We are not quite finished with 2021 yet!  What steps could you take for your year-end investment before we cross over to 2022? In this session, we will discuss the following topics:

• Tax Code Refresher
• Retirement Accounts
• Health Savings Accounts
• Tax Loss Harvesting
• Asset Location Optimization
• Charitable Donations

Guest:

Jeremy D Witbeck, MBA, CFA, CFP® is a Partner with Polaris Wealth Advisory Group, LLC. Before joining Polaris Greystone, Jeremy worked as a Portfolio Manager at a Registered Investment Adviser in the greater Los Angeles area where he built customized portfolios for high net worth clients and developed client relations. Jeremy has an extensive background in the financial service industry and holds the Chartered Financial Analyst (CFA®) charter and Certified Financial Planner (CFP®) designation.

Host:

Chia-Li Chien, Ph.D., CFP®, PMP®, CPBC, is an Assistant Professor and Director of the Financial Planning Program of California Lutheran University. Before her academic role, she held several senior management positions in Fortune 500 companies, including Diageo, ABB, CIGNA, and RSA Insurance Group. Dr. Chien is a frequent speaker about succession planning at national conferences and has published three books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” She publishes research on succession topics in a variety of academic and practitioner research journals. Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®). Chia-Li Chien is pronounced Jolly Jan.

We learn how to manage money in very different ways. Some of us are lucky to have excellent role models at home. For example, Dr. Chien watched, learned, and modeled after her parents at a very young age. Her mom gave her allowance to manage her breakfast and lunch throughout her school years. She was part of a savings club where she saved into a simple saving book weekly.  These simple habits shaped Dr. Chien’s financial behaviors.

But not everyone has the access to role models and mostly relies on peers or friends. Well, this will depend on who you hang out with that could totally reshape your financial behaviors.  Join Dr. Chien to interview Mr. Cousineau, and find out how he might guide us in our financial behaviors through powerful stories.

Guest:

Jake Cousineau is a high school teacher and author. After years of teaching personal finance at the high school level and being disappointed with the literature available to young adults, he decided to do something about it. In 2020, he released his book, How to Adult: Personal Finance for the Real World, which helps young adults understand and approach the financial realities of adulthood. Using straightforward explanations, relatable examples, and entertaining personal anecdotes, How to Adult teaches topics ranging from compound interest and budgeting to 401(k)s and mutual funds.

Cousineau stresses the importance of storytelling and humility in personal finance: “Sharing my own missteps in personal finance is incredibly important to me. Too often, people avoid addressing their financial woes because they don’t want to admit their own ignorance or confront their problems. I hope the stories of my own blunders help people feel a bit less insecure about any mistakes they may have made and encourage them to address their issues.”

Host:

Chia-Li Chien, Ph.D., CFP®, PMP®, CPBC, is an Assistant Professor and Director of the Financial Planning Program of California Lutheran University. Before her academic role, she held several senior management positions in Fortune 500 companies, including Diageo, ABB, CIGNA, and RSA Insurance Group. Dr. Chien is a frequent speaker about succession planning at national conferences and has published three books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” She publishes research on succession topics in a variety of academic and practitioner research journals. Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®). Chia-Li Chien is pronounced Jolly Jan.

Certified Financial Planner or CFP® often recommends the clients set up a trust when their financial situation warrants such a valuable tool.  One out of five financial advisors is a CFP® accordingly to CFP Board or Certified Financial Planner Board of Standards, Inc. There are three general business models in the financial service industry. In this interview, Mr. Cosentino will help us better serve the clients an understanding of what trust companies do and how to communicate that with the clients.

Guest:

Eric W. Cosentino, CTFA, is a Vice President and Private Wealth Advisor with FineMark National Bank & Trust. Mr. Cosentino has nearly 30 years of experience in the financial services industry, with half of that time in Southwest Florida. He works directly with clients to build and preserve their wealth while developing meaningful relationships in Lee and Collier counties. Mr. Cosentino holds a Bachelor of Arts from the University of Massachusetts at Amherst and has earned the Certified Trust and Financial Advisor (CTFA) designation. He also completed National Trust School at the University of Chicago and the National Graduate Trust School at Northwestern University. Mr. Cosentino currently serves as a board member and volunteer for the STARability Foundation, a local non-profit that provides educational, vocational, and social services to individuals with disabilities. He also serves as the Treasurer and volunteer for Delnor-Wiggins Pass State Park, Community Service Organization.

Host:

Chia-Li Chien, Ph.D., CFP®, PMP®, CPBC, is an Assistant Professor and Director of the Financial Planning Program of California Lutheran University. Before her academic role, she held several senior management positions in Fortune 500 companies, including Diageo, ABB, CIGNA, and RSA Insurance Group. Dr. Chien is a frequent speaker about succession planning at national conferences and has published three books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” She publishes research on succession topics in a variety of academic and practitioner research journals. Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®). Chia-Li Chien is pronounced Jolly Jan.

CAN ROBO-ADVISORS HELP FINANCIAL PLANNING PROFESSIONALS?  

Since the beginning of the pandemic, technology has progressed rapidly allowing adjustment to living and working at home. Still relatively new to the industry robo-advising is also progressing rapidly. 

In June 2019, Vanguard’s robo-advisor managed a total of $140 billion and over 10 billion U.S. dollars was managed by the sixth-largest robo-advisor (Statista Research Department, 2020).  According to Investopedia, “The industry has experienced explosive growth as a result; client assets managed by robo-advisors hit $987 billion in 2020, with the expectation of reaching $2.9 trillion worldwide by 2025.” 

What are Robo-Advisors? 

In the interview, Dr. Jason McCarley described robo-advising as a form of automation to create statistical decision aid. He described it to be similar to human interaction with technological systems that are already in place and we are familiar with such auto-pilot systems or a Tesla. Robo-advising is related to how humans interact with automated systems. “It’s to help make choices or make judgments under conditions where there’s a lot of uncertainty,” McCarley said. Robo-advisors have the ability to improve the accuracy of predictions and judgments that humans can make.  

To put it into perspective, McCarley gave another example. This type of technology is used in predicting how well students would do in a graduate program. He explained that it is usually a simple equation but it will outperform humans at predicting success. “We find people underperform these kinds of statistical decision aids. The other thing we find is even though they are better than us, we don’t like to use them or tend to ignore or override the advice,” he said. 

McCarley explained that there are many benefits to robo-advising but what is great about robo-advisors is that decisions don’t need to be made because plans can be automatically opted for. This takes away the confusion of what percentage size to contribute to savings for example as well as what investment to be involved with. 

 The Risks of a Completely Automated System

When it comes to technology, many worry about the risks and the unknowns. McCarley explained that three main things should be looked out for. The first is knowing that occasionally it makes a mistake, so human monitoring is needed to keep a check on the system. The second is that situation awareness can be lost when those become disengaged with financial planning. Lastly, people often don’t trust statistical aids but they do trust other people. However, they are more likely to trust the robo-advisor if it is accompanied by a human. 

What Does a Statistical Decision Aid Do?

McCarley gives an analogy to Spell Check as to how a statistical decision aid works. First, it Informs. In Spell Check, this would be the line to let you know something doesn’t look right. Then it Counsels. In Spell Check, it guesses suggestions for you to replace the word or grammar. Then, it Acts, which is fixing it for you. Spell Check doesn’t act until you command it to, unlike a robo-advisor. McCarley said there is a greater chance for a mistake you won’t catch if it acts by itself. “At each level, it’s taking some of the workloads off for you but it’s also taking a little bit out of the process so you have to work a little harder to keep an eye on what’s going on,” McCarley said. 

Mechanical vs Holistic Decisions

A Mechanical decision is calculated, often doing a better job in performance compared to human decisions, whereas holistic decisions are human-made, explained McCarley. “The first thing we have to recognize is that sometimes the algorithm is wrong, that is the nature of problematic decisions is that we can’t always be right. We have to accept that even though the aid is wrong sometimes, it is probably more right than me,” he said. 

Role of Trust 

When using robo-advisors there is a certain element of trust and willingness to rely on it that must be fulfilled. The first part of trust is working out how good and reliable it is. The more mistakes that happen, the less trusting the user will find it. What’s more, occasional errors can also lead to undermining trust. 

The second part is having an understanding of the process and how it works. When users don’t understand how or why the recommendations or predictions are what they are, it can lead to confusion or even frustration. It’s also important to understand why it may go wrong and that it’s impossible to be correct all the time. 

How Much Will It Cost to Get Automatic Versus Human Advice?

The hope with robo-advisors is that people who don’t have much money to spare will find it worthwhile instead of a human advisor. The hope is to make it accessible and reduce the cost of financial advising. However, McCarley said there has been less uptake than hoped for, but the younger generations remain to be interested. “Old investors and wealthier investors are actually more willing to spend money on a human advisor. They like the interaction and they trust the human advisor more,” McCarley said. 

One of the issues mentioned earlier is that users sometimes “set and forget” when using robo-advising. The best way to avoid misuse in the younger generations or those using robo-advisors is to get the user involved in monitoring the process, explained McCarley. Goals need to be changed when the user’s goals change so the predictions can reflect. Getting involved and keeping on top of updates on their progress stops any surprises, he said.  

Advice to Financial Planning Professional About Robo-Advisors 

McCarley’s parting advice to the financial planning professionals was; “having a financial planner as a liaison between the advisor and the investor fights the problems. The investor probably trusts you so they will take your advice more than they might take the advisor from a computer. Having or wanting a financial planner for human interaction, and having that liaison is valuable for the people who can’t or don’t want to have human interaction. Encourage them to take the advice but know what they are doing,” he said. The advantage is financial planners can leverage the tool and have their clients be actively engaged.  

About Jason McCarley:

Jason McCarley is a Professor in the School of Psychological Science at Oregon State University and has previously held faculty positions at the University of Illinois and Flinders University in Adelaide, South Australia. He conducts research in the areas of human factors and applied cognition, with a focus on attention, signal detection, and human-machine collaboration.

About the Host:

Dr. Chia-Li Chien is a succession program director at Value Growth Institute, a succession consulting practice dedicated to helping business owners increase their firms’ equity value. Before her private consulting practice, she held several senior management positions in Fortune 500 companies. Dr. Chien is a director of the financial planning program at the School of Management at California Lutheran University. Dr. Chien is a frequent speaker about succession and retirement planning at national conferences and has published three award-winning books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®).

About the Author:

Rosie Baker is an undergraduate student at California Lutheran University, graduating in May 2021. She is studying Communication with an emphasis in PR and Advertising and has a minor in Creative Writing. In July 2020, she published her first book, Mirrors & Windows: Unlocking a New Framework to Envision Your Success, with New Degree Press. 

References:

Statista Research Department. (May 4, 2020). Value of assets under management of selected robo-advisors worldwide as of March 2020 (in billion U.S. dollars) [Graph]. In Statista. Retrieved May 05, 2021, from https://www-statista-com.ezproxy.callutheran.edu/statistics/573291/aum-of-selected-robo-advisors-globally/

Frankenfield, J. (2021, May 7). What Is a Robo-Advisor? Investopedia. https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp

Dr. Chien interviewed Professor Jason McCarley, on “Can Robo-Advisors Help Financial Planning Professionals?” on April 20, 2021, at 1:00 pm PST.

The growth of FinTech helps both consumers and financial planning professions in many ways. Financial planning professionals established relationships and trust over time. They guide their clients through their financial journeys. The use of Robo-Advisor is on the rise and is a part of many financial planning professionals’ offerings. In this session, we will discuss the following questions:

• What are some inherent biases that could harm consumers?
• What are the variables that influence automation trust and dependence?
• How to overcome these biases?
• How to prevent these biases?

Reference:

Bartlett, M. L., & McCarley, J. S. (2019). Human interaction with automated aids: implications for robo-advisors. Financial Planning Review, 2(3-4). https://doi.org/10.1002/cfp2.1059

Hratch J Karakachian, CPA, ESQ, is a senior adjunct faculty member at California Lutheran University School of Management.  He has been teaching in the MBA in Financial Planning Program since 2013.  He has taught Principles of Estate Planning, Income Tax and Strategy, Managerial Accounting, and Foundations of Accounting and Finance courses.

Hratch earned a Bachelor of Science in Accounting and Bachelor of Science in Business Administration with an emphasis in real property development management as well as a Master of Business Taxation degree all from the University of Southern California.  He subsequently earned a Juris Doctor from the University of West Los Angeles.  He is a licensed Certified Public Accountant and an Attorney at Law by the State of California.

Hratch began his accounting career in the tax division of Arthur Andersen in Los Angeles.  He quickly rose through to ranks to the level of Tax Manager.  He moved on to Deloitte Tax also in Los Angeles where we was promoted to Senior Manager.  Following a ten year career in the Big Four accounting firm environment, Hratch joined a large local firm.  Since 2008, he has been a private practitioner providing a broad range of tax planning, compliance, and advisory services to owner-operated enterprises and their owners as well as families.  Since 2012, he has been providing legal services with an emphasis on taxation, estate planning, real estate, and business advisory services.

We could all agree that 2020 is an outlier year compared to the historical cycle. The new normal shapes our life going forward.  In this session, we will discuss the following questions:

• Tax Code Refresher
• Retirement Accounts
• Health Savings Accounts
• Tax Loss Harvesting
• Asset Location Optimization
• Charitable Donations

Register now, you will receive a confirmation email containing information about joining the meeting. This is a webinar you won’t want to miss!

About Jeremy D Witbeck, MBA, CFA, CFP®

Jeremy D Witbeck, MBA, CFA, CFP® is a Partner with Polaris Greystone Financial Group, LLC. Before joining Polaris Greystone, Jeremy worked as a Portfolio Manager at a Registered Investment Adviser in the greater Los Angeles area where he built customized portfolios for high net worth clients and developed client relations.

Jeremy has an extensive background in the financial service industry and holds the Chartered Financial Analyst (CFA®) charter and Certified Financial Planner (CFP®) designation.

What is International Financial Planning?   

As globalization becomes more apparent in our lives, there is an increase in the number of people moving around the world and owning properties in more than one country. We are all global citizens which means we have the ability to live where we choose, however, what happens to your finances and taxes when you make the big move? 

Ashley Murphy is a tri-citizen of the USA, Australia, and the UK. He has had years of first-hand experience of what it is like to not only move to another culture but deal with the side no one really talks about – finance, insurance, and tax. His niche of international financial planning developed from his experience when moving from Australia to the USA in 2005. He spent years looking for more information on international financial planning but couldn’t find what he was seeking. Murphy decided to bring the information together and help others who are in the same boat. He is a CFP in America and is currently studying the CFP in Australia which will make him one of the few financial advisors to be qualified in both countries. 

International financial planning is working with clients that have moved, are moving, or own properties, in two countries. The clients Murphy works with are in various stages of their expatriate journey, someone who has been sent by their firm to a foreign country, there has to be something already in motion, he said. Whether that is a job offer, or they have already moved, or the dream the couple had is finally being planned. The clients come to him with a set of concerns or questions, seeking the answers they need to continue their motion of moving. 

Financial Planner’s Change in Australia 

In Australia, there has been a recent decrease in the number of those working in the financial planning field due to regulation changes, Murphy explained. Last year, there were 2400 departures and just 15 entrants into the financial planning field. The commissions have now been restructured to be fee-only changing the way planners work and interact with their clients, Murphy said. This new change is difficult for any financial institutes to adopt, including CFPs.

This new commissions structure is different from how commissions work in the US. In the US there are typically three business models; the first model is commission only, the second model is commission and fee-based, and the third model is fee-only. 

Murphy shared an example with the webinar about how this new change in Australia is creating an expensive barrier. “If someone with a 401K plan is seeking advice for their average funds, they will want to move from a high-cost structure to a low-cost structure,” Murphy said. This is a relatively simple and easy answer that people are seeking the recommendations for but the high fees are creating an expensive barrier, he said. The commission restructuring has changed the way financial planners need to work in Australia.  “Having clients in different countries with different complexities, we’ve really had to tweak how we work with them to make it profitable,” Murphy said. 

Knowing Your Countries

Every country is different with their taxes, retirement plans, insurance, etc. therefore as an international financial planner it is important that you know both the countries you are working with, he said. Taking on a client with countries that you are not specialized in, nor have worked with before, is a huge challenge and it will consume your time with trying to learn and understand how it works for the client. It sounds very ethnocentric, he said, but it is important to concentrate on certain information. There is not enough time in the day to work with clients who have a multitude of living in other countries. As a planner, you must know your limits of much you can take on and help your clients. Therefore, you must know when to turn them to someone that can help them more than you can.

Murphy’s specialty in Australia and America is what makes his business effective. He understands the financial services and planning of both countries and has even had first-hand experience of living in both.  “Clients are seeking to reduce the number of contact points. People are busy, so if they can meet with someone that understands both environments and has this knowledge set, it is beneficial to them. You need the US financial knowledge, the knowledge of the foreign country, and the knowledge of how the two work together. It’s going to be unique” he said.  Every combination of countries is different which is why it is important to have your niche. 

Murphy also explained that when working with an international financial planner, it is best to work with someone who lives in the same country you are currently living in. Murphy works and lives in the US, therefore, although his knowledge of Australia’s financial planning is fantastic, it will never be quite as good as someone who is currently living there. “Someone that lives and breathes the news cycles, the updates in retirement and tax laws, they are hearing about the changes that are happening,” he said.  

Working with Tax

Each country’s tax treaty differentiates, he said. It’s important to know when the treaty came into existence in relation to the other country. This is why it is a good idea to work with a handful of tax attorneys to seek their advice and bounce it off one another as they will all have varying opinions. Further, you need to have trust in the service providers, but also in yourself. Take the time to weigh in your thoughts even if you’re not an expert by using knowledge and interpretations, Murphy said. 

“You need to be competent,” he said, “The riches are in the niches.” When a client works with someone who has made it their career to specialize in those countries, it helps them more and you. 

The Future

When many clients move across borders they have the benefits from the employer but still need help. They have tax help but it is more compliant for the employer with little to no focus on personal finances. “I think we’re beginning to see the very start of executive cross-boarding financial services,” Murphy said. 

The generation of baby-boomers is beginning to move into retirement. During this time, many decide to migrate to another country and live their dreams on a warm, tropical beach or an apartment in a European city. Retirement cross-border planning could be a niche that the financial industry may see developing in the next few years. 

About Ashley Murphy:

Ashley is a tri-citizen of the USA, Australia, and the UK. In 2005, he ventured to the United States to pursue his dreams in the San Francisco Bay Area.

He has been quoted in the Wall Street Journal and was profiled in Financial Advisor Magazine. From 2014 – 2017, Ashley taught aspiring CFP candidates at UC Berkeley Extension and Golden Gate University. Presently, he is a Knowledge Circle host for the International and Cross-Border Knowledge Circle with the FPA and a regular conference speaker. He was awarded the CFP® designation in 2012 and voted Secretary of FPA NexGen the same year. Ashley is currently undertaking CFP® studies in Australia which will make him one of the few financial advisors qualified in both countries when completed.

About the Host:

Dr. Chia-Li Chien is a succession program director at Value Growth Institute, a succession consulting practice dedicated to helping business owners increase their firms’ equity value. Before her private consulting practice, she held several senior management positions in Fortune 500 companies. Dr. Chien is a director of the financial planning program at the School of Management at California Lutheran University. Dr. Chien is a frequent speaker about succession and retirement planning at national conferences and has published three award-winning books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®).

About the Author:

Rosie Baker is an undergraduate student at California Lutheran University, graduating in May 2021. She is studying Communication with an emphasis in PR and Advertising and has a minor in Creative Writing. In July 2020, she published her first book, Mirrors & Windows: Unlocking a New Framework to Envision Your Success, with New Degree Press. 

Dr. Chien interviewed Ashley Murphy, CFP®, AIF® on “What is International Financial Planning?” on Dec 2, 2020, at 1:00pm PST.

Globalization fuels the need to move top talents to enable them to expand their markets. As a result of these talents who are working outside of their home countries, their wealth grows internationally. Hence, international financial planning becomes complex. In this session, we will discuss the following questions:

• What are clients with dual or tri-citizen typically looking for in planning?
• What can financial planning professionals do to help dual or tri-citizen clients?
• How about a non-us citizen spouse?
• Why is international financial planning in demand?

Resource: Global Financial Planning Institute

Ever since Kathryn Courain was 6 years old she has loved horseriding. Growing up in Santa Barbara County, north of Los Angeles, she spent her childhood surrounding herself with horses. From a young age, she was taught the importance of discipline, structure, and initiated a competitive drive within herself. 

Courain earned her undergraduate degree in business with a concentration in finance at San Luis Obispo University. Her degree allowed her to grow and learn what she was passionate about in the business world. 

At 12 years old her parents set up a checking account for her to spend on her horses. Using this account she would budget for horse boarding, training, feed, shoeing, and shows. Before she became a teenager Courain understood how to manage money. When working with her horses Courain learned how to negotiate, think ahead, be intuitive, and goal-orientated. All of these skills she has translated into business. Horseriding was not just a hobby, but it was something that allowed her to learn the vital skills of managing along the way. 

When Courain left university she thought she was going to be an accountant with a CPA. “I realized early on that I loved accounting, but I was also fascinated by business law, real estate finance, and essentially any course that challenged me and kept my mind active,” Courain said. When at university her dad made her read a book. She learned from the book that she should be passionate and love career. 

Courain knew that she loved finance but she was unsure of what she could do with that as she had no idea about financial planning. In 1992 she got a job at a finance company. She described it as being “aggressive marketing” that left her feeling shocked at the unethical behavior of not helping others. 

Not long after Courain went in search of finding a new job. She found one as a junior financial planner in the Santa Ynez Valley on a private horse ranch. It was a perfect fit that she spent 26 years working at. “It was an amazing experience, wonderful opportunity, and I got to do not only something that I love but I get to help clients and help them pursue their goals and dreams,” Courain said. 

The owner of the firm become an important mentor, “he always made me dig for the answers,” which Courain values as it allowed her develop her critical thinking, analytic, and intuitive skills to know where to go to find the information 

In February of 2016, Courain transferred to a new firm Avalan Wealth Management, a boutique wealth management firm. “It specializes in working with business owners and entrepreneurs but also successful families, with my background with helping with generational planning.” She joined partners with Rich Schuette, together their two practices blended well together. Now, four years later they have added an additional four full-time staff members and two advisors. 

The pandemic has created new challenges and opportunities for Avalan’s clients. Clients are dealing with issues such as staffing, government assistance, moving forward, and small business owners are shutting down. 

“Every client is unique in this industry. Each client comes to us with a different problem and our job is to find multiple solutions and help the client work through and feel comfortable with the solution they think is best and that they also agree,” Courain said. 

The advisors that work at Avalan specialize in different areas Courain said. As wealth managers, they want to add value to all areas of the client’s life, “We want to make sure that in every area of your life we are helping you.” As a firm, they want to build relationships with those that they can bring value to, not just investments. Their virtual family office is similar to Elizabeth Campana in the previous webinar. To market their business they rely on clients being their biggest sale source, not social media, nor traditional advertising. 

Courain is a big believer in paying it forward. She spends free time volunteering and donating money to various charities of her choice researching where the money goes within. Working with wealthy families she has seen the benefits of donating and the impact it can have on others. She also spends time helping younger, junior financial advisors with their skills, etc, describing it as “a rewarding profession” with so many different directions that can be followed within the industry. 

Picking a niche to work in can be difficult. But, Courain believes it should be something that you’re passionate about and something you’re good at. For example, if you love cars working in a car dealership may be a good idea because you have a strong ability to understand the terminology and what is happening.  

“I really want to let people know that you should really like what you’re doing. Mondays are my favorite day of the week,” Courain said. I love this advice as it can be applied to any industry. I am also a strong believer that you should do something that you love and enjoy as a profession even if it means taking extra time to discover it. 

“If you love to help people and if you love to problem solve, this is an unbelievable career path with so many amazing opportunities,” Courain said at the end of her webinar. 

To learn more about careers in financial planning and being a financial advisor, contact the Financial Planning program here at California Lutheran University. Please visit http://bit.ly/clumbafp.

About the Speaker:

Kathryn Courain has close to three decades of experience assisting high-net-worth clients with their total wealth management needs, including perpetual trust planning, private foundation and charitable planning, commercial financing and tax planning.  She specializes in managing legal and tax advisor relationships in order to provide clients with a comprehensive vision of their overall financial goals.

Since each client has unique investment and planning objectives, Kathryn employs different strategies and solutions to meet specific needs.  She provides the necessary unbiased advice and financial analysis necessary that helps guide clients through the wealth management process to ensure goals are met.

Kathryn grew up in Santa Barbara County and was an avid equestrian for more than 30 years.  She has a passion for supporting charities, especially animal welfare charities, and is the current Board Treasurer of C.A.R.E.4Paws.

About the Host:

Dr. Chia-Li Chien is a succession program director at Value Growth Institute, a succession consulting practice dedicated to helping business owners increase the equity value of their firms. Before her private consulting practice, she held several senior management positions in Fortune 500 companies. Dr. Chien is a director of the financial planning program in the School of Management at California Lutheran University. Dr. Chien is a frequent speaker about succession and retirement planning at national conferences and has published three books, including her most recent publication, “Enhancing Retirement Success Rates in the United States.” Dr. Chien serves on the boards of various national financial service associations. She holds a doctorate in financial planning and is a Certified Financial Planner (CFP®) as well as Project Management Professional (PMP®).

About the Author:

Rosie Baker is an undergraduate student at California Lutheran University expecting to graduate in May 2021. She is studying Communication with an emphasis in PR and Advertising and has a minor in Creative Writing. She is currently writing a book, Windows and Mirrors, which is due to be published this summer with New Degree Press.

Here is a transcript of the webinar:

Cindy Grether: 

Good morning everyone. Today’s presentation “Year End Investment Planning” is brought to you by California Lutheran University’s financial planning program. We have one of our instructors who is presenting today, it’s Jeremy Witbeck. Jeremy is also an alum of the program. He received his MBA and financial planning here at Cal Lutheran. He’s also certified financial analysts and CFP, he received his undergrad in accounting at the University of Arizona and then his master’s degree here. I’m going to go ahead and let Jeremy start.

Jeremy Witbeck: 

All right, well thank you so much, Cindy. So today I am going to be presenting on some year and investment planning strategies and techniques that can be deployed to really try to take ownership of your taxes and some strategies to try to build long term wealth, through some of the preferential treatment that we receive in the tax code.

As I go along for those that are with me, please feel free to ask any questions or interject any of your own commentary, I recognize that there’s a lot of very knowledgeable professionals that are on this with me and hopefully will continue to join as I go along. And so the more than happy to have your thoughts or insights as we evolve in our conversation.

So, with that said, for the purpose of today, I’m going to focus on a few different areas. The first thing is I’m going to review just a refresher of the tax code that was enacted in 2018 and has continued in on in 2019. There were quite a few changes that were made from the tax code that we’ve had for many years prior to this change and so that certainly has some planning implications and things that we want to be aware of. I am also going to review the 2019 tax brackets and really lay out where we’re trying to target into, if we can, to maximize some of the tax benefits for individuals and married couples.

Then from there we’ll start going into some of the strategies. So we’re going to look at retirement accounts, the health savings account, we will look at tax loss harvesting strategies. We will look at asset location optimization and then lastly we’ll conclude with a discussion on charitable donations.

With the 2019 current tax code there were quite a few changes that were undertaken. The big one is that the tax brackets that people are subject to and also non-living entities as well. We’re overhauled to where they became a little bit flatter and overall the marginal tax brackets that people are subject to are lower. The reason for this, or the thought process that was communicated by Congress and the White House administration for doing this is that they also changed the way that deductions are handled. So in order to compensate for that, the overall marginal tax rate structure went down with that. And so the new tax code also increases the standard deduction. So it was a significant increase on were in 2019 the standard deduction is $12,200 for an individual person or $24,400 for a married couple. The reason why that is significant is a lot of people that were itemizing before, no longer meet the qualifications to itemize since the standard deductions is larger and that has some tax planning and investment tax planning, more specifically ramifications that need to be considered.

Now with this tax overhaul, personal exemptions were eliminated. So we no longer have a section on the tax form that asked for the number of people that are covered on that tax form with an exemption amount given and then also state and local tax deductions were kept and so they were kept to $10,000. So this is something that is felt on the coastal areas where a property taxes tend to be high and state taxes tend to be on the higher end. And so it’s important to note that before where you can deduct the full amount of that, that it is now capped at $10,000.

A couple other notable changes the mortgage interest deduction was lowered from $1 million on and $100,000 for a home equity line of credit down to $750,000. That was a pretty big reduction and that’s of course the limits that are in place for a married couple on those numbers. Simply divide by two if you’re looking at it for a single person.

A lot of the itemized deductions have been reduced or eliminated, the most notable especially for our profession is you’re no longer able to deduct the expense for attorneys for CPA’s and for tax preparers and for investment advisors on a person’s tax return when dealing with an individual tax return.

Then lastly, there is a new 20% pass through income deduction for certain types of corporations when engaged in certain business practices that you want to make sure that you’re knowledgeable about.

Now for the intent of this conversation we’re really going to focus in on how we can optimize our investments to fall in line with this tax code. But it’s important to have an understanding of how the tax code works to then understand how that’s going to impact some of our investment decisions.

Now the tax brackets did change pretty significantly. And so this chart here is a summary of our new tax bracket. Was there a question or comment? No. Okay.

 This is the new tax, tax bracket structure that we as taxpayers are subject to. You’ll notice that on the left of the chart the tax bracket ranges from 10% all the way down to 37% and the income levels that are subject to those tax brackets are listed on the right, where we have four different groupings. One is for a single taxpayer when we have head of household. So that would be a single taxpayer with dependence. Married filing jointly or qualifying widow is the third column. And then lastly, married filing single is the last column.

Notice that on the tax bracket there’s one that has a star and then one that has an X. The reason why I listed that there is for our tax planning, we are trying if we can to have a taxpayer remain in the 24% tax bracket or lower. The reason for that is because there’s a significant increase once we jump above the 24% all the way up to 32%. And so if we are able to keep a married couples taxable income, their AGI, below 321,450 or a single person’s below 16,725. Then we are going to have a significant impact on the amount of taxes that they have to pay.

The X is below the 35%, that signals where we start to see the marriage penalty introduced again. And so you’ll notice that what is unique to this tax bracket structure is that up until 35% the single and the married filing jointly numbers are figures are doubling. So, meaning that the 10% is 9700 for a single taxpayer for a married filing jointly taxpayer it’s 19,400 or double that amount. And that relationship stays true even through the 32% tax bracket, where a single taxpayer, the top end of that bracket would be 204,100 for married filing joint tax return before 408,200.

At 35% it no longer doubles. So there is a significant marriage penalty. Another strategy if we can’t keep them in the 24% tax bracket is to not go above 612 350 for a married couple since that has a significant tax ramification.

But for the purpose of this conversation. We’ll talk about ways to try to keep us in the 24% tax bracket or lower using some planning techniques on with our investments. So let me pause for a moment and see if there’s any questions or comments before we move on.

No. All right.

The first thing that you want to really look at and perhaps one of the most obvious areas is to make sure that you are maximizing your retirement accounts. There’s a couple of reasons for this. One is that the contributions to your retirement account are what are called above the line tax.

Deduction items, meaning that it doesn’t matter if you itemize or if you take the standard deduction, but you’re going to receive a tax benefit for making your retirement account contribution with a few exceptions. One of the best pieces of advice that I’ve heard given, especially to young earners, is to try to get to the point where you’re maxing out your 401K contributions so that way the money can grow for you.

We can take advantage of the tax structure by recognizing whether or not we should make our 401k contributions as a traditional deductible contribution or if we should use a Roth 401k election for those contributions, now I’ll go into that consideration in just a moment.

The 2019 maximum contribution amount is 19,000. If you are over the age of 55 then you’re allowed to make an additional $6,000 catch up provision contribution which means that you can elect to defer $25,000 into your retirement account.

Now if you don’t have access to a 401k plan or if your income level is low than a certain phase out amount. You can also or you can in lieu of not having 401k contribution, make an IRA contribution. In 2019 the maximum contribution amount is 6000, if you’re the over the age of 55 you can make an additional $1,000 contribution which means that the maximum amount is 7000.

Now, earlier I mentioned that Roth 401k is or a Roth IRA are an option for you. And this is where we can use some planning to see if it makes sense to use the traditional route or the Roth route for these contributions.

The answer for this is determined by where your income level falls. And so if you’re in the 24% or higher tax bracket, then it is generally advantageous to make the contributions to your 401K and your IRA accounts on a deductible basis, meaning that you want to use the traditional route. However, if you are in the 10%, 15%, or 22% tax bracket, then that is a time where it makes more sense to contribute on or within a Roth account because your tax bracket is very low, and it is unlikely that out a few a future date, when you start taking money out of these retirement accounts, that you would be in a lower tax bracket. So it’s better to pay the taxes now where you’re assured to have a low tax bracket, as opposed to waiting until later where if your tax bracket goes up, then you’ll end up paying more in taxes than what you would have needed to.

Now, it should be noted that you may be ineligible to make a Roth or deductible IRA contribution if you have a company sponsored plan and/ or if you exceed certain income levels. So when making these contributions you will definitely want to consult with your tax professional. That’s something to be aware of but it’s definitely a conversation that you should have because there are some significant tax deferral advantages by utilizing these retirement accounts.

So let’s go ahead and pause and see if there’s any questions or comments from the group… Yeah, Brett.

Brett Layton: 

A great explanation and the beauty of Roth is if they’ve been so expanded lately, and it really gives employed younger people an opportunity to stuff money in that Roth before their income rises to the point where they’re phased out. And then if you’re write out those phase out levels. You can do some strange things. I mean, you can even donate to a (inaudible) if you’re self-employed to take your AGI down underneath the limit. And then at least get a Roth IRA in there because even though you’re qualified by a plan, you’re under a plan, you’re under the AGI limit and then the beauty of that Roth is it you’re diversifying attacks location you assets when you are in a D accumulation strategy and retire.

Jeremy Witbeck: 

Yeah, excellent points Brett and this is where I can’t stress enough having a knowledgeable planning oriented tax planner is going to significantly help in these areas. To Brett’s point, there’s a lot of planning that can take place here to ensure that we’re getting the maximum benefit out of these retirement accounts. This is where if you are at a stage where you’re in a lower tax bracket the Roth should be a heavy consideration because there’s some significant advantages to investing in a Roth account for future expenses. One being that because you’re in a lower tax bracket, you’re not going to pay a lot of taxes on those funds that also diversifying the retirement accounts that your funds are in at a later date helps to immunize you against future tax changes, so excellent points Brett and I appreciate you bringing that to the conversation. Any other comments or questions before we move on?

Cindy Grether:

I have a quick comment. So it looks like this is one of the first things you’re going to look at right?

Jeremy Witbeck: 

Absolutely. This should be one of the first things that everyone thinks of doing to plan for the future and to plan for taxation.

Cindy Grether: 

Alright. Thank you.

Jeremy Witbeck: 

Alright, so let’s go ahead and look at health savings accounts. So this is really become popular in the last I’d say 10 years or so. Some people would actually argue that a health savings account is even more valuable than a retirement accounts, meaning a 401k or an IRA account not explain why that said in just a moment.

If you’re not familiar with the health savings account a health savings account is a special investment vehicle that you’re allowed to use if you are in what’s called a high deductible health insurance plan.

So high deductible health insurance plan is one where you have to cover certain costs out of pocket and these costs that are covered out of pocket tend to be much higher than what you would find in a traditional medical coverage plan. Now the reason why you’d be willing to do this is the premiums for this type of insurance are also lower and you have the benefit of saving than a health savings account.

The way that a health savings account, which is called HSA for short, works is that you are allowed to contribute pretax dollars just like a 401k plan for example. So you contribute your pretax dollars and then they are invested and grown for future medical expenses. The beauty of a health savings account is that the growth is tax free and when you use the funds for qualified medical expenses, they are withdrawn tax free. So that’s where it deviates significantly from a 401k or other retirement account is that these are not taxable when they are withdrawn from the account. So that’s something that is not true for a 401k plan or a traditional IRA account.

The other benefit of a health savings account is that there is no RMD requirements. So if you reach the age of 70 and a half and you have a big HSA balance, you’re not required to start distributing like you are under the current tax code with a traditional IRA. Now with the health savings account you are allowed to contribute up to $7,000 for a family policy or $3500 for a self-policy.

If you’re over the age of 55 you also are given an additional thousand dollar makeup provision to increase your HSA balance.

This is another account that should be a primary consideration for contributing to if you have the right medical insurance policy.

Now I recognize that not all companies offer high deductible health insurance plans. If your company doesn’t offer one, unfortunately, this is an investment vehicle and a savings vehicle that you’re not eligible for but we’re seeing these types of plans grow in greater popularity, and so this is probably something that you will see down the road if you haven’t seen it yet already.

So any…oh Brett I see that you have your hand raised.

Brett Layton: 

Yeah, I think these are great, but I think people, just personally I’m 62 and while I’m healthy I’m entering the stage where medical expenses are real. So HSA’s may not be a debt I want to take, even though they have some very attractive features. And if you can build that pile of money until you become my age we’re all going to spend a quarter million bucks on health care and retirement, so it’s just wonderful.

Jeremy Witbeck: 

Yeah, absolutely and you can use the funds and a health savings account for things like Medicare. So there’s a lot of flexibility on how you use it for qualified medical expenses. But to your point, this is just like a 401k, the biggest benefit for these is when you start younger and that you’re allowed you are able to allow time to compound the amount in these accounts. Whereas at 62 being that you’re three years away from Medicare age, and in fact, you’re no longer allowed to contribute to an HSA account once you get the age of 65 the benefit there would be greatly muted.

Do you have any other comments or questions are see your hand is still up?

Cindy Grether: 

Jeremy, I have a question, what is considered a high deductible?

Jeremy Witbeck: 

The definition changes every year, I did not prepare the figures. It would be something around $9,000 per year. But the difference is that you would be required to pay out of pocket up to that level and then other types of coinsurance and maximum out of pocket levels will kick in. But I don’t have those figures prepared with me today.

Cindy Grether:

Okay, but that that makes sense. I just didn’t know how high it went. 

Jeremy Witbeck:

Yeah it is a much higher amount. So for a single person, it’s going to be half as much as it is for a family policy. I should say rather to use their terminology, self-policy will be half the level of a family policy, I believe the numbers I just quoted previously were for a family policy, but these are things that you can easily look up just with a quick Google search to see what the current years thresholds are. But it will say when you select the medical plan what the or if it qualifies as a high deductible medical coverage because it will typically have high deductible in name.

Cindy Grether:

Alright. Thank you.

Jeremy Witbeck: 

All right, any other comments before we move on? No. Okay.

So another strategy that we can deploy is what’s called tax loss harvesting and the reason why we do this is because with capital gains if we are able to keep the capital gains below 488,850, long term capital gains are taxed at a very profitable rate of 15 and then over that amount we start seeing 20% taxation and then we can get into more complicated subjects like the Obamacare surcharge or the Obamacare tax that helps to cover the medical plan changes that were enacted under the Obama presidency. And so because these taxes can become quite high on especially when you factor in the state taxes there are often times strategies that we want to deploy to try to reduce the gains that were recognized in any one year.

One of the ways that we can do that is by looking within the portfolio and our taxable accounts to see if there are any quote-unquote loser stocks or loser securities and these are simply securities that have lost value, since they were initially purchased.

For example, imagine that you have a to stock portfolio and let’s say one stock went up 20% since you bought it and the other stock went down 10%. The overall portfolio has appreciated approximately 10% if we had half between the two securities. But the way that the tax codes written we only have to pay taxes on the gains that are realized. And so we can leave the stock that’s up 20% unrealized, and we can sell the stock that’s down 10% and realize that game. So for our tax return purposes we would only show the 10% loss which would help to shelter any other capital gains.

Now, it should be noted that if you don’t have any capital gains the most that you can use against ordinary income which ordinary income is another way of stating your job income or your W2 income.

The most that you can utilize as a $3,000 loss against your ordinary income and so you don’t want to get too aggressive on this necessarily if you don’t have any gains to shelter. But this is an effective way to bring down your tax bill, especially on your investment gains.

There is one caveat when you tax last harvest and that is you have to wait 30 days to repurchase the security. Both before the date of sell and after the data of sell and so that means that you can’t just sell it and then buy it back tomorrow and expect to capture this lost because then the wash self-provisions will kick in. And so, you have to not hold that security within it’s really a 61-day window, 30 days before the day of and 30 days after, that way you can take advantage of the loss on your tax return.

So, any comments or questions on tax loss harvesting? No? Alright.

So, one other note to mention is, this is something that you really want to think about throughout the entire year, and not just necessarily at the end of the year. One of the missed opportunities on is that you have a volatility event where there’s some tax loss harvesting that could occur in the middle of the year and then the market rallies through the end of the year. If you wait until the end of the year, you may have lost your window, this is something that you want to keep in the front of mind throughout the entire year because there can be some significant tax strategies that can be deployed given certain volatility events that are incurred.

Let’s talk about asset location optimization. So, this is one of those areas that I don’t hear talked about enough on but it can make a significant difference on your taxes over time by knowing where to hold certain types of assets. And so, because of the way that tax deferred and taxable accounts recognize taxation events or because of the timing difference, then there are certain securities that are advantageous to be held in one account versus the other.

So, in the taxable account anytime that there is a recognizable event you’re going to incur taxation and so we tend to hold assets in a taxable account that will minimize or extend the timing of the recognition of that income or of that game. Within a taxable account, that’s where you typically want to use more of your passive or lower turnover funds and strategies.

Once again, we’re trying to avoid recognition of taxes and to defer them as long as possible and the taxable account is a perfect place to hold them. Also, you want to hold your long-term capital gains tax securities within the taxable account. Your dividend payers meaning more specifically your qualified dividend players. So your US dividend payers are preferably held in the taxable account because they also receive preferential tax treatment.

Also, direct real estate should be held in a taxable account and not in a tax deferred account. This is actually one that sometimes is not well understood. And so let’s explain why.

When you directly invest in real estate there are a lot of tax advantages for doing so. One being that you get to appreciate the property when you hold real estate for investment purposes. You get to right off the interest and the taxes that are paid. You also get to leverage the real estate when done in this manner and so real estate can be an attractive holding because of the tax benefits and the benefit of leverage that you receive

It should be held in taxable account. The reason why you would really shy away from directly investing in real estate in a tax deferred account. So, for example, within a Self-Directed IRA is because you lose many of the tax benefits by holding in the IRA. So for example, you are no longer able to write off the interest and you’re no longer able to depreciate the property.

Also, you typically cannot use a mortgage when held in a Self-Directed IRA account, for example, and so you lose the benefit of the leverage that you would enjoy in a taxable account. Direct holdings of real estate should almost always be held in a taxable account. Then lastly, any tax-free types of bonds should be held in a taxable account because you’re not paying taxes on them anyways and so you get no benefit by holding them in a tax deferred or tax exempt account.

Now within the tax deferred or tax-exempt account, this is where you’ll want to place your more active or higher turnover funds and strategies. This is where you’ll also want to have your short-term capital gains type investments also rates should be held in a tax deferred or tax-exempt account. The reason for this is that reads generate a lot of ordinary income and in fact rates are required to distribute 90% of their income and so it is very tax inefficient to hold that within a taxable account so better place would be within your tax deferred or tax-exempt account.

When I say tax exempt that means your Roth IRA, for example. Also, taxable bonds are much better held in a tax deferred account is once again interest income is an ordinary income type item which has a higher tax bracket structure then long-term capital gains in dividends and so bonds be held within the tax deferred account. Then lastly, this one’s not as well-known, precious metals. So, things like gold and silver should be held in a tax deferred account, not in a taxable account. On the reason for that is that when you recognize the gains on precious metals, the taxation is treated as a collectible asset. Which collectibles have an alternate tax schedule. In fact, precious metals have a long-term capital gain rate of 28% versus the typical 15% that most tax preparers would face on other types of assets. So, because the taxation rates so high on precious metals it is generally preferable to hold them in a tax deferred account or a tax-exempt account.

So, any questions on asset location optimization or comments?

This is another one of those areas where an advisor can really build a lot of long-term value by knowing understanding and recognizing this and building a portfolio that seeks to optimize the assets on as well as possible.

Cindy Grether:

It looks like Brett has a question.

Jeremy Witbeck: 

Oh, Brett. Thank you.

Brett Layton: 

Hi, thank you. I had a brief interruption. Direct real estate, did you talk at all about the possibility of tax-free exchange if they’re in taxable accounts?

Jeremy Witbeck: 

I did not. On this I did not cover some 1031 exchanges, but…

Brett Layton: 

I’m sorry. Just the other thing about self-directed IRAs, I’m a tax preparer and they can be tremendously dangerous because a lot of people don’t understand or fully appreciate prohibited transactions and the excise tax that’s associated with breaking the rules. 

Jeremy Witbeck: 

Yeah, absolutely. When you really boil down what most people are investing in the self-directed IRAs and the limitations or the shortfalls. It’s almost never a recommended strategy for people because you’re giving up so much and you’re creating a lot of headache and opening yourself up to a lot of issues that it’s one of those investment ideas that probably should die but kick around I think because of the love that people have a real estate and it gives them the ability to invest in something that they might not otherwise have the means to even if it’s in a very poor way of doing it. So those are great points right. I appreciate that insight there. Any other comments or questions?

Alright, so the last thing I want to review with everyone. Our charitable donations. And so the reason wh a lot of times, people will have a belief that it doesn’t matter what my tax situation is, I will have a tax benefit by donating to a charity. And while that’s never always been true. It is especially not necessarily true. Given the new tax code with a much higher standard deduction amount.

For a charitable donation to be recognized on your tax return that means that you have to itemize at least when done in a traditional route. So, since many taxpayers are not going to itemize, especially in the later stages of their life, charitable donations that no longer have an impact on their taxes.

That doesn’t mean, of course, that you shouldn’t donate to charities, but it does mean that we can be smarter about how we donate to charities to try to ensure that we receive that tax benefit. One of the ways that we can do that is by donating a portion or all of an RMD directly to a charity. What that does is that bypasses the RMD from being reflected on your own tax returns, so that you’re not taxed on that income. You receive a definite and very direct tax savings by making that donation to a charity.

Once again, you don’t have to make the entire RMD payable to the charity, you can do a portion, but that is something that’s recommended, especially for those that know that they’re not going to itemize. Avery effective strategy is to donate appreciated stock directly to the charity. Or, and I’m going to cover this in a moment, to a donor advised fund. The reason why it is more preferable to donate appreciated stock even over cash to a charity is because typically when you sell a stock and recognize the game, you have to pay capital gains tax if it’s out long term or you have to pay a short term gains of those held short term on that stock and then the after tax proceeds can be donated or spent however you’d like. However, you bypass or you eliminate the need to pay any gains, or excuse me, taxes on the gains when you donate it directly to a 501C3 charity. Since the charity has a tax-exempt status they also will not have to pay any taxes on the gains. So it means that a donor is able to give a higher amount, since there is less of a tax drain on the contribution.

Now, for those people that are close to the standard deduction amount a strategy to consider is making multiple years of donation in one year and then going a year or two, without donating. By lumping your donation together, it can kick you above the standard deduction threshold and ensure that you receive a tax write off for the amount that you donated

The last one and this is one I think will see us with more prevalence with the current tax code is to use what’s called a donor advised fund. What a donor advised fund does is it allows you to set aside a pot of money and to dole that money out over time. So there’s no requirement that you dispose of it quickly. In fact, you can dole it out over the next five, ten, twenty years if you want it. And so the reason why this is advantageous is that you get an immediate tax deduction in the year that the funds are donated to the donor advised fund, but that doesn’t mean you have to give it to the charities right away. You can spread it out, you can do your research, you can do whatever it is that you believe will help you decide how best to use those funds. Now the one caveat though is once you donate funds into a donor advised funds you’re not going to be receiving that money back. It is a gift to charities, which will be selected later by you, but it is a donation or a gift that you can’t recall if you change your mind.

But those are the tax planning strategies I put together, Brett it looks like you have a comment or question.

Brett Layton: 

I’m sorry, no, I left my hand up, but now that I’m on charitable remainder trusts are also interesting in special circumstances if you have appreciated property. One of the issues that we’re all facing now though is that the discount rate that the IRS uses is so tremendously low, it’s really tough to get much of an annuity back and still qualify. 

Jeremy Witbeck: 

Yeah, and this is certainly not an exhaustive list of ways that you can make charitable donations to your point, charitable remainder trusts are another avenue on that can be deployed. And once again, this is where having a knowledgeable and an effective tax planner and advisor can really help you to make some long-term decisions and long-term planning choices that will not only bring yourself considerable value and tax savings, but also give you the ability to use your wealth to enact changes or social programs that you personally believe in. So, with that. Any other comments or questions before we wrap up? No? 

Cindy Grether:

Oh, I’m going to put Joe on the spot. Joe, do you have any questions? You’d have to unmute your mic, so to speak.

Joe Gitto: 

Hi, I’m in a pretty noisy place that’s why I have on you on mute. But no, I don’t. I mean, this is, you know, very a short briefing of information that I’m already aware of but I like to kind of stay sharp. I like joining these calls, but thank you so much for the info I appreciate it.

Jeremy Witbeck: 

Yeah, well thank you both for participating with us today. So, Cindy, I don’t know if there’s any other questions, but that concludes the presentation I prepared for everyone to that.

Cindy Grether: 

Okay, I just want to reiterate California Lutheran University School of Management offers an MBA in financial planning for professional seeking and graduate degree. It helps financial advisors pursue a leadership position or grow their financial planning practice by deploying advanced financial planning, effective client communication counseling, streamline practice management, as well as leveraging fintech. Cal Lutheran is also a Hispanic serving institution.

There’s a graduate level scholarship is available to qualified Latina women who are seeking an MBA and financial planning. So if you’re thinking about coming and joining us, don’t hesitate to contact me or contact our admissions group.

And with that, I want to thank you, Jeremy for taking the time today, we appreciate you and teaching here at CLU and bringing the wealth of knowledge that you have to the classes you teach and to this particular presentation. So, thank you.

Jeremy Witbeck:

It was my pleasure. Thank you, Cindy.

Learn more about Cal Lutheran’s Financial Planning Program here and follow us on social media:

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If you are wondering what an angel investor is, Mike Panesis is the man you should talk to. Panesis has been an angel investor for about ten years. He is the Chairman Emeritus of the Board of Governors of Tech Coast Angels (TCA) which happens to be one of the largest accredited angel investor groups in the country. He is also the head of the TCA’s Central Coast Investor Network, and a founding member of Santa Barbara Angel Alliance. As well as the Executive Director for Entrepreneurship at California Lutheran University at the Westlake Campus. 

Angel investors are “private investors that like to invest in startups but [they] don’t necessarily know them, you have to go find them,” said Panesis. They are often the investors that allow a startup to get started, which is the most difficult part for the business and the riskiest part for the investor.  

Angel investors are similar to venture capitalists except venture capitalists invest with other people’s money and are employees of a venture capitalist firm, whereas angel investors use their own money to invest with and are not professionals in the business. They behave similarly but work with no salary said Panesis, and they will not fund business plans written on the backs of napkins in a diner he joked.

There are many pros and some cons as to why startups take angel investors. They are often willing to invest again, they are a useful source of advice, and they have good connections to venture capitalists, potential exits and mentors. Some cons are that it can be time-consuming and distracting. 

There are different types of angels; individual angel, angel group, family office, equity crowdfunding program and super angel. 

Panesis is part of a couple of angel groups- this means those in the group invest by themselves, but they evaluate the startups together.  Most angels invest around $25K at one time, usually, they don’t pay more than that. For startups, it can be a lengthy process to eventually get to the point of being invested in, as the investors want to research and have a good depth of knowledge before putting-a-pen to paper. 

According to Investopedia, there are a few ways to invest in a startup either through ownership equity, convertible debt, crowdfunding platforms or angel investor networks to pool capital together. Return of Investment (ROI) is achieved with exit. To reach an exit there are multiple ways, it could be; initial public offering (IPO), acquisition, acquihire, later round buyout or share buyback. 

Panesis advises to set a limit for private investment, to take a conservative approach in publicly-traded stock, and diversification in your portfolio is very important. 

If you are interested in being an angel investor now or in the future, Panesis suggests asking these questions:  

• Have they got a good idea?
• Have they demonstrated they can sell it?
• Do I think they have the resilience to stick with it? 
• Is there a good market opportunity or potential?
  

Until listening to Panesis’s webinar, I had not heard of the term angel investing although I had a rough idea of how personal investments work along with venture capitalists. I think that as young people we should be aware of this type of investing and educate ourselves about it for a few reasons- in the future we may want to be angel investors or we may have a startup one day, particularly if you are interested in the business side. 

If you want to learn more about angel investing I highly suggest this website which helped me to understand it more in-depth. You could also learn more by working with a Certified Financial Planner (CFP) practitioner or reach out to the Financial Planning program here at California Lutheran University. 

About the Speaker:

Mike Panesis is the Executive Director for Entrepreneurship at California Lutheran University at the Westlake Campus. Panesis previously taught at a technology management program at UC Santa Barbara, where he also played a key role in the new startup incubator at Goleta Entrepreneurial Magnet. He has a wide background ranging from executive management to management consulting.

 Panesis is the Chairman Emeritus of the Board of Governors of Tech Coast Angels (TCA). This is one of the largest accredited angel investor groups in the country. He is also the head of the TCA’s Central Coast Investor Network, and a founding member of Santa Barbara Angel Alliance. Panesis has an MBA degree in Marketing from Rutgers University in New Jersey.

About the Author:

Rosie Baker is an undergraduate student at California Lutheran University studying Communication with an emphasis in PR and Advertising. She is also minoring in Creative Writing.

References:

California Lutheran University. (n.d.). Faculty Directory. Retrieved from 

https://www.callutheran.edu/faculty/profile.html?id=mpanesis. 

Ganti, Akhilesh. “Angel Investor.” Investopedia, Investopedia, 29 Sept. 2019, 

https://www.investopedia.com/terms/a/angelinvestor.asp. 

Watch the archived webinar below:

Mike Panesis – Webinar

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