Q2 FINANCIAL INSIGHTS TO ENRICH YOUR LIFE - Planning Alternatives
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FINANCIAL INSIGHTS TO ENRICH YOUR LIFE
Q2
2021
W
W EE LL C
CO ME
OM E
Years ago, my parents, siblings and I gathered in a If there are loose ends in your incapacity and estate
Maine hotel room. We had all come to New England plans, we can assist you. Our senior wealth advisors
from across the country for an event. While we were all have decades of experience in navigating these
together, my father called a formal family meeting. My discussions as well as a process for helping manage
parents wanted to discuss their wishes should they these critical conversations with empathy. We are
N AT H A N become incapacitated or pass away. It was a lengthy equipped to give your family a safe space to hold a
conversation that was difficult and heavy but also highly productive discussion and plan for the future.
M E R S E R E A U , C F P®
productive. The decisions we worked through – from
who was responsible for financial matters to how things If the pandemic taught us anything, it’s that life is far
were to be managed in the event of incapacity – during from predictable. If you’re having trouble initiating an
that pivotal meeting became powerful reference points estate planning discussion with your family, please
for our family. contact us for guidance. We are here for you.
Having held that meeting proved to be highly valuable On a lighter note, as Planning Alternatives continues to
after my father died and as my mother continues to deal grow and evolve, so does the look and feel of our
with Alzheimer’s disease. brand. Not only are we going to continue to provide
frequent communications about personal finances, we
I understand firsthand the importance of holding family are looking forward to unveiling our new website and
meetings. It’s one of the reasons that Planning logo. Please see our News and Events section for
Alternatives has focused in recent years on facilitating more information.
forthright conversations with our clients and their family
TA B L E O F circles. While topics such as death or disability or
Wishing you an enjoyable summer,
long-term care are certainly challenging, it’s ultimately
CONTENTS
far more challenging if you choose not to address them.
How to Protect Yourself Against 2
Fraudulent Push Notifications
When a loved one is sick or a family is grieving a loss,
you want everyone involved to be able to focus on care
News & Events 3
and support. You do not want family members
5 Nathan Mersereau, CFP®
Family Wealth Planning attempting to coordinate a hotbed of thorny unresolved
President
Investment Commentary 7 issues, bickering over financial accounts, or trying to
Disclosures & Footnotes 10 reconcile various opinions regarding healthcare.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 1
HOW TO PROTECT YOURSELF AGAINST
F R AU D U L E N T P U S H N OT I F I C AT I O N S
While most people now regularly watch for suspicious emails from scammers posing as trusted contacts or corporations,
savvy cybercriminals have turned to a new avenue to commit fraud: fake push notifications.
W H AT A R E P U S H
HOW TO PROTECT YOURSELF
N OT I F I C AT I O N S ?
Push notifications are alerts that pop up on devices 1. Scrutinize All Notifications 3.Review Device Settings –
to attract attention. They are small dialog boxes For one, smartphone and computer users should Especially Notifications
(i.e., windows) that usually appear in the upper scrutinize all notifications. If you receive a It’s prudent to regularly review the settings on
right-hand corner of your PC or laptop screen or at notification from a company you have not your PC/laptop and smartphone, including
the top of a smartphone screen informing you of interacted with in the past, it could be fraudulent. notifications. Think of it as a notifications audit.
something new for a site, app, or service. Do not click on it. Be sure to check your browser and smartphone
settings to determine what notifications are
Examples of these types of notifications include an Of course, the notification might not be fake, as it is turned on. Disable those that look unfamiliar and
alert for a sale at your favorite online store, an a common practice for companies to sell their those services which you no longer use.
announcement that a new email or WhatsApp customer lists to other companies who then send
message has arrived, a reminder prompting you to messages to those customers. Further, some One way to avoid fraudulent push notifications is
update your software or the publication of a recent websites automatically opt-in users to receive push to turn off notifications altogether or limit
article on a news outlet website. notifications even though explicit authorization was notifications to only apps you wish to hear from
not granted. regularly.
Fraudulent push notifications were first reported as
a phishing tactic in 2019, with one attack using In short, use your judgment when evaluating the A “spring cleaning” of push notifications can go
push notifications fraudulently designed to legitimacy of push notifications, and don’t be so a long way toward staying safe and secure
originate from Google Chrome. Since then, quick to click on them. It is best to err on the side online.
fraudsters have leveraged the logos from trusted of caution.
companies to create fake notifications,
encouraging users to click on what they think is a 2.Use Strong Passwords and Update
safe link. Furthermore, attackers also use security Antivirus Software
flaws in trusted apps to send “real” push Be sure to take protective measures online by
notifications that carry dangerous links or using strong passwords, changing them often, and
encourage users to share personal information. installing and updating antivirus software.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 2
NEWS & EVENTS C O M PA N Y R E B R A N D U P D AT E
In the coming weeks, you will notice some
differences when you interact with Planning
Alternatives and we want to make sure you are
not surprised.
The changes will be in our logo, on our materials
and will be noticeable when you log onto our
website. We are introducing a new look that we
think best reflects what we do for our clients and
how we stand out.
What will not change is our commitment to you.
We will work closely with you at every step of
your planning and life, taking the journey with
you. You will still enjoy the same relationships
here, with a team working on your behalf. We will
continue our ongoing education events and other
ways we can add value to the experience of
Planning Alternatives.
We look forward to our team sharing the new look
with you, in a variety of ways, and continue to
appreciate the trust you place in Planning
Alternatives.
Thank you for your feedback!
Thank you to all who took the time to complete
(EST) our survey via email recently, we sincerely
appreciate your feedback. We strive to bring you
the utmost value and are grateful that you
volunteered yourself to give us tools to better
serve you. Please do not hesitate to continue
communicating with us on how we can improve
our services and communication, we look forward
to hearing from you.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 3
WELCOMING OUR
NEW TEAM MEMBERS
K AV I SA DAS I VA N MADISON COIL AMANDA ABI-SAMRA
Intern Intern Marketing Officer
In his role as an intern, Kavi assists in creating Maddy assists with a variety of organizational Amanda is the Marketing Officer at Planning
financial plans, attends advisor meetings, and projects within the firm and is motivated by Alternatives. With a passion for client
helps organize client data. His eagerness to helping others. engagement and business development,
learn about the industry comes from his Amanda designs events and communications
aspiration to help people plan and save for a Maddy is currently a senior at Michigan State for our firm that engages our community and
better future. University, and studies Social Relations and adds value to people’s lives.
Policy at the James Madison Residential College
Kavi is an honors student pursuing a bachelor’s for Public Affairs. She is also involved on Amanda received an undergraduate degree in
degree in Finance from Michigan State campus at MSU, including being a third-year Marketing from Oakland University. She is a
University and expects to graduate in the spring member and Secretary of an A Capella group on life-long learner and constantly works to
of 2022. In his free time, he loves to play sports campus called “State of Fifths.” educate herself on evolving trends.
and spend time with his friends and family.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 4
F A M I LY W E A LT H P L A N N I N G :
T R A N S PA R E N T C O N V E R S AT I O N S A R E K E Y
FORMULATING A PLAN AND Family Lifestyle
ENCOURAGING COMMUNICATION The parents should disclose all family members to Planned travel, hobbies, and spending habits
When it comes to building and maintaining wealth whom they would like to bequeath assets. Family also have a place in family wealth planning
across generations, it is vital to formulate a solid plan. members may not necessarily be children; they discussions. These affect how much money
At Planning Alternatives, we believe this process could also be grandchildren, distant relatives, or the heads of the family will need to live
begins with candid and transparent conversations. even close family friends whom the parents would comfortably in retirement and, ultimately,
We find that even the most carefully designed like included in their estate plan. how much money they will leave as part of
strategy can fail if the plan is not clarified and their legacy.
embraced by all relevant family members. Work
Knowing when a transition to part-time work or 2. Financial Disclosure
Since 1983, Planning Alternatives has advised clients stopping work altogether helps identify a timeline Once the parents have completed the
on how to deal with the challenges of family wealth for income needs and prepare for lifestyle and living discussions outlined above, the next phase is
succession. We have refined our four-phase process location changes. for their wealth advisor team to organize the
and use a direct but empathetic approach to help information. This helps facilitate financial
clients optimize their wealth transfer plans and foster Expenses disclosures between parents, children, and
healthy communication. We pre-plan each meeting, All large, predictable expenses are vital parts of the other involved family members. It's important
gather information and design a strategy which initial discussion regarding family wealth planning. to note, this conversation is often
includes a concise action plan with a calendar for Examples include down payments for children's challenging, as many families do not enjoy
implementation. Our wealth advisors are here to help homes or funding the grandchildren's openly discussing money and wealth. Still,
every step of the way. college education. transparency is vital to advancing the family
wealth plan.
FOUR-PHASE PROCESS Health
1. The Initial Meeting – What we cover. The parents should also discuss health status at the This disclosure may include the presentation
The aim of the initial meeting between the parents initial meeting, as the cost of care has skyrocketed . of the parents' net worth. Funds in all
and their wealth advisor team is to review and Part of the financial plan might need to be allocated savings, checking, investment, retirement
articulate goals. To promote openness and clarity, we to healthcare provisions for one or both parents. accounts, and other financial products (e.g.
advise the first meeting does not include other family insurance or annuity policies) are included.
members. That way, the wealth advisors can get a Charitable Giving Apart from investments, other information
clearer picture of the family heads' wishes before Charitable giving is a topic that also should be (e.g. credit card statements and titles to
interpersonal relationships, and family politics have a discussed. There may be current obligations with a assets, including homes and property) needs
chance to complicate matters. Values and goals charity, or the parents may wish to consider to be presented. It is important to share
discussed in this meeting can include any or all donations to one or more charities as part contact information for all key professional
of the following: of their legacy.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 5
F A M I LY W E A LT H P L A N N I N G :
T R A N S PA R E N T C O N V E R S AT I O N S A R E K E Y
contacts, so the advisors can help coordinate attorney or allowing an adult child or other READY TO TAKE THE NEXT STEP TO FAMILY
efforts. responsible family member or friend, to assume WEALTH PLANNING?
responsibility for the execution of the will when the
Parents should not feel obligated to provide parent becomes ill, incapacitated, or dies. HERE’S YOUR ACTION LIST:
100% access to all financial accounts upfront.
1. Speak to your advisor to discuss
To ease the transition and maintain some initial 4. Family Wealth Planning Action List
Family Wealth Planning.
privacy, adult children can begin discussions Once the information outlined above is presented to 2. Gather all relevant information.
about taking over one or more financial tasks. all family stakeholders, the advisors can craft a 3. Schedule an Initial Family Meeting.
For instance, offering to help organize bill holistic family wealth plan with specific
4. Identify gaps in communication
payments may be a way to start the process of implementation steps. This plan could include
or knowledge.
transferring control. everything from reviewing succession planning for
5. Planning Alternatives customizes a
the family business, to allocating a portion of
detailed plan with an Implementation
3. Discussion of Incapacity or Death investable assets to long-term strategies designed to
Calendar.
While often a complicated conversation, be passed down to the next generation, to updating
6. Execute the Plan.
discussions regarding potential future estate documents to ensure all wishes are
incapacity and death are essential for family memorialized. An action list with a realistic
HOW PLANNING ALTERNATIVES
wealth planning considerations. implementation timeline will help intentions
CAN HELP
become a reality.
Transitions are never easy. Frequently, a family
As a common example, a family may need to
can benefit from the the holistic wealth planning
redraft estate plans. The estate plan includes Including everyone in the conversations helps ensure
conversations and solutions offered by Planning
the will, trusts, and the naming of an executor that all family members understand the vision and
Alternatives.
and beneficiaries. Since the original drafting of financial goals held by the heads of the family.
documents, several personal life events and Though there is no guarantee that family wealth can
Planning Alternatives uses a team-based
changes may have occurred. For example, the be preserved, these transparent conversations can
approach. As a result, you and your family can
death of a spouse, an illness, a divorce, the foster a more cooperative and harmonious interaction
access the entire firm's skill and experience to
birth of a grandchild (or several of these that helps families achieve their financial goals.
help guide these wealth planning conversations
instances) can all impact estate plans.
and make these transitions as seamless
Changes in estate and tax laws may also
as possible.
require parents to rewrite their will to ensure
that assets are preserved, managed, and
distributed as intended.
Families may consider designating a power of
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 6INVESTMENT
IN
C O M M E N TA R V E S T M E N T C O M M E N TA R Y
Y
J I M L O N G C F A , C F P® , C M F C®
Director of Investments
PERFORMANCE BONDS
Sparked by accelerating economic growth and a Longer-term interest rates fell from their first quarter
worldwide COVID-19 vaccination effort gaining steam, all highs; in response, bonds (Barclays U.S. Aggregate
major asset classes advanced in the second quarter. index) rose 1.8% during the quarter (typically, there is an
Inflation spiked in the second quarter, resulting from inverse relationship between interest rates and existing
several factors: comparisons to last year’s pandemic bond prices). The Federal Reserve signaled that
depths, supply and demand imbalances, and consumers short-term interest rates would likely remain near zero
signaling their improving confidence via increased through 2022, while leaving the door open to multiple Source: Planning Alternatives
spending on the services sector of the economy. rate hikes in 2023. While not our baseline expectation,
Commodity prices rose, helping alternative assets to the possibility of higher, persistent inflation remains a
performance leadership for the quarter. Bonds recovered threat to future fixed income returns.
a portion of their first quarter decline as interest rates A LT E R N A T I V E S
retreated somewhat from their first quarter highs. Most raw materials prices rose during the second
quarter; commodities from oil to lumber to copper
STOCKS moved higher. As supply and demand moved back
Stocks in all regions climbed higher in the second quarter. towards balance, some spot prices retreated from their
U.S. stocks (Russell 3000) returned 8.2% for the quarter, highs; still, commodities (Bloomberg Commodity) was
outpacing the 5.5% return of International stocks (MSCI the alternative category’s leading performer. Overall,
All Country World Index ex-U.S.). Large-sized (S&P 500) alternative assets rose 9.9% for the quarter, with Source: Planning Alternatives
U.S. companies outperformed their small-sized (S&P contributions from global real estate (FTSE
SmallCap 600) and mid-sized (S&P MidCap 400) EPRA/NAREIT Developed) and natural resources (S&P
counterparts, even as all three categories continued their Global Natural Resources), which also gained as
strong 2021 performance. Overseas, developed markets economic demand strengthened.
(MSCI EAFE) bettered returns from emerging markets
(MSCI EM) on a relative basis.
Source: Planning Alternatives
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 7I N V E S T M E N T C O M M E N TA R Y
J I M L O N G C F A , C F P® , C M F C®
Director of Investments
PERSPECTIVE
available workforce at any given time. After so Why is employment so important to understanding the
Arguably, the pandemic disrupted the labor market more
many discouraged workers left the workforce economy and markets? Aside from the obvious effect of more
than any other facet of the American economy. Think back
entirely during the pandemic, it is crucial that people working equaling more economic output, the answer
to January 2020: record low unemployment levels in the
this number returns at least pre-pandemic resides with the Federal Reserve, whose stated goals are
U.S. and expectations for continued full employment. While
levels. price stability (i.e. inflation around a certain target) and
it is easy to understand why employment dropped off a
maximum sustainable employment. While prices have
cliff last spring – a shutdown of the U.S. economy! –the
After more than 22 million workers lose their fluctuated based over the past year due to supply/demand
path forward is murkier.
jobs at the start of the pandemic, we have seen imbalances as well as extensive fiscal stimulus, longer-lasting
So many facts, figures, and statistics go into describing this a slow but steady return to work as the inflation generally requires a broad level of wage increases
sector that it is sometimes challenging to keep everything economy has reopened. U.S. employers have that results from full employment in a growing economy.
straight. Summarized below are some key labor market brought millions back to work; however, there When these conditions are present, the Fed starts raising
metrics along with their current status and directional remains a record 9.3 million job openings. Why? interest rates – which in turn can cause stock market
trend: One opinion is that the enhanced volatility.
unemployment benefits extended through
Labor force participation rate, defined as the percentage of September 2021 via the most recent legislation Based on the decline in the labor force participation rate, the
civilian population 16 and older that is working or actively signed into law by President Biden are to blame increase in the unemployment rate, the still-elevated number
looking for work, serves as an important measure of the for the persistently high numbers. By paying of first-time and continuing unemployment claims, and the
benefits recipients their standard record number of job openings – we still have a long way to
unemployment amount, plus an additional $300 go. Once the unemployment rate falls, and businesses are
per week, many argue that this provides a competing (in the form of higher salaries) for workers,
“ Hard work never killed anybody,
but why take a chance?
disincentive to work for those earning more to increasing wages will likely be the catalyst for Fed action.
“
– Edgar Bergen
remain idle. Another opinion is that childcare
logistical challenges and COVID health POSITIONING
concerns are keeping workers from seeking Our investment philosophy continues to be guided by our
employment. Whatever individuals’ reasons, the company’s four key tenets: asset allocation, global
fact remains that workers are proving very diversification, cost sensitivity, and marrying portfolios to a
difficult to find at the precise time when many financial plan. The current state of employment, and the
companies need them. Federal Reserve’s interpretation of the data, helps to inform
our opinion about which investments are currently most
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 8I N V E S T M E N T C O M M E N TA R Y
J I M L O N G C F A , C F P® , C M F C®
Director of Investments
appropriate, while always practicing a discipline However, close attention and analysis will be
of risk management. required for 2022 and beyond. The interplay
between employment, interest rates, and the
We expect that throughout the remainder of Federal Reserve will be superimposed on a
2021, employment metrics will improve, background of stretched stock and bond
economic growth will remain strong, and that valuations. Return expectations may need to be
inflation will fluctuate up and down as supply adjusted downward, and flexibility in search of
chains work their way back to normal. However, opportunities will be necessary. We are ready for
we feel this combination of factors will not be the challenge.
significant enough to force the Fed into
meaningfully altering their game plan of tapering Please contact us with
bond purchases beginning in late 2021 / early
2022 and beginning short-term interest rate
questions, or just to chat!
hikes in late 2022 or early 2023.
We continue to favor stocks over bonds on a
relative basis; earlier this year we effected a 5%
reduction in bond exposure in favor of stocks.
The post-pandemic combination of GDP growth,
corporate earnings growth, and continued
central bank low interest rate policy has been
Jim Long, CFA, CFP®, CMFC®
positive for stocks and likely will be through the Director of Investments
end of the year. Although obstacles remain
before the pandemic can be declared over,
especially within the labor market, we are
confident in our current investment positioning.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 9DISCLOSURES & FOOTNOTES
The content of this newsletter is intended for 1. Asset Classes: Domestic Stocks are represented by Foreign Developed Stocks are represented by the Managed Futures are represented by the
educational purposes only. Certain material in this the Russell 3000 Index, which measures the MSCI EAFE Index, a market capitalization weighted Morningstar Managed Futures category, which
work is proprietary to and copyrighted by Planning performance of the largest 3,000 U.S. companies index designed to track the performance of stocks in captures the performance of mutual funds that trade
Alternatives. Reproduction or distribution of this representing approximately 98% of the investable developed markets (excluding the U.S. and Canada). liquid global futures, the majority of which follow a
material is prohibited and all rights are reserved. U.S. stock market. International Stocks are Emerging Market Stocks are represented by the trend-following strategy. Performance data is from
represented by the MSCI ACWI ex U.S. Index, a MSCI Emerging Markets Index, which is a market Morningstar Office, Bloomberg and Tamarac Advisor
This material contains our current opinions and such market capitalization weighted index that is designed capitalization weighted index designed to capture View.
opinions are subject to change without notice. to measure the global stock market performance of the stock market performance of emerging markets.
Neither the information nor any opinion expressed developed and emerging non-U.S. markets. Long/Short Stocks are represented by the 2. Benchmark Performance: The components of the
herein constitutes a recommendation to invest in Alternative Strategies are represented by the Morningstar Long/Short Equity category, which benchmarks are listed below. Data from Tamarac
accordance with a particular strategy or a solicitation Morningstar Multialternative Fund Category, which captures the performance of mutual funds that hold AdvisorView/Schwab PortfolioCenter.
for the sale or purchase of any particular security. consists of mutual funds that provide exposure to sizable stakes in both long and short stock positions.
There is no assurance that any securities discussed different alternative investment strategies that may Long/Short Bonds are represented by the
herein will remain in an account’s portfolio at the time take short positions, invest in currencies, derivatives Morningstar Nontraditional Bond category, which
you receive this report or that securities sold have not or other alternative asset classes. Alternative Assets captures the performance of mutual funds that
been repurchased. The securities discussed are held are represented by a blend of three indices: 33% pursue strategies divergent in one or more ways
in Planning Alternatives’ Tactical “model” accounts, (Commodities) Bloomberg Commodity TR Index, from conventional practice in the broader bond-fund
including Conservative; Moderate Conservative; which is a broadly diversified index composed of 19 universe, such as tactical management of bond
Moderate Conservative Plus; Moderate; Moderate commodity futures contracts on physical commodities exposures, active management of duration, currency
Plus; Moderate Aggressive; and Aggressive; and do in seven sectors; 33% (Natural Resource Stocks) S&P trading and/or shorting.
not necessarily represent a client’s entire portfolio. Global Natural Resources Index, which is comprised
Furthermore, the securities discussed may in fact of 90 of the largest publicly traded companies in
represent only a small percentage of a client’s natural resources and commodities businesses that
portfolio holdings. A complete list of the performance meet investability requirements; 34% (Global Real
for all of the securities in your accounts managed by Estate) FTSE EPRA/NAREIT Developed Index, which
Planning Alternatives is included in your personalized is designed to track the performance of listed real
quarterly performance report. Accounts may not own estate companies and REITs worldwide. Bonds are
every security discussed due to variations in account represented by the Barclays Capital Aggregate Bond
size, tax status, fund closures, custodian rules and Index, which represents most intermediate,
availability, etc. It should not be assumed that any of investment grade bonds traded in the U.S., including
the securities transactions or holdings discussed Treasury securities; government agency bonds;
were profitable or will prove to be profitable, or that mortgage-backed bonds; corporate bonds and a
the investment recommendations or decisions we small amount of foreign bonds traded in the U.S.
make in the future will be profitable or will be Short-term Bonds are represented by the Barclays
equivalent to the investment performance of the U.S. Govt/Credit 1-5 Yr. TR index, which measures the
securities discussed herein. There is no guarantee performance of U.S. dollar-denominated U.S. Treasury
that current or future investment decisions will be bonds, government related bonds and investment
profitable and, in fact, may result in a loss to grade U.S. corporate bonds that have a remaining
investors. Data contained herein from third-party maturity of greater than or equal to one year and less
providers is obtained from what are considered than five years. Municipal Bonds are represented by
reliable sources. However, its accuracy, completeness the Barclays 1-10 Year Municipal Blend Index, which is
or reliability cannot be guaranteed. Performance an unmanaged, total return, market value-weighted
information is net of all mutual fund or index that tracks the short and intermediate
exchange-traded fund fees and expenses; is components of U.S. investment-grade tax-exempt
annualized for periods greater than one year; bond market, including General Obligation, Revenue,
assumes reinvestment of all dividends and capital Insured and Prerefunded bonds with a remaining
gains; and assumes investment occurred at the maturity from 1 up to 12 years.
beginning of the period indicated. Investment return
and principal value of a fund will fluctuate so that an Large Cap Stocks are represented by the S&P 500
investor’s shares on redemption may be worth more Index, a group of 500 large companies selected by
or less than the original cost. Index returns are for S&P and weighted by market capitalization. Mid Cap
illustrative purposes only. Index performance returns Stocks are represented by the S&P 400 Index, which
do not reflect any management fees, transaction is a group of 400 mid-size companies selected by
costs or expenses. Indexes are unmanaged and one S&P and weighted by market capitalization. Small
cannot invest directly in an index. The information Cap Stocks are represented by the S&P 600, which is
presented is past performance and is not an a group of 600 small-size companies selected by S&P
indication of future results. and weighted by market cap.
THRIVE REPORT Q2|2021 Please review Disclosures and Footnotes | 10You can also read
