Every financial advisor knows the feeling of having their good advice ignored. Clients splurge when they shouldn’t, play it safe in retirement when they can afford to spend more, and just won’t update those darned beneficiary designations. But what if advisors could create New Year’s resolutions for their clients? Granted resolutions and follow-through are two different matters, but for this week’s Barron’s Advisor Big Q, we invited five advisors to create resolutions for their clients. Here’s how they responded.
Craig Robson, founding principal, managing director, Regent Peak Wealth Advisors
Create or pursue your own stretch goals. Those could be financial, personal, or relational. We always bucket aspirational goals in our clients’ plans, and I will periodically remind them and ask, “What is preventing you from pursuing those goals?” Another way to say it is, “If not now, when?” Examples could be building your dream home, starting a business, going for that C-suite job opportunity.
The second resolution is to take chances. Make yourself available for some new opportunities. For me, the pandemic was a huge reminder of this. We started our firm eight months before the pandemic started. In the summer of 2020, I decided to negotiate a five-year contract for brand-new office space. When everybody was leaving and parking lots were empty, we were going back in. We negotiated fantastic financial terms and got great new fresh office space in Atlanta. Obviously, think it through and be educated, but there’s nothing wrong with taking some chances.
Emily Millsap, manager, financial planning, Avantax Wealth Management
Take thetime to learn your generational wealth story. So many of our beliefs about money and financial behaviours are tied to what we’ve learned and observed from our family and our culture and our community. And we always try to make money about math and logic, but there’s a lot of emotion tied into why we make the financial decisions we do. Understanding how our current behaviours and beliefs are connected to the stories of those who came before us, and then passing those stories to the next generation, is such a powerful and healing thing.
There are a few books out there that I really like on this topic. Loaded: Money, Psychology, and How to Get Ahead without Leaving Your Values Behind touches on some of that. Anything by Dr. Brad Klontz; Mind over Money: Overcoming the Money Disorders That Threaten Our Financial Health is a great one. Those are good places to start, and then talking to your parents, grandparents, aunts, uncles, about what they remember, what they learned, how they felt about money.
If you really want to do a deep dive, you can build a genogram, which is like a family tree, but you outline levels of education and career and how ancestors behaved with money and what they thought about money. Another resolution is that anyone who carries anxiety about their financial future will seek out experts who can help calm their fears and make a plan.
Dane Burkholder, private wealth advisor, Ameriprise Financial
New Year’s resolution No. 1 is to update your financial plan. People spend so much time focusing on markets and investments and rates of return. But the beginning of the year is a really great time to step back and say, “What are my financial goals, and am I on track for those financial goals?” No. 2 is doing a 401(k) audit. That could be as simple as rebalancing the assets inside of the 401(k) or setting the account to automatically rebalance throughout the year. If you were fortunate enough to get a raise, increase your contributions.
Resolution No. 3 is looking at your emergency fund. We have a unique opportunity to get a positive return on cash, with money-market accounts and CDs at 5%. People who are sitting on large cash balances have a tremendous opportunity to keep money liquid and available, but earning some interest. No. 4 is managing emotions: There are going to be points where the market pulls back or potentially corrects, but sometimes the best strategy is to take no action. When you use emotion to create action, generally the result isn’t beneficial. If you have a house that’s worth $800,000 and you go on Zillow the next day and it’s worth $700,000, you’re not going to sell your house.
Andrew Crowell, vice chairman, wealth management, D.A. Davidson & Co
The markets moved upward dramatically last year, and it’s very likely that clients’ target allocations are different than their current allocations. Somebody who owned a little Nvidia at the beginning of the year now has 220% more in terms of market weighting. So it’s important to rebalance annually, because you may inadvertently be carrying more risk than you need to or want to.
And if Santa makes a list and checks it twice, we have to do the same with all of our beneficiaries on every retirement account, with our trust documents, and so forth. Things change, relationships change. People die, people divorce, people marry, and the list that may have been valid 12 months ago may not be valid today. So make an annual checkup appointment and look at all the beneficiaries listed on your company 401(k), the IRA rollover from your first job out of college and whatever else.
It’s always helpful to set a budget and prioritise what you are going to be saving for this year and create spending guardrails. Banks and brokerage firms will soon allow you to download spending summaries from the prior year; pie charts breaking out spending by category. It can be eye opening to see, “Wow, I know we ate out a lot, but that restaurant line is a lot bigger than I thought.”
Nicholas Yeomans, president, Yeomans Consulting Group
Start with getting organised. Folks say they have that desire, but when it comes to actually getting organised and lining up all their affairs, to put together their tax documents, their estate-planning documents, their portfolios, their 401(k)s and IRAs, everything’s everywhere. I work with a lot of people who are retired, and as you get older, things unfortunately happen, from incapacity to death. Often, there is one spouse left holding the bag, and now they’re hunting and pecking and trying to find out where everything was. They’re already in a state of emotional distress, and now you’ve compounded that distress. Organising is a gift to the spouse who might end up having to take care of you or make those final decisions after you’re gone.
My second resolution is to communicate with family. Younger generations are more proactive in communicating with their kids, but unfortunately, a lot of folks in that 60- to 85-year-old group tend to do a much poorer job. We’re talking about the organisation of your finances and who is in charge of what. Who’s your trustee, who’s your power of attorney, what are your wishes with your healthcare directive? Is everything in a lockbox in your office? And what were you thinking when you put your will together? Why did Sandy get more than Charlie? [Explanatory] letters are a great idea. However, it’s even more meaningful to bring everyone together every two or three years and give them an update as to what you’re doing and why you’re doing it.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Even amid two international conflicts and an upcoming U.S. presidential election, some philanthropic leaders are optimistic about the direction of overall giving through 2024.
Penta spoke with heads of several non-profits and leading philanthropists to gauge whether charitable giving will continue its reported slump from 2023 or rebound alongside renewed interest in various political and economic issues.
“Contrary to what some might expect, philanthropy has had resilience in these times,” says Stacy Huston, executive director of Sixdegrees.org, a youth empowerment non-profit based in Virginia founded by actor Kevin Bacon in 2007.
Huston’s view echoes recent data from the biennial Bank of America Study of Philanthropy published last year, which found that while affluent giving is largely down, the value of the average philanthropic gift is up 19%, surpassing pre-pandemic levels.
The notion of what these gifts look like is changing, and is partially responsible for the growth. Philanthropy can be executed through more avenues than ever, whether through celebrity association, tech titans stewarding large endowments, or athletes using their platforms to advocate for and create meaningful change.
“The industry and movement is creating new models, and you want to get it right,” says Scott Curran, CEO of Chicago-based Beyond Advisers. “No one should take their foot off the gas pedal.”
Curran spent a number of years with the Clinton Foundation in its infancy before leaving in 2016 to open his own consultancy, which focuses on philanthropy strategy at the highest levels. Curran and his team work with celebrities, athletes, multi-generational family foundations, and other affluent givers who need guidance in directing their philanthropic efforts. It’s a growing area of interest: Over half of affluent households with a net worth between US$5 million and US$20 million have, or are planning to establish, “some kind of giving vehicle” within the next three years, according to the Bank of America report.
Corporate philanthropy, rather than individual giving, is the cornerstone of Marcus Selig’s work as chief conservation officer at the National Forest Foundation, a Congressionally chartered non-profit based in Montana responsible for protecting millions of acres of public lands.
“Our outlook is business as usual,” he says, advising that giving may slow down, but not enough for the foundation to change course.
Factors such as political polarisation in the U.S. and the wars in Eastern Europe and the Middle East are pushing nonprofits to consider their niche, and how they might work with other groups, both on the corporate and philanthropic levels, Selig says.
“It leads to a little more sharing on the ground in what needs to be done,” he adds.
Steve Kaufer , founder of Massachusetts-headquartered e-commerce giving platform Give Freely and founder of TripAdvisor, says that the economy has a much bigger role in election years, as he looks to build and grow something that can act as a “counterbalance.”
“There’s a trend towards democratisation, and acting collectively can lead to greater impact,” he says.
Kaufer’s new platform hopes to leverage the everyday philanthropist through online shopping dollars to benefit major charity partners like UNICEF and charity:water, who earn funds as shoppers choose an organisation to benefit through an online clickthrough process.
“Whether a good year or bad year, e-commerce will continue to keep growing,” he says. “Nobody doubts that.”
Whether a legacy foundation, corporation or individual, the political landscape this year is requiring some to exercise caution as they consider what their own charitable actions might be and how it could be viewed more broadly. For the personal philanthropist, every move is now scrutinised more closely. On the nonprofit side, entities are exercising more due diligence to understand if a specific donor aligns with their mission and that there aren’t any underlying issues that could cause greater pushback.
“You have to be able to walk the walk,” Huston says. “For example, we’ve had to turn down very large donor checks from corporations because there’s a Reddit stream calling them out on their human rights practices.”
She adds that even a routine charity activation could now be aligned with a political party, and that adds complexities to how a higher-profile organisation like Six Degrees can activate, especially as the film Footloose turns 40 in 2024 (which Bacon starred in).
“A lot of organisations and states want to align themselves with this feel good moment, and we should be able to stand side by side with everyone, but we have to be aware,” she says.
Another topic attracting donor interest today is mental health, an area that historically has been underfunded and under-resourced by philanthropy, according to Two Bridge partner Harris Schwartzberg, who has been closely linked to the mental health space for more than a decade.
Today, the issue for mental health nonprofits is less about resources and more about societal divisiveness and polarisation around the topic. There’s an “overwhelming demand” for solutions, but the space is in a “perfect storm” for the broader political issues to make things worse, Schwartzberg says.
In Curran’s opinion, the storms brewing are troublesome, but they are also creating new opportunities for corporate and personal giving. The current state of philanthropy is one of “dynamic, expansive, and blurred lines,” meaning a careful blending of targeted giving combined with an understanding of the broader geopolitical landscape could lead to a successful overall philanthropic strategy.
“There are a lot of headlines that distract, but shouldn’t,” he says. “2024 needs more serious philanthropists than ever.”
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’