Category: Insights

Read all of the insights coming from the experts at confluence financial partners.

  • 2024 Starts Here: Reflect, Plan, and Measure for a Purposeful Year

    The beginning of a new year is an exciting time to reflect, dream, and plan for the future. January is a month filled with anticipation and the good news is that we have control over 2024 and we can be the architects of our year.

    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!

    Greg Weimer
    About the Author

    At the core of his personal and professional life, Greg is passionate about helping individuals and families maximize their lives and legacies. His dedication to this mission shines through as an individual, wealth manager, and leader.

    McMurray, Naples

    724-271-8801
    greg.weimer@confluencefp.com
    Email Greg

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    Greg Weimer

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  • Stock Market Recap: January 2024

    Month in Review

    • It was a choppy month for stock and bond markets as volatility rose towards the end of January. US large caps squeezed out a positive return, while US small caps and international equities trailed.
    • Investors pushed expectations of interest rate cuts out, helping to increase interest rates, which weighed on major bond markets during the month.
    • Economic data remains strong enough that the Federal Reserve largely took a March rate cut off the table in late January.

    Equity Markets Following Bear Market Recoveries

    The S&P 500 reached a new all-time high on January 25th, illustrating the progress the equity market has made following the most recent bear market. Along with making new all-time highs comes an influx of short-term noise, making it important to review the history of market returns following bear market recoveries. Looking at all 14 cases since 1957, the S&P 500 rose an average of 23% over the 18 month period following the 20% recovery from a bear market low. In present day, the S&P 500 had a bear market low on October 12, 2022, and recovered 20% roughly 9 months later in June 2023. Ignoring short-termism around all-time highs, history suggests the equity markets continue to rise after recovering from a bear market.   

    Source: Yahoo! Finance as of 1/30/2024; BMO Capital Markets via Brian Belski.

    What’s on Deck for February?

    • Earnings season will wrap up, after companies posted largely mixed results in January. 
    • Banks are back in focus following the surprise weakness in some regional bank earnings. Given the events of March/April 2023, investors have heightened sensitivity to any perceived weakness in the banking channel.
    • The Federal Reserve does not have a (FOMC) meeting in February, so investors will look for additional information from Fed officials following the January meeting. The Federal Reserve surprised investors by taking a March rate cut off the table, suggesting it would happen later in 2024 depending on economic data.
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill
    Jan-2024-Market-Recap-3Download

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    William Winkeler

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  • Disability Insurance Planning for Physicians: Key Facts & Considerations

    Nearly 1 in 5 people living in the United States will suffer a disability lasting more than one year before the age of 65.1

    Many individuals do not like to think or talk about a potential long-term disability, but they do need to talk about disability insurance. 

    Why Physicians Should Consider Disability Insurance

    Imagine not being able to practice your specialized medical skills due to illness or injury. The financial impact could be devastating for you and your family. As a physician, your income hinges on your ability to work. That’s why individual disability insurance as part of your financial plan is crucial for safeguarding your earning potential.

    Understanding Disability Insurance Types

    Choosing disability insurance involves understanding the different types and the benefits each brings. For example, there are two categories of disability policies, short-term disability and long-term disability. Short-term disability policies are typically obtained as a group policy benefit from one’s employer while long-term disability policies are also offered as a benefit through an employer BUT are more commonly purchased as an individual policy through a broker or financial advisor.

    Additionally, you can purchase own-occupation coverage or any-occupation coverage. The difference between the two is meaningful. Under an own-occupation policy, a person is typically considered disabled if they are unable to perform the material and substantial duties of the job they were working at the time they became disabled. Under an any-occupation policy, a person is considered disabled if they are not able to perform substantial duties of any job for which the person may earn a certain percentage of their pre-disability earnings.  

    For physicians, it is essential to work with an advisor who understands your needs and unique situation to recommend the right disability insurance strategy.

    Key Considerations

    Beyond basic understanding of disability insurance, it’s important to understand key factors like the carrier, benefit amount, elimination period, and renewal options.

    • Insurance Carrier – know who you are working with. Currently, only 5 carriers offer “true” own-occupation coverage.
    • Benefit Amount – the IRS publishesd “Issue & Participation” amounts based on your income and existing disability coverage.
    • Waiting Period – the amount of time one must wait to collect benefits when disabled – typically 90, 180, 365, or 730 days.
    • Benefit Period – how long one will be eligible to receive their tax-free benefit. This is typically to age 65, 67, 70, or lifetime.

    The above list is not all encompassing but should be considered as you construct your insurance package.

    Here to Help

    At Confluence Financial Partners, we work with physicians to secure and protect their income in the event an unexpected illness or injury becomes reality. Please reach out if you would like to start the conversation today.

    Life and disability insurance and life insurance with long-term care benefits are not issued through Confluence Insurance Services. Products and services referenced are offered and sold only by appropriately appointed and licensed entities and financial advisors and professionals. Not all products and services are available in all states. 

    Rob Linkowski
    About the Author

    Rob Linkowski brings more than 35 years of experience in designing and providing quality life and disability insurance programs to his clientele of medical professionals, business owners, family and friends. Rob is passionate about advocating for his clients and not the insurance companies.

    McMurray

    724-271-8801
    rob.linkowski@confluencefp.com
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    Rob Linkowski

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  • Multi-Generational Legacies: Communicating Your Estate Plan

    $96 Trillion is going to pass from one generation to the next over the coming 30 years.

    This is either going to go smoothly or poorly, and much of that answer will come down to estate planning.

    Your estate plan is a crucial aspect of securing your family’s future, and communicating this wealth plan effectively to your children is perhaps even more important.

    Here are 4 key strategies to help ensure your heirs are ready:

    1. Talk About It

    This might seem basic, but start the conversation early. Don’t wait for a crisis to discuss your estate plan. Start the conversation with your children while everyone is in good health and spirits. Choose a suitable time and place for the discussion, ensuring minimal distractions. This will allow your children to focus on the important matters at hand without feeling rushed or pressured.

    • Clarify Roles and Responsibilities

    Clearly communicate who will be responsible for executing your wishes and managing your affairs if you are unable to do so. If your adult children will be filling these roles, tell them. Don’t assume that your oldest child will understand why you made your middle child the executor. Explain your decisions and choices so that when the time comes there won’t be any confusion or hurt feelings.  

    • Educate Your Heirs on the Structure of Your Estate Plan

    You don’t have to share all of the details right away, but make a plan for bringing in the next generation into your financial picture. These discussions are difficult to begin in most households, but at some point you should consider letting your adult children know what you have and how all of it will be transferred. Eventually you should share detailed information about your assets, including properties, investments, and savings. Do you have a financial plan with your financial advisor? It would be wise to share it with your children.

    When in doubt, over communicate. You would be amazed at the disagreements that will come up after you are gone, many of which are due to a lack of direction and clarity on your part. Don’t assume your children will know what to do. Spell it out for them.

    • Address Potential Concerns and Questions

    You don’t have to share all of the details right away, but make a plan for bringing in the next generation into your financial picture. These discussions are difficult to begin in most households, but at some point you should consider letting your adult children know what you have and how all of it will be transferred. Eventually you should share detailed information about your assets, including properties, investments, and savings. Do you have a financial plan with your financial advisor? It would be wise to share it with your children.

    When in doubt, over communicate. You would be amazed at the disagreements that will come up after you are gone, many of which are due to a lack of direction and clarity on your part. Don’t assume your children will know what to do. Spell it out for them.

    Nobody likes to have these conversations, but they are important. We often talk at Confluence about helping our clients maximize their legacies, and typically children are the most important part of a legacy. We are here to help you facilitate meaningful conversations with the next generation that help you ensure your wealth impacts future generations positively. Don’t wait, the time to communicate is now.

    Chuck Zuzak
    About the Author

    Chuck joins Confluence Financial Partners with 13 years of experience in the financial services industry, most recently as Director of Financial Planning at JFS Wealth Advisors. At a fundamental level, Chuck’s passion for financial planning stems from the desire to help clients connect their personal values and purpose with their financial resources.

    Pittsburgh

    412-391-0377
    chuck.zuzak@confluencefp.com
    Email Chuck Zuzak

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    Chuck Zuzak

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  • Stock Market Recap: February 2024

    Month in Review

    • Rally continued for stocks in February, with the key development of broader participation- for example, US small cap stocks had a strong month.
    • String of inflation data and commentary from the Federal Reserve pushed bond yields higher during February.
    • The inflation report released during the month (January CPI) showed prices rising more than expected, driven by higher housing related costs.

    Attention to Interest Rates

    Investors are curious as to when the Federal Reserve will start lowering interest rates. During February, investors recalibrated expectations once again for the start of rate cuts, believing that the first reduction will be pushed back to June 2024. This change makes sense for various reasons: inflation continues to remain somewhat firm, and the labor market remains very strong.

    Historically, forecasting the path of interest rates has been notoriously difficult to do and ultimately, introduces unwarranted noise into investors’ outlooks. The chart below shows how even the Federal Reserve struggles to predict its own interest rate decisions.

    Source: Capital Group, Bloomberg. As of February 23, 2024. Federal funds rate data from January 2016 to February 2024. Forward looking dot plot projections are reported quarterly from September 2016 through December 2023.

    What’s on Deck for March?

    • Inflation data will be in focus as investors watch for any signs of continued increases of prices. The February CPI report is released on March 12th and expected to show declining inflation.
    • The Federal Reserve’s March meeting (FOMC) will be closely watched for commentary around the outlook for growth and inflation. Fed Chair Jerome Powell has already indicated a March rate hike is off the table.
    • As of February 29th, 97% of the S&P 500 companies had reported earnings, with the remainder wrapping up in March. With 97% of companies reporting, year-over-year earnings growth came in at +4%. 
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill
    Feb 2024 Market RecapDownload

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    William Winkeler

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  • Should Millennials Plan on Social Security?

    Social Security, started in the 1930s as a part of FDR’s New Deal, has been under fire since I can remember. All the while, the program has been helping fund the retirement of some 47 million Americans, with another 19 million on survivor or disability benefits. What started out as a way to ensure elderly Americans had some form of income has turned into a major piece of the US economy.

    As we help our younger clients plan for retirement, we often hear, “Let’s not plan on Social Security, I don’t think it will be there by the time I retire.” While we understand where this attitude is coming from, we don’t think it reflects reality.

    Here’s why:

    • Social Security is funded by a separate payroll tax (FICA) that comes out of paychecks up until an individual reaches $160,200 in earned income (2023). That means, that for the first $160,200 each earner makes, 6.2% goes to Social Security, with another 6.2% coming from the employer.
    • That’s a total of $19,864 that goes to Social Security for someone who earns $160,200.
    • These amounts are then paid out directly to retirees, survivors, and disabled individuals.

    As long as there are people working in the United States, there will be money going into, and then out of Social Security.

    “But what about the trust fund?”

    • As discussed above, Social Security is funded directly from payroll taxes. Up until very recently, the ratio of working to non-working Americans had been high enough that Social Security benefits were fully funded each year.
    • However, as Baby Boomers retire and birthrates continue to decline, this is changing. If payroll taxes are not enough to current obligations, the difference is paid by the asset reserves in the Social Security trust fund. As more and more workers retire, the trust fund is expected to be depleted.

    By the most recent estimates, the trust fund assets will be spent down by 2034. At that point, Social Security would officially be insolvent.

    “That’s what I mean! Once Social Security is insolvent, I won’t get any benefits!”

    But what does insolvency actually mean?

    • Assuming no legislation is passed to shore up the program, all benefits will be cut to about 79% of what they are today.
    • 79% is not 0%. Far from it, in fact, 79% is still solid amount of guaranteed income that the younger generation can plan on as a piece of their overall retirement picture.

    “That’s it? That doesn’t sound as bad as what I’ve read in the news.”

    No, it doesn’t. For younger workers who have plenty of time to factor such a possibility in their long-term planning, the potential reduction would not be life changing. A relatively modest increase to retirement savings would make up for the potential shortfall.

    In reality, Congress will be forced to act, there will likely be changes to Social Security at some point. These changes will probably make sure that current benefits are not cut, and that Americans with no time to adjust will not have the rug pulled out from under them. For younger Americans, the fact remains that as long as we have workers and payroll taxes, Social Security will be there in one way or another.

    Disclaimer: This analysis could certainly change pending action by Congress. We are in no way trying to predict the future, but we believe this analysis is reasonable based on the current landscape.

    Chuck Zuzak
    About the Author

    Chuck joins Confluence Financial Partners with 13 years of experience in the financial services industry, most recently as Director of Financial Planning at JFS Wealth Advisors. At a fundamental level, Chuck’s passion for financial planning stems from the desire to help clients connect their personal values and purpose with their financial resources.

    Pittsburgh

    412-391-0377
    chuck.zuzak@confluencefp.com
    Email Chuck Zuzak

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    Chuck Zuzak

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  • Stock Market Recap: March 2024

    Month in Review

    • Stock and bond markets rallied during March, with broadening of results- large cap value stocks (+5.0%, Russell 1000 Value TR Index), small cap stocks (+3.6%, Russell 2000 TR Index), and international stocks (+3.3%, MSCI ACWI Ex-USA NR Index) finished the month ahead of large cap growth stocks (+1.8%, Russell 1000 Growth TR Index).
    • Economic data continues to look strong in the United States. The Federal Reserve also confirmed their forecast of three 0.25% interest rate cuts in 2024.

    Time to Look Beyond Cash?

    Last month we discussed the difficulty in forecasting changes in interest rates. During March, investors spent the month aligning their outlook with the Federal Reserve’s guidance, which remains some level of interest rate cuts sometime later this year. While the exact timing cannot be known, we do know that historically there have been opportunities to shift out of cash investments near peak interest rates.

    Going back to the six previous cycles since 1984, investors have been better off investing in bonds, US stocks or a balanced portfolio compared to staying in cash during the 12-months following the peak level of interest rates. Forecasting the exact time of peak interest rates/rate cuts is fruitless, but for long-term investors there is an opportunity to look beyond cash.

    Source: Bloomberg, FactSet, Federal Reserve, Robert Shiller, J.P. Morgan Asset Management. The 60/40 portfolio is 60% invested in S&P 500 Total Return Index and 40% invested in Bloomberg U.S. Aggregate Total Return Index. The S&P 500 total return figure from the 1984 period was calculated using data from Robert Shiller. The analysis references the month in which the month-end 6-month CD rate peaked during previous rate hiking cycles. CD rate data prior to 2013 are sourced from the Federal Reserve, whereas data from 2013 to 2023 are sourced from Bloomberg. CD subsequent 12-month return calculation assumes reinvestment at the prevailing 6-month rate when the initial CD matures.

    What’s on Deck for April?

    • The Federal Reserve meets at the end of April, they are expected to hold interest rates constant. Investors will look for updates around the timing of interest rate cuts and balance sheet changes during the presentation. 
    • The inflation report and jobs report for March will be watched by investors for signs of continued progress on the inflation front, and for any weakening in the jobs market.
    William Winkeler
    About the Author

    Bill has more than 15 years of experience in the investment industry, most recently as Managing Director of Investments at a private wealth management firm. In his role at Confluence, Bill chairs the Investment Advisory Committee and develops and implements investment strategy for clients of the firm, as well as communicates investment content with clients.

    Pittsburgh

    724-719-6600
    bill.winkeler@confluencefp.com
    Email Bill
    March-2024-Market-RecapDownload

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    William Winkeler

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  • Is Your Family Financially Prepared for the Unexpected?

    If you were gone tomorrow, would your family be financially OK?

    That is a jarring question, and one that most of us try to avoid.

    As difficult as this scenario is to consider, however, we owe it to ourselves and our loved ones to be able to answer the question with certainty.

    Below are some points to consider:

    • Estate Plan
      • Do you have up to date wills, trusts, and other applicable documents? Have you gone through the documents in the past 5 years? What has changed since they were written? Is it time for an update?
      • Does your estate plan help and encourage family collaboration while safeguarding relationships? Many a family has been torn apart by disputes regarding an inheritance.
    • Life Insurance
      • Do you have life insurance in place? Is it enough so that your spouse and children would not have to worry about money when you are gone?
      • We can’t control very much in this situation, but we can control the windfall that our dependents would receive if we die unexpectedly.
    • Communication
      • Do your loved ones know the structure of your estate plan? Do they know what your expectations are for the money? If you have young children, this may be a conversation to have with your spouse and the person who would be the legal guardian for your children. If you have adult children, this could be a family meeting where the plan is fleshed out in more detail.
      • Studies show that aging parents have a difficult time bringing up finances with their children. This is understandable, but it needs to happen at some point. Your adult children can handle it, and the risks of them knowing how much money the family has pale in comparison to the burden that an unexpected inheritance can be.
    • The Things No One Thinks About
      • Passwords, document locations, lock boxes, safe combinations, utilities, iPhone lock codes, and anything else that your loved ones would need.
      • If you knew you weren’t going to wake up tomorrow, what information would your loved ones need to handle everything? Consider a tool like everplans to help with this.
    • Trusted Person
      • Is there someone in your life whom trust to be there for your family if something happens to you? We work with many clients who view us as that person who they trust to be across the table from their spouse should this situation arise. We are often one of the first calls that is made, because we know where everything is and we’ve helped clients through this before.

    So, we ask again.

    If you were gone tomorrow, would your family be financially ok?

    If you aren’t sure, take time to reflect. We at Confluence Financial Partners have been helping clients answer that question in the affirmative for decades, and we would be honored to be able to help you as well. We know this isn’t a pleasant thing to work through, but it’s worth it, and you owe it to those you love.

    Chuck Zuzak
    About the Author

    Chuck joins Confluence Financial Partners with 13 years of experience in the financial services industry, most recently as Director of Financial Planning at JFS Wealth Advisors. At a fundamental level, Chuck’s passion for financial planning stems from the desire to help clients connect their personal values and purpose with their financial resources.

    Pittsburgh

    412-391-0377
    chuck.zuzak@confluencefp.com
    Email Chuck Zuzak

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    Chuck Zuzak

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  • Your Financial Guide for a Career Transition

    Navigating a job change is a significant undertaking, especially for those with considerable assets and financial interests. This guide is designed for professionals, including executives, physicians, and business owners as they work through the intricacies of transitioning to new opportunities.

    Here are some important things to consider:

    • Review your compensation plan.

    Understanding your compensation package is important, because compensation is usually a huge part of transition decision. Beyond salary, bonuses, and deferred compensation, it’s essential to assess the long-term value of your total package. For example, if you are re-locating, consider the impact of cost-of-living adjustments.

    Don’t forget to evaluate non-monetary benefits such as professional development opportunities, wellness opportunities, and overall company culture. All of these can have a significant impact on your job satisfaction and overall well-being.

    • Evaluate your retirement plan.

    What do I do with my old retirement plan(s)?

    Roll into an IRA: Working with a financial advisor can help you determine if rolling into an Individual Retirement Account makes sense. The benefits of this option include having more investment flexibility and control. Typically, you will have a broader range of investment options compared to an employer sponsored 401(k) plan. This allows you to diversify your portfolio while also consolidating accounts if you have multiple 401(k)s with previous employers. If you work with an advisor, you will have professional investment management as well as financial planning available. A good financial advisor will also be able to help with tax and estate planning matters, though he/she cannot replace your CPA or attorney.

    or

    Move your old retirement plan to your new employer: Most employer sponsored retirement plans allow for assets from previous retirement plans to flow into the new plan. This is certainly better than leaving the assets with your old employer’s plan, but this option likely does not include the investment options and flexibility as well as professional management and planning found if you roll assets into a managed IRA. That said, it may be your lowest cost option.

    • Understand changes to your health insurance.

    Be aware if there is a waiting period for health insurance with your new employer. If that is the case, look into extending your previous employer’s coverage through COBRA if there is a gap.

    Have a solid understanding of the different health insurance plans offered by your employer and consider factors such as the network of providers, deductibles, co-pays, coverage for prescription drugs and preventative care to name a few.

    Take advantage of  tax-advantaged accounts like Flexible Spending Accounts (FSA)s and Health Savings Accounts (HSA)s if your employer offers them.  These accounts can help you save money on qualified medical expenses. Additionally, HSAs can serve as an additional retirement savings vehicle.

    • Review Stock Options and Equity Compensation Programs.

    If your previous employer offered stock options or equity, be sure to understand the vesting schedules and the implications of leaving.

    Equity compensation can significantly increase your wealth, but also add complexity to your financial and tax planning picture. For example, the decision to exercise stock options should be timed to optimize tax implications and align with your broader financial goals, risk tolerance, and time horizon. Working with a financial advisor can help you make an informed financial decision.

    A job transition is an important time and opportunity to reassess your financial strategy. By taking a look at your compensation, retirement planning, healthcare options, and equity compensation, you position yourself for both peace of mind and long-term success.

    If Confluence can be a resource to you during this transition, please reach out. We are happy to help!

    Chuck Zuzak
    About the Author

    Chuck joins Confluence Financial Partners with 13 years of experience in the financial services industry, most recently as Director of Financial Planning at JFS Wealth Advisors. At a fundamental level, Chuck’s passion for financial planning stems from the desire to help clients connect their personal values and purpose with their financial resources.

    Pittsburgh

    412-391-0377
    chuck.zuzak@confluencefp.com
    Email Chuck Zuzak

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    Chuck Zuzak

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  • Finding Balance: Living in the Now, Learning from the Past, and Planning for the Future

    Are you focused on the past, present, or future?

    What is your time ratio? Here are a few thoughts to consider:

    10% – Past
    We benefit greatly from history, experiences, and lessons from our past. Unfortunately/fortunately, the past is over. We can no longer control or change it. Hold on to the positive experiences and valuable lessons, and leave the regrets behind.

    60% – Present
    It’s really all we have! Living in the moment is a gift. Waking up to the now and having a “be where your feet are” attitude is an important perspective to keep as you focus on the present. Let’s be careful not to allow fear, or distractions like cell phones, to steal our moments.

    30% – Future
    Happiness comes from believing your best days are ahead. Planning reduces stress, creates energy and increases the likelihood of a bright future. Don’t wonder if your best days are ahead of you, take concrete steps so that you can be sure!

    Let’s encourage each other to learn from the past, live in the present and believe in the future.

    We are grateful to be a part of your journey!

    Greg Weimer
    About the Author

    At the core of his personal and professional life, Greg is passionate about helping individuals and families maximize their lives and legacies. His dedication to this mission shines through as an individual, wealth manager, and leader.

    McMurray, Naples

    724-271-8801
    greg.weimer@confluencefp.com
    Email Greg

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    Greg Weimer

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