfilling the RMD, does not have to be reported as income, and is especially beneficial for those who do not itemize their deductions.

At SoundView, we evaluate your personal tax situation and let you know if any tax planning strategies should be considered before year-end. We’ll make every effort to coordinate planning with your tax preparer, both to get their input prior to implementation and to ensure they have everything they’ll need to file complete and accurate returns for you in the coming year.

Everyone Has a Plan...

by Ben L. Jennings, Director of Planning Research, CPA/PFS, CFP®

In a August blog post, I introduced the concept (and benefits) of proactive aging: preparing well for the typical transitions we (or our parents or other loved ones) face as we get older. These transitions include where we live, how we handle driving and transportation, how we make and share financial decisions, and how to negotiate health and medical choices. Last month, Kevin Slater discussed preparing for the unexpected situations in life (by the way, the likelihood of those “unexpected things” increases as we age!). How’s that for a punch in the face?

As I've been broaching this topic in client conversations, often the initial reaction may be that “the planning is done” because “I have estate planning documents” (a will, durable power of attorney, etc.) in place. I want to point out that this is necessary, but insufficient preparation. Sorry.

For each of the transition areas I noted above, I contend there is a process of at least six steps to follow (and having legal documents in place is only a partial aspect of one of the steps!). Here’s what I mean:

1. Clarification. This whole endeavor is about maintaining as much control as you can, and to do that, you have to be clear on your philosophy on the subject, your personal goals, and your preferences. You may need to do some research and reflection.

2. Authorization. Here is where you get those legal documents in place. You may also benefit from formalizing agreements among your family about what you want to have happen in various scenarios.

3. Organization. You (may) have your life arranged in a way that it’s easy for you to take care of (if you don’t, that’s another great reason to tackle this). Think also of ways you can arrange things so they not only work well for you now, but can be comfortably maintained as life changes for you, and even would be relatively easy for someone else to pick up if needed.

4. Information. Once you have things 80% organized (don’t let the perfect be the enemy of the good!), it’s time to take a first pass at showing others how to access data and documents they may need to help you manage your financial life at some point.

5. Simulation. Test your progress by practicing your plans to make sure your preparation is complete. If you plan to use public transportation when you limit your driving, can you get to the nearest transit stop? Can your spouse figure out how to pay your monthly bills? Would your health care agent make the choices you want in particular medical scenarios?

6. Continuation. Maintain your plans over time. You can probably continue to simplify things to make it easier for others to help you. Your preferences for who to have in what role may change. You may be able to work on that other 20% of your organization.

Following this kind of process will put you well on the way to having your house in order. Be proactive and put in the effort now, you’ll be glad you did when the time comes.

Year-End Summary

Year-End Summary

By: Vicki Simpson

As I have been reflecting on the past year in the markets, the following words capture the many highs and lows of 2018.

Volatility. Rising interest rates. Earnings. Wages. Valuations. Bull market. Trade wars. Tweets. Correction. Bear market.

I can imagine them stacked up as a memorial to the past year, marking this place in time so we can leave it behind and move forward in 2019.

Let’s first take a look at 2018, by the numbers.

I will not say that 2018 lacked excitement! We stood upon the mountaintop at the end of the third quarter with cautious optimism. Unfortunately, by mid-October, the S&P 500 dropped nearly 5% and continued to tumble down the mountainside for most of the fourth quarter. Q4 hit hard across all markets as shown by the red bars in the chart below. Taking a step back to look at the year as a whole, we see the U.S. markets were down more than 4%, but fared better than all other equity markets and alternatives. The bond markets struggled as well, remaining relatively flat for the year, and did not provide the counterweight to equities that we have experienced in the past.

As we look back three years, the S&P 500 is up nearly 10% in that time frame, still showing evidence of the amazing growth in 2016 and 2017 that well exceeded the recent losses in 2018. The uphill climb surely strengthened our legs and tested our endurance which can only help us weather whatever comes next.

The investment committee continues to track performance and market trends, evaluate changes such as interest rate hikes and assess the resulting impact to client portfolios. Who knows what valleys and obstacles lay ahead in 2019 on our way to the next mountaintop, but we are committed to coming alongside each of our clients on this journey.