2023 brought a number of important developments that had important implications for wealth management and financial planning. Here, the team of financial advisors at Weiss, Hale & Zahansky Strategic Wealth Advisors share their take on some of the most impactful changes they've seen this year.
Rising Interest Rates Create Opportunities
"Higher interest rates have presented additional opportunities in managing short term holdings and for those holding large amounts of cash or emergency funds, the ability to generate a higher rate of interest than they may be paying on the mortgages and car loans they may have taken out prior to the Federal Reserve’s hiking policy," says Laurence Hale, AAMS®, CRPS®.
"The recent high inflation has given rise to increases in larger Social Security benefits, offsetting some of the rise in higher prices, particularly for those relying on this source of income in retirement. In addition, those fortunate enough to still have a traditional pension with a COLA (cost of living adjustment), may have received outsized increases to their benefit payments."
Navigating Monetary Policy Shifts in Portfolios
"Continuation of interest rate increases on US and global monetary policy fronts provided for pockets of opportunity across markets. Navigating those opportunities for client portfolios and business owner business plans has been a key focus this year," notes James Zahansky, AWMA®. "While interest rate growth continued, marketplace innovation also continues, particularly in AI and other technologies, and we should all consider this and be sure clients and investors separate the day-to-day headlines from market performance to be sure we are thoughtful about the future of strategic financial plan achievement at the client level."
Retirement Planning Changes from Secure Act 2.0
In the view of Leisl Langevin, CFP®, CDFA®, the most impactful changes were from the Secure Act 2.0.
“Student loan payment matching contributions (starting in 2024), for accumulators that are still paying off debt, this allows them to pay off debt while saving for retirement. RMD age was raised from 72 to 73. Those born in the 1960s and later it is age 75,” Langevin says. “This has a big impact on accumulators as we plan for retirement and considering their tax deferred money might be growing for longer causing higher RMDs later in life."
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Psychology and Human Behavior in Financial Decisions
"Importance of psychology in financial planning has become increasingly important in our field - recognizing and understanding the emotional and cognitive factors that influence financial decision-making helps us meet the client where they are," Michael Baum, CFP®, RICP® emphasizes. "When we are more familiar with the clients’ goals, values, fears, and concerns, we can give more strategic and personalized advice that they are able and willing to act upon (next-best action approach)."
Baum adds, "High yields on cash/cash equivalents – for the first time in years, people could get actual interest from banks via savings, CDs, money markets. We encouraged a lot of clients to take advantage of this, but we’re already seeing data indicating the best time to get out of cash (and into other asset classes) is before rates decline. In other words, enjoy it for now, but cash will not remain attractive forever."
Focus on Client Values and Goals
"I’m really happy to see the traction and recognition that is building in the industry for putting the client’s specific needs, preferences and values at the center of the financial planning process, in alignment with their goals. That’s something that’s at the core of our approach here at WHZ, so that really resonates with me," says Holly Wanegar, CFP®.
"The best part of my career is getting to know our clients, hearing about their families, and watching them achieve their goals over time. This motivates me every day, and it makes me so happy to get up and come to work at a company that shares these values with me.”
“By truly listening and understanding our clients’ values and perspectives, we’re able to build a plan together that really is tailor-built just for them, and that makes them more likely to stick with that plan and succeed at reaching their goals," Wanegar said.
Overall, 2023 has brought meaningful evolutions in the financial planning, investing, and wealth management industry, from responding to economic shifts to leveraging technology and focusing more deeply on the human side of financial planning. As advisors, we at WHZ look forward to continuing to adapt and provide the most strategic guidance to help our clients achieve their financial life goals. If you’d like to partner with us to set a path toward achieving your own financial goals, contact us at (860) 928-2341 or firstname.lastname@example.org, or schedule a complimentary consultation on our website.
Authored by Laurence Hale, AAMS®, CRPS®, James Zahansky, AWMA®, Leisl L. Langevin, CFP®, CDFA®, Michael Baum, CFP® RICP® and Holly C. Wanegar, CFP® . Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com.