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Author Archive: R. Brady Siegrist, CFP®
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Tax season is in full swing, and it can bring some uneasy thoughts.  “How much will I get back?”  “How much will I owe?”  “Am I forgetting anything?”  “What can I expect next year?”

In a recent team meeting, one of our firm’s partners shared a question from a client that’s often not heard, “Why is my tax bill so low?!”

This client had been taking significant IRA distributions since the beginning of retirement as they had settled into a routine of travel and other retirement leisure.  Of course, IRA distributions are generally going to be taxed as income, and the client became accustomed to paying a steady tax bill each year.  In recent years, their travel slowed and their expenses correspondingly decreased, but their regular withdrawals had not.

RBS Blog 06.03.16The other day I read a Bloomberg article that cited a recent survey suggesting that while the average U.S. employee calculates that he or she will retire at age 65, as a group the odds are around 50% that they will still be working at age 70. By the tone of the story, I would surmise this is less by choice and more by need.

At Janiczek Wealth Management, we are very fortunate to work with financially independent individuals and families, who have successfully put themselves in position to control their own destiny as it relates to their financial well-being. In the majority of cases, this independence did not simply happen overnight, but was the result of hard work and perseverance that eventually resulted in a major liquidity event or accumulation of wealth that changed the equation from “having to work”… to “choosing to work”. It is a very powerful edge to know that you are going to work simply because you want to, not because you have to.

Wealthy families or their advisors rarely appreciate hearing the term “generation-skipping transfer tax” (GSTT) The nuances of this specific tax law can be quite complicated, but there’s a reason Brady Blog 04.07.16for it: families and individuals often enjoy giving from one generation to the next, and the GSTT offers a fixed rate that ensures such gifts are taxed appropriately.

There is a recent study from Boston College’s Center on Wealth and Philanthropy, an estimated $59 trillion will be transferred from 2007 to 2061. While not all of that is subject to the GSTT, it does illustrate how important such a tax is today – and will become for the future (simplistically thinking about our federal deficit and the upward trending expectations for servicing our debt through higher taxes—the government will get their cut!).

We recently hosted an expert team of six highly regarded advisors to have an open discussion and brainstorming session focused on how best to serve successful families, Brady Blog 03.04along with the inevitable complexities and nuances of managing different aspects of their significant wealth.  Among this group included specialized experts exclusively serving financially successful families, business owners, and C-level executives.  The players around the table included an estate attorney, a consultative tax professional (CPA), a life insurance advisor, a high-end property and casualty insurance agent, and two comprehensive wealth management professionals.

Take a deep breath…  YOU have the golden ticket!  Your thoughts immediately jump towards all your wildest dreams, and reality starts to kick in that money is no longer a hurdle to life experiences or the worldly goods you desire.  If you can dream it up, you can do it!  With such a substantial jackpot, it’s hard to fathom that someone could possibly blow through this type of fortune.  Without a clear and concise plan, however… anything is possible!

So how do you protect yourself from becoming associated with the unwanted statistic that 70% of lottery winners eventually end up broke?

The task for growing and protecting your assets can be daunting, and there are 35 areas of wealth that need to be optimized in order to become an Accomplished, Depletion-Resistant Wealth Steward.

The giving season is upon us, and at Janiczek we are blessed to work with and guide a number of charitably minded clients whose life long mission is to give back to their favorite charities and causes on a regular basis.  While their generosity and intentions really don’t revolve around the tax advantages (it is more about the philanthropies they support), to give wisely is a great way to benefit both the recipient and the donor.

Janiczek donations

So what are the main reasons for making a charitable gift?  That answer may be very different from one person to the next, but I would suggest some of the more common motivations would include the following:

  • Compassion for those in need
  • Religious and spiritual commitments
  • Perpetuation of one’s beliefs, values and ideals
  • Support for the arts, sciences and education
  • The desire to share one’s good fortune with others

I recently sat down with one of our clients who had enjoyed significant success in building their wealth through the concentration of a publicly traded company.  Throughout his twenty plus year career as an executive, he had amassed hundreds of thousands of shares of company stock representing several millions of dollars.    With a goal of winding down his career in the next 3 years and
nearly 87% of his family’s entire net worth in this single stock, it was clear the potential dangers outweighed the benefits of having a portfolio so dependent on one single publicly traded company. 

After showing the husband and wife through our Strength-Based Wealth Management™ (SBWM) process that they could not only meet but exceed their ideal lifestyle from the assets they have accumulated, I asked the following question…You can continue to take on this level of risk, but why?  In this particular case, the couple agreed it was more than time to unwind this concentration and re-allocate to a broadly diversified, risk-adjusted portfolio.  This decision released a level of tension and stress the couple had been feeling for a number of years, and offered peace of mind they would be able to weather any type of economic storm with a more balanced approach.

If I had to sum up our purpose when it comes to comprehensive wealth management, I’d have to say we deliberately aim to help our clients do everything possible to “deserve success” in all market conditions.  As George Washington was often quoted throughout his leadership, “We cannot insure success, but we can deserve it.”

When I think about individual investors, many factors have to be considered when constructing a portfolio that is appropriate for their given goals and objectives.  Not only does one need to build a diversified portfolio of investments (across stocks, bonds, cash, and alternatives), they also need to incorporate other assets and liabilities on their balance sheet such as real estate, loans, concentrated holdings, business ownership, and human capital.

Selling Your Business

I recently presented to a room full of successful business owners on the topic of “ensuring your business is part of your retirement strategy”. What became immediately clear was the level of success these individuals have recognized as they continue building their respective companies… and ultimately their net worth. The stories shared had many similar financial characteristics including: record sales growth, impressive earnings, strong revenues, great cash flow, ability to reinvest back into their companies, as well as healthy distributions back to the owner that allowed for living an enviable lifestyle.

Stepping away from the discussion of their shared business successes, I inquired on how many owners had a concise vision of when they planned to step away from their business and what their ideal retirement (or post-business life) looked like. Roughly 50% of the room raised their hand with the majority planning to exit within 3 to 10 years. They shared visions of extensive travel, second homes, giving back to their communities, spending quality time with family, new hobbies, starting a new business, etc. The overriding goal was to be financially independent of course!

2015 Annual LimitsI know the idea of reviewing one’s cash flow situation is probably not cracking your list of new and exciting priorities to tackle right out of the New Year’s gate. But staying on top of key financial numbers for cash flow and tax planning purposes could give you the opportunity to further maximize savings, reduce taxes, and continue towards building a bigger and brighter future. Consequently, I want to share one of the more concise resources that compiles key IRS tables for the 2015 calendar year, produced by the College for Financial Planning®.


*Ranked/Named among Top, Best and Most Exclusive Advisors sources: Barron's March 2016, 2015, 2014; Advisory HQ March 2016; Financial Times June 2015; Five Star Professional November 2015, 2013, 2012,2011, 2010, 2009; Mutual Funds Magazine January 2001; NABCAP September 2010, 2011, 2013; Worth Magazine July 2002, January 2004, October 2004, October 2008; Wealth & Finance International, October 2014. Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if Janiczek Wealth Management is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of Janiczek Wealth Management by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Janiczek Wealth Management), or any non-investment related content, made reference to directly or indirectly on this website will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this website serves as the receipt of, or as a substitute for, personalized investment advice from Janiczek Wealth Management To the extent that a viewer has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Janiczek Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the website content should be construed as legal or accounting advice. If you are a Janiczek Wealth Management client, please remember to contact Janiczek Wealth Management, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Janiczek Wealth Management current written disclosure statement discussing our advisory services and fees is available upon request.

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