00:00 Speaker A

With a record number of Americans turning 65, more investors than ever are preparing their portfolios for retirement. But with market volatility sending markets swinging so far this year, how can financial advisors guide clients through the volatility? I want to bring in Sarah Mauser, who is the Verdens Capital Advisors managing director of financial planning for this week’s FA Corner brought to you by Capital Group. Sarah, good to have you here. What are some of the biggest issues facing your clients right now?

00:45 Sarah Mauser

Thank you so much for having me. You know, there is a lot of volatility right now in the markets. And from that comes a lot of planning opportunities to help put clients at ease. So here at Verdens Capital Advisors, we really focus on the planning side of it. And a lot of what clients are coming to us with, the questions they’re asking are coming from what they’re hearing in the news. And so a lot of that revolves around potential changes with the proposed tax bill. So a lot of the questions revolve around, especially for our higher net worth clients, how do they most effectively transfer that wealth with where things are today and how they might change? And so a lot of those questions talk about, should I do a Roth conversion? What is a Roth conversion? Should I do it? Should I be transferring money into a trust or gifting money now? Um, and there’s a lot of planning that we can do today to lock in knowns before there are some unknowns potentially in the future with what could change.

02:19 Speaker A

Are you seeing a push for safe havens amid some of that volatility that some of your clients might be lighting up your own phone about?

02:46 Sarah Mauser

You know, for us, we do a really fantastic job of making sure our clients are educated. So on the investment side, we have a tremendous team that make sure to control the volatility as much as possible within our portfolios. But with the planning that we’re doing for clients, that really is putting them at ease from an educational perspective.

03:22 Speaker A

So with that in mind, how are you seeing, especially within the Silver tsunami, uh, tsunami, the planning for estates and the estate planning that they’re trying to update, set up, and where are they at in those phases, kind of on aggregate?

04:01 Sarah Mauser

Yeah. So, you know, with clients, it is, can we lock in those knowns now? So if those tax exemptions do sunset, that estate tax exemption is essentially going to be cut in half. And so can you maximize those opportunities now? Can you gift those assets now? There’s ways to harvest those opportunities today, and particularly from an estate transfer perspective. Now, if those provisions do get locked in, uh, as we look at the bill potentially becoming permanent, you know, there could be additional opportunities as well, but they could also not be there. And so to lock in those opportunities today gives us gives clients a real opportunity to have conversations with their advisors now, uh, before potentially those opportunities disappear at the end of this tax year.

05:24 Speaker A

And so all this in mind, what are some of the changes that clients and everyone needs to be aware of, especially considering the in-review GOP tax bill right now?

05:53 Sarah Mauser

Yeah, that’s a very good question. For most taxpayers, there’s not going to be dramatic changes. There’s going to be increases to some deductions to, you know, how income is taxed. There’s talks about how tips and things will be taxed, child tax credit increases, potential deductions for the purchase of a vehicle. Small changes, small changes that will impact taxpayers, yes, but not dramatically. The tax changes to tax brackets are set to change slightly, but be relatively stable for, for most, uh, for most earners. Where the changes are really going to impact are changes to those with a higher net worth and those with a higher income. So as we look at changes potentially to the standard deduction, uh, if that is reduced, are there opportunities to maybe accelerate income in certain ways now in terms of charitable giving, uh, to be able to, you know, take that, that itemized deduction now before that potentially even gets locked in higher? And from an estate perspective is really where we’re seeing the biggest impact, as I mentioned earlier, being able to lock in those knowns now, yes, potentially take advantage of some additional increases in the future that are going to be indexed for inflation. But if those estate tax exemptions do sunset, those higher earners and those with a higher net worth could potentially lose out on this on an ability to significantly transfer wealth in a more efficient way.

07:59 Speaker A

How nimble is some of the retirement planning? And, and I ask that from a perspective of knowing that a lot of the retirement savings practices for those who are closer to retirement tend to be, hey, we’ve already de-risked to such an extent that we’re just trying to make sure that the money continues to grow. We’re in less risky parts of the investment, uh, spectrum, if you will, whilst still maintaining a little bit in smaller proportion in our portfolio of risk. But when you have the opportunity and sense that there could be a market rebound like we’ve seen from the depths in April back to the end of May, early June now, what were they doing within that time period?

09:11 Sarah Mauser

That’s a good question. You know, our clients really were not making changes, and we were not recommending drastic changes. Now, we were making nimble tactical changes to the portfolio, but for the most part, our advice was always to stay invested. Because as you mentioned, rebounds happen quickly, and taking yourself out of the market, putting money in more conservative investments, it, and the market timing, when you look at, at history and the research, it just, it’s, it’s never in, it’s never in your favor because no one can time the markets. And so our clients were not making changes. But this is where the planning really comes into play and working with a financial advisor that you know is focused on financial planning. Because what it really comes down to is, it comes down to expenses. At the end of the day, it comes down to expenses, and are you spending in a way that is sustainable for your portfolio? And with some clients, we have the conversation of when we’re sort of in the trenches of volatility, it may need to be a conversation of we’re temporarily pulling back, um, and making sure we’re planning a way to be able to do that, to be able to, to weather that storm. Yeah. But when it comes to making changes, it really is, you know, hold on to the side of the kayak, and I know that that sounds cliche, but our recommendation has been, you know, allow us to manage the portfolio tactically and hang on because market rebounds happen quickly. And instead, let’s focus on the planning side of it and ensure, especially retirees who are looking to retire, are, are staying within their spending means.

11:34 Speaker A

Sarah, thanks so much for taking the time here with us.

11:41 Sarah Mauser

Thank you so much for having me. It’s been a pleasure.

11:46 Speaker A

That was this week’s FA Corner brought to you by Capital Group.