Year End Planning 2020
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Soundtrack to a Financial Advisor's Life – Alex Mihajlov, Senior Private Wealth Manager at Olde Raleigh Financial Group Discusses Year End Planning
Trevor Chambers:
CHAMBERS: Hey everybody. This is Trevor Chambers from Olde Raleigh Financial Group. We continue on with our soundtrack to an advisor’s life blog and podcast. And today we have an in-house guest with Mr. Alex Mihajlov. And today we want to talk about some year end planning. What is on your mind, Mr. Mihajlov on that?
MIHAJLOV: Well, Trevor it’s great to see you.
CHAMBERS: Good evening.
MIHAJLOV: Good evening and welcome.
CHAMBERS: Welcome.
MIHAJLOV: This is probably one of the most important part — times of the year right here. Because this is the time that we really go into full out year end planning mode. And I think this year due to the pandemic, it is probably one of the most complex and important times to have a year end planning session with your, at minimum your financial advisor.
CHAMBERS: I would say that’s a great idea. What specifically are you thinking about that people really start — need to consider this year? What changes went on?
MIHAJLOV: Well people ask me all the time if I’m worried about the stock market. I’m not as worried about the stock market as I am about tax brackets.
CHAMBRS: Right.
MIHAJLOV: And I think people have a historic opportunity to take advantage of tax brackets because I don’t think there’s anywhere for tax brackets to go ultimately than up. So, I think this is a great time for people to take a hard look at their tax bracket and make sure they’re topping it off by potentially pulling money out of retirement and IRA accounts and either converting them to ROTH or not converting them to ROTH but giving them out at this level tax brackets.
CHAMBERS: Can I stop you right there?
MIHAJLOV: Sure.
CHAMBERS: What do you think most CPAs are going to say to that?
MIHAJLOV: It’s a mixed bag. Some CPAS will agree with that and some CPAs are very focused on getting the client the lowest possible tax bill every year they can. And I’m trying to get clients to look into the future a little bit. Not just this year but over the next five to ten years. What I think that definitely tax brackets will head to the upside. With all the money that ‘s been pumped into the economy, somebody’s going to have to start paying for that.
CHAMBERS: Tell me about one little wrinkle, RMDs, do you take them? Do you not? What’s going on there?
MIHAJLOV: So, people this year, there’s a lot of rejoicement (sic) because people don’t have to take their Required Mandatory Distribution and I’m not sure that’s the right — necessarily the right strategy. But the right strategy is to make sure that your tax bracket that you have gotten your income up to the top of whatever bracket you are. Assuming you’re in the 25 percent tax bracket or lower and you want to make sure that you’ve used that tax bracket all the way up because I think that you’re — you’re brackets are going to be creeping up over time. And we can show that to people. You know, you also want to make sure that — you also want to make sure that you’re — you’ve made your IRA contributions if that makes sense. Your retirement plan contributions have been made. You know, is your — we’re seeing a lot of year end planning around long-term care this year. A lot of people are seeing big premium increases form their long-term care providers. Let’s talk that out, figure that out. The, you know, this is a great time of year to maybe have a family meeting when families are getting together for the holidays. Maybe having a family meeting so you start advising the next generation about what’s going on with your finances. I think that’s a great plan as we all age to have another layer of somebody overseeing what’s going on or at least aware of it. You know, have you made all your charitable contributions. Have you contributed to the charities that mean something to you? Not — not — least nor lest is, you know, have you balanced your gains and losses. I’m shocked at the number of advisors that don’t take time to go through a clients account and tell them let’s take some loss and offset some gains, or offset future gains if you don’t have any gains this year.
CHAMBERS: And why is that important? Why is taxes —
MIHAJLOV: I just think if you’re going to invest and take risks, you ought to keep as much of the return after taxes, you possible can.
CHAMBERS: It kind of makes sense to me. I don’t know.
MIHAJLOV: It does. But we see — we do a lot of business because a lot of advisors don’t do that. So, the — this is probably the, you know, the other thing with this pandemic is people are looking at their life insurance more than they have before and so this is a great time to review life insurance. Life insurance rates have changed dramatically over the last ten years. In a lot of cases having dropped a lot. People are sitting on old policies that probably need to be reviewed to see if they’re still suitable and needed etcetera, etcetera. On top of that are your accounts beneficiary designated correctly, you know —
CHAMBERS: Often times not.
MIHAJLOV: Right.
CHAMBERS: In the industry we find that it’s a lot of people
MIHAJLOV: A lot of people.
CHAMBERS: — not doing it correctly.
MIHAJLOV: I mean, we’ve had instances where we’ve heard of people leaving money to their former spouse, you know —
CHAMBERS: Yeah.
MIHAJLOV: — which is not a good — it’s not a pleasant conversation to have. So, I think having a year end meeting this year is probably one of the most important years to have it.
CHAMBERS: Well, on that note, we’ll end it here for this week and so everybody think about year ends and all the taxes, ramifications, things like updating your be.
beneficiaries. All right. Thank you so much, Alex. I appreciate it. Have a great weekend.
MIHAJLOV: You’re welcome. Thank you.
CHAMBERS: All right, we’ll talk to you soon.
MIHAJLOV: Yep, bye.
CHAMBERS: Thank you, bye.
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Call Alex, Blake or Trevor. 919.861.8212
Alex Mihajlov:
The arch of his career has now landed his firm, Olde Raleigh Financial, to become a fee-based, Independent Advisory firm. Prior to that Mr. Mihajlov was a branch manager at A.G. Edwards, Wells Fargo and Raymond James. His career has been an evolution and, in turn, his perspective on service has evolved. “My team and I have experienced the large brokerage houses and banks. While they have carved out their spot in the marketplace, I can say it is not for us. We have evolved and we tend to attract those who have evolved away from cookie cutter to a world of customization. They want collaboration. They wanted to be listened too. They want a relationship and we want them to be excited about our relationship.”
Trevor Chambers:
Trevor joined Olde Raleigh Financial Services in January of 2015 and his primary role is new business development and marketing. Prior to joining the firm, Trevor spent 12 years working at his family’s restaurant, Raleigh’s Bella Monica Cucina & Vino. “Exceptional service, no matter the industry, is paramount and we attract clients who value and take comfort in being taken care of.”