“After two volatile years, investors can make moves to protect their assets from the impact of political decisions, ongoing market uncertainty, as well as possible rising inflation and a falling dollar in 2010,” said Robert DiQuollo, CFP, CPA and Presiden
Madison, NJ (PRWEB) December 8, 2009 –-
Brinton Eaton Wealth Advisors, a boutique wealth advisory firm, today announced its “Top 10 for 2010” – ten moves investors should make in the coming year to preserve and grow wealth as well as successfully adapt to changing government fiscal policy, financial regulations and markets. The list calls for investors to re-evaluate their risk tolerance, minimize tax impacts, refine their asset allocations, fine-tune their plans for college and retirement, and revisit their estate planning and charitable giving. The firm also strongly recommends that in light of the many shifts still taking place in the financial services industry, investors conduct a complete due diligence review of their financial advisors.
“After two volatile years, investors can make moves to protect their assets from the impact of political decisions, ongoing market uncertainty, as well as possible rising inflation and a falling dollar in 2010,” said Robert DiQuollo, CFP, CPA and President of Brinton Eaton Wealth Advisors. “We highly recommend they consult their financial advisors and make these Top 10 Financial Moves to protect and grow their wealth.”
#1 – Time for a Risk Tolerance Checkup
Before the 2008 market meltdown, you may have thought you had a handle on your investment risk tolerance. Now that you’ve lived through the worst financial storm in almost a century, your views may have changed. For example, you may have a different outlook on how much short-term volatility you can comfortably withstand. Talk to your financial advisor about how your risk tolerance may have changed, and decide how that should impact your investment portfolio.
#2 – Revisit Your Asset Allocation
The financial crisis may have made you question the level of risk you are willing to take. However, don’t let the great recession of 2008/2009 divert you from the fact that every portfolio needs diverse allocations to weather future storms. Your strategic asset allocation should be immutable to changes in the economy and the markets, but not to changes in your life. Some of those changes are gradual, such as aging or deteriorating health, some sudden, such as loss of a job, birth, death, divorce, unexpected dilemmas or windfalls. Talk to your financial planner and make sure that your asset allocation reflects your REAL risk tolerance.
#3 - Strengthen Your Retirement Plan
Although markets have shown signs of recovery, there’s a good chance that your portfolio has not rebounded to levels that will allow you to retire on schedule. The only way to know for sure is to ask your financial advisor to provide you with a lifetime cash flow analysis, to determine if your present and future needs will be met by the assets you have now. Make sure your advisor integrates their investment and tax advice with your overall financial plan.
#4 – Adjust Your College Savings Plan
Taking an aggressive approach to college planning may have seemed like a good idea four or five years ago, but with portfolios now down substantially, you’ll have to revise your approach. If you have children in their early teens, now is the time to determine if you need to start saving more or invest your college fund differently. Your financial planner will guide you on how to balance the need for growth with a solid risk management strategy.
#5 – Consider a ROTH IRA Conversion
As of 2010, anyone, regardless of income, can convert all or a part of a traditional IRA to a ROTH IRA. A ROTH IRA can be a sensible move for someone who not only wants to see assets grow tax free, but be able to withdraw, or not, at will with no tax consequences. It is also a great vehicle for inheritance since it would provide your heirs a stream of tax-free income. To do the conversion, however, you must pay taxes on the entire amount converted, which can have a hefty price tag. It’s a big decision, and one that should be made together with your financial planner and estate attorney as well as your accountant.
#6 – Look Ahead on Income Taxes
In 2010 the Bush tax cuts are likely to expire. Although all tax brackets may not be affected, current government policy, such as health care reform, would indicate that people at higher income levels may have a significantly higher tax burden going forward. Talk with your financial advisor and your tax professional to plan income to the best of your ability for 2009 and 2010 — especially if you are self-employed or have executive compensation options to consider.
#7 – Get Ready for Changes in Capital Gains Taxes
The Obama Administration has been clear about its intention to increase capital gains tax rates. With this in mind, you might consider managing your portfolio appropriately. For example, suppose you have a large gain in a stock that you have held for more than a year and were considering selling at some point, and you do not have sufficient capital losses to offset the gain. You should consider selling that stock in 2009, when Federal long-term capital gain tax rates are as low as they are likely to be for some time. Make sure to talk to your tax professional on any state implications
#8 - Update Your Estate & Gift Planning, Considering Changes in Estate Tax Laws
The estate tax laws are far from static. While the IRS is currently operating under “sunset provisions” that allow an estate to leave $3.5 million to other than a spouse tax free, if Congress does not act, the tax law expires on 1/1/2010 and will revert to the $1 million threshold on January 1, 2011. The best way to protect your children or other heirs from steep estate taxes: review your estate plan annually to ensure your documents incorporate the appropriate provisions to minimize the tax hit under current law if you and/or your spouse die. You should also periodically review your trustees, custodians and executors. Also, as many assets have declined, you may need to adjust the dollar amounts you are leaving to your heirs; you may want to consider replacing those amounts with percentages, so if your estate value goes up or down, it won’t affect how your assets are distributed.
#9 – Explore Tax-Friendly Ways to Give
With interest rates low, there are innovative ways to gift assets using Grantor Retained Annuity Trusts (GRATs). GRATs are a financial instrument used to make large financial gifts without paying a US gift tax. There are other things to take advantage of, such as low-interest-rate loans to your children. Work with your financial advisor to see if any of these options or others will work for you and your family.
#10 – Complete a Due Diligence Review of Your Advisor
Given the financial scandals and market turbulence of the last 18 months, now is a good time to conduct a due diligence review of your advisor. You may think you know your advisor, but what could be damaging are issues you never thought to ask about. Sit down with your advisor and ask: 1) Where your assets are custodied. Be wary of an advisory firm that’s its own custodian, and be sure your assets are housed with an established third party. 2) Whether your advisor has ever been disciplined for unethical or improper conduct. You can check the advisor’s history for violations or disciplinary actions with state and federal agencies and industry organizations. Checking is free and usually can be done online. And, 3) How your advisor’s clients did in the last down market. You want to ensure that your advisor is as focused on wealth preservation as it is on wealth accumulation.
About Brinton Eaton:
Based in Madison, NJ, Brinton Eaton is a boutique advisory firm with a long history of serving affluent individuals and their families across multiple generations. The firm helps its clients protect, grow, administer and ultimately transfer their legacy of wealth through a full range of integrated services, including lifetime cash flow projections, financial/tax/estate/retirement planning, investment management, charitable giving, and business succession planning. Brinton Eaton's clients tend to be corporate executives, professionals, entrepreneurs, and retirees with investable assets over $2 million. For more information, visit http://www.brintoneaton.com.
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