financial plan – AWM

Client Newsletter 3Q23

admin — Tue, 25 Jul 2023 10:00:33 +0000

Dear Ambassador Family,

I hope you are enjoying a wonderful summer! Let me update you on a few important topics.

Why You Want to Keep Your Financial Plan Up to Date

Only 2 years ago in 2021, we had a fantastic year in the markets. Sometimes, strong markets spur complacency. We made an effort to steer our clients away from it.

We encouraged our clients to be proactive while markets were on our side. We advised you to develop a financial plan and be ready for a downturn, should it come. We also urged you to challenge yourselves with probing questions, such as:

Where are you now?
Where do you want to be?
What is your timeline?
How much volatility can you afford?
Have you had major changes in your life?

At the beginning of last year, we spoke again and cautioned that 2022 might not be as good of a year for your investments. Concerns about rising interest rates and their impact on asset bubbles in real estate and other areas suggested caution about the kinds of investments you chose to make. 2023 has started out better, but we still have concerns as to how sustainable the rally might be.

It is easy to get caught up in your emotions when it comes to money. Some people are prone to falling in love with certain investments. Many of you are close to retirement and worry about your financial situation once your paychecks stop coming in. Others, who are already in retirement, might find it quite difficult to suffer a reduction in investment income.

Those that planned ahead experienced solid returns and were in a better position to sustain their lifestyles in spite of the market volatility since 2022.

However, those who lacked a strategic financial plan faced greater risk, and are more inclined to make ill-informed choices based on emotions and not rational, strategic planning. Even with only moderate losses and a pickup in market volatility, they were more vulnerable to panic by obsession with the ups and downs of news produced by media outlets.

Having a well-thought-out strategic plan can significantly increase your likelihood for success. When we understand how much time you have, how comfortable you are with taking risks, and how quickly you need access to your money, we can create strategies that are better at helping you. It’s like having a bigger toolbox to find the best solutions for you.

Changing Jobs? Consider a Direct Rollover IRA.

If you are changing jobs, you might benefit from directly rolling over your retirement investments from your previous employer to a direct rollover IRA. Done correctly, directly rolling over your investments to an IRA avoids the risk of a tax penalty if you failed to act after 60 days. It also allows you to save with continued tax deferral. An IRA provides greater investment options that might benefit returns and diversification. Consolidating accounts might also simplify your investments.

Potential risks include the loss of employer-provided benefits and the need for careful planning to meet the 60-day deadline. A corporate plan might also be cheaper.

Understanding the rollover process and executing it on time is essential to avoid tax penalties.

Despite the risks, changing jobs and using a rollover IRA potentially offer greater control and flexibility over retirement savings. Proper evaluation and planning might help mitigate risks and maximize the benefits of a rollover IRA.

Investment Update: When the Crowd Zigs, Zag

Recently, when I turned on the business news, many of the guests interviewed were waxing poetic about the attractions of the market and the end-of-recession prospects for 2023. It left me scratching my head.

Barely 1 in 20 names of the S&P 500 are actually up in 2023 (after a correction of most stocks in 2022). The rally has focused mostly on names perceived to benefit from Artificial Intelligence (AI). Valuations appear high relative to history, yet earnings for most of the market are not rising and falling in many cases.

Banks and many stocks geared toward economic growth are down. Only 3 months ago, several banks had failed because of large, sudden deposit outflows. Now we are seeing default rates on commercial property loans pick up.

Interest rates remain high and are not falling. Stocks celebrated the Fed not raising rates in June, but Canada, UK, and Australia DID after taking similar pauses. While headline inflation appears to be slowing, core inflation is resilient.

While we took up risk slightly in the first part of June for more aggressive accounts, at current levels, we are skeptical. Yields on cash above 5% appear compelling relative to most other assets. It is possible that the bubble mindset has returned to parts of the market, but without confirming fundamentals, it risks bursting. The global economy shows pockets of weakness.

Call us from Missouri (“Show me”), but we remain defensive in the near term and would not be surprised to see volatility return, perhaps as soon as this summer.

Spousal Rights & Retirement Plans

Married IRA owners usually do not need their spouse’s permission to choose a different beneficiary. However, if you have a company retirement plan, like a 401(k), you typically need your spouse’s consent. In some plans, you may also need spousal permission before taking a large lump sum distribution.

ERISA provides two types of financial protection for spouses (IRAs are not covered unless you live in a community property state).

Firstly, in all ERISA plans, spouses are automatically designated as the primary beneficiary unless the participant designates another beneficiary with spousal consent.

Secondly, unless the participant opts for an alternative payment form with spousal consent, their benefit must be paid as a special annuity known as a “QJSA.” This annuity provides a monthly benefit throughout the participant’s lifetime and, if the spouse survives, continues paying them for their lifetime.

The QJSA requirement applies to most ERISA-covered plans, excluding those without annuities as a payment option (i.e. 401(k) plans). However, it does include most ERISA 403(b) plans and defined benefit pension plans.

Mark Your Calendar for Labor Day Weekend!

Back in 2019, Charles Schwab acquired TD Ameritrade. Your account(s) will be transitioning to the Schwab Alliance platform over Labor Day weekend. This transition is on track to take place by Tuesday, September 5, 2023.

In preparation for this transition, you will be receiving communication from TD Ameritrade and Charles Schwab. I will highlight a few things you need to be aware of.

Key Takeaways:

Your TD Ameritrade accounts will automatically transition to Schwab Alliance on (or around) Tuesday, September 5, 2023.
After 9/5/2023, Charles Schwab will serve as your new custodian.
AWM will have all the same authorizations for trading, fee deduction and payment, and money movements.

August 25, 2023	Last day to request an incoming account transfer
September 1-5, 2023	Account information will be unavailable (8:30 p.m. ET on 9/1/2023 to 5:00 a.m. ET on 9/5/2023).
September 5, 2023	Account information will be available again at 5:00 a.m. ET.

Accessing Your Schwab Alliance Account

Starting Tuesday, September 5, you will access your account(s) through Schwab Alliance (schwaballiance.com).

If you have a Schwab Login ID and password, there is nothing you need to do. You can log in with these credentials.
Need to set up your Schwab Login ID and password? Go to schwaballiance.com and select New Schwab User, then follow the prompts.

AWM Client Portal

Once the TD/Schwab merger is complete, it may take a few extra days for your Schwab accounts to appear in your client portal. We thank you for your patience during this merger.

If you have any questions or concerns, please reach out to us. We will do our best to answer your questions and help however we can.

Sincerely,

Petr Burunov, CFP®
President / Wealth Strategist

The post Client Newsletter 3Q23 appeared first on AWM.

Client Newsletter 1Q19

admin — Wed, 16 Jan 2019 12:58:48 +0000

Why a Financial Plan Is So Important!

Dear Ambassador Family,

Happy New Year! In order to think ahead, I believe it is critical to reflect objectively on the past.

Let’s do both in this letter.

We will discuss the benefits of having an up-to-date, strategic financial plan. Then I will explain how we sought to deepen our relationship with you in 2018 – and some plans for 2019.

Keeping Your Financial Plan Current Was Relevant in 2018

Let’s go back to 2017 for a moment. Many of you will remember that we had a fantastic year in the markets. Sometimes, strong markets spur complacency. We made an effort to steer our clients away from it.

Where are you now?
Where do you want to be?
What is your timeline?
How much volatility can you afford?

At the beginning of last year, we spoke again and cautioned that 2018 might not be as good of a year for your investments. Concerns about rising interest rates and their impact on asset bubbles in real estate and other areas suggested caution about the kinds of investments you chose to make.

I understand how easy it is to get caught up in your emotions when it comes to money. Some people are prone to falling in love with certain investments. Others of you are close to retirement and worry about your financial situation once your paychecks stop coming in. Others, who are already in retirement, might find it quite difficult to suffer a reduction in investment income.

2018 was an extremely volatile year. We saw two major market pullbacks, one in early 2018 and one later in the fourth quarter. In fact, the S&P 500 pulled back 20% from its peak on September 20^th.

We were vigilant this year before and during the market decline. You might remember we started the year with a cautiously optimistic outlook and trimmed back that optimism in August. Additionally, we

adjusted your portfolios according to our conversations we have had to match your risk tolerance and time horizon.

Those that planned ahead in 2017 experienced solid returns and were in a better position to sustain their lifestyles in spite of the market volatility in 2018. (As I write this, markets have recovered some of their losses in early 2019. However, it would not surprise us to see continued volatility. You can read about our thoughts in the Investment Letter later.)

However, others who lacked a strategic financial plan were at greater risk. Some of them might be more inclined to make ill-informed choices based on negative emotions and not rational, strategic planning. Even with only moderate losses and a pickup in market volatility, they were more vulnerable to being made to panic by an obsession with the ups and downs of news produced by media outlets.

You have a greater chance to succeed when you have a strategic plan in place. The more we know about your timeline, risk tolerance, and liquidity needs, the more holistic and effective our strategies potentially can be to assist you in your personal journey.

More Ways We Built Relationships with You in 2018

We deepened our commitment to serving you in 2018. Here are some examples:

Ambassador Website – we redesigned and launched our new website! This is a resource for you, your family and friends to find relevant content and learn more about our firm.
Resource Center – in the last year, we have written 70 articles (and 4 white papers) on 7 topics relevant to you and other professionals who work with you. Learn about Financial Planning, Retirement, Investments, or even Travel.

Client Portal – your personal website gives you greater access to your Financial Plan. You can see your family’s balance sheet, including accounts we manage on your behalf and other aspects of your net worth – bank accounts, loans, and other assets and investments. We can approach your situation holistically and recommend solutions relevant to your unique situation.

Focused Email Campaigns – this provides yet another way for us to touch base with you. You can stay connected with us and share any relevant content with your friends, family, and other professionals you work with (Attorneys, CPAs, etc.).

Deepening Our Relationship with You in 2019

We’re watching your money: The markets seemed to have corrected too much late last year and have started to recover. However, we are also mindful of risks from slower economic growth, trade wars, and tighter monetary policy globally. Your portfolios still have the opportunity for growth, but we are particularly mindful of downside risks.
Staff: Chelsea Makhanov has joined us to learn and enhance our operations. Our full-time staff has now grown to 6 people.
We continue to focus on clients like you: Clients who desire someone like us to engage them more deeply in their financial and personal affairs. We have added several new relationships in 2018. I personally want to thank those of you who have referred these new families to join us.
Saying goodbye to others: As part of focusing on families like yours, we have also had to let go of a few who did not want to engage with us.
Family Barometer Number to come: We have sent it to a few clients and professionals over the last couple of months. After receiving feedback, we are working to refine and clarify certain sections of this white paper. We are looking forward to making adjustments and releasing this paper sometime this year.

Our New Year’s Wish to You

When you go to see your doctor, you have one of two goals in mind: either you are sick and in need of treatment, or, you are proactively seeking out prevention. Everyone can and should do both. Our goal is to remind you that financial checks up are important, you are investing in yourself. We are here to help you make wise decisions with your finances.

In 2019, let’s make a Financial Plan. The more you invest in yourself, the better we can help you in achieving your financial goals and dreams. Don’t be shy. I and my staff are here to help you.

Thank you for working with us, we look forward to 2019.

Sincerely,

Petr Burunov
President/Financial Planner

The post Client Newsletter 1Q19 appeared first on AWM.