Client Memos

Is Your Current Asset Allocation Still Appropriate?

As the stock market continues to reach all-time highs, we want to encourage you to review your investable assets to make sure your asset allocation is still appropriate based on your goals and risk tolerance.

You may be asking yourself what you can do in today’s environment. We have outlined a handful of important steps:

  1. Review your investment goals and objectives, time horizon, and tolerance for market volatility. One’s financial picture and priorities can change over the years. It is best to optimize your asset allocation accordingly.
  2. Stay diversified across multiple asset classes and securities. Diversification amongst uncorrelated asset classes can provide downside protection during market corrections.
  3. Own quality assets. For example, we seek companies that have strong competitive advantages, strong balance sheets, and generate a lot of cash.
  4. Allocate to riskier assets only when you are being properly compensated to take on the additional risk.
  5. Temper return expectations going forward. Over the last decade, the US stock market’s average annual percentage return has been in the double-digits, significantly above its historical high-single-digit average annual return. This recent trend is not likely to continue forever, and returns over the next decade are likely to be more modest. In fact, some large institutional investors are forecasting mid-single-digit returns over the next ten years.

If you have questions on any of these above-mentioned steps and how they can be incorporated into your financial plan, please feel free to give us a call.

In the meantime, if you haven’t already done so, a great first step is to complete and return our *Risk Assessment document. We can then schedule a meeting to have an in-depth conversation about your asset allocation and address any financial planning questions you may have.

We take pride in working with our clients to help them achieve their financial goals, regardless of the macroeconomic environment.

All the best,

Your Team at Gamble Jones

*If you need the Risk Assessment Document please call 626-795-7583 or email us.

What is “Estate Planning”?

What is “Estate Planning”?  Estate planning is the process of understanding the ownership structure and the beneficiary structure of your assets to ensure your property is transferred to the desired parties upon your death in a headache-free and tax efficient manner.

In other words, how are your assets owned, who should inherit the assets, and are things structured to accomplish your wishes?  Furthermore, what are the tax implications of such transfers and how can Federal and State estate or inheritance taxes be mitigated?

What are some of the common estate planning tools?

  • Last Will and Testament
  • Beneficiary Designations and Transfer on Death (TOD) and Payable on Death designations
  • Trusts—both revocable and irrevocable—are customizable, and there are several types of trusts structures to accomplish your goals.
  • Healthcare Power of Attorney
  • Financial Power of Attorney
  • Business Succession Plans and Buy/Sell Life Insurance Plans

What are the most common pitfalls of failing to develop and periodically review your estate plan?

Probate: Probate can be a lengthy, expensive (fees are generally set by statute), and public process where the local court determines who shall receive your assets when a joint owner or beneficiary is not designated. This can be especially true in California; however, some States’ probate processes are more streamlined and efficient, particularly for small estates.

Incomplete or inaccurate beneficiaries: Your IRAs, 401(k)s, 403(b)s, Deferred Compensation, and Pension plans should have both a Primary and Contingent beneficiary. Even your home and individually owned assets may have a beneficiary using the “transfer on death” (TOD) or “payable on death” (POD) designations.

Variable Annuities: Non-IRA variable annuities can be poor estate planning tools as the cost basis does not “step-up” upon the death of the owner(s). Understanding the pros and cons of such vehicles before purchasing them is important.  With few exceptions, variable annuities have relatively high expenses and restricted liquidity.

Common Estate Planning “Myths”

Myth: A Will avoids probate.

Truth: Your Will does not avoid probate—the court uses your Will to give legal authority to your designated Representative (Executor) so that he/she may collect (marshal) your assets, pay all debts, taxes, and creditors’ claims, and distribute the remaining assets.

Myth: I won’t owe estate taxes because my estate is below the Federal exclusion amount.

Truth: Some States have inheritance taxes, estate taxes, or both. Understanding your State’s tax law is important. For more information, click here.

Myth: My Federal estate tax exclusion is automatically “portable” to my spouse. 

Truth: Federal law imposes an estate tax on the transfer of assets owned at death. Currently, the estate tax begins on estates valued at more than $11.4 million (as of 2019).  Since assets pass between spouses tax free, the tax exemption for a married couple is doubled (total of $22.8 million).  In order to take advantage of your spouse’s Federal estate tax exemption, you must file the 706 tax return. For more information, click here.

If your estate planning documents are complete, we recommend backing them up within the Vault within the Gamble Jones Client Portal.

If you don’t have an estate plan or haven’t reviewed it in several years, please contact us to review your unique situation. 

All the best,

Your Team at Gamble Jones

What is a “Fiduciary”?

“A fiduciary is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.”

– Justice Cardozo, Meinhard v. Salmon

In an age of information overload and more investing options than ever before, investors must be able to rely on thorough, unbiased advice from their financial professionals, especially in regard to investment advice.

While there are many financial services professionals and titles, only Investment Advisers are legally held to the fiduciary standard. Gamble Jones has been a fiduciary and Registered Investment Adviser (RIA) since our doors opened nearly 65 years ago.

So, before someone with whom you work hires an investment professional, please strive to understand their standard of care and incentives by asking two questions: “Are they a fiduciary?” and “How are they compensated?” 

Their answers may be enlightening.

Please give us a call if you have any questions

Sincerely,

Your Team at Gamble Jones

Get Planning with Gamble Jones

To better serve you and your family, we continue to invest in our services and technology. Over the past several months, we’ve invested in comprehensive financial planning tools and services to help you avoid potential pitfalls and reach your personal and financial goals. 

We believe all clients would benefit from a periodic review of their “financial house” and creating a roadmap to improve their chances for success. If we haven’t already discussed this service with you, please reach out to schedule a call or meeting with one of our Certified Financial Planners™ to create a financial plan or to focus on your most pressing planning concerns such as retirement income generation, tax planning, risk management, and/or estate planning.

As always, if your risk tolerance or investment objectives have changed, or if you’ve experienced a life-changing event over the past year, please contact us at your earliest convenience for a review.

We thank you for your trust and look forward to speaking with you during 2019.

All the best,

Your Team at Gamble Jones