2024 STP Meeting Theme: Risk Management

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

We introduced our clients to our new planning software, Right Capital, during Strategic Planning (STP) meetings this past fall. We reviewed & updated goals, confirmed financial resources, and built a sustainable long-term cash flow plan and opened a lot of new conversations around the “What if...?” and “What happens when I....?” questions. This year we will build on that framework and review strategies for answering those questions and managing key risks that could impact your financial plan. 

The reality is we all face risk each day. Although you can never eliminate risk (the possibility of injury, illness, death, or property loss), there are several strategies for managing risk that can help protect against loss:   

  1. Avoid – steer clear of activities with a high potential for adverse outcomes. 

  2. Transfer – spread potential impact of risks by pooling resources with others (i.e. insurance). 

  3. Accept - acknowledge and take on potential risk, along with any related financial cost. 

  4. Reduce – thoughtfully lower the likelihood or severity of potential risks. 

Your Advisor will identify appropriate strategies to manage key risks relevant to your personal situation during your meeting. We can’t wait to get started and look forward to helping each of you choose the best strategies to address the most critical risks and gain confidence to face the unexpected.

We’ll need your help to accomplish this!  Several weeks ahead of your STP meeting, your Support Advisor will request updated insurance documents, notes on recent or upcoming asset changes, and key personal and professional risk factors. 

Chart of the Month: Magnificent-ish?

by Kevin Slater, CEO, Lead Advisor, CFP®

In 2023, the big gain in the US stock markets were driven by the outsized returns of seven giant companies.  The “Magnificent Seven”: Apple, Amazon, Alphabet (Google), Meta (Facebook), Microsoft, NVIDIA, and Tesla all experienced incredible returns! 

The performance of these name brand technology companies led some to question why an investor would bother holding anything else. Having individual positions in any of these, let alone all of them, guaranteed the investor would outperform the boring old index in 2023.

But a closer look reveals this magnificence was perhaps momentary. If we look at the performance of these stocks and an index fund of the largest US companies (S&P 500) year by year since 2021, we may have a different viewpoint.

NONE of them beat the S&P 500 every year. Three underperformed over these 3+ years, sometimes wildly (Tesla!). Four outperformed sometimes wildly (NVIDIA).

This is a great reminder of a few things:

  1. The US is home to many great companies.

  2. There are many different investment strategies that can generate good returns.

  3. What works during one period may not work during another.

  4. It is incredibly hard to predict what stocks will outperform the overall market.

At SoundView, our portfolios are heavily invested in a broad number of US companies. We are doubtful we can outguess the overall market, so we continue to invest in low-cost index funds.

Did You Pay Your Homeowners Insurance Last Year?

by Ben Jennings, Lead Advisor and Director of Planning Research

A little less than a year ago, friends of ours were sitting in their living room watching their favorite TV show. They heard a popping sound in the adjacent laundry room and opened the door to investigate. Their clothes dryer had caught fire! They got out of the home safely, but though the fire was relatively contained, the smoke damage made their home uninhabitable for several months, and many of their household contents had to be replaced.

You may not find it surprising that out of all my acquaintances - numbering certainly in the dozens and perhaps in the hundreds - to my knowledge these were my only friends who experienced a house fire in the last year.

You also may not find it surprising that - to my knowledge - each of my dozens of friends paid their homeowners insurance premium in the last year.

My question is: Why are those two facts not surprising to us? It seems each of my friends - with one exception last year - made a decision to pay hundreds of dollars unnecessarily! If you weren’t my friends who had the fire, why doesn’t the outcome of the last 12 months show that paying your homeowners insurance premium was a poor decision?

My answer is: In this example, we see we can’t evaluate the quality of decisions based on outcomes. (I will note this point is equally true but less easily seen in other settings, but that’s for another newsletter!) Instead, decisions are appropriately evaluated by the soundness of the process used to reach the decision.

We all face situations of uncertainty and risk which require decisions. Later this year, our planning emphasis for most clients will be how we manage the most important risks that can impact our financial life.

Here is the process we’ll use in a nutshell: For the most common risks that may affect you, we are going to consider the probability of a negative outcome, and the consequences of that outcome.

Some outcomes may be likely, but inconsequential, while others could be rare but devastating. Considering these two aspects of a given uncertainty will help us determine what combination of these four categories of risk management approaches should be used:

  1. Avoiding the risk

  2. Controlling the risk

  3. Accepting the risk

  4. Transferring the risk

Insurance (transferring the risk) is one kind of tool we can apply to financial risks, but there are “other tools in the toolbox” to consider. As we prepare to work with you in this area later this year, we are busy refreshing our processes, tools, and decision frameworks so we can advise you well and effectively. Let us know if you have general or specific questions you’d like us to address!

SVA Portfolios: Hmm, Something About You Looks A Little Different

by Kevin Slater, CEO, Lead Advisor, CFP®

When it comes to portfolio management, SoundView does not attempt to beat the market by making lots of short-term trades. We believe strategic investing based on long-term trends generates great long-term results.

This quarter we have made a handful of changes to our allocations, some of which required making no trades whatsoever!

On the equity side, we have increased our bias to US stocks in moderate and conservative portfolios. We retain a significant allocation to International developed markets but slightly less so.  We aren’t trying to guess which (US or International) market will do better this year, we just think the US will outperform more often than it underperforms. Due to the returns of 2023, many portfolios saw little to no trading driven by this change.

In more aggressive portfolios, we reduced our allocation to emerging markets and eliminated our exposure to China. The combination of internal Chinese policies, global politics, and a shift in production away from China by many global corporations does not bode well. Is there money to be made there? Possibly. We believe there are better, more promising options for those with the stomach for the wild swings in returns emerging markets tend to produce.

On the fixed income side, we made a few trades to increase yields without taking much more risk. We are believers of the maxim “don’t fight the Fed!”. So, our combination of funds remains very conservative with relatively short maturities.

We anticipate further small changes later this year. We are looking at ways to better diversify our large cap US holdings in a period that has been dominated by a handful of big firms (see this month’s article on the Magnificent Seven). We will see where the Fed takes interest rates before we make more changes to the fixed income side.

We continue to review investment opportunities outside of the core liquid portfolio. These often require higher minimum investments and/or a willingness to be tied up in illiquid funds for a long period of time. We will reach out to you if we find something that is both an attractive investment and suitable for your situation.

Please let us know if you have any questions.

Chart of the Month: US Trade Deficits

by Kevin Slater, CEO, Lead Advisor, CFP®

According to the U.S. Census Bureau, the US has run a persistent trade deficit since 1975.

The size of our deficits vary widely and our major trade partners can change. It wasn’t all that long ago that commentators were convinced Japan would soon control the USA due the size of the deficit.

China has been the dominant partner during much of the past 15 years—with the same concerns voiced. However, we are seeing a shift as the deficits with the European Union, Mexico, and Vietnam have grown while that with China decreases. 

Let’s see who is in the headlines 15 years from now.

This Whole Thing is Rigged: Kevin’s SoundView Story

My name is Julie Gibson. If we haven’t met in person, we’ve most certainly spoken on the phone or emailed back and forth. I’m the CEO’s Executive Assistant and also play a big role in the firm's daily operations.

This month, I’m highlighting one of our fantastic Advisors, Kevin Rigg. Kevin is excited for the opportunity to share his story with you, just like so many of you have shared your stories with him. Here's a glimpse of who he is to his family, community, and colleagues.

Priority #1 Family

The Rigg Family

Kevin and his wife, Annie, have five kids ranging from the ages of 9 to 19. With one in college, two in high school, one in middle school, and the youngest in elementary school, the Rigg family has an ever-changing schedule. Their lives are jam-packed. Needless to say, Kevin’s days are far from "winding down" when he leaves the office. Annie Rigg, with all the skill of an air traffic controller, makes sure that Kevin knows where he needs to land next before heading home. Wisely, Kevin checks in with Annie as well (to see how she’s doing.)

Kevin’s community involvement has followed the rhythms of the family. He served for six years as the treasurer for the Olympia High School Girls Soccer Boosters. During COVID, when very limited numbers were allowed to watch the girl's high school soccer games, he was allowed to "announce" them over Facebook Live so families could follow along. Kevin's also enjoyed supporting other great local organizations, such as the Union Gospel Mission and the Hands On Children’s Museum.

Fun Facts

Kevin grew up swimming every day. He also enjoys cycling and mountain biking. And -- he runs. After speaking with him, I can’t tell how much he actually enjoys running… but he does it anyway. In case you were wondering, given these three sports just listed, yes, he has done triathlons. He was even once a hardcore bike commuter. Rain or shine, Kevin would bike to work four days a week.

Given his athletic abilities, I asked Annie how competitive Kevin is. She responded “He is more of a seeker of excellence. He looks for ways to be more efficient, to improve -- to complete the task. It does allow for much success, but not necessarily winning. He wants to do things very well.”

As his coworker at SVA, I can also attest to this attitude in his work life.

Professionally

Kevin has been with SVA for 18 years. He is our Director of Financial Life Planning, a CPA, a board-certified Financial Planner, and a Lead Advisor based in our Olympia office.

Kevin is at the office every morning like clockwork. He’s cheerful. He’s dedicated. He’s focused. He’s a leader to our staff, a listener, and a collaborator. See his responses to a few of my questions about his professional life.

(JG = me, Julie Gibson  KR=Kevin Rigg)

JG: Creative writing or mathematics?
KR: Definitely mathematics. A logical and linear way of thinking appeals to me, and creative pursuits just don’t come as naturally. Anyone who knows me knows that I am a creature of habit, and it’s pretty hard for me to deviate from the norm.

JG: What did you want to be when you grew up?
KR: Like a lot of tall, semi-athletic kids, I had dreams of playing in the NBA. Thankfully, that dream faded pretty quickly, and I figured I would be an accountant or an engineer of some sort.

JG: Where did you go to college?
KR: Freshman year at a small private college in Longview, Texas, studying engineering. I switched to business (accounting) and stayed close to home at the University of Idaho for the rest of college.

JG: What do you enjoy about financial planning rather than practicing as a CPA?
KR: No more tax season (I’m only slightly kidding as Annie made it pretty clear after the fifth tax season that she wouldn’t mind if it were my last)! What I liked most about practicing as a CPA was the direct client interaction and personal planning, but the work was mostly seasonal and very narrow in focus. Pursuing my CFP® and a career in financial planning was ultimately about doing that kind of work all the time and in a more comprehensive fashion (not just tax planning). I am so glad I made the switch…I love my work and can’t imagine doing anything else.

JG: What's the best professional conference you've ever attended, and what made it good?
KR: It was not a conference in the traditional sense, but the best experience was the “Be Our Guest” event at Minnesota planning firm, Accredited Investors. I attended with our CEO Kevin Slater, and in exchange for a donation to the FPA Foundation for Financial Planning (to support pro bono work), we got to spend a day at the firm talking to the owners and other team leaders about how they run their business and provide comprehensive planning services to their clients. In many ways, Accredited embodied the type of firm we aspired to be, and the time we spent with them that day helped us start to craft a vision for how to consistently deliver those types of services to clients.

2023 SVA in Review

Thank you.

Thank you for another year of working together through the magnitude of experiences every year brings.  It is tempting to assess any given year by the year-end market returns. By that measure, 2023 was great! This simple measure, however, fails to measure what we experienced. Some years, the markets can be incredibly volatile (does anyone remember 2020?). Some years, economic or political uncertainties overwhelm whatever returns portfolios achieve.

Even more impactful are our personal highs and lows. Personal thrills or disappointments leave far more memories than a periodic rate-of-return calculation. Each of you experienced 2023 in very different ways.

At SoundView, 2023 was a good year.

Yes, the markets were great. Equally important, we established a connection with you and provide meaningful service. Great strides were made in our long-term financial modeling and tax analysis in 2023, which significantly informed our portfolio management for each client (and no, we still don't prepare taxes!).

Our Operations team did an amazing job in transitioning us through three major software changes. Our Support Advisors simplified life for our clients whenever they could. By sharing their wisdom and applying it, our Advisors have taken their learning to the next level.

What can you expect in 2024?

We are exploring opportunities created by the higher interest rate environment and sifting through the ever-expanding array of investment ideas and strategies. Later in the year, we will discuss ways to manage each client's risk profile, including utilizing insurance coverage as needed.

Most importantly, you can expect our team to continue caring about you as a person. You matter; we are here to serve you in whatever circumstances life throws at you.

Thank you for allowing us to be a part of your life. We appreciate you.

Kevin Slater
CEO, Lead Advisor, CFP®

Chart of the Month: Wrapping Up 2023

by Kevin Slater, CEO, Lead Advisor, CFP®

2023 was a great year for almost every asset class. Equities were all up double digits! It was virtually the opposite of 2022. Unlike in 2022, nearly everything made money. In another contrast to 2022, investors in commodities suffered losses.

What this chart doesn’t tell you is how we got there. While 322 of the S&P 500 stocks ended the year in the black; the gains from just 7 stocks accounted for over half of the overall performance of the index. And as late as early November, the US bond index and the emerging markets index were at a loss for the year. All of their gains and then some came in the last two months of the year.

2023 was a great year for disciplined investors who were patient and remained invested despite 2022 and the ups and downs of 2023. However, it was not a great year for those who attempted to time the market or were chasing commodity returns from 2022.

Our 2024 RMD Strategy

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

It may seem early to discuss 2024 RMDs, but we have already been looking ahead to tax and cash management for next year, and RMDs play a critical role in that planning. A brief review of RMD basics:  

If you inherited a retirement account or are over 73 years old
and own a retirement account, you are likely subject to Required
Minimum Distributions (RMDs). An RMD is calculated each January
based on the prior December 31st account value divided by a factor
tied to your age at the end of the current year. If you want more
information on what RMDs are and how they work, check out our
post from earlier this year.

In last month’s newsletter, I discussed Qualified Charitable Distributions (QCDs) and our goal of completing them for all clients by mid-January next year. We also aim to complete all RMDs shortly after any QCDs — all by the end of January. This is why Advisors are now estimating 2024 RMDs and having conversations with clients to gather QCD information and address other key details beyond QCDs (i.e., tax withholding and where to deposit the funds).   

In the past, unless there was an immediate need for cash, we tended to defer taking RMDs until later in the year, primarily hoping for more tax-deferred income. However, this often led to deferring decisions until much too late in the year, which led to increased processing delays at custodians and increased risk of penalties (50% for any portion not withdrawn!). We also encountered difficult situations with heirs trying to access accounts and take RMDs before deadlines when an account owner died during the year before taking their RMD.   

To avoid the abovementioned issues and increase our operational efficiencies, we have been moving the RMD processing timeline up over the years. We plan to do so again in 2024 and look forward to efficiently completing this administrative task for you by the end of January. Here is a brief outline of the new process:

  • December 31st – Estimate RMD and discuss key details (QCD, tax, etc.) 

  • January 10th – Finalize RMD and key details (using custodian data) 

  • January 15th – Raise cash in retirement account to satisfy RMD 

  • January 20th – Complete QCDs (if any) 

  • January 31st – Complete RMD 

We hope our new, earlier RMD timeline is a testament to our commitment to you, ensuring your retirement is handled with both efficiency and personal care. We're here to support you every step of the way.

Chart of the Month: SoundView’s Team

by Kevin Slater, CEO, Lead Advisor, CFP®

We are about to celebrate our 17th birthday as SoundView Advisors! We have the privilege of walking with clients through some incredibly significant events during that time: retirements, weddings, the birth of babies and grandbabies, college graduations, new jobs, anniversaries, and many, many birthdays! We have also seen some hard times: major market drops, spikes in inflation, loss of jobs, and the loss of loved ones.

The key to supporting people lies in our team's expertise and dedication. They are remarkable, and consistently support our clients through all situations. Our team has collectively given more than 93 years of time serving clients at SoundView. Add to that the years they’ve served at previous firms, and you have more than 150 years of experience helping people with their financial lives!

To you, the clients of SoundView Advisors, we want to express our deep gratitude for putting your trust in us and allowing us to be a part of your journey. We have been honored to support you for the past 17 years, and our team remains committed to providing you with the best financial guidance and support possible.

G.I.F.T.

by Krista Wallace, Advisor, CFP®

“When we give cheerfully, and accept gratefully, everyone is blessed.”
~ Maya Angelou

‘Tis the Season for giving!

Requests for last-minute charitable donations flood our inboxes this time of year. According to Charity Navigator, non-profits receive an average of 41% of their contributions in the last few weeks of the year. We encourage a slightly different approach: beginning the new year with giving – in the form of Qualified Charitable Distributions (QCD) and other strategies. 

Your advisor has likely already spoken about giving this season, but there are other reasons you should consider financial gifts. Consider the four reasons below regarding how you might consider a G.I.F.T. now or in the future.

G - Gracious Generosity:  Reflect on the generosity and kindnesses you have received over your life. This season choose to begin your 2024 with a gracious heart for others and embrace the joy of giving.

I - Intentional Impact: There are many organizations that rely heavily on contributions from individuals to exist and serve your community. Consider a gift that reflects your values and impacts your neighbors.

F - Fiscal Fitness: An apple a day keeps the doctor away…. But did you know that giving is also good for your health? A 2018 study at the University of Chicago School of Business showed that giving to others sustains our happiness, while other studies have linked lower risks of depression, decreased loneliness, and improvements in cardiovascular health as a result of giving to others and/or volunteering.

T - Thoughtful Trimming: There are plenty of ways to give thoughtfully (and tax-efficiently) other than QCDs. Consider a securities gift when your company stock plan vests annually. Could you set aside a portion of your annual salary increase, and earmark it toward giving? What about building charitable giving into your estate plan?

Live Generously
Whether you choose to give during the holiday season or start the new year with a gracious heart, your generosity can make a meaningful impact on the lives of others. Remember, there are many ways to give thoughtfully and tax-efficiently, and your advisor can help guide you in choosing the right strategy for your unique circumstances. Let us all embrace the joy of giving to make a deep and lasting positive impact on people’s lives.

Qualified Charitable Distributions (QCDs)

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

If you inherited a retirement account or are over 73 years old and own a retirement account, you are likely subject to Required Minimum Distributions (RMDs). An RMD is calculated each January based on the prior December 31st account value divided by a factor tied to your age at the end of the current year.

In most cases, an RMD is fully taxable as ordinary income, but the IRS provides a way to lessen the tax impact through Qualified Charitable Distributions (QCDs). A quick primer on QCDs:

  • Allows those 70 ½ years of age or older to make gifts directly from their individual retirement account (IRA) to a qualified charity.

  • Counts toward satisfying the RMD without being treated as taxable income.

  • Often leads to net lower taxes compared to making outright cash gifts.

Our goal is to help you make any desired QCDs by mid-January and complete RMDs soon thereafter. To make this happen, you can expect to hear from your Advisor before the end of the year to do the following:

  • Estimate next year’s RMD and review prior year QCDs (if any).

  • If QCDs are desired, confirm gift amounts and any changes to the recipient list.

  • Obtain the mailing address for any charities not already on file.

The steps above will allow us to prepare the necessary QCD paperwork ahead of time and get it out to you for your signature, so distributions are completed within the mid-January timeline. While it may feel a bit odd to be making charitable contributions in January rather than December, we assure you the charities will be happy to receive the funds at any time!

2024 Annual Review Update

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

The SoundView Team is already hard at work preparing for 2024 Annual Review meetings. In early January we will send all clients (yes, including you!) a request for 2023 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 gather information needed for tracking 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 have 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; the Annual Review is a great opportunity to assess progress and determine if any changes need to be made. 

We continue to refine and improve our Annual Review process, but the 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.  

 

Chart of the Month: More School? Ugh.  Less School? Youch!

by Kevin Slater, CEO, Lead Advisor, CFP®

‘Tis the season for campus visits and applications. Some students have a clear vision of their future and how education fits into it; however, there are many others who wonder whether more education is really worth the cost.  The importance of managing education costs cannot be overstated, and overcoming this barrier typically leads to better employment opportunities and higher earnings.

Unveiling the Mysteries Behind SVA’s Fee Structure

by Kevin Slater, CEO, Lead Advisor, CFP®

Our goal at SoundView Advisors is to make a deep and lasting positive impact on clients’ lives by providing highly personalized, proactive, and comprehensive financial advice. Whether it’s taxes, insurance, employer benefits, estate planning, gifting, or education funding – There are many ways we can help you get ahead financially beyond just picking investment options. 

It is a challenge to develop a fee structure which reflects this depth and breadth of service. The structure shouldn’t be confusing (for clients), onerous to manage (for us), or generate unexpected headaches (for anyone)! Over the years, we have considered numerous ways to calculate our fees; each has its own challenges.  

For example, an hours-based approach may sound appealing, but there are drawbacks. It can discourage open communication. We don’t want a client choosing NOT to call us because they are worried about the cost—our advice might save them far more than our fees! An hours-based fee may also create unhappy surprises: how would clients feel about receiving an invoice for hours spent analyzing something we ultimately recommend against or spent resolving an issue on their behalf?  

Ultimately, we settled on an asset-based approach to our fees that is reflective of our client’s total invested assets; and their whole portfolio. Think of it as a sort of simplified net worth-based retainer fee. It is intended to reflect our commitment to advise clients on any financial question at any time. We feel it is simple to calculate, while scaling to address the full complexity of each client’s individual situation and encourages communication about ANY question, at any time.  

While our asset-based fee structure may infer (to some) that the value of our services is primarily in investment selection and trading, that is not our intent. As noted above, much of our work and value does not always directly correlate to individual account values. In the end, we chose a simple structure knowing that from time-to-time we may have to explain our thought process. 

Thank you for allowing us to make a positive impact on your life. We are fortunate to be in a business that can do that every day.

Changes to SVA Advisory Agreement and Fee Schedule

by Kevin Slater, CEO, Lead Advisor, CFP®

Over the next few months, we will be updating our Advisory Agreement documentation. The current version is now about 15 years old, so there are a few things that need updating.  

Our goals are to improve clarity and make inflation-driven adjustments to our fees, while giving you plenty of time to understand the impact of the changes. For many clients, there will be no difference in costs. Nevertheless, all clients will need to sign the new document which will be effective January 1, 2024. 

What will be different?

  1. We are adjusting our standard fee schedule. While the initial rate increases, we have accelerated the balance at which point a lower rate begins to apply. Please note that client portfolios of $1,500,000 or more will not be impacted by this change.

2. We are increasing our minimum annual fee from $5,000 to $7,500.

3. We are modifying some family household discounts to better reflect the services provided. (This applies only to family members who are NOT minors such as parents or adult children.) 

4. We are adding language to clarify which accounts are subject to our fees, and which are not.

Key Dates

November 3rd (or before) - We will be sending out a personal communication to every client household. In it, we will review how the changes impact each client personally (if at all).

December 15th (or before) - We anticipate sending the new Advisory Agreements to every client for review.

December 31st - We hope to have all Agreements signed!

January 1, 2024 - The new Advisory Agreements will take effect.

Late March, 2024 - The first fees based on the new agreement will be charged.

Before signing, we want to make sure all your questions are answered. Please let your Advisor know what clarity you need – we're here to help!

Chart of the Month: YTD market performance

by Kevin Slater, CEO, Lead Advisor, CFP®

We are long-term investors at SoundView. Each quarter we share how the various major indexes have performed year-to-date to help clients understand the drivers behind their portfolio returns.

This year has generally been positive for large-cap stocks and negative for bonds. 
U.S. large-cap equities continue to lead the pack; international equities are also performing positively, and U.S. small-cap stocks are experiencing a slight decline.

What is hidden in this chart? The 3rd quarter was negative for virtually every asset class. Bonds were pummeled as the market began to believe what the FED was saying, and inflation persists. But even that doesn’t tell the whole story. If you bought very short-term bonds, you have done just fine.   

We anticipate increased volatility in the markets as longer-term interest rates continue to rise, and equity markets determine who will benefit and who will be adversely affected by the higher rates. 

While we do not engage in market timing, we may make some year-end trades to effectively manage client taxes and adjust the risk level in portfolios.

Financial Independence and Long-Term Sustainability

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

2023 Strategic Planning Meeting

As the seasons rapidly shift from Summer to Fall, here at SoundView we also find ourselves in transition from Annual Review season to Strategic Planning (STP) meetings. While the Annual Review is intended to look back at the prior year(s) and assess the current financial picture, STP meetings are forward-looking and we typically focus on addressing a specific planning need (cash flow, investments, insurance, taxes, estate, etc.).  

2023 STP meetings will primarily focus on financial independence. We will introduce you to our new financial planning software, Right Capital, and use it to review your financial trajectory and likelihood of long-term sustainability. Our objective for the STP meeting is to help you answer this one key question: 

Am I on track to accomplish the most important and greatest number of personal goals? 

We will prepare your financial plan with the most up-to-date personal and financial information we have on file. We may reach out ahead of the meeting and ask you to review our input and assumptions. If we do, please take a moment to review the information and let us know of any major changes we should consider. We will of course review and refine the plan together at the STP meeting and discuss if any changes are needed to help you remain on a sustainable path. 

Chart of the Month: More Years Than You Expected?

by Kevin Slater, CEO, Lead Advisor, CFP®

Do you have enough money to last the rest of your life? A critical variable in answering that question is how long you will live.  It may be longer than you assume.

The graph below shows the average life expectancy in the US based on a person’s current age. Keep in mind, 50% live longer than the average.  The graph also shows the age 10% will reach—again many of which will live even longer.

The data does not parse out the impact of factors such as work environment, diet, exercise, genetics, and health history.  Those may have an impact but again perhaps not as expected.  For example, my cardiologist suggests family history is more predictive of heart failure than cholesterol levels.

Our goal is to use whatever information we have available to make reasonable and somewhat conservative estimates of client life expectancy.  If we assume too short of a life span, we risk the client running out of money at a point when they cannot generate additional income.  If we assume too long of a life span, we risk discouraging actions or goals they could well afford to take.  Neither outcome is attractive to our clients or to us.

Please engage thoughtfully with your advisor to help set and test a range of reasonable assumptions.

2024 Key Numbers for Health Savings Accounts

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

The IRS recently released the 2024 contribution limits for health savings accounts (HSAs), as well as the 2024 minimum deductible and maximum out-of-pocket amounts for high-deductible health plans (HDHPs).

What is an HSA?

An HSA is a tax-advantaged account that enables you to save money to cover healthcare and medical costs that your insurance doesn't pay. You can establish and contribute to an HSA only if you are enrolled in an HDHP, which offers "catastrophic" health coverage and pays benefits only after you've satisfied a high annual deductible. The funds contributed are made with pre-tax dollars if you contribute via payroll deduction or are tax deductible if you make them yourself using after-tax dollars.

HSA withdrawals used to pay qualified medical expenses are free from federal income tax. If not used to pay qualified medical expenses, withdrawals are subject to ordinary income tax and a 20% penalty. When you reach age 65, you can withdraw money from your HSA for any purpose; such a withdrawal would be subject to income tax if not used for qualified medical expenses, but not the 20% penalty.

What's changed for 2024?

Here are the updated key tax numbers relating to HSAs for 2023 and 2024.

If you plan to maximize contributions to an HSA in 2024, please make sure to update your payroll elections to match the new contribution limits shown above. If this applies to your situation, you can expect your advisor to go over this along with other tax planning issues prior to year-end.