To do so effectively, we need to do 3 things:

1. Reflect.
   1. To lay the foundation for an exceptional 2024, it’s important to get yourself in a positive state. The state you’re in matters! If you don’t take the time to reflect, you will likely come up short. Take a moment to flip through your phone’s photo album, review your calendar, and take inventory of what all you accomplished in 2023. Putting yourself in a positive state will help you dream and plan for the year ahead with excitement.
2. Plan.
   1. What does an awesome 2024 look like for you? The more specific, the better! A good way to do this is to think about each quarter and what 3 or 5 things you want to accomplish. Dig into the ‘why’ behind these goals; make it emotional and powerful. The significance of your ‘why’ will inherently help you find the ‘how.’
3. Measure and stay focused.
   1. To turn your dreams into accomplishments, it’s crucial to establish specific metrics and maintain your focus. In the hustle and bustle of life, staying focused on your ‘why’ can be challenging. Regularly revisit your goals, assess your progress, and adjust course if needed.

By implementing the Reflect, Plan, Measure framework, we will become active participants in the creation of a year filled with intention and excitement.

Great Days Ahead!

When someone thinks about socking away money in a college fund for children or grandchildren, the first thing that comes to mind is a 529 plan – a savings plan for qualified educational expenses, which may include not only tuition, but also room and board, books, and other school supplies.  But did you know that a 529 can also be an attractive consideration for transferring generational wealth?

The Advanced:

• Contributions are considered completed gifts.  You can annually give $18,000 (for 2024) per donor per beneficiary, or $36,000 per couple per beneficiary, without being subject to the gift tax.
• “Super funding” – Contributions can be front-loaded, up to $85,000 (up to $170,000 for married couples)– or five years’ worth of contributions at once.  If you decide to do this, you can’t fund the account for the next four years.
• You can name a trust as the account owner, which will give you control even after you’re gone.  Trustees can make decisions for the account that are advantageous to the beneficiaries and ensure your wishes for the account are carried out.
• Contributions to a 529 plan reduce the taxable value of your estate and because contributions are treated as completed gifts, they are immediately removed from the donor’s estate and exempt from the current federal estate tax limit ($12.92 million per person or $25.84 million per couple).
• Another new benefit starting 2024 (per Secure Act 2.0), it is now permissible to rollover up to a lifetime limit of $35,000 tax free from a 529 plan to a Roth IRA.  The money must be moved to a Roth IRA for the beneficiary of the 529 as opposed to the owner of the 529 account; and the account must have been in existence for at least 15 years. Only funds in the plan for at least 5 years are eligible for rollover. (Please note that annual Roth contribution limits will apply based on the rules included in the legislation and the IRS could interpret differently upon implementation.) 

Whether you want to reap the ‘basic’ benefits of a 529 savings account, or want to discuss the ‘advanced’ benefits – the best approach is reaching out to your Confluence Wealth Manager or starting the conversation altogether. We look forward to helping you and your family with education planning in 2024.

About the Author

Known for his professionalism and calming demeanor, Zac is focused on helping his clients reach their financial goals through comprehensive financial planning and unbiased guidance.  Zac and his team support and care for…

Sewickley

724-719-6609

zac.saunders@confluencefp.com

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Month in Review

• Stock and bond markets extended their rally in December, capping off a strong fourth quarter with broad-based gains. Value stocks and US small cap stocks led equity markets higher during the month.
• Major US bond markets finished in positive territory, preventing what would have been a record-breaking third consecutive calendar year loss.
• The continued decline in inflationary data and increased likelihood of a rate cut by the Federal Reserve were key catalysts for markets during the month.

Narrow Market Leadership

The S&P 500 and growth stocks benefitted from continued strong results from technology companies during 2023. The outsized results of these companies pushed their valuations even higher, with Apple finishing the year as roughly 7% of the S&P 500’s value. This is the largest single weighting in the last 30-years and follows three previous years where Apple represented at least 6% of the S&P 500’s market capitalization. While Apple and six other companies were responsible for the lion’s share of the US stock market’s results in 2023, there are opportunities for broader participation as we head into 2024.

Source: FactSet and Goldman Sachs Asset Management. As of December 31, 2023.

Month in Review

• Stocks fell during the month of October, marking the third straight monthly decline for the S&P 500 Index.
• Bond markets also fell again during the month, the fifth straight monthly decline for the asset class.
• Concerns over US government funding helped keep interest rates higher in October, pressuring stock and bond markets again.
• US corporate earnings season is also in full swing, with over 50% of the S&P 500 having reported by the end of the month. Companies have thus far reported positive earnings growth with mixed outlooks.

As enthusiasts and collectors approach the later stages of their lives, the act of collecting takes on new dimensions. Some may be content to sell their collection and pass the proceeds on to heirs, but for others the treasures that have been amassed over the years are now an opportunity to leave a legacy that will continue to endure.

Here are four considerations to help navigate this phase of your collecting journey:

1. Legacy Planning and Succession Strategy

If you haven’t already, start to incorporate your collection into your broader estate plan. Decide how your treasures will be managed, preserved, or passed on. Engage with experts who specialize in collectibles and estate management, particularly those well-versed in the tax implications of transferring collections.

Consider which heirs will receive each item and why, taking into account their emotional significance and potential for instilling responsibility. If you aim to establish a philanthropic legacy, donating to a museum or organization aligned with your mission not only offers tax benefits but also ensures parts of your collection remain together.

2. Balancing Emotional and Financial Value

While financial considerations have likely played a role in your collecting journey, the emotional value of your treasures becomes increasingly significant as you near this phase. Embrace the joy and memories your collection evokes. If the next chapter is one that doesn’t fetch your estate the highest possible payout or the most optimal tax deduction, that can be OK if the destination fulfills your wishes and maximizes the emotional component of the transition.

3. Philanthropy & Impact

Consider the broader impact your collection can have. Some individuals opt for philanthropic endeavors that align with the themes of their collection. For example, a collector of classic cars may choose to donate his or her collection to an automobile museum that will display the vehicles and allow them to continue to provide joy for many. Donating items, contributing proceeds to charitable causes, or establishing cultural endowments can solidify your legacy as one that extends beyond material possessions.

4. Don’t Forget Logistics

Once you’ve established a robust plan for your collection, it’s crucial to have capable individuals ready to carry it out. For vehicles, consider arranging for an appraisal in advance or identify a trusted appraiser to guide those handling your estate. If you anticipate liquidating a coin collection after your passing, take the initiative to identify a reputable precious metals dealer beforehand. By personally selecting the third parties involved, you can alleviate the executor’s potential challenges in managing and distributing your collection.

As your collecting journey matures, it evolves into a narrative of legacy and stewardship. It’s important to recognize that your collection signifies not just an investment, but a testament to the diverse experiences of your life. Take the necessary time and consider that at Confluence Financial Partners, we’re here to help. Collaborating with the right professionals can help ease the burden and ensure both your life and legacy are maximized.

Month in Review

• Major stock indices broke a two-month streak of gains, with all major indices finishing down for the month.
• Growth companies regained favor after two months of value and small cap companies leading the market.
• Bond prices declined due to rising interest rates.

Insight on Inflation

Despite the market volatility, evidence from July’s inflation report suggests progress towards a “soft landing” scenario, where inflation is gradually decreasing, and the economy avoids a recession. In July, headline inflation was at +3.3%, year-over-year, down from its peak of 9.1% in June 2022. Unlike June 2022, supply chains and goods have largely normalized, with wages and services being the key drivers of inflation today.

Source: BLS, FactSet, J.P. Morgan Asset Management. CPI used is CPI-U and values shown are % change vs. one year ago. Core CPI is defined as CPI excluding food and energy prices. The Personal Consumption Expenditure (PCE) deflator employs an evolving chain-weighted basket of consumer expenditures instead of the fixed-weight basket used in CPI calculations.  Guide to the Markets – U.S. Data are as of August 31, 2023.

Our mission at Confluence Financial Partners is to Maximize Lives and Legacies.

As our industry has evolved, we understand that the role of a wealth management firm has become bigger than simply managing portfolios and building financial plans. While plans and portfolios remain essential, we believe that true wealth lies not only in financial abundance but also in physical and mental well-being. Studies show that individuals who prioritize their health tend to experience enhanced cognitive function, increased productivity, and overall improved quality of life.

In light of this, it is with much enthusiasm that we announce the addition of a dietitian to our team at Confluence, Sarah Rupp, MS, RD, LDN!

Our commitment to associates and clients is to expand beyond the conventional boundaries of wealth management and we believe the addition of Sarah helps us deliver that commitment.

We look forward to sharing Sarah’s knowledge to further Maximize Lives and Legacies.

Great Days Ahead!

Greg Weimer, CEO

The banking system recently became front-page news following the failure of two banks in March. The headlines related to bank failures can illicit very emotional responses about safety of deposit accounts and cash investment solutions.

We believe it is more important than ever to look through the headlines to the fundamentals of cash management.

Cash management fundamentally breaks down into two categories:

1. Deposit accounts, and
2. Cash investment solutions.

While the two have similarities, there are fundamental differences with structure and protection.

Deposit Accounts

• Bank Deposits: Interest-bearing account at a banking institution, such as a savings or checking account.
  • These accounts do not have market risk.
  • Insured by the Federal Deposit Insurance Corporation (FDIC) to applicable limits
    • FDIC deposit insurance is backed by the full faith and credit of the United States government. Currently, FDIC coverage extends to $250,000 per owner (and per account type), considering the underlying banking institution. For example, a joint account may have $500,000 of FDIC coverage at a single banking institution.

Cash Investment Solutions    

• Certificates of Deposit (CDs):  Investment that earns interest on a lump sum basis for a defined period of time.
  • In contrast to deposits, CD’s typically offer higher interest rates versus bank deposits to compensate for monies being unavailable during the life of the investment.
  • FDIC coverage applies to $250,000 per individual per issuing institution.
• Individual Treasuries: Securities issued by the US Government, can be interest-bearing or zero coupon (earn lump-sum at maturity). The term of Treasuries can vary significantly: 4 weeks to 30 years.
  • Exempt from state and local taxes, but subject to federal tax.
  • Not covered by FDIC insurance, rather explicitly backed by the full faith and credit of the United States government.
• Government Money Market Mutual Funds: Mutual funds that invest in Treasuries and US Government securities, paying interest on a recurring basis. Government money markets target a stable $1.00 value (not guaranteed)
  • Not FDIC insured.
  • Money market mutual funds underwent significant changes starting in 2016, which introduced redemption fees and liquidity gates, an effort to introduce a tool to combat any “run” on money markets. Only government money market funds are exempt from the rules surrounding redemption fees and gates (however, they can adopt them if previously disclosed to investors). Currently, none of the government money market funds offered by Raymond James have adopted redemption fees and gates.

In addition to FDIC insurance and backing of the full faith and credit of the US government, most assets held at firms such as Raymond James are covered by the Securities Investor Protection Corporation (SIPC), to applicable limits. The SIPC was established in 1970 and protects client assets up to $500,000, including $250,000 of cash. SIPC account protection would apply in the event a firm fails financially and is unable to meet obligations to clients, not against a loss in market value.

Despite the negative and unsettling headlines, there are multiple robust cash management solutions available to clients, with multiple layers of risk mitigation. At Confluence Financial Partners, we believe in the soundness of our banking system and maintain complete confidence in our client cash management tools.