A Thanksgiving Like No Other

A Thanksgiving Like No Other

Thanksgiving is my favorite time of the year. Each year, our family gets together in a small town in Western Tennessee called Eva, and we rent cabins where we can all spend a few days together catching up on our busy lives. It is a place that my children routinely call their “favorite place in the world,” where many of my fondest memories have been made. But in 2020, it seems that just about everything that involves large gatherings of people has been canceled. Not being able to go down there because of the pandemic has been very hard on my kids and on me. I have decided that this is the best year to sit back and really understand what being thankful is about. It is precisely when things seem the hardest that we should self-reflect and try to find the small (and big) things that are going on around us that we can be thankful for.

The biggest news of the year has been the impact of COVID-19 and how it has impacted every one of us in different ways. I am currently battling the virus, and it has been a challenge so far. I have lost the ability to taste or smell anything. As I am dealing with that, I am more thankful than ever for the smell and taste of a full Thanksgiving spread, complete with turkey, mashed potatoes, stuffing, baked macaroni and cheese, and apple pie! I know there are many people who have not been as fortunate to be recovering from this insidious virus. One of my friends is currently intubated as he fights through the side-effects of his infection. This thing is real and it is REAL nasty! But I don’t have to let it rob me of my joy around this time of year. There is always something to be thankful for, and I am thankful for the health that I have and that my family has so far tested negative for the coronavirus.

It is easy to lose perspective when things are not normal or we are inconvenienced. This year we have all, at one time or another, had to deal with wearing a mask to help stop the spread and flatten the curve of infection. This has made me realize how important it is to put other people ahead of myself when it comes to my day-to-day interactions. It has also shown me how much I enjoy the simple sight of a friend or a stranger smiling at me. We have lost that this year in many of our in-person interactions, and I am going to be happy when this is past us and we can bring happiness to each other with our smiles! I am also going to miss my family at Thanksgiving, but we are able to set up a large Zoom meeting with “virtual cabins” where we can break out and spend some time together catching up. Thankfully, we won’t have to wear masks during this time, and we can see each other and enjoy the time that we do have. It’s not the same, but it is definitely something to be thankful for!

I know that many of our clients have been dealing with tough things this year, whether health-wise, financially or emotionally. We want you to know that we are here for you to talk about anything that is on your mind. We love the value that we can bring to your life, and most of all we are THANKFUL for the trust that you have put in all of us here at Walkner Condon to help you navigate the choppy waters of 2020 and beyond, as you plan for and work towards your long-term goals and dreams. Without each and every one of you, our firm would not exist. So as you reflect back on this year, and all that it has brought to us collectively, we want to wish you a very Happy Thanksgiving, and we hope that you have a chance this year to realize the special things in your life that you can be thankful for.

Jonathon Jordan, CFP®

Schwab & TD Ameritrade are Officially One Firm

Schwab & TD Ameritrade are Officially One Firm

On November 25, 2019, The Charles Schwab Corporation announced their acquisition of TD Ameritrade Holding Corporation in an all-stock transaction originally estimated at $26 billion. The deal was initially a surprise to many investors and even Registered Investment Advisors (RIA) that use the Schwab and TD Ameritrade advisor platforms. However, after doing some research, the deal started to make a lot of sense. Schwab and TD Ameritrade have been competitors for over four decades as “alternatives to traditional Wall Street brokerages”. Both companies serve “do-it-yourself” investors, as well as RIAs. Their missions align to empower both the retail investor and the independent financial advisor to ultimately help people reach their financial goals. Both companies have been leaders in reducing costs for the typical investor by eliminating commissions on equity trading (see our past blog “Commission-Free Trading: Is It a Free Lunch?”). Not long after slashing trading commissions on equity trades, the acquisition was announced. Both firms believe that combining firms will enhance the client experience and further scale operating costs.

On October 6, 2020, the deal was closed for $22 billion.

Why did WCFA add Schwab as a custodian in May?

As we wrote back in May, we believe that the Schwab/TD Ameritrade combined company will offer one of the most complete offerings for our clients. Shortly after the announcement of the merger, Walkner Condon added the Schwab platform to our list of custodians. At the time, we discussed what we thought was the best way to hit the ground running when the merger occurs, and that was to familiarize ourselves with the platform prior to the transition. Additionally, it has offered us the ability to help clients with Schwab accounts that they would like us to manage without having to transfer assets over to another custodian. Moreover, many 401k plans offer a self-directed option with Schwab, so this may also open up investment opportunities for our clients without being required to use their preselected investment lineup. Many clients’ assets, particularly in our International Advisory business, are already custodied at Schwab.

How does this affect existing clients? Do I need to do anything?

The short answer is no. Both Schwab and TD Ameritrade sent emails to their advisor partners (including Walkner Condon) stating that it is “Business as Usual”. Given the size of Schwab and TD Ameritrade, the transition is expected to take between 18-36 months. The advisor platforms, Schwab Advisor Services and TD Ameritrade Institutional, will remain separate custodians until the transition is complete. For clients, this means that if their assets are at TD Ameritrade, they will continue to use AdvisorClient.com to access their accounts, download statements, etc. until the transition is complete. Similarly, for clients with assets at Schwab, they will continue to use client.schwab.com. We will share updates with our clients as we continue to learn more over the coming months and years.

What else do clients need to know?

Clients are probably wondering how their resources, tools, and pricing will be affected by the Schwab/TD Ameritrade merger. Here is a quick response to some of these FAQs:

Am I able to open new accounts on the platform that I’m currently using?

Yes. If your accounts are at TD Ameritrade, you can continue to open new accounts on the platform (same with Schwab).

How will the technology and resources I access online change?

You won’t notice any changes in the near future. At some point, there will be some consolidation of the Schwab and TD Ameritrade platforms, and we will communicate those changes to you when we know more. Again, that is estimated to be 18-36 months from now.

Another note on technology:

The beauty of being an independent firm is that we’re able to constantly reevaluate the tools and technology that we use and procure for our clients. Tools such as RightCapital, Riskalyze, Blueleaf, MoneyGuidePro, etc. will continue to be used as we believe they enhance the client experience. That said, if we find a better and more efficient tool for our clients, we will explore those tools with an open mind. Schwab and TD Ameritrade have never dictated the use of these supplementary tools that our firm has chosen.

Does my pricing change?

No. Your investment advisory fee indicated by the fee schedule in your Walkner Condon Client Agreement stays the same.

What happens to my accounts when the transition is completed?

Schwab has indicated that there will be a “bulk conversion” when the transition is completed in 18-36 months. They have stated that they intend to accomplish this with no interruption to clients’ account history, no new client account paperwork, and no new transfer paperwork.

What is being done to protect my assets and personal information?

Both Schwab and TD Ameritrade have earned their clients’ trust for many decades by implementing many safeguards to keep their clients’ information secure. Protecting information will continue to be a priority during the transition. Designing and testing security procedures is of utmost importance.

We believe that the combined Schwab / TD Ameritrade entity will continue to make investing and financial planning more accessible, allow our advisors to utilize modern tools & technology that will enhance the client experience, and allow greater flexibility of investments & services to help people meet their financial goals. Please be on the lookout for additional communication from us, as well as from Schwab and TD Ameritrade. Please reach out to your advisor for any questions that you may have.

Preparedness

Preparedness

The idea of being prepared requires a unique mindset. It demands that we think about and plan for a situation that is much worse than our current one. Mentally and emotionally, it’s difficult to put ourselves in the middle of the hypothetical thunderstorm when it’s sunny outside. It’s easy to fall into a false sense of security that the bad times won’t be as bad or scary as they often are. This, then, leads to not actually preparing for those times, but more so going through the motions of a plan to make ourselves feel a little better. Proper preparedness requires careful thought, planning, and a realization that when, not if, things go sideways, we have already rehearsed the steps to avoid a bad outcome. 

As some of you may know from our podcast, I recently had a pretty serious health scare that landed me in UW Hospital twice for three-day admissions. Fortunately, the incredible doctors, nurses and staff have me back on the mend and feeling much better. But I can’t seem to shake the feeling of laying in that hospital bed and wondering what I could have done differently to be more prepared. My case was one with little notice and didn’t afford me any warning. That said, there were still things that I could have done to improve the outcome. 

I will admit that I somewhat took my health for granted, having lived the last twenty years of my life without a medical issue of any kind. Unfortunately, this led me to my false sense of security and failure to be proactive. Why do I need a physical, I feel great? Why do I need a primary physician, I never get sick? It was this kind of thinking that led to a lack of planning and foresight as to what could happen. My situation would have been helped greatly with a few proactive steps, such as the annual baseline of health that having a yearly physical provides, and a solid relationship with a general practitioner. 

And the idea of being prepared isn’t limited to our health and wellbeing. We should absolutely apply these lessons to our financial lives. Financial advisors preach about the importance of having an emergency fund and liquid assets for unforeseen expenses, and rightly so. This year has illustrated just how quickly things can go awry. Stable employment was no longer stable with the unemployment rate reaching into the double digits. The first half of 2020 was the litmus test for preparedness. We will get past the ugliness of COVID and the economy will recover, but we should think critically about how we handled this situation and what we may do differently the next time it happens.  

When you consider your own preparedness, I would recommend focusing on these four areas of your financial situation. Liquid assets or an emergency fund is the first area. Ideally, we would like to see at least three months of expenses built up in bank accounts or safer investments. This will help to bridge the gap of a sudden layoff or gap in employment. A mid-term investment account is the second area of focus. This is an account that is typically using market related investments, however, the money can be withdrawn without penalty. This is the backup to your emergency fund. We generally use this money in the event that our emergency fund is depleted, but we are still not out of harm’s way. Insurance coverage is the third area. Do you have short-term and long-term disability coverages and, if so, how much do they actually cover? These are questions to ask prior to needing the coverage as the amount of the benefit may not replace your entire income. You may decide to buy additional coverage if your work benefit is lacking. The fourth area is comprehensive estate planning. In the event that you become unable to make decisions on your own, it is crucial that you have powers of attorney in place. If you do not have these documents as part of your estate plan, I would strongly recommend having your plan reviewed with an attorney. 

Ultimately, we need to live our lives and not be scared about what tomorrow will bring. It doesn’t make sense to constantly live in fear. With that being said, being prepared and mentally ready is the panacea for the unexpected. It gives us the confidence that the next big thing, whatever it may be, won’t catch us off guard. They say that an ounce of prevention is worth a pound of cure, and I now have a much better understanding of that phrase. Be conscious of what might happen, think through the different scenarios and make changes to your current situation to be a little more prepared. Trust me, you will be happy that you did. 

 

Nate Condon

Financial Planning for Special Needs Families

Financial Planning for Special Needs Families

There can be many challenges for families with medically complex or special needs children: emotional, physical, and financial. Some considerations include increased medical and care costs, an inability to qualify for certain types of insurance or social programs, and planning for their life as an adult if they are unable to financially support themselves or live independently. This blog is a follow up from a Gimme Some Truth podcast request and looks to touch on some of the aforementioned topics.

Raising children is expensive; the USDA estimates that middle-class, married couple families can expect to pay close to $240,000 per child by the time the child becomes an adult (that number is excluding college!). It may be more expensive to raise a special needs child. Autism Speaks estimates a lifetime cost for a person with autism, for example, can be $1.4 – $2.4 million.

About half of US children with special health care needs are covered by private insurance while another half are covered by Medicaid (with 4% uninsured). In many cases, Medicaid covers medical and long-term services that private insurance does not. There are a number of families that find themselves unable to qualify for Medicaid while their private insurance may not provide the coverage that they need for their special needs child. There are programs such as the Katie Beckett Program that helps these types of families “fill the gap”. The Katie Beckett Program allows families that have too much assets or income to qualify for Medicaid still have access to Medicaid programs while their child still lives at home, even if they have private insurance.

If a special needs child has an inability to work or live independently, there will have to be a plan in place for the care and financial wellbeing of the child. Establishing a plan for guardianship (if the parents were to die) of children is highly recommended whether there is a special needs child involved or not. However, additional care and planning for someone with special needs can go beyond childhood and last their entire lifetime.

There are a number of strategies on how to protect someone with special needs financially. One way to support someone with special needs financially without putting them at risk of not qualifying for programs such as Medicaid is a special needs trust. The trust is set up to benefit the person with special needs; the funds in the trust can be used to pay for their needs such as medical, equipment, rehabilitation services, and much more. Special needs trusts can be funded from gifts by the family or even from life insurance proceeds. One thing to note is that the trust should be administered in a way that the trust pays the service providers directly, not the beneficiary (otherwise the beneficiary may be at risk of losing public assistance). Engaging with an estate attorney with experience in special needs and disability planning is a good place to start. One resource is Wispact, which has compiled a list of attorneys that have a focus in this area. 

Each family is unique; some concepts mentioned may apply to their needs, but they might not. This blog post is meant to cover a high-level, informational overview of special needs planning and to include links to some resources that were mentioned in the podcast. If you or someone you know would like to have a more in-depth discussion around their specific scenario, please reach out. We welcome the conversation.

 

Mitch

The Slow Pace of Fast Change in a Post-COVID World

The Slow Pace of Fast Change in a Post-COVID World

One of my favorite (perhaps apochryphal) quotes comes from the French novelist Gustav Flaubert who, while surveying Paris during the Franco-Prussian War of 1871 declared, “After all of this, we will still be stupid.” And while Flaubert’s view of human nature is perhaps slightly more negative than mine, I do think that one of the things at which we excel as a species is overstating the long term effects of recent or current events.  

That quote came to mind when I saw this morning’s headline from the Wall Street Journal: “Europe Lease Deals Suggest Traditional Office Will Endure in Post-Covid World.” The assumption at work in this headline is that a universally accepted truth in a post-COVID world has been that real estate rentals were going to take a hit, as businesses would all shift to work from home via Zoom and the various other productivity apps that link us. However, as this article suggests, the shift away from traditional offices to full-time remote working will likely not happen overnight.  

We have seen a sharp decline in travel in this pandemic, since even in the best circumstances, airplanes tend to be petri dishes of disease. However, this is not the first time that the industry has faced an existential crisis. Recall the predictions about the industry’s demise during the climate of fear immediately after 9/11. Students of history will remember that not two months later, a plane crashed outside of New York City, and, in December of 2001, the infamous shoe bomber was also arrested, compounding the fear of flying that was already in the atmosphere. Similarly, in an article in the Financial Times, airline experts believe that the industry will change– more point-to-point flights, perhaps fewer giant planes– but that ultimately, according to former head of British Airways Sir Rod Eddington, “if we get a vaccine, people will be back to normal in a year.”

None of this is to say change won’t happen– perhaps men will start washing their hands after going to the bathroom more— but the changes will be more subtle and less dramatic than we think. And, like taking our shoes off when we board airplanes, they will likely soon become the new normal.  

Perhaps the greatest confirmation of the fact that the ways of the world will be slow to change is that I, who passionately embraced working from home (almost as much as my dog), am writing this to you from our office on the corner of Glenway and Monroe.    

 

Keith Poniewaz

 

Don’t Skip Your Vacation

Don’t Skip Your Vacation

“I need a vacation!” 

Growing up, these are the words I used to hear from my parents when the inevitable stresses and pressure of work, kids, and life would get to them. As a child, I loved to go on vacation, whether it was up to northern Wisconsin or down the East coast to a beach. Some of my greatest memories are from those vacations. Going to the beach, enjoying a campfire, and running around Disney World with my siblings are experiences that I will never forget. Now that I’m older (much older!), I have the ability to go on vacations that I hope will have the same impact on my children. So, why, when they have the means to do it and there are so many benefits to them, is it so difficult for some people to actually take that big vacation? I find myself having this conversation with clients routinely, and there are several reasons that I have found.

According to the Oxford English Dictionary, the first appearance of the word “workaholic” occurred in the Toronto Star in 1947. Many Americans have a hard time actually taking the time off due to an inability to “shut out” their work. They find their identity in what they do, and it becomes an addictive, singular focus. I routinely work with people who have a tremendous amount of unused, “banked” vacation time that they plan on taking as a lump-sum when they retire, instead of using it to take paid rest and relaxation or a trip to a place they’ve always wanted to go. They lament not taking vacations in the prior years, but when it comes to the future, it’s one of the first things they want to incorporate into their financial plan in retirement.  Often, they carry the same habits into retirement and find a myriad of excuses as to why they can’t or shouldn’t go on vacation. They fear the cost, their lives are too busy, and sometimes, I hear those dreaded words, “We are going to go NEXT year.” At that point, I like to remind my clients that this is something that’s going to be a good thing for them, something that we have planned for, and that it’s important to execute on that dream we discussed as we laid out their plan. I’ve even gone so far as to retain a travel agent to help facilitate a “planned-for” vacation when I sensed the clients hesitation. Upon returning, they let me know that it was one of the best, most memorable experiences of their lives.  

According to Project Time Off, a survey from the United States Travel Association (USTA), there are 768 million unused vacation days in America. As financial planners, we work with clients who are currently working, planning to work longer in their careers, and retirees. The topic of vacation is generally one we put into the “goals and dreams” category, but there are several studies indicating that people who regularly take vacations, or even staycations, lead more productive and happier lives. It’s no accident that vacationing creates memories, whether you go on a sabbatical by yourself or take a vacation with your family and friends. When you have a daily routine, the brain tends to go on autopilot, collecting fewer memories. It’s the unusual instances, the aberrations we remember and store for life. Planning for and executing on taking a vacation can be difficult, but we find it to be worth the work.

If you have worked with us, we have more than likely had the conversation about planning for your goals and dreams. Since vacations can have a high financial cost and commitment, let us help you to incorporate them into your plan as well as prioritize those goals. We have resources that can project what the future costs will be, what taking the big vacation now will do to your long-term goals, as well as trusted resources in the Madison community to help you plan your trip. If you feel like you “need a vacation”, or want to plan for the ones you’ll be taking in the future, we can discuss it when we meet. All we ask in return is that you share some of the great stories, happy photos, videos, and memories that will last a lifetime.

Jonathon Jordan