Happy Thanksgiving!
As Thanksgiving approaches, we have been thinking of the many things we are grateful for. This year, we are incredibly grateful for the many people in our lives.
We would like to say “THANK YOU!” to all of our clients, family, friends, and professional colleagues. We are thankful for our relationships with all of you. NorthAvenue would not be where it is without your friendship and support.
In addition to saying thank you, we want to show you that we are continuously taking steps forward to achieve our goal of providing exceptional service and always striving to improve our client experience.
Technology Developments
TD Ameritrade Updates AdvisorClient®
AdvisorClient® from TD Ameritrade Institutional has received an upgrade. The platform has been redesigned to streamline the user experience to allow more efficiency when accessing:
- Upcoming cash activity
- Retirement contributions, distributions, and RMD information
- Position level gains and losses
- Tax document e-delivery enrollment
- Balance history chart
In addition to these updates, users will continue to have secure access to their account values, balances, positions, and more.
Ally Bank Introduces “Buckets” For Online Savings Accounts
If you have an Ally Bank Online Savings account it is likely that you may have received an email from them announcing that they have created “buckets” for Online Savings accounts and they will be released on December 7th, 2019, according to Ally Bank.
Instead of opening different savings accounts to budget dollars for emergencies, home improvement, vacation, education, vehicles, etc., the Online Savings account is now capable of creating up to 10 savings buckets within the account so that money can be set aside for your savings goals.
Check out their announcement if you would like to learn more!
Investment News
Will FAANG Continue to Steer the Market?
Facebook, Amazon, Apple, Netflix, and Google have experienced remarkable growth over the past decade - so much so that they are commonly referred to by the acronym FAANG. As the performance of these 5 stocks outpace the rest of the US market and their market share becomes increasingly large, some investors question whether the tech industry has led us into a new era of investing. However, a review of historical data shows us that it is common for only a handful of companies to drive market performance. Furthermore, history has shown us that companies cycle through the top performers’ ranks and don’t stay at the top over the long-term. This is an argument for a diversified portfolio, as we can’t know if past top performers will remain on top. To learn more about how FAANG and market leaders affect portfolio returns, check out this article.
The Yield Curve
CERTIFIED FINANCIAL PLANNER™, Danielle Seurkamp, a member of Kristen’s GAP (Gen-Y Advisor Peer) Group, explains the Yield Curve by comparing bonds to CDs. Per Danielle, “Think of bonds like CDs. You let someone borrow your money for a period of time (the years to maturity) in exchange for interest (the yield). The longer they use your money, the higher interest rate you can expect to earn. That's all a normal yield curve shows; the yield goes up as the years to maturity do. An inverted yield curve occurs when the opposite happens; long-term lending pays less than short-term. This is rare and is often viewed as a predictor of tough economic times ahead.”
Vanguard November Market Perspectives
Vanguard’s Market Perspectives offer bite-sized insight into current and projected US and global economic behavior. Key takeaways from their latest article are:
The likelihood of a shallow recession in 2020 is more than 50%, but the risk of a more severe recession is only 10%.
The Fed may cut rates once more in 2019 and make at least one further cut in 2020.
Vanguard expects unemployment rates to remain broadly stable and labor markets to remain relatively tight in the year ahead.
To read more, check out the article.
Tax Law Updates & Proposals
IRS Proposes New RMD Life Expectancy Tables to Begin in 2021
The IRS has recently released their proposed regulations to update the life expectancy and distribution period tables, used to calculate Required Minimum Distributions (RMDs) for owners of retirement accounts, as well as their beneficiaries. Retirement account owners and their beneficiaries are living longer lives and have been ‘forced’ to take distributions of their funds based on a time table with a short life expectancy.
Check out this article from Michael Kitces that further describes the IRS proposed changes and their effects.
401k Limit Increases for 2020
The IRS announced that the 401k contribution limit has been increased to $19,500 for tax year 2020 in Issue Number: IR-2019-179, posted on IRS.gov. Not only will this add the potential to contribute an additional $500 to 401k plans, but it will also impact employees who participate in federal government Thrift Savings Plans, most 457 plans, and 403(b) plans.
Additionally, the catch-up contribution limit increased from $6,000 to $6,500 for employees age 50 and over, who participate in the plans above.
We will be keeping this in mind for clients participating in these plans during 2020 tax planning.
IRS Provides Tax Inflation Adjustments for Tax Year 2020
The 2020 tax year annual inflation adjustments have been announced by the IRS. There have been adjustments to more than 60 tax provisions and tax rate schedules.
Some of the many adjustments include:
A raise in the standard deduction for single and married tax payers.
The Failure to File penalty increases to $330.
The adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit increased by $2,000.
For more details about these annual adjustments and other tax items of great interest to most taxpayers, check out the IRS Issue Number: IR-2019-180.
Medicare Part B Premium & Income Limits for 2020 Released
The Centers for Medicare and Medicaid Services recently announced two important figures for 2020: next year's Part B base premium, and the income brackets for Medicare Part B surcharges.
According to the announcement at CMS.gov, the base premium for Medicare Part B, which covers doctors’ fees and outpatient services, will rise from $135.50 per month to $144.60 per month.
While the base premium is higher, the income limit for that base premium has risen as well. Now those who in 2018 had Adjusted Gross Income of less than $87k filing single, or $174k married filing jointly, will pay the $144.60 premium. In 2019, those limits were $85k and $170k, respectively.
Continuing Education
FPA Monthly Meeting – Corporate Bond Ratings
Chandler and T.J. recently attended the monthly meeting of the Financial Planning Association Central Ohio Chapter, where the topic was corporate bond ratings and how they are determined.
Brandon Zureick CFA of Johnson Asset Management in Cincinnati shared with the group that two major factors influence a company’s bond rating: its capacity to repay debt, and its flexibility to withstand changes in economic conditions.
Zureick said that bonds are divided into two groups based on their rating: investment-grade bonds and speculative bonds, also known as high-yield or junk bonds. He said that as one moves down the ratings scale, yield tends to rise, but so does the chance of the company defaulting on their debt. Bonds rated AAA are the highest-quality, while bonds rated BBB- are the lowest bonds that are still considered investment grade. U.S. Treasury STRIP bonds are rated AA+, just a notch below AAA.
Zuerick shared how his firm has found a “sweet spot” in the ratings scale. He said that bonds in the A- to BBB+ range on the Standard and Poor’s ratings scale are both high-quality and offer attractive yields. The bond funds that we recommend for client portfolios include bonds in this ratings range.
NAPFA Monthly Meeting - Elder Abuse
This month’s topic of discussion at the NAPFA meeting was Elder Abuse. As you may know, the reporting of elder abuse is a legal requirement for financial advisors and it is important for us to understand how to recognize it and have processes in place to take action.
Chandler & T.J. attended a presentation by Tamara Miller, Policy Developer for the Bureau of Child and Adult Protection and the Ohio Department of Jobs and Family Services. Miller explained the statutory definition of Elder Abuse and indicators of maltreatment. She also shared the process of how and where to make a report and what happens after a report is made.
It is reassuring that many professions, especially financial advisors, have best interests in mind and are looking out for our elderly community.
NorthAvenue Sponsors Charities
Going, Going, Gone!
Early this month, Kristen and her husband, Jeff, attended the annual Going, Going, Gone! live and silent auction hosted by Scholarship Opportunities for Success (SOS). SOS believes in helping women of low income succeed in meeting their education and employment goals, provide better lives for themselves and their children, become better role models, become free of dependence upon public
welfare programs, and begin to stop the cycle of poverty in their families and communities.
Green Gala 2019
The Ohio Environmental Council hosted the 2019 Green Gala on November 16th. Chandler and Kristen attended with their other halves and a few guests. This year’s event celebrated the organization’s 50-year anniversary since its founding in 1969. The theme was centered around 1969, and guests were encouraged to dress groovy and were treated to live music. NorthAvenue donated our services as a silent auction item in support of the event! We enjoy supporting the OEC as their hard work advocates for a healthier, more sustainable Ohio.
Mark Your Calendars
November 29th - December 2nd: Brown Thursday, Black Friday, & Cyber Monday
December 3rd: Giving Tuesday
December 7th: Medicare open enrollment for 2020 closes. Review plan options at Medicare.gov.
December 15th: Charitable gifts of stocks, bonds and mutual funds should be submitted to ensure they are completed during this calendar year as they take a few days to process.
December 31st: Last day to take Required Minimum Distributions
Hosting this year's celebration?
Planning for Visitors
Don’t try to do everything last minute. Plan ahead with a houseguest checklist to get your home feeling cozy and inviting.
Turkey 101
Need a refresher on how to make a turkey? Check out Food Network’s Alton Brown’s Thanksgiving Turkey Survival Guide and Roast Turkey recipe.
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