Financial Advisor as a Coach

by Scott Blakemore

Pete Pultz was my Jackson High School swim coach.  As a student, I was certain there were training days he actually enjoyed watching us suffer through a rigorous workout.  But now, as an adult, I can appreciate that he made us better physically and mentally.  In my opinion, that is a sign of a great coach – one that pushes you, helps you see things you cannot and builds your confidence. 

The best athletes and musicians in the world have coaches because they know there is always more to learn.  Consistent training and having a great coach matter in your financial life, too.

How does a Financial Adviser act as a coach?  I’m glad you asked.

A Financial Adviser, acting as a fiduciary in your best interests (not theirs), can help you understand your financial future, anticipate things you may not have considered, and educate you on important issues.  But probably the most important ‘coaching’ moments occur during the difficult and emotional times that come with investing and life. 

Of course, it is rewarding to see a client accomplish more than they imagined.  Every coach loves those moments.  But coaches also deal with losses too, and it is sobering to help someone whose plan didn’t turn out as they had hoped.  In my experience, it is in the moments of illness and death that having someone help you navigate your critical financial decisions proves most valuable. 

Coach Pultz helped me be a better swimmer, but more importantly, a better person.   My life is blessed because he was in it.  I am sure you have people that have influenced you, too.  Don’t be afraid to seek help and coaching from professionals that will push you, help you see things you can’t, and build your confidence in your future.  Remember the best in the world still use coaches, so why shouldn’t you? 

Wisdom For The Ages

Wisdom For the Ages
by Mark Olson

What the world needs now are people and businesses that know how to live well in this fascinating, exasperating world. Eugene Peterson described it as living in robust sanity. Anyone for robust sanity these days?

The road to living well in robust sanity is paved with wisdom. Wisdom is the ability to discern inner qualities and relationships using practical knowledge and experience. I believe the high wisdom is always accompanied by heavy doses of empathy and humility. Through the centuries, wisdom is associated with attributes such as justice and compassion and virtues such as integrity and benevolence.

What follows is a collection of 20 paraphrased wise sayings that originated thousands of years ago and have stood the test of time.

• When you grab all you can get, the more you get, the less you are.

• Set your heart on a life of understanding.

• Find all the good trails.

• Keep your feet on the tried and true paths.

• Don’t lose your grip on love and loyalty.

• Wisdom is better than all the trappings of wealth.

• A thick bankroll is no help when life falls apart.

• Good character is the best insurance.

• The world of the generous gets larger and larger.

• A life devoted to things is a dead stump.

• The more wise counsel you follow, the better your chances.

The diligent find freedom in

their work.

• The thinking of principled people

makes for justice.

• Truth lasts.

• A plain and simple life is a full life.

• The mark of a good leader is loyal followers.

• Never walk away from anyone who deserves help.

• Sell everything and buy wisdom.

• The ways of right-living people glow with light.

• Never take love for granted.

My personal favorite is “find all the good trails” because it reminds me that every day, we each have the opportunity to learn and grow from all who have come before us. My hope is that each one of these wise sayings spurs you on to do and be more.

See you along the way.

Covid Update

We pray that you and your families have managed to stay well and safe during this continuing pandemic and that you are able to connect with friends and families in new and creative ways this holiday season! Please remember that your GuideStream Team remains available to serve you via phone, email and Zoom. 

The end of the year brings a perfect time to remind you of some financial “housekeeping” items:

  • 2020 IRS Form 1099-Rs should be mailed to all retirement account holders by January 31, 2021. More detailed tax reporting Information will be mailed to our GuideStream clients in January, along with the annual Black Diamond Performance reports.
  • If you are currently subject to RMD’s, the CARES Act enables you to defer your 2020 RMD. For more information, please see: CARES ACT & RMDS for 2020 – GuideStream Financial. If you have not yet, and wish to defer your 2020 RMD, please contact Debb or Lori at (800) 325-8975.
  • The SECURE Act passed into law in December 2019 pushed the Required Minimum Distribution age out to 72. To find out more, please see our article at Secure Act & Your IRA – GuideStream Financial
  • It’s a good time to take a look at the Beneficiaries on your account and make sure everything is as you wish it to be. Recent changes in the SECURE Act may affect your beneficiaries. To make changes or for additional questions, please contact Lori or Debb at (800) 325-8975.
  • If you haven’t had a chance to explore our BD3 client portal, please feel free to watch our tutorial: Black Diamond Account Access Training – YouTube
  • Make sure you’ve made your maximum yearly contribution amounts to your IRA and employer retirement plans.
  • Check your flexible savings accounts (FSA) and make sure you have used the funds in them before the end of the year.
  • And last, but certainly not least, don’t forget to donate to your favorite charities!

Budget Is Not A Swear Word!

Just like you know how to put gas in your car, where your air pods are, and how to work your Keurig, you should know how to control your money! Money is a tool.  A budget is a plan for your money. Without a plan, your money controls you instead of you controlling it. Here are some steps to get you started: 

  1. Track your expenses for 3 months. No rules, just keep track. 
  2. Sort those expenses into categories. Things like: Eating Out, Groceries, Pet Care, etc. 
  3. Figure out your average monthly expense in each category.
  4. Now label each category as one of the following:
    1. Obligations (things you must pay, like debt or tuition), 
    1. Needs (stuff you need, like electricity, groceries, or internet if you work from home), and 
    1. Wants (all the other stuff). 
  5. Add up all the averages. Is that more than your net income? If it is, then it’s time to downsize. Start with things labeled “wants”. Can you downsize those to fit the whole picture into your income? If you still need more, move on to “needs”. You might try shopping for new car insurance, getting on a budget plan with your utility company, or buying a gift card to the grocery store you prefer. When it’s empty, time to get creative with what’s left in the pantry!

A word of encouragement related to Step #5: Think about the kind of life you want to have. Don’t restrict yourself in certain areas because you feel like you should. If you want to spend $300 a month on clothes, that’s okay, but recognize that you may have to give up money in other categories to make that a reality. Ask yourself what you really want and arrange the maximum amount in each category accordingly. 

  • Once you’ve whittled down your wants and needs so all expenses fit within your income, that’s your budget! Continue keeping track of your expenses. There are many apps and software programs that can help with this (like, Mint.com or EveryDollar). You could also build a good old-fashioned spreadsheet. 
  • Review the averages every 2-3 months. Maybe you’re consistently overspending in 1 or 2 areas? Then see what you could wiggle around in your other categories to make more room in the ones where you spend more. Maybe it would be helpful to be more specific in certain categories, so you can more easily expose overspending. Remember that 2-3 months is a long time in budget world. So, keep an eye on things and don’t be afraid to rework it if it’s not working for you. 
  • Don’t forget to factor in savings. If you have goals you’d like to save towards – either short-term or long-term – fit those into the budget. Then you’re managing your present and making steps toward the future! 

Remember that your budget is YOURS. Don’t let outside influences pressure you into making it look a certain way. You do need to pay your bills, but even those can be different from household to household. Your budget is a tool, not a millstone around your neck or a cage for your spending. It’s a way for you to get in control of your money and get some financial freedom!   

A reprint of the June letter that went to our clients with investment accounts…

Our minds are racing these days. The arrival of the coronavirus has added unprecedented health and economic challenges to our everyday lives. Racial tension, cries of injustice, civil unrest, and protests have further challenged the status quo in America. It is easy to feel overwhelmed with such large issues and no easy answers. 
 
We could all use a bit more faith these days. Faith takes our eyes off the here and now and gives us much needed perspective. It is “being sure of what we hope for and certain of what we do not see.” Faith gives us hope that science will bring a solution for coronavirus, just like it did for smallpox. Faith also gives us hope that we will triumph over injustice. 
 
You have placed great faith in GuideStream Financial to help guide you financially through uncertain times. You have trusted us to help you make wise long-term decisions regarding how to invest for future needs. We help you steward your resources for decades, or even generations, to fulfill your financial and legacy goals. Keeping this perspective is critical for success. 
 
In the midst of all that is happening today, did you watch the SpaceX/NASA launch? What an amazing display of human creativity and ingenuity! It was an exciting and proud moment for innovation, collaboration, and our nation. Just one small example of this was the way the rockets returned to earth and landed themselves perfectly on a drone ship near Ireland, despite challenging choppy seas. 
 
Creative individuals working together enabled to SpaceX/NASA launch to happen. What was once thought impossible became possible due to a long-term plan and individuals committed to overcome the hardest obstacles they encountered along the way.  
 
Your financial plan has no knowledge of current events; it is oblivious to the “news of the day.” Instead, it thrives on long-term planning and a steady hand. At GuideStream Financial, our counsel is never based on emotion or the “news of the day.”  It is rooted in discipline, patience, faith in the future, and time-tested financial principles. We are here to provide you with wise counsel and the best opportunity for success. Remaining steady in uncertainty is our specialty.
 
We are already seeing glimpses of hope in these unprecedented times. Humans are created in God’s image and are therefore amazingly resourceful. We will get through all of this and come out better on the other side. If you are uncertain of your plan, let’s talk. We want you to have the faith, hope, and confidence that comes through understanding your needs and concerns. We are here for you.
 
With patience and faith in the future,
Your Team at GuideStream Financial

COVID UPDATE

As we all find ourselves taking incremental steps back toward re-opening and recovering, the team at GuideStream wanted to give you an update. As most of you know, during the recent pandemic, the GuideStream Team stayed on the job, albeit a bit more creatively! We are so thankful that, with the help of technology, we had the opportunity to stay engaged with you via email, text, fax, phone and Zoom.  

So, where do we go from here? Our management team is still continually evaluating and assessing the safest way to return to “business as usual”.  So, what does that mean for you? Due to ongoing safety concerns, we will still be limiting the amount of traffic into our main office for the near future. We will still be available to you via all methods listed above and, if you would like to drop something off at our office, please just call from the parking lot and we will come to you. 

The difficult decision, in the interest of safety, was made to cancel the GuideStream Client Picnic in July. We’re planning to be back bigger and even better on July 31st, 2021. Our staff is fully functioning here to serve you daily. 

Thank you for allowing us to continue helping you Navigate Life’s Currents! 

Our Response to COVID-19

Helping You Navigate Life’s Currents Over the past seven years, we have methodically attempted to prepare you for what we are all currently experiencing and hearing in the financial news. While the exact events can never be predicted, history has shown that times such as these occur in a fairly regular cycle. The following paragraph was included in the quarterly letter we sent April 18, 2017:

We feel that this is an ideal time to remember that bear markets are temporary declines greater than 20%. They occur an average of once every 4 years and last approximately 17 months. We are highlighting those realities this quarter so that when a temporary decline of more than 20% occurs in the future, you will understand that this is normal and temporary and therefore not succumb to financial journalism’s phenomenon we refer to as the “apocalypse du jour”.

After 11 years (7 years longer than normal), we officially entered bear market territory on March 11, 2020. The coronavirus (COVID-19) and a price war on oil were the catalysts. While not minimizing the seriousness of the current challenges, we hope the following thoughts help put the present realities into perspective.
WHAT WE KNOW

• Real-life investment success can simply be defined as avoiding “The Big Mistake”, i.e. selling holdings during a significant temporary downturn. Remember, this too shall pass.
• Markets respond most negatively to fear and uncertainty. Both of these factors are running at extremely high levels which correlate to the magnitude and pace of the current temporary declines. We have no control over uncertainty; however, we can (and should!) have perfect control over how we respond to it.
• The disciplined practices of asset allocation, diversification and rebalancing are built into your portfolios. Together, these comprise the wisest way to achieve your long-term investment objectives across all market cycles. This is where our disciplined investment principles and practices are focused.

OUR RECOMMENDATIONS
• Avoid “The Big Mistake” by being patient and maintaining the long-term investment plan and strategy we have helped you develop.
• Don’t hesitate to call our team for any reason. Part of our primary responsibility is to assist you through times like this. We are here for you and welcome any questions and conversations you would like to have.

It is a humbling honor for our team to advocate on your behalf by being objectives guides, wise investment counsellors
and “steady hands on the tiller”. We count it a sacred privilege to be entrusted with such important matters at all times,
but especially in these days.

With Appreciation,
Mark Olson, CIMA®
President/ Chief Investment Officer

Please remember that past performance may not be Indicative of future results. Different types of investments involve varying degrees of risk, and there c.in be no assurance that the future performance of any specific investment, Investment strategy, or product
(in duding the investments and/or investment strategies recommended or undertaken by GuldeStream Financial, Inc. (“GuldeStream Financiar), or any non-fnvestment related content, made reference to directly or indirectly fn this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or appl!cabte laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or Information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from GuideStream Financial. Please remember to contact GuideStream Financial, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. GuldeStream Financial is neither a law firm nor a certified publ!c accounting firm and no portion of the newsletter content should be construed as legal or accounting advice. A copy of the GuideStream Financial’s current written disclosure Brnchure discussing our advisory services and fees continues to remain available upon request.

CARES ACT & RMDS for 2020

THE CARES ACT & REQUIRED MINIMUM DISTRIBUTIONS FOR 2020. . . 

On March 27, 2020, The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was enacted. What does this mean for Required Minimum Distributions (RMD)? Under normal circumstances, federal laws typically require individuals of a certain age (historically age 70½ but recently changed to age 72) to take mandatory distributions from their retirement savings. Under the CARES Act, these mandatory distribution requirements are waived for 2020.

Individuals Already in Distribution Status
For individuals who were already in required distribution status (generally, those who turned 70½ prior to 2019), the law waives the mandatory distribution requirement for 2020.

Individuals Just Beginning RMDs
For individuals who reached age 70½ during 2019 and were required to take their first RMDs by no later than April 1, 2020, the law waives the mandatory distribution requirement for 2020 and, in some cases, the 2019 mandatory distribution as well. Only individuals who did not take their 2019 RMDs during 2019, however, are eligible for a waiver of the 2019 RMD.

RMD Relief Also Available for Beneficiaries
In addition to providing RMD relief for plan participants and IRA owners, the law provides temporary relief from the required distribution rules that apply to beneficiaries of deceased plan participants and IRA owners.

For beneficiaries, the form of relief varies depending on (1) when the plan participant or IRA owner passed away and (2) the beneficiary distribution option to which the beneficiary is subject. The 2020 RMD is waived for beneficiaries taking some form of life expectancy distributions. For beneficiaries subject to the 5-Year Rule, the 2020 calendar year is to be excluded when determining the applicable 5-year distribution timeframe.

Although the mandatory distribution requirements have been waived for 2020, individuals still have the option of taking distributions at their discretion. The law change merely provides IRA owners, plan participants and certain beneficiaries with the option of foregoing all or part of the required distribution amount if they wish to do so. Individuals who have already taken mandatory distributions during 2020 but would have preferred to leave the amounts in their IRAs or workplace retirement plans may wish to consult with a tax advisor to determine if some or all of their distributions may qualify either for conventional rollover treatment or for repayment treatment as a Coronavirus-Related Distribution.

If you would like to defer your 2020 RMD, please contact either Debb or Lori at (800) 325-8975.

Secure Act & Your IRA

HOW MIGHT THE RECENTLY PASSED SECURE ACT AFFECT YOUR IRA?

A piece of legislation passed into law in December 2019 has changed the landscape for IRA accounts. The “Setting Every Community Up For Retirement Enhancement” (SECURE) Act is complex web of new rules and updates to old rules pertaining to retirement accounts. If you own an IRA, we wanted to make you aware of some of the recent changes:

  • Required Minimum Distribution (RMD) age now pushed out to age 72
    • If you have already started RMDs under the previous 70 ½ rule, then you must continue.
    • If you turn 70 ½ in 2020, you can defer your RMD start until you’re 72
    • PLEASE NOTE: Congress recently passed the CARES Act (Coronavirus Aid Relief and Economic Security Act), which permits individuals to forgo taking their 2020 RMD if they have been impacted by COVID-19. This option is open to individuals who have already begun taking RMDs, those who would have begun in 2020, and those who have extended their first RMD from 2019 into the first quarter of 2020. Please contact us if you have questions, or if you would like to postpone your RMD until 2021. 
  • IRA contributions: previously, IRA contributions were not allowed after an individual reached age 70 ½ . Under the SECURE Act, an IRA owner can contribute at any age, if he or she has earned income.
    • Please note that you cannot contribute for 2019 if you were age 70 ½ or older as of Dec. 31, 2019.
  • Qualified Charitable Distributions (QCD) amounts:
    • After reaching age 70 1/2, you can make qualified charitable contributions of up to $100,000 per year directly from your IRA.
    • Deductible IRA contributions made for the year you reach age 70 1/2 and later years can reduce your annual QCD allowance.
  • We would encourage you to review the beneficiary arrangements on your IRAs:
    • If someone other than your spouse is your beneficiary, he/she will have to fully distribute the IRA money within 10 years. Unless your beneficiary is:
      • your minor child
      • a disabled individual
      • a chronically ill individual
      • an individual who is not more than 10 years younger than you
    • Thankfully, the new 10-Year Rule offers some flexibility around the timing of distributions. Funds can be withdrawn in any amount, at any time over the course of the 10-year term – as long as the entire amount is withdrawn by the end of the 10th year.
    • All the funds withdrawn are taxable to the beneficiary as income.
  • If you are currently taking required distributions from inherited money, according to your life expectancy, you may continue to do so. This change is only effective for beneficiaries of IRA owners who pass away in 2020 and beyond.

Please note that additional clarity on some of the details of the SECURE Act is forthcoming from the Federal government.

Your GuideStream Financial advisor would be glad to review your unique situation with you and answer any additional questions you may have. GuideStream Financial does not offer tax and/or legal advice, so it may be advisable to contact your CPA and your estate-planning attorney if you have one.

As always, please contact us with additional questions, concerns, of if you need to make changes to your account.

Please remember to contact GuideStream Financial, Inc. (“GuideStream Financial”), in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose, add, to modify any reasonable restrictions to our investment advisory services, or if you wish to direct that GuideStream Financial  effect any specific transactions for your account.  A copy of our current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

Four Options For Your 401(k) When Changing Jobs

FOUR OPTIONS FOR YOUR 401(K) WHEN CHANGING JOBS.

Changing jobs is one of the biggest life decisions you can make and doing so presents an important financial decision: What should you do with your former employer’s 401(k) plan? There are four options you have and understanding the pros and cons of each will be crucial to find the best fit for your situation.

Keep the funds in the old employer’s plan

While this option certainly requires the least amount of effort, not all investors are eligible to leave funds in their former employer’s plan. If your vested 401(k) funds amount to less than $5,000, your former employer has the right to require you to remove the money in some fashion. That $5,000 balance can include all of your contributions, all vested employer contributions, and all investment earnings on those funds. Additionally, your former employer may require that you withdraw your funds once you reach the plan’s average retirement age.

Outside of being low-effort, keeping funds in your former employer’s plan can be beneficial if you need more time to research alternative options, if your new employer’s plan requires employees to reach a certain length of employment to enroll, or if you had access to exceptionally good investment options.

Before deciding to let the funds stay put, make sure there are no additional fees associated with the plan for non-current employees and that your investment options remain the same.

Roll the funds into your new employer’s plan

It has become far more commonplace for 401(k) plans to accept rollovers from past employers without penalty but there are considerations to make before doing so. First, be sure that you are satisfied with your new job and that you will be there for a reasonable amount of time. Should you decide the new position is not for you, it can be a headache transferring funds around. Second, compare the investment options in your new employer’s plan to your old one. Once you have transferred the funds out of the old plan, there is no going back to your previous options.

If you decide to roll over into your new employer’s plan, ensure that the transfer is made directly into the new plan – also known as a trustee-to-trustee transfer. This allows your funds to remain tax deferred and avoids the temporary 20 percent penalty that would be applied if you were to cash-out your retirement savings and then deposit them manually into your new employer’s plan. Now, you would get that 20 percent back once filing your tax return at the end of the year however, there is no need or benefit to putting up the money in this scenario. To avoid that penalty, make sure that rollover checks are written out directly to the new plan or plan administrator, not yourself. It would be wise to contact your company’s plan administrator for details on this process.

The biggest perk of rolling your retirement funds into your new employer’s plan is for simplicity’s sake. Often, investors can lose focus on the performance of their investments with a former employer. As long as your investment options are comparable at your new position, rolling over into one main account is a good practice.

Transfer the funds into an Individual Retirement Account (IRA)

Coming from a former employer’s plan can lead many investors to overlook the option of transferring their funds into an Individual Retirement Account (IRA). An IRA can be set up through nearly any bank or other financial institution and allows a greater range of investment options than the ones chosen by most employer 401(k) plans. While the differences between a 401(k) and an IRA are numerous, the main advantage to your employer’s 401(k) is the matching of contributions up to a certain percentage.

It is important to note that you will not receive a match on the funds you transfer from a previous employer, only on the funds you contribute once enrolled in the new plan. Because of this, there is no real reward on choosing to transfer into your employer’s plan over an IRA unless the plan’s

investment options are more attractive. With an IRA, you are in the driver’s seat to choose which funds, stocks, or bonds you invest in and there will be more effort required as a result. On the other hand, you may encounter some savings depending on what plan fees are associated with your employer’s plan.

Just like rolling over into your new employer’s 401(k), you will want to execute a trustee-to-trustee transfer if choose the IRA option. The same fees will apply if you withdraw funds before transferring to your IRA.

Cash out the funds

Lastly, cashing out your funds from your former employer’s plan is the option that nearly every financial professional would advise against. The same penalties discussed above that apply to an early withdrawal cannot be made up in your tax return as they can with a 401(k) or IRA transfer and will be a pure loss. Despite the losses, 2013 research from Boston Research Technologies found that just over 30 percent of workers changing jobs will elect to cash-out their retirement funds.

The only two instances where cashing out should become an option is if you are over the age of 55 or need the money for an immediate purpose. If you terminate your employment in or after the calendar year in which you turn 55, you will no longer be subject to an early-withdrawal penalty for that employer’s plan. In the case of a former employer’s plan that you left before age 55, those funds will still be subject to this penalty. The potential workaround is if these funds were transferred into a post-55 employer’s plan.

For any 401(k) questions, please don’t hesitate to contact your GuideStream Financial Advisor.

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