Generational Wealth Planning

 In 1914, Britain and Germany each had a horse-based cavalry 100,000 men strong. However, mechanized warfare was coming into its own and featured things like guns that spit bullets, mass produced tanks and trucks and communication on wire. Beyond the horrors of “The Great One”, witnessing the old world rubbing against the new during WW1’s horrors framed that generation of souls. I was born in 1970 and I had it easy. I was not a brave soldier and my generation thankfully dodged fighting in an all-encompassing World War.

I grew up talking on a red-ish wall mounted rotary phone with a long curly-cue chord. Now, my kids are what they call “digital natives” replete with handheld supercomputers distributing Snapchat videos across their “Network”. It’s humbling to consider the things that human ingenuity can create – both good and bad. The world keeps moving.

Energy’s Impact on Wealth Planning

In early January, my team and I went to a 2020 Macro Economic outlook forum. Hosted at The Umstead, a well-appointed local hotel in nearby Cary, NC, the forum featured three speakers including an economist Brian Westbury. Some call him a “perma bull.” I just see him as someone who articulates that the world keeps moving and the moves need to be framed against history (24sec-1min 56sec).

For several years he has been harping on the impact technology is having on all aspects of our lives and the economy. He points out that not long ago in his native Chicago, airline passengers picked up their paper tickets at airline storefronts on Michigan Avenue. By no means is he the only one pontificated on this subject but his focus on fracking and how this technology is changing the global energy landscape is worth noting.

Turns out, the U.S. produces a lot of energy. According to the EIA, in September 2019, the United States exported 89,000 barrels per day (b/d) more petroleum (crude oil and petroleum products) than it imported. I recall, as a child of the 1970s sitting in long lines waiting to put gas in our car because OPEC cut the U.S. from their tap. A decade ago, the United States was importing 10 million barrels per day more petroleum than it was exporting. While the United States remains a net importer of crude oil, long-running changes in U.S. trade patterns for both crude oil and petroleum products have resulted in a decrease in overall U.S. net petroleum imports.

BTW – Net petroleum trade is calculated as total imports of crude oil and petroleum products minus total exports of crude oil and petroleum products. It should be noted that although the United States currently imports more crude oil than it exports, it exports more petroleum products than it imports, resulting in net total petroleum exports. In other words, due to a major technological breakthrough that we scaled up, the U.S. is further examining its role as the world’s hegemon. The world keeps moving on.

The Ole Gronski Portfolio and Being Fiduciary

Alex Mihajlov, one of Olde Raleigh Financial founders, has been a long time subscriber of a financial industry newsletter put out by Nick Murry. Nick is a very straight talking, pragmatic guy who believes that as an advisor, you need to think deeply about engaging clients who resonate with you. He likes to say, and I am paraphrasing here, that an advisor’s boat has limited numbers of seats and not all potential clients can be saved from the floods.

Nick is also famous in our industry for coining the phrase like “The Gronski”, sometimes also known as the “The Ole Gronski”. This is a generic term used to describe all sorts of cookie cutter retirement investments that are sold to the public.If you have invested in a “Target Fund” within your traditional or Roth 401(k) you have been touched by The Ole Gronski. Target Funds have an ample dash of Modern Portolio Theroy which more or less says when your young tilt more of your investments towards equities and less of fixed income (bonds). As you age, lighten up on equities and add more fixed income. It’s the fund you choose when you don’t know what to choose. Its message, if you don’t have the time or incling to create a business plan for retirement choose a Target Fund.

While the Ole Gronski is an industry joke – wealth planning for your retirement & legacy are serious matters. Being an investment advisor held to a fiduciary standard matters. We must do what’s in our clients best interest. And therefore, we are not believers in The Ole Gronski no matter its form. We attract humans who recognize that the world keeps moving and The Ole Gronski may not meet their needs. They require a more hands on approach when it comes to the business of their retirement. Access to a broader pallet of equity investment strategies than that of advisors from the broker dealer or bank sales channels.

Health Care Expenses & “I’ll just call your husband” 

A few weeks ago a client called in wanting to set up a few accounts with us on her ageing Mother’s behalf. The client explained that she was her Mother’s caretaker and with that had full power of attorney over her affairs, financial or otherwise. Her Mother’s long time advisor started to question withdrawals out of her accounts for what was legitimate and expected elder care expenses for a woman in her nineties. She told him her mother’s expenses were none of his concern and that she was moving the accounts to another advisor.  His response: “Well, I’ll just call your husband about this!”

Wow. Turns out, not all those kinds of “gentleman” sporting that kind of attitude got on the one way train back to 1975. Unreal. The world keeps moving.

RMD’s Don’t Stretch – Beneficiary IRA’s Just Changed.

On December 20th, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act became law. You may not have heard of it but its impacts are far reaching.

Congress actually got something done and constructed a bill (now law) that helps entrepreneurs, students and student loans as well as part-time workers save for retirement. It also has some big changes with regards to retirement tax planning around required minimum distributions (RMD’s).

One of the biggest changes is the elimination of the Stretch IRA may impact the financial planning of many individuals. Prior to the SECURE Act,  beneficiaries of inherited IRA’s were allowed to “stretch” the RMDs throughout their lifetime. Now, those who inherit an IRA, 401(k), or other defined benefit plan, must take all distributions within ten years of inheriting the account. Certain groups are exempt from the changes. For more details check out this blog post.  

Ah yes, the world keeps changing.

Note:  All information contained herein is derived from sources deemed to be reliable but cannot be guaranteed.  All economic and performance data is historical and not indicative of future results.  All views/opinions expressed in this article are solely those of the author and do not reflect the views/opinions held by Advisory Services Network, LLC. This article may contain links to articles or other information that may be contained on a third-party website. Advisory Services Network, LLC is not responsible for and does not control, adopt, or endorse any content contained on any third party website.


Trevor Chambers
Private Wealth Manager