StrategIQ Published Works

(58) Legacy Planning: Are Your Heirs Prepared?

By Pamela A. Martin, CFP®, AIF®

Successfully leaving wealth to heirs, a charity, or both is not an easy process. To many, it may seem like a simple matter of bequeathing accumulated assets to them. It is not that simple! If you’re fortunate enough to have a substantial amount of assets to pass on, you have probably spent a lifetime building up those assets. You don’t want them squandered when they are transferred either during your lifetime or after. In this document are six recommendations of what you can do...

(57) Investment Income Strategies; Cash-Secured Puts

By Dalton J. Stokes

The cash-secured put option strategy involves an investor writing (also known as selling) a put option while simultaneously setting aside enough cash to buy the stock, or exchange-traded fund, if the put contract is exercised by the buyer of the contract. Hence the term, “Cash-Secured”. The seller of the put option is bullish on the underlying stock in the long-term and is hoping for a temporary downturn in its price, so therefore, their goal in selling the contract is for it to be exercised by the contract buyer, requiring them to buy the stock at the specified strike price. When the investor sells the put option, they receive a cash payment from the option buyer, which is referred to as premium...

(56) Covered Calls - Investment Income Strategies

By Dalton J. Stokes

A covered call is an option strategy designed to manage risk and help investors earn additional income on securities that they already own. The strategy involves an investor holding or buying a stock and simultaneously selling (writing) a call option on that same stock at a strike price above the stock’s current price. Typically, this strategy is employed by investors who believe that the underlying stock will experience only minor price fluctuations (and feel that there is a substantial probability that the call will not be exercised by the buyer). The buyer of the option contract (“Call Buyer”) is buying the legal right (but not the obligation) to buy a specified amount of shares of the underlying stock at a predetermined future price (strike price) on or before the contract’s expiration date...

(55) 2021 StrategIQ Tax Reference Guide

This handy reference guide provides helpful tax information as it relates to 2021 & 2020 tax rates, standard deductions, credits, alternative minimum tax (AMT), education credits and deductions, traditional and Roth IRA, qualified plans, 2021 capital gains tax rates, trusts and estates, estate planning, social security changes for 2021, and health care. The contents of this guide are not intended for application to, and shall not be used or relied to with respect to, any specific facts. Each recipient is urged to consult a legal or tax advisor with respect to specific facts, scenarios or questions, or before taking any action that may have any legal or tax implications.

(54) Learn How To Defer, Reduce, or Eliminate Capital Gains Taxes

As a way to stimulate investment in low-income communities, the “Investing in Opportunity Act” was created as part of the Tax Cuts and Jobs Act, passed in December 2017. In order to incentivize investors to commit their investment capital on a long-term basis, the program provides investors with significant tax savings. To qualify as an Opportunity Zone, an area needs to meet certain low-income requirements such as a higher than 20 percent poverty rate or a majority median family income less than 80 percent of the metropolitan median family income. There are over 8,700 Qualified Opportunity Zones in the continental United States, Washington D.C., and U.S. territories...

(53) Six Major Risks to Family Wealth

By Steven M. Gronceski, CFP®, AIF®

All too often, family wealth fails to last. One generation builds a business – or even a fortune – and it is lost in ensuing decades. Why does it happen, again and again? Often, families fall prey to serious money blunders. Classic mistakes are made; changing times are not recognized. PROCRASTINATION - This is not just a matter of failing to plan, but also of failing to respond to acknowledged financial weaknesses. As a hypothetical example, say there is a multimillionaire named Alan. The named beneficiary of Alan’s six-figure savings account is no longer alive. While Alan knows about this financial flaw, knowledge is one thing, but action is another. He realizes he should name another beneficiary, but he never gets around to it. His schedule is busy, and updating that beneficiary form is inconvenient.

(52) Estate Planning After a Second Marriage

By Steven M. Gronceski, CFP®, AIF®

Marrying again makes estate planning more involved. How do you provide for everyone you love? Should you provide for everyone you love? How do you arrange to transfer wealth in a way that won’t hurt the feelings of certain heirs? If you have not planned your estate yet, take inventory. Spend a half-hour and jot down the assets you own, major and minor. Who should own these assets after you die? Your spouse should do this, too – and you should talk about your preferences. It may not turn out to be the easiest conversation, but agreement now may preclude family squabbles and legal challenges down the line. (If you have a prenuptial agreement in place, you may have already discussed some of these matters.) You should also consider two scenarios – what happens if you die first, and what happens if your spouse dies before you do.

(51) Who Needs a Trust?

By Steven M. Gronceski, CFP®, AIF®

Ask anyone you know what kind of person would need to be concerned with estate planning, and 90% would describe the well-to-do retiree who has spent the last 40 years of life building up substantial wealth. Young people tend to think they are invincible. They don’t plan on getting sick or even worse, dying. Why, then, do they need an estate plan? They need an estate plan for the same reason that older people create them: we are all mortals with a finite lifespan and no guarantee of good health. Young families do have certain unique concerns that need to be properly addressed, including the prospect of having an 18-year-old inherit assets outright, or having a court decide who will oversee assets for minor children.

(50) The Role of a Trustee: Responsibilities & Liabilities

By Steven M. Gronceski, CFP®, AIF®

The roles and responsibilities of a trustee are the same regardless if they are a family member or a hired professional. It is important to understand these responsibilities in order to decide whether to use an individual or a corporate trustee. WHO WILL SERVE AS TRUSTEE? It is not required that an individual accept the role of trustee – he or she may decline the responsibilities. Another option is to use a corporate trustee. Corporate trustees are experts at administering trusts. One can also choose to modify the acceptance and add a co-trustee, such as a corporate trustee.

(49) What are the most common mistakes people make when creating their trusts?

By Colleen M. Henes, CFP®, JD

I had a client recently ask me, “What are the top three things you see ‘wrong’ in other people’s trusts?” My initial response was that all three issues are the same: not having one in the first place!Among the many benefits an estate plan can provide is ameliorating the impact of what might be called problematic beneficiaries. Many of us can count among our family members individuals with mental health issues, ranging from mild depression to conditions that warrant serious treatment. 

(48) Why do I need an estate plan with trusts? Isn’t a will enough?

By Colleen M. Henes, CFP®, JD

Let’s begin with a single-sentence answer: If you have particular wishes relating to the distribution and taxation of your assets, the designation of a surrogate for your business or the nomination of guardians for your kids, and you desire to maximize the likelihood that those wishes are actually implemented, I urge you to take control of the process by establishing a well-thought-out estate plan incorporating trusts. 

(47) How can financial planning turn my legacy into a “live-acey”?

By Jeremy D. Schares, CFP®, CRPC®

I’m not interested in my legacy.  I made up a word: ‘live-acey.’  I’m more interested in living.’’  At age 77, the author of that quote not only held a seat in the United States Senate, he also took a seat as a crew member on the Space Shuttle Discovery and went into orbit around the earth . . . for a second time. Of course, we are talking about John Glenn.  So, what does the life of John Glenn, a true hero, have to do with the financial planning of us earthbound mortals? It has to do with Glenn’s wonderful coinage: live-acey.

(46) Should I employ different strategies for accumulating wealth vs. managing it?

By Steven M. Gronceski, CFP®, AIF®

Without question, building a business or career—the "accumulation" phase for wealth—requires its own set of strategies, not to mention risks. Then, as wealth begins to grow, a complementary but somewhat different set of management strategies becomes necessary to protect and preserve that wealth during the client's lifetime and for future generations. We like to say that wealth accumulation is planning scribbled in a notebook, while wealth management requires thorough, in-depth, x-ray type analysis. While clearly different, the two processes overlap and intersect and should force advisor integration.

(45) Should I adopt a "buyer beware" approach to selecting an investment advisor?

By Bradley J. Rathe

Most of us have heard of the legal doctrine “caveat emptor,” or “let the buyer beware.” Caveat emptor warns buyers that if they fail to conduct adequate due diligence before making a purchase, they will have no recourse if the product or service does not meet their expectations.That sage warning also applies to selecting an investment advisor. In short, be cautious: Before engaging an investment advisor, look beyond the attractive surface to ensure that what is hidden is equally compelling. We suggest you start by educating yourself about those qualities that are of critical importance for selecting an investment advisor.

(44) Will the winner of the presidential election affect my financial planning?

By Bradley J. Rathe

If you are reading this before November 8, 2016, Barack Obama is still president, and you have not yet cast your vote for either the Democratic candidate, Hillary Clinton, or the Republican nominee, Donald Trump. But whomever you favor, it is time to get your financial strategy ready for a policy change almost certain to occur no matter who takes the oath of office.History teaches us that a change in presidents nearly always predicts new approaches to the relationships among government and businesses and the individual.

(43) If risk is inevitable, what can I do to manage it?

By Bradley J. Rathe

Much has been written about "risk" as it relates to investing. This includes something called "risk tolerance," a quality or trait that all investors possess and that all wealth advisors are tasked with measuring, on a scale from "low" to "high." A client’s ability to tolerate risk should influence what an advisor suggests be included in a portfolio, as well as an optimal balance of high-/low-risk investments overall. But focusing on investors’ risk tolerance in this way portrays risk as some sort of “uncontrollable force” that exists on its own and that some investors have a stomach for, and others do not.

(42) How do I manage risk with today’s fixed income investments?

By Chad E. Hassinger, CEO and Bradley J. Rathe, CIO

In many ways, today’s fixed income is the new equity. Years ago, when you invested in a bond, you earned your 6 or 7 percent annually through maturity and that was that. Now, because of the persistent volatility in the market, investors and their advisors need to treat fixed income almost the same as an equity investment. In short, to-day’s fixed income brings with it the risks most often associated with equities. So, investors need to be more opportunistic and more carefully manage their fixed income risk.A good place to start: Evaluate each of your fixed-income investments individually and, when doing so, ask yourself: “Am I being sufficiently paid for the risk I am taking with this investment?”

(41) Can I boost the impact of my giving with strategies similar to those I use in my business?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

The general answer is: Yes, you most certainly can help a charity with the same strategies you’ve employed to create and increase your own net worth. However, the more complex question is: How exactly do you do that? As a member of a high net worth family, you are most likely to incorporate a formal charitable gift arrangement for your favorite causes or charities into your overall financial and estate planning. You may also have been solicited by your local religious institutions or community organizations to contribute to appeals, fund drives or auction dinners targeting specific, often urgent, needs.

(40) Do I really need a "team" of professionals to help me avoid the pitfalls of divorce?

Douglas J. Hoover, CFP®, ChFC®, CDFA™

In my experience, most people faced with the prospect of a divorce, think of it as a legal process, governed by state laws and handled by “divorce lawyers.” But, in reality, getting divorced goes well beyond the legal. It is also about family and emotions and, for high net worth couples in particular, very much about money. Few attorneys—and this is meant with all due respect—possess the skills to handle all those variables. Meaning that, in a high-asset divorce, you need to assemble a team of professionals qualified to address each one of those variables. Your Legal Team - Of course you will need legal representation, but be sure to select attorneys who specialize in divorce.

(39) Should I adopt a 'buyer beware' approach to selecting an investment advisor?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

Most of us have heard of the legal doctrine “caveat emptor,” or “let the buyer beware.” Caveat emptor warns buyers that if they fail to conduct adequate due diligence before making a purchase, they will have no recourse if the product or service does not meet their expectations. That sage warning also applies to selecting an investment advisor. In short, be cautious: Before engaging an investment advisor, look beyond the attractive surface to ensure that what is hidden is equally compelling. We suggest you start by educating yourself about those qualities that are of critical importance for selecting an investment advisor.

(38) Why should I insist my advisors work less independently and more as a team?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

To answer your question, let’s begin with a story: A financially independent client of mine met with his wealthy aging mother and the two agreed that the proceeds from her estate should go not to him, her son, but should skip a generation and go directly to her grandson. Shortly thereafter, the mom’s attorney, who had set up her revocable living trust with generation-skipping provisions, called me to help identify the best way to complete the transfer of the mom’s assets to the trust. After reviewing the finances of my client’s mother, I discovered that most of her money was in non-qualified annuities.

(37) Why is it important for me to understand the 'psychology of money'?

By Bradley J. Rathe, CIO

According to legend, F. Scott Fitzgerald once said to Ernest Hemingway, “The rich are different from you and me,” to which Hemingway responded, “Yes, they have more money.” High net worth families certainly live differently than families of more moderate means, and, without question, money does affect one’s psychology and behavior. But, in the context of the effect of human emotion on a person’s investment decisions, and the effect of those decisions on the markets, those across the wealth spectrum actually share more commonalities than differences. This article strives to raise awareness about the “psychology of money.”

(36) What are some creative ways of benefiting from irrevocable trusts?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

Irrevocable is not a welcoming concept. We humans are not comfortable with anything that is “not capable of being changed” or “impossible to revoke.” And that sense of finality may well be the reason why investors are often slow to include “irrevocable trusts” in their strategies. But if you are willing to overcome these typical hesitations by exploring the often-underutilized opportunities trusts afford, then you, your estate and heirs are likely to celebrate their many available benefits. When you move part of your estate into an irrevocable trust, you do relinquish ownership of those assets. But the transfer from your estate into an irrevocable living trust (“living,” because it is created during your life) may protect those assets from creditors or lawsuits under current law.

(35) Does the traditional 'glide path' retirement formula still work?

By Bradley J. Rathe, CIO

As Archie and Edith used to sing, “those were the days,” and they certainly were, at least in terms of retirement planning. But times have changed. Today, the traditional “glide path” strategy, where after retiring you got 5 percent out of your Treasuries and “were good” is almost irrelevant. With rates hovering at or near zero, many believe that formula is no longer a viable option. Keeping in mind that retirement planning has a lot to do with percent-ages and expectations, the new rules of retirement apply from the average Joe right up to the highest net worth families.

(34) What is ‘tax diversification,’ and how can it benefit me?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

Most investors associate “diversification” with the mix of investments in their portfolio and use it as a strategy to reduce risk. The same strategy works for considering the one place you lose money: taxes. We call this approach “tax diversification,” and in many respects, it works and benefits you the same way diversifying your investments does. In simple terms, tax diversification is less about where you invest and more about how to reposition your highly appreciated assets so that when you pull money out, you avoid getting hit with higher taxes.Historically, many investors have put money into IRAs and other tax-qualified plans for deductibility and tax deferral, while their businesses, stocks and real estate became highly appreciated.

(33) Is it possible to increase my charitable giving and improve my financial position?

By Chad E. Hassinger, CEO and Michael A. Jankowske, CFP®

Every year, the government knocks on your door to collect taxes. Once your income is in the government’s coffers, the government allocates a portion of it to a number of expenses, including those incurred for the common good and in the public interest, such as social security, unemployment, Medicare, health and military. Your direct control over the allocation of the government’s collections is zero—that job is left to the legislative and executive branches. When we consider the inefficiencies of a large government bureaucracy, as well as the influence that special interests and politics have on such allocations, it is no overstatement to say that your “contribution” to the common good and public interest via taxes gets diluted.

(32) How can I modify a concentrated position and help lower my risk?

By Bradley J. Rathe, CIO

Recognizing that you have a “concentrated position” and that you need to modify it counts as a significant first step in helping to reduce your risk. We say “significant” because high net worth business owners and corporate executives often: a. do not realize they have a concentrated position; orb. realize they have a concentrated position but are reluctant to change it. While owners and executives often share traits A. and B., their positions become “concentrated” differently, so the strategy to modify or “hedge” these diverse concentrations differs as well.The Business Owner Hedge: Whether you built a company “from the ground up” or inherited it, the likelihood is that most of your assets are tied up in your business. Let’s say it is a well-run and profitable company that manufactures house paint and markets its products domestically.