Financial Planning Update

We are pleased to offer these planning suggestions about the new tax law, long-term care insurance, portfolio management, protecting access to your financial accounts, and changes in the financial services industry.


The biggest, but not yet well heralded, change from the new tax law is the near necessity for each of us to now view tax planning from a multi-year perspective.  The clearest example is that many who used to itemize deductions might now be taking the standard deduction, which was increased by the new tax law to $12,000 for single and $24,000 for joint filers, plus an extra $1300/married person over 65 and an extra $1600 for an unmarried person over 65.

When you take a standard deduction, it takes some tax planning to figure out when or whether to switch to itemizing deductions in other years: For example, if you are under the age of 70 1/2, you might bunch charitable deductions into one year every three or five years or so by making savvy use of a donor advised fund. In contrast, if you are over 70 ½, you can also use Qualified Charitable Distributions (“QCDs”) to fund charitable gifts directly from your IRA, further complicating the decision of how best to fund charitable gifts.

Adding more complexity, there are new default withholding rates which may or may not result in the right tax being withheld for you. You might inadvertently be over or under withholding, which is sobering to realize since the tax year is now half over, giving you less time to adjust withholding. There is a new IRS withholding calculator, which—oh, gosh—is as complicated as preparing your actual return.

Regardless of your tax bracket, it’s timely to refresh tax planning and especially tax withholding with your tax preparer.


If you have long term care insurance and an after-tax annuity, heads up! In many instances, you can use wealth in that annuity to pay long term care insurance premiums pretax. The growing popularity of this planning strategy comes from:

NOTE: A notable and disappointing exception is that John Hancock, a key long-term care insurance provider, does not support paying long term care insurance premiums with funds drawn from annuities.

Paying long term care insurance premiums pretax with wealth trapped in an annuity is a savvy strategy for both tax and cash flow planning.


Yes, hang on to your hat, or better yet, just pause and take a deep breath.  Volatility in the markets is back towards more normal levels, which can feel disturbing if you had been lulled into thinking the recent stability in the markets was typical. If you have targeted the appropriate risk level for your long-term portfolio, minimized costs, and diversified assets, then it is OK to ignore short term moves in the market.

Make sure you know enough about your portfolio to describe it in terms of its targeted risk, cost, and diversification, and keep an eye on transactions simply to confirm there is no unexpected trading.  Then, leave it alone. Don’t keep taking the lid off something that is at just the right simmer and meant to cook all day. Good cooking and successful investing take time.


Be alert to messages from your bank and brokerage firms.  For data protection and regulatory compliance, absent a prompt response from you, financial firms are now blocking account web access or particular account features after a specified period of non-use by you and/or after a specified number of unanswered requests for updated information from you.  Examples include: Banks blocking web access to your account if you don’t respond to verification requests of your contact information and Vanguard sending an electronic message to you indicating that because of non-use, the check-writing feature of your account will be removed absent a timely response from you.

Be sure to reply to the increasing number of requests for data verification from your financial firms. Be aware that these requests can come by regular mail—or through the online messaging center when you log into your account. Avoid hassle; don’t ignore these messages.


Our industry is in the throes of regulatory change that we find disheartening.  We believe the proposed regulations from our regulator (SEC), if enacted, will make it even harder to discern who is a salesperson and who is a true fiduciary.

The difference is crucial: You deserve to know who is selling product from their inventory versus who is selling unbiased, competent advice. Until there is a legal definition for the term “financial advisor”, you have to look for clues to determine whether you are talking with a salesperson (broker) or a fiduciary (someone legally required to act in your best interest at all times, with compensation fully disclosed). For example, if at the end of an advertisement you see fine print or hear fast talk which includes the terms FINRA or SIPC, the advertisement is from a broker.  NOTE: The Institute for the Fiduciary Standard has a new sharp advertising campaign message on this point.

The financial services industry is also, like many industries, in the throes of technology-induced change with intense pressure to scale up and commoditize services.  In such times it is easy to lose the right balance between running a sustainable business and delivering professional personal service.

We are committed to managing that balance well. In a recent letter to our clients, we explained our approach to navigating these current strong industry trends.  We commented that we hope the regulators will get it right in the present round of deliberations, but in the meantime, we intend to be an Exhibit A example that concierge fiduciary advising is possible and valuable.  Being a fee-only-all-of-the-time fiduciary firm, with interdisciplinary planning expertise, and a commitment to providing comprehensive personal financial planning will continue to distinguish us as one of a very small minority of advisory firms.

Finding comprehensive and personal fiduciary advice is possible. Know the hallmarks.


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phone: 414.351.9111

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