New Client Portal

Our client portal, provided by Orion Advisor Technology received an upgrade and a facelift! I can hear the questions already: Client Portal? Orion? Huh?

Never fear, brave reader. Nate’s here to set the record straight and put your mind at ease.

GRAND CENTRAL STATION

Orion is our Portfolio Management Software. Think of it as the Grand Central Station of all your account and investment information. Thousands of data points flow in and out of the software every day to help keep us (and you) up-to-date on your complete financial picture.

One of Orion’s many features is a Client Portal, a place where you can log in and see the balances of your investments, transaction details, and even performance data. It can be pretty handy.

If you’re already utilizing the portal, you won’t have to change or update your credentials — the switch should be seamless. Many of the core functions of the portal will remain the same, but the user interface will be much smoother. Some of the main features of the dashboard can be seen below.

View fullsize

We’re excited for the change, but this ain’t our first rodeo, either. We know there can be hiccups in anything involving technology. Once you log in and poke around for a while, let us know what you think. If you have questions, ask your Support Advisor, and they’ll point you in the right direction.

YEAH, BUT WHAT IF…?

I know, I know. FOMO (fear of missing out) is a real thing, folks. So real that you might be feeling its impact as we speak. If you’d like to find out how to access the Client Portal, let us know and we’d be happy to help get you up and running. If you don’t care either way, that’s fine, too. We’re not gonna push, if you’re not gonna pull.

Whether through the Client Portal, random check-ins, or your normal client meetings, we want to make sure you have access to all the information you can stand. If you have any questions , don’t hesitate to reach out. We’re here to help.

Inflation Reduction Act: What You Should Know

By Kevin Rigg, Director of Financial Life Planning, SoundView Advisors

The Inflation Reduction Act, signed into law on August 16, 2022, primarily addresses changes to Medicare, health insurance, and energy-related tax credits. It also provides additional funding to the IRS and is paid for by a new corporate alternative minimum tax and an excise tax on certain corporate stock buybacks.

You can expect to hear more from us in the coming months about the planning implications of this Act, but for now, we have summarized the key consumer provisions below.

Medicare

• Authorizes the Department of Health and Human Services to negotiate Medicare prices for certain high-priced, single-source drugs. Only 10 of the most expensive drugs will be chosen initially, and the negotiated prices will not take effect until 2026. 

• Starting in 2025, a $2,000 annual cap (adjusted for inflation) will apply to out-of-pocket costs for Medicare Part D prescription drugs.

• Starting in 2023, deductibles will not apply to covered insulin products under Medicare Part D or Part B for insulin furnished through durable medical equipment. Copayments for covered insulin products will be capped at $35 for a one-month supply.

Health Insurance

• Starting in 2023, a high-deductible health plan can provide that the deductible does not apply to selected insulin products.

• Affordable Care Act subsidies (scheduled to expire at the end of 2022) have been extended through 2025.

  • Indexing of percentage contribution rates used in determining a taxpayer's required share of premiums is delayed until after 2025.

  • Those with household incomes higher than 400% of the federal poverty line remain eligible for the premium tax credit through 2025.

Energy-Related Tax Credits

• Starting in 2023, a tax credit of up to $7,500 is available for the purchase of new clean electric vehicles meeting certain requirements.

  • The credit is not available for vehicles with a manufacturer's suggested retail price higher than $80,000 for SUVs and pickups, $55,000 for other vehicles.

  • The credit is not available if the modified adjusted gross income (MAGI) of the purchaser exceeds $150,000 ($300,000 for joint filers and surviving spouses, $225,000 for heads of household).

• A tax credit of up to $4,000 is available for the purchase of certain previously owned clean electric vehicles from a dealer.

  • The credit is not available for vehicles with a sales price exceeding $25,000.

  • The credit is not available if the purchaser's MAGI exceeds $75,000 ($150,000 for joint filers and surviving spouses, $75,000 for heads of household).

• The residential clean energy credit extends the current 30% tax credit towards the installation cost of solar panels and expands it to include other equipment used to harness renewable energy (including battery storage technology).

• The current 10% residential energy credit (with a lifetime cap of $500) is replaced with a “nonbusiness energy property credit” that offers a 30% tax credit and an annual cap of $1,200 (although some projects allow for a higher $2,000 cap).

Social Security Reform

By Kevin Rigg, Director of Financial Life Planning, SoundView Advisors

It is projected that starting in 2035, just 80% of promised Social Security benefits will be payable if Congress doesn’t fix the program sooner. Making the program sustainable will generally mean raising taxes, cutting benefits or a combination of both. 

The coming shortfall has been well known for years and many proposals have been put forth to shore up Social Security. A recent survey of voters by the University of Maryland’s Program for Public Consultation sought to assess what changes had the most public support. These are the changes to help sustain the Social Security program that had the most support amongst survey respondents:

1. Raising the Social Security payroll tax cap

In 2022, Social Security payroll taxes are applied on up to $147,000 in income, a level that is adjusted each year. Several proposals have been put forth to either increase this threshold (to $250,000) or reinstate it at higher income levels (over $400,000).  These changes would have the most significant impact on sustaining the Social Security program, in some cases eliminating up to 61% of the shortfall.

2. Reducing benefits for high earners

Wealthier retirees receive more generous benefits on an absolute basis, although the percentage of benefits relative to earnings goes down as income increases. There are proposals to perform means testing that would further reduce benefits for top earners, which are estimated to eliminate the shortfall by 11%.

3. Gradually raising the retirement age

Your retirement age is when you stand to get the full benefits you earned based on your work record. Increases to the retirement age that were enacted in 1983 are still getting phased in today. For people born in 1960 or later, the full retirement age is 67. Because many people work and live longer, proposals have been made to raise the retirement age again, which could reduce an estimated 14% of the shortfall.

4. Increasing the payroll tax

Currently, employers and employees each pay a tax of 6.2% of wages, and raising those rates could have a big impact on the program’s solvency. A simulation showed that raising those rates to just 6.5% would help eliminate 16% of the shortfall.

It’s hard to predict what will happen with Social Security reform, but changes to the program are likely in the coming years, and the proposals listed above are certainly garnering more attention. We don’t anticipate significant changes to actual benefit payments in the near term, and any that are made are likely to be phased in over several years. We will continue following these issues, and you can expect further analysis and conversation from your advisory team as we learn more.

Source: https://www.cnbc.com/2022/08/03/changes-americans-are-willing-to-make-to-fix-social-security.html

Employee Spotlight: Nichole Harrison

Nichole Harrison is the newest member of the SoundView team!

Nichole received her Master of Science (M.S.) in Personal Financial Planning from Kansas State University in 2018. She’s been honing her skills ever since, and has been a wonderful addition to the growing team here at SoundView. As she's learning more about you, we thought it would be good for you to know a bit about her, too.

KEEP READING FOR NICHOLE'S ANSWERS TO OUR “GET-TO-KNOW-YOU” QUESTIONS!

What's the craziest thing you've ever done?
On a beach in Costa Rica, I held the back flipper of a SEVEN FOOT female leatherback turtle while she laid her eggs—and lived to tell about it!

What’s your favorite movie?
Escape to Witch Mountain—the version from the 70’s, of course!

What’s your favorite quote?
"When you are happy you can forgive a great deal."
- Princess Diana

What’s the most important thing in your life?
My four children, and continuing to learn for the rest of my life.

What’s your dream vacation?
I enjoy connecting to my roots, so I want to take a nice, long family-history tour across Europe! I recently found out I have family heritage in Italy—sounds like a good place to start!

If you could be any animal, what would you be?
An Otter. I have my reasons.

What would be your “last meal”?
I would skip it. If I knew I wouldn't be around much longer there would be other things I would rather do than eat.

EDITOR’S NOTE: firm leadership does not endorse the skipping of last-meals. Food is amazing.

What is your favorite thing about working at SVA so far?
The people! My very first day, Vicki showed true emotion while sharing at our staff meeting, Lisa willingly picked out my lunch, and I received multiple messages of support and encouragement from the rest of the team.

What drew you toward Financial Planning?
SoundView’s purpose is “to have a deep and lasting impact on people’s lives” — that spoke to me. Money was my first language. I counted, saved, and invested from an early age. When I discovered more about how it impacts the quality of life, I was all in!

The Markets Keep Moving

by Kevin Slater, CEO, Lead Advisor, CFP®

The Fed has finally acknowledged what many have been communicating for some time; inflation is a real and persistent issue in the U.S. The problem of inflation is more complex than a temporary supply chain slowdown. Many blame Russia’s invasion of Ukraine, which has ballooned commodity prices of many types: oil, gas, grain, and precious metals. Certainly, it’s a factor.

But much like a noxious weed, inflation’s roots go deeper. Over the past few years, the economic policies of both Republicans and Democrats injected massive amounts of cash into all parts of the economy, including the markets. As a result, we have much higher housing costs, heavier consumer spending, and aggressive business expansion (paired with worker shortages).

By raising interest rates, the Fed is increasing the costs of borrowing and thereby reducing spending capacity. They hope to slow inflation from the current 8%+ rate to a target 2% rate. Their challenge is to slow the economy without doing major harm. This is difficult as some sources of inflation, such as commodity prices, may not be impacted by these actions.

The markets, as always, are trying to forecast the future. The bond markets have already priced-in additional interest rate hikes. The stock markets are assuming companies will not be able to grow as quickly and, in many cases, may need to contract. Where will consumers spend their money? How will each company be impacted by higher rates and reduced overall spending?

At SoundView, we don’t believe in “timing the markets.” In the short run, no one knows how the markets will react to inflation reports or Fed actions. However, as a firm we do make strategic changes at times based on significant economic shifts. We will continue to keep portfolios well-diversified and look for opportunities to add stability should the broader market continue to slide.

Our current focus with fixed income (bonds) is the preservation of capital. Bonds lose value when interest rates are rising so we have shortened duration significantly to reduce this impact. Once rates stabilize, we will extend duration to take advantage of the higher income offered from higher rates.

On the equity side, we have seen prices become much more reasonable according to traditional metrics. That said, the S&P 500 remains growth-biased and many of those companies have greater business risk as rates rise. On the other hand, even if the Fed triggers a recession, many companies will remain profitable and may outperform the rest of the market. We are exploring ways to balance this exposure without making a market call.

These are challenging times for investors, and we anticipate there could be more losses ahead. Even so, we believe in the long-term value of investing and the opportunities market corrections create.

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Falling Markets & Portfolio Changes

by Kevin Slater, CEO, Lead Advisor, CFP®

It has been a rough year in all parts of the financial markets. Due to several factors, nearly every part of the bond and equity markets have fallen dramatically.  How do we respond? Our goal is to remain strategically disciplined in our portfolio allocation and adjust only for long-term changes to the markets while also taking in new information as it arises. 

We feel some changes are in order due to the following:

• Increased government intervention in China across multiple industries with focus on the most profitable companies

• Russian invasion of Ukraine and the impacts on commodity supplies (grain, oil, and natural gas) and on geopolitical alliances

• Higher inflation as unemployment remains low

• Rising Interest rates and a flatter yield curve

China’s crackdown, the invasion of Ukraine, and the shifting allegiances have reduced our expectations for emerging market returns. Some emerging markets will benefit from higher commodity prices while others will suffer for the same reason. Some may see a jump in trade while some will not. We are reducing our allocation to emerging markets while retaining the use of active managers.

Rising interest rates and increased geopolitical uncertainty hurt international small cap companies disproportionately. This portion of portfolios has struggled despite low-interest rates, we think it will get harder. We are reducing our allocation to international developed small cap.

Amid the array of headwinds, international developed markets have thrived, most notably in Europe as the scope of the war remains limited but the side effects benefit larger companies in developed markets (ex: defense and energy companies).  We will reallocate the proceeds from emerging markets and international developed small cap to international developed large cap.

While we use broad index funds for most of our equity investments, we also use a select group of active global managers who tend to have a growth-oriented bias in their company selections. Growth oriented stocks have been punished by rising interest rates. We are reducing our allocation to active global managers and redirecting the funds across US companies.

On the fixed income side of portfolios, we have seen a rapid and massive jump in interest rates across the yield curve which reduces the value of bond holdings. Longer term bonds are punished more severely than shorter term bonds.  We will further reduce the average term of bond holdings until the yield curve stabilizes.

We intend to make these changes in the coming weeks. In the process, we will reduce the average manager cost and the level of volatility in portfolios. Please let us know if you have any questions.

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Market Summary - May 2022

By Vicki Simpson, Trading Analyst, SoundView Advisors

If you don’t already know, there is no nice way to say it – at the moment, everything about investing looks awful. Bond values are declining as interest rates rise and equities markets are well into a correction. In addition, high inflation is reducing the purchasing power of your dollars. The downward trend of the first quarter continued into April. While many things are out of our control as investors, SoundView’s Investment Committee is focusing on ways we can mitigate the impact of current volatility, reduce risk and preserve capital in portfolios. I encourage you to read Kevin Slater’s article for insights on the factors affecting various markets and how our Investment Committee is responding and repositioning client portfolios.

Click HERE to find out more!

Staff Changes at SoundView

by Kevin Slater, CEO, Lead Advisor, CFP®

We are blessed with an incredible team at SVA. I appreciate the heart, knowledge, and wisdom each member of our team brings to the table. Our team is a strong community who depend on each other in order to provide you with our best insight and service. They are a wonderful group of people.

Change, however, is inevitable. Cole Spence will be taking an indefinite leave of absence to pursue personal interests. He is leaving on good terms, and we would welcome the opportunity to work with him again in the future. He has been a significant part of our team, and we wish him the very best in his pursuits. His last day will be May 27th.

At the same time, I am excited to announce we have hired Nichole Harrison, a longtime acquaintance of Kevin Rigg's. She has worked for financial firms in the Olympia area and has passed her CFP exam. She has communicated that our culture and the manner in which we serve our clients has really resonated with her. She will join our team on Monday, May 16th, and we are looking forward to sharing the gifts and talents she brings to SVA.

Predictably, these changes will require some reorganization of client assignments. We are committed to serving you well, especially during this time of transition.

Please join us in welcoming Nichole, and wishing Cole well.

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It’s Good To Hear Your Voice

by Nate Porter, Chief Operating Officer, SoundView Advisors

IT’S GOOD TO HEAR YOUR VOICE

My kids love to sing. Around the house, on a road trip, in the shower — you name it.

For my son who’s 12, it’s mostly Imagine Dragons these days. He did, however recently request a playlist from an ancient band called “U2”, which shows that I’m doing SOMETHING right. For my daughter, 9, it’s the songs from whichever Disney/Pixar “joint” that has most recently dropped; currently, it’s all Encanto, all the time. And Queen. Can’t forget Queen.

Now, when they sing, whether the notes are spot-on or not, I know it’s them. Being their dad, their voices are unmistakable to me. Heartwarming, I know, but how does this relate to you? A few weeks ago I read these statements on FTC.gov:

“Newly released Federal Trade Commission data shows that consumers reported losing more than $5.8 billion to fraud in 2021, an increase of more than 70 percent over the previous year.”

And “Of the losses reported by consumers, more than $2.3 billion of losses reported last year were due to imposter scams—up from $1.2 billion in 2020.”

That’s a tune I definitely don’t want to hear around the office.

A DIGITAL DISGUISE

Imposter scams are nothing new, but they are more sophisticated these days: email-spoofing, robocalls, they can even come via text message! The notes differ slightly different, but the tune is always the same: a scammer pretends to be someone you trust in an effort to convince you to send them money. In our world, these scams are almost entirely digital. Here’s the million-dollar question: why? Because using the written word, scammers can impersonate anyone they like. They can wear any mask.

That’s why your voice is so important! If a scammer gets on the phone and pretends to be someone you’ve had dozens of conversations with, you’d know instantly something was wrong. To bring it home: you know us. You know our voices and our faces, and we know yours—and that’s a powerful thing.


TRUE “VOICE RECOGNITION”

We’ve set up a few new rules for our firm to ensure neither you nor the firm falls victim to this type of fraud:

• An outgoing funds transfer (out of a your investments to a bank account), must be verbally authorized by the client. This can be via phone, or in meeting.

• In the same way, an outgoing funds transfer may not be authorized solely digitally.

• Your Lead Advisor will be notified of all transfer requests, big or small.

• Note: if you’ve set up a standing/automatic transfer, say, on a monthly basis, the rules are different. We won’t call you every time!

While some of this might sound like a hassle, I hope you’d agree a quick phone call may end up saving us all a ton of grief. And this goes both ways. If you receive written communication from someone on our team that seems strange, err on the side of caution. Let us know. Forward the message to us so we can look it over. Or you can even call us and we would be happy to talk about it with you. 


NOT JUST A BOX TO BE CHECKED

At SoundView, we insist on understanding our clients well. Our advisors don’t (and won’t ever) have hundreds of clients apiece. You’re not just a name on a list, or a box to be checked. You’re a household we have a unique relationship with. Knowing you well helps us do our jobs better, but it also has other effects. We can better sense if someone is experiencing cognitive decline. We can pick up on higher levels of stress and anxiety. Most of all – we know what you look like, sound like, and how you communicate. This can diminish the dangers of imposter scams.

Knowing you helps us learn from you, protect you, and serve you better. If you have any questions, or just want to say hi, never hesitate to give us call. I love talking to our clients-- it’s always good to hear your voice.

New Texting Number

by Nate Porter, Chief Operating Officer, SoundView Advisors

A few years ago, some SVA clients requested the ability to text with our team. While we love having conversations with our clients, there are some situations where texting can also be convenient.

In 2020 we researched our options and ultimately chose a secure/compliant platform for texting clients. Since that time, we’ve communicated with dozens of client households this way.

As of March, 2022 some changes are underway we thought you should know about.

1. We’ve recently upgraded our texting platform, switching from our previous provider.

2. Along with that change has come a new phone number to send and receive texts.

3. If you’ve texted with us in the past, we will be sending you a message from our new number; save it in your phone.
   

As with any technology platform, we want to be mindful and cautious. We’ll never ask you to do complex or out-of-the-ordinary tasks over text, and we’ll never ask for account numbers or other personally identifiable information.

If you’d like to communicate via text, please reach out to your Support Advisor, and we’ll make sure you’re all set up.

Making a Game Plan to Deal with Memory Loss

By Kevin Rigg, Director of Financial Life Planning, SoundView Advisors

“Have you seen my keys?”
“Where did I leave my glasses?”
“Have I paid this bill yet?”

Undoubtedly, all of us ask questions like this, perhaps even multiple times a day! Forgetfulness is a part of everyday life and is often easily explained by distraction, stress, drowsiness, as well as numerous other factors. However, it can also be a sign of memory loss (or cognitive decline), something experienced by 1 in 9 adults over age 45 according to the CDC. As one might expect, the prevalence of cognitive decline increases as we age, and those who are dealing with it are often living alone (36.2% of those over 65).

As financial planners we strategize ways to grow and protect our client’s financial assets so they will have the resources necessary to handle increasing care needs, as they age. This planning is critical but equally important is assessing the risks to financial assets from fraud and mismanagement once someone begins to experience cognitive decline. The key is to discuss these issues and create a game plan early on, well before cognitive decline has begun.

Here at SoundView we have established a process to proactively help our clients deal with the potential of cognitive decline and it all centers around our Trusted Contact Designation (formerly known as the Sharing of Information Authorization). We ask all clients to complete this form, naming at least one trusted person we can contact, should we notice changes in behavior or patterns that could suggest a cognitive decline. Our job is not to diagnose cognitive decline, we will leave that to the medical professionals, but rather to recognize potential warning signs and alert others who are able to help.

In addition to the Trusted Contact Designation, we take additional steps to protect our clients from potential fraud and abuse:

1. Estate Document Review – We revisit estate documents periodically to ensure they accurately reflect our client’s wishes and name the proper individuals in trusted, decision-making roles.

2. Cash Flow Review – We annually review income and spending trends to identify irregular patterns or unexpected cash flows.

3. Freeze Credit Reports – We may suggest our clients contact each credit bureau to put a freeze on their credit and provide an extra layer of protection before opening new accounts.

4. Limit Solicitations – We recommend contacting these agencies to help reduce junk mail (www.optoutprescreen.com or 1-888-567-8688) and limit spam calls (www.donotcall.gov or 1-888-382-1222).

It’s never too early to start working on a game plan for dealing with memory loss. The next time you find yourself scouring the house for your misplaced keys, perhaps take a moment to assess how prepared you are to deal with the financial risk of cognitive decline, no matter how far in the future you think it might be. Your SoundView team is here and ready to help you make progress on that plan, beginning with the important steps reviewed above!

2021 Market Summary

By Vicki Simpson, Trading Analyst, SoundView Advisors

Despite the continuing challenges from the presence of COVID, 2021 turned out to be a good year for investors. We experienced multiple waves of businesses re-opening, then restrictions, followed by more re-openings, even as new variants made their way around the globe. A side effect of these waves was supply chain disruptions in many parts of the economy, from car components to ingredients in your favorite restaurant dishes. As the economy revived, unemployment continued to fall, with job openings exceeding the number of labor participants seeking work. The shortage of goods and people has led to the largest jump in inflation in over 30 years. Extended periods of high inflation can have a negative impact on just about everyone, from retirees to savers.

Despite these seeming contradictions, global growth was strong in many areas. The US Large cap markets experienced returns above 28%, Small caps just under 15%, and international markets above 11%. The ongoing concerns about China regulation and some geopolitical risks took a toll on emerging markets in 2021, which were down almost 3%.

In 2022, the impact of the Fed’s plans to raise interest rates and reduce their balance sheet will be watched closely by many. Will inflation ease because of these policies or will it persist and continue to erode the current purchasing power of consumer dollars? Will the rate of economic growth outpace this season of higher inflation? COVID and geopolitics may also contribute to greater volatility in the year ahead.

Questions continue: How do we position bond portfolios to weather the storm of rising interest rates? Are there biases within equities portfolios we can manage or reduce to keep pace with growth expectations? How do we combat inflation should it persist? Positive portfolio returns are great, but real returns are what matter most. The SoundView team continues to monitor the situation, as well as these key elements, to keep clients on course to achieve their goals. We believe well-diversified portfolios will continue to reward and protect investors in times such as these.

Considering Premium Changes with Long-Term Care Insurance

Ben Jennings, Lead Advisor and Director of Planning Research

With the (anticipated) entrance of the Washington Cares Fund, more and more of our clients are becoming acquainted with insurance for long-term care (LTC) needs. While LTC policies are - in theory - designed to have stable premiums, if you have had an LTC policy in place for a while, the odds are good you have seen premium increases.

If you receive such a premium increase letter, you will also typically be given some options to reduce the premium increase by changing the policy benefits. There are three primary levers which might be adjusted:

• The maximum daily or monthly benefit

• The minimum benefit period

• The growth in the benefit over time

Sometimes this presents a nice opportunity to re-shape the policy benefits in response to personal or other changes since the policy was taken out. At other times this is a temptation to eliminate needed coverage (or attractive benefits in older policies that aren’t even offered today) to save a few dollars. While making these decisions, we look at factors like these:

1. Fresh Eyes. How would we design this policy now if we had a blank slate?

2. Reality Check. How does the current periodic benefit compare to current costs in the geographic region in which care might be received?

3. Cost Structure. If LTC was needed, would it add substantially to household expenses (common earlier in life), or would those costs take the place of other expenses (more typical in later life)? The answer may be different now than it was when the policy was taken out.

4. Other Resources. We may now have more (or less) confidence the client’s other resources could adequately cover LTC costs.

Of course, in addition to benefit design, we must evaluate affordability, and whether the proposed premiums still represent a good trade-off between managing the risks of long-term care and the client’s other goals.

Finally, we need to ask - assuming we might want to downgrade the coverage to save premium dollars - is now the right time to do so? Once done, we will never again have the opportunity to restore benefits to the level they are at now, so we must keep in mind a downgrade is a one-way option, which cannot be reversed. It is also frequently possible to ask the company to downgrade policy benefits in the future, even if premium increases are not occurring at the time.

This question is a subset of the broader risk-management area. We look at risks like this and ask, “How likely is this to happen?” (prevalence) and “How bad could it be if it did occur?” (consequences). We are glad to serve as your guide through this kind of thought process, if (or when!) the need arises.   

2022 Tax Season - Be In The Know

The 2022 tax season is about to get underway as the IRS recently announced they will begin accepting and processing returns on January 24 (https://bit.ly/3nnaDhM). We’ve been through this process a time or two and have shared our answers below to the most common tax-reporting questions we receive from clients this time of year.

WHEN SHOULD I EXPECT MY 2021 INVESTMENT-RELATED TAX FORMS?

Taxable Accounts - You can expect to receive a Consolidated Form 1099 from your account custodian (Schwab, Pershing) in mid to late February. This form is produced for each of your taxable investment accounts and reports the income earned in the account during the year (interest, dividends, and sales proceeds).

• If you have not received your Consolidated Form 1099 in the mail or electronically by early March, please let us know and we will help track it down for you.

Retirement Accounts - If you made a distribution in 2021 out of any retirement account (401k, 403b, IRA, etc.), you can expect to receive a 1099-R from the account custodian reporting the amount distributed.

• The deadline for custodians to send these forms out is January 31st, so you can expect to receive them by early February.

Private Placements - If you have invested in private placements, you should receive one or more additional investment-related tax documents that you will need to report on your return. 

• If any of your private placement investments are in a partnership, you will receive a Schedule K-1 and can usually expect it from the partnership by the end of March.
  

WHAT ELSE SHOULD I KEEP IN MIND FOR FILING MY TAX RETURN THIS YEAR?

Qualified Charitable Distribution (QCD) – A QCD is a charitable gift made directly from your IRA that does not have to be reported as taxable income on your return. The full IRA distribution still gets reported on the tax form (1099-R) and it is your responsibility to remove the QCD amount from the taxable portion on the return.

Tax-Favored Account Contributions (IRA, Roth IRA, HSA) – If you already contributed to one of these accounts for 2021, please make sure it is reported on your return. The contribution deadline is April 18, 2022, so you still have time to fund these accounts for the 2021 tax year.

Charitable Contributions – Even if you no longer itemize deductions, it is still worth tracking and reporting your donations to charity as each taxpayer is eligible to deduct up to $300 ($600 for couples) of charitable contributions each year.

Advance Child Tax Credit Payments – If you received advance child tax credit payments during 2021, you will need to reduce the amount claimed for the credit on your 2021 return. The IRS will send a notice (Letter 6419) with the total amount received to assist with the child tax credit calculation on your return.

Economic Impact Payments – If you did not receive a third economic impact payment, or did not receive the full amount, you may be eligible for a recovery rebate credit when you file your 2021 return. The IRS will send a notice (Letter 6475) with the total stimulus payments received in 2021 to assist with the recovery rebate credit calculation on your return.

We know that tax filing time can be stressful as you gather documents and records to file your tax return before the deadline. We hope this is helpful and alleviates some of the stress, but please let your planning team know if you have any further questions.

Kevin Rigg, Director of Financial Life Planning, SoundView Advisors and the SoundView Advisors Client Service Team

Who’s Your Favorite?

by Kevin Slater, CEO, Lead Advisor, CFP®

Someone recently asked me who my favorite clients are.  I laughed out loud.  This question has become a sort of running joke in our office.  My honest answer?  Whichever client I last spoke to--no kidding! 

At a time when people seem pigeonholed (voluntarily or not) into opposing factions; it is joy-giving for me to have a very different experience in my own life.  I am savoring wonderful relationships with people who are distinctly different from one another. They represent a wide array of ages, backgrounds, skills, interests, professions, and yes, different beliefs and opinions.  There is a lot of potential for disagreements, debates, and worse!

Instead, I see our clients have a great deal in common.  All of you share our values of people, service, humility, excellence, collaboration, learning, and stewardship. Those values are common to our clients but certainly not universally held, nor frequently held in combination.

This leads me back to my answer to the favorite client question. Aren’t our best relationships with people who share our deepest values?  I think so. 

Thank you for exhibiting your value of people by treating our team with kindness, respect, and care.

Thank you for valuing service by allowing us to serve you and teaching us how to do it well.

Thank you for the humility you demonstrate in trusting our team and the work we do for you.

Thank you for caring about excellence, holding us to high standards, and letting us know if we fall short. 

Thank you for collaborating with us by engaging in very personal conversations—giving us an understanding of what brings you joy and what concerns you.

Thank you for living a life of learning as shown by your curiosity and your questions—ALL of them!

Thank you for exemplifying stewardship by giving us time out of your busy schedule to address important issues and answer OUR questions.

Thank you for being you.  You are one of our favorite clients!

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2021 Tax Planning: Tips & Deadlines

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

As 2021 draws to a close, here are 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 your payment is postmarked no later than January 15, 2022.

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)).

3. Consider filling up lower tax brackets. A great way to get this done is with a Roth conversion, which must be completed by December 31st.

4. Maximize itemized deductions. Consider the timing of state/local tax payments, medical expenses, and/or charitable contributions to bring itemized deductions above the standard deduction ($12,550 for singles and $25,100 for marrieds).

5. Maximize charitable giving tax savings.

   • Take advantage of an easing of charitable deduction tax rules, including a $300 above-the-line deduction and removal of the 60%-of-Adjusted Gross Income (AGI) limit, both for cash donations only.

   • Contribute to a Donor-Advised Fund and receive an immediate tax deduction while maintaining the ability to distribute funds to a preferred charity later.

   • Use a Qualified Charitable Contribution (QCD) to contribute directly to a charity out of an IRA (a QCD is only available to IRA owners over age 70.5).

   • Donate shares of appreciated securities (stocks, bonds, mutual funds) to receive a tax deduction and avoid capital gains tax.

At SoundView, we evaluate your personal tax situation and let you know if any tax planning strategies should be considered before year-end. Your input in this process is crucial, so please let us know if there have been any major life changes that might impact your tax situation. We make every effort to coordinate this planning with your tax preparer. We want their input prior to implementation and work hard to ensure they have everything needed to file your return in the coming year.

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2022 Annual Review Update

by Kevin Slater, CEO, Lead Advisor, CFP®

The SoundView Team is already hard at work preparing for 2022 Annual Review meetings. By early January we will have sent all clients (yes, including you!) a request for 2021 cash-flow information, as well as year-end values of non-portfolio assets and loans.  

The primary objective of the Annual Review meeting is to accurately assess your financial situation and track your progress toward meeting long-term goals. To do this well, we need timely and accurate financial data and appreciate your help in providing the information requested.  

We will review financial reports at the meeting, but also plan to discuss important life changes you made in the last 12 months and any key, upcoming decisions. Ultimately, we want to increase the chances of you achieving your life (and financial) goals — so if changes need to be made, this meeting is when we’ll discuss your options.  

While no major changes are planned, we continue to refine and improve our Annual Review data gathering and reporting processes, which means you may notice slight differences from prior years. That said, the Annual Review meeting's core purpose remains the same: bringing the focus back to long-term planning while keeping our eyes on the path you're walking today.  

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Inflation For How Long?

by Kevin Slater, CEO, Owner, SoundView Advisors

After years of little to no inflation, the US government formally acknowledged the jump in inflation by announcing the largest cost of living adjustment to Social Security in 40 years. Some of it was to be expected as COVID lockdowns eased and businesses which had been heavily discounting goods and services (deflationary) brought them back to prior levels. Even so, this raises several questions: why does inflation matter? Should we be concerned about the current spike? And what can we do about it? 

Simply stated, inflation is the persistent increase in the price of goods and services. This is the normal state of affairs and sounds benign, but it is not. In 1998, if you had $ 2.50, you could buy a Big Mac. If you buried the money in your yard and dug it up 15 years later, that same $ 2.50 would not be nearly enough for a Big Mac (at $ 4.19)! The reason we invest our savings is so the dollar we set aside now can buy as many or more goods and services in future as it does today. You would need to invest in 1998 at an average annual return of just over 3.5% on your $ 2.50 to buy the same sandwich 15 years later. 

The greater the inflation, the greater the required return on investments to keep up. All else being equal, someone who retires in a low inflation period does not need to generate as high a return as someone who retires in a higher inflation period to maintain their standard of living. This means they can theoretically invest more conservatively if they so choose.  

If this is a temporary spike, not much needs to be done. Conversely, if we are entering a period of persistent inflation, we may need to consider some different choices. Bonds, a core part of our portfolios, suffer if higher inflation is protracted whereas stocks, real estate and commodities do well.  

The challenge is to invest in a given asset in a way that ensures the benefits of that asset or strategy are realized by our investors. We can easily do that with stocks but do not want portfolios overly dependent upon them. Commodity prices track inflation well but capturing those price increases in a liquid investment vehicle is difficult. Real estate investments are similarly challenging as investors tend to be far better off investing directly in a specific property or tightly managed pool of properties than in a broad index. 

Most recently we have been investing in direct placement real estate for qualified investors. For a broader swath of clients, we hold Treasury Inflation Protected Securities (TIPS). We are considering an expansion of TIPS holdings and reviewing overall portfolio allocation structure as we continue to watch the inflation numbers. After all, we want to make sure you can afford to buy the same sandwich 15 years from now that you can buy today. 

An Interesting Third Quarter

by Vicki Simpson, Trading Analyst, SoundView Advisors

The third quarter was quite interesting! We had summer vacations, a new variant of COVID making its way around the world, kids back to school, the 2020 summer Olympics, backlogs at ports, rising prices and more. Here are a couple investment highlights from the quarter:

The bond market remained relatively flat for the quarter, until the end of September, when the Fed made its intention clear to begin tapering in the near-term and confirmed rate increases could begin in 2022. The Fed’s target for inflation has been met, leaving the job market as the other major indicator for the Fed to begin these changes. Job reports will be closely monitored in the fourth quarter, as well as the inflationary pressure caused by global supply chain bottlenecks. Bond markets will continue to be volatile in anticipation of and as a result of these upcoming policy changes.

Concerns over China’s regulatory actions, as well as potential fallout from real estate developer Evergrande’s default risk, has had investors on edge. Emerging markets had a notable correction in the third quarter and year to date is in negative territory. Fund managers are still optimistic about the long-term outlook for China and emerging markets as a whole, but many are repositioning to invest in companies that align better with China’s economic and social goals, which reduces the risk of scrutiny and regulation.

Washington Cares Exemption

Lisa Graber, Operations Assistant

In August, Kevin Rigg provided an update on the rapid changes regarding the Washington Cares Act (WCA), created to establish the Washington Cares Fund. All signs indicate the WCA continues to move forward toward the January 1, 2022 initiation of mandatory deductions from all Washingtonian’s W-2 income.

For various reasons, many have sought to secure an exemption from the WCA. If you were able to secure a qualifying Long-Term Care (LTC) policy (and it goes into effect before November 1) you might be breathing a sigh of relief, but that would be premature. Obtaining an LTC policy is an essential step, yes, but there’s more work to be done.

There is still one more multi-step process to get through before you can be certain the deduction won’t be applied to your paycheck starting in January.

PAY ATTENTION TO THE EXEMPTION

If you choose to opt-out of the WA Cares Act, you must apply for an exemption. Below is an overview of the process:

1. If you do not already have one, you will need to create a SecureAccess Washington (SAW) account.

2. Once you have confirmed your registration to SAW, you will need to add the Employment Security Department’s (ESD) “Paid Family and Medical Leave” to your SAW services.

3. You will then need to proceed to create your WA Cares Exemption account and apply for the exemption.

4. ESD will review your application and notify you of your eligibility for an exemption from WA Cares coverage.

5. You will NOT need to upload your insurance policy at this time, but you will be required to attest to having obtained it. Make sure you save your insurance policy because you may need to provide it in the future.

6. If your application is approved:

a. You’ll get an exemption approval letter from ESD, at which point you’ll be:

• Excluded from the program with no option to re-enroll.

• Disqualified from accessing WA Cares benefits in your lifetime.

• Required to present your exemption approval letter to all current and future employers. If you fail to present your ESD approval letter, employers will be required to withhold non-refundable WA Cares premiums.

7. Exemptions will take effect the quarter after your application is approved. This means your approval letter needs to be dated no later than December 31, 2021, for you to avoid deductions from your 1st Quarter 2022 W-2 income.

8. Click here for the detailed instructions for applying for an exemption letter provided by the WA Cares Fund.

APPLY YOURSELF

There has been no indication from the state regarding how long the approval process will take. Their website says they “have a team that’s solely dedicated to reviewing applications for exemption from WA Cares, and they have been hard at work since the application opened on Friday, October 1.” That said, if you plan to apply for the exemption, we suggest you do so straightaway; don’t wait until later in the quarter. We believe this will increase the likelihood your approval letter will be provided to you well before the December 31 deadline. Once received, you can submit it to your employer. Then, and only then, you’re allowed a much-awaited (and earned!) sigh of relief.

As always, if you have questions about the WA Cares Act and how it relates to your situation, your planning team is here to help!