Always Be Learning

Many of you have roles in your jobs that require you to go to industry specific conferences.

Alex, Blake and I attended two or three industry conferences every year. They feature Economists’ predictions and views, Portfolio managers explaining how they manage risk and reward and “rah rah” sales consultants with new ways to gather new clients. You go to enough of these over the years and you can come away with a few conclusions. One, you may get one or two good takeaways in the form of actionable pieces of information that can, if utilized, make a difference in your life, business and success. Two, conferences are mostly about getting out of the office, hearing other perspectives and crowded airports.

A new wrinkle, however, has appeared in the past few years. Neuroscience. Lectures on how the brain makes decisions or how to measure a person’s hard work or “grit”. One speaker pursued a Ph.D. in Happiness at Harvard and became depressed while doing so. One scientist told it like it is, “our minds are a fairly chaotic collection of vagueness that will languish in that state unless you willingly lead it out into the light”. To help combat its tendencies the science suggests the Jedi mind trick of “framing”. Framing is THIS THING you must do NOW that leads to the meaningful NEXT THING you must do to help you arrive at the FUTURE GOAL. Framing, done right, emphasizes you considering specific actions like, for example, automatically funding your Roth 401k every pay period.

Framing leads with the future you want firmly settle in your mind. Recently, a close friend confided to me that he had accumulated some consumer debt and at fifty-nine years old he had very little savings. He asked if he should focus on the elimination of the debt first and then once debt free he could start saving. I asked him to frame the debt as his past and savings as his future and to consider a plan that included both savings and debt elimination. The savings could be small, very small, at first. But, the specific act of saving had to happen in order for his new framing to work.

A Lesson from Este Lauder

Occasionally, in life, grenades get tossed in our fox holes. To survive, you have to quickly figure out how to get the grenade or yourself out of that hole. Framing the challenge as it relates to your final goal helps navigate them. For example, Este Lauder and her cosmetics juggernaut faced an early challenge of getting her perfume on the shelves of the most exclusive department store in Paris. After traveling all the way from New York City the lead buyer of the store refused to even meet with her. The “official lore” is the next day she walked into the department store and quietly poured an entire bottle of her perfume on the rugs around the womens department. Over the course of the next few weeks more and more customers keep asking sales clerks for the name of the perfume and soon enough Este Lauder’s perfume was on the shelf. Aggressive move? Yes, for sure. Might even get her in jail today. But, the buyer, under pressure from customers wanting the mysterious scent, acquiesced and added Este’s perfume to the shelves.

Bottom line she found herself making a bold action because she framed the challenge in terms of the end goal. No snooty perfume buyer was going muck up her march towards world domination. In that moment, she knew her bold actions would create a multiplying effect. She removed the grenade from her foxhole.


We spend time framing and then reframing with our clients. As a boss once told me when it came to staff you train once and remind them again many times. When we onboard a new client we review that over the last 40 years the S&P 500 experienced average intra year declines of 14%. Kind of amazing if you think about it. Funny thing is, most clients don’t remember the “cataclysmic” declines much past a few months of them occurring. Right now, we are just finishing up 2019 year end client meetings. We asked several if they remember that one year prior the S&P had bottomed out 20% down? Most don’t recall. They react this way not because they are ignorant or forgetful but because they are simply human. Maybe, financial advisors are actually historians. Past performance does not dictate the future returns but framing economic cycles and market gyrations against history is one of the best tools in our tool kit. 

The SECURE Act – A Tax Storm Rising

On May 23, 2019 the House of Representatives passed the SECURE Act with a vote of 417-3; the Senate approved it on December 19th and President Trump signed it on December 20th. The SECURE Act – Setting Every Community up for Retirement Enhancement – represents the most significant retirement policy legislation since the Pension Protection Act of 2006. It will modernize and expand defined contribution retirement plans (i.e.401ks) AND significantly reframe tax planning going forward for investors.

While there are several changes, the one that could really sting some is the provision that does away with the “stretch IRA” for non-spouse beneficiaries who are more than 10 years younger than their spouse. Inheriting Mom’s $1mil IRA just went from a taxes trickle to a taxes fire hose. The Stretch allowed you to maximize the life of the IRA by keeping as much money as you could in the account. This staved off large Required Mandatory Distributions and their close cousin – tax bills.

There are some exceptions including a child that has not reached maturity age as well as a when a beneficiary is a surviving spouse, disable or chronically ill or not more than 10 years younger than the deceased IRA owner. If you are passing down a large IRA or in the pipeline of ineriting one a tax-grenade just got tossed into your foxhole.

 Looking Ahead

Changes like The SECURE Act can be framed by a world-class personal financial plan. This Fall, with the Act in mind, we started reworking clients plans to see what impact it would have on those with $1M or more. Let’s just say that for those of you out there that have not really thought about tax planning before it may be time. Re-assignment of beneficiaries and distribution planning are part of the game. With today’s relatively low tax brackets, bracket management in conjunction with Roth conversion is worth considering. Also, if you the option to choose a Roth IRA or a 401k but have so far not done so it may be time to start.

If you are interested in hearing more about the SECURE Act and tax-smart investing please feel free to reach out to us at 919.861.8212.

All views/opinions expressed are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.  Advisory Services Network, LLC does not provide tax advice.  The tax information contained herein is general and is not exhaustive by nature.  Federal and state laws are complex and constantly changing.  You should always consult your own legal or tax professional for information concerning your individual situation.   The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.  Indexes are unmanaged and do not incur management fees, costs, or expenses.  It is not possible to invest directly in an index.