Podcast: Play in new window | Download

Insightful. Independent. Innovative.
Podcast: Play in new window | Download
Podcast: Play in new window | Download
Are you maximizing your wealth potential? A recent study found that high-net-worth individuals have over half their wealth in IRAs and 401ks. If you’re like many investors, you may be overlooking a crucial component of your financial portfolio: your 401k or 403b accounts. These accounts, known as held-away assets, can play a significant role in your overall investment strategy.
In this blog, we’ll show you why considering these held-away assets is essential for investment diversification, risk management, and increased efficiency, and why you should consider having a professional financial advisor optimally integrate these assets into your overall portfolio and financial plan. If we reference a 401k, and you have a 403b, just keep in mind it works the same way. It is just another held-away asset.
Here’s the punch line: Intelligent Investing is able to monitor, manage, and trade 401k, 403b, or other retirement assets while you are still employed. We can do this using our Intelligrations® and it helps minimize our clients’ financial stress so they can maximize their lives.
Held-away assets are investment accounts that are held by an investor at a financial institution other than the one where their primary investment portfolio is managed. These assets typically include 401(k) plans, 403(b) plans, 529 plans, and other employer-sponsored retirement plans. Held-away assets are typically not managed directly by a financial advisor or wealth management firm, but rather are held with a separate institution, and managed by the individual employee. Despite being held separately, these assets should still be considered and incorporated into an investor’s overall financial strategy and investment portfolio, making it important for financial advisors to consider them when working with clients.
A 401k or 403b is considered a defined contribution (DC) plan. A defined contribution (DC) plan is a retirement plan that’s typically tax-deferred, in which employees contribute a fixed amount or a percentage of their paychecks to an account that is intended to fund their retirements. In addition, the sponsor company can match a portion of employee contributions as an added benefit. Employers like DC plans because the risk of the underlying investments are placed upon the employee. This is why America has shifted away from having pension plans (defined benefit plans) where they were on the hook for the underlying investment results.
Let’s take a look at some of the benefits of integrating your held-away assets into your overall financial picture.
Investment diversification is a key factor in reducing risk and maximizing returns in a portfolio. However, holding assets in multiple accounts at different institutions can make it difficult for investors to achieve true diversification. This is where considering held-away assets can play a crucial role. By taking these assets into account and incorporating them into an overall investment strategy, financial advisors can help clients achieve a more diversified portfolio.
When managing a portfolio, it’s important to consider not just the type of investments being held, but also the tax implications of those investments. For example, qualified accounts like 401(k)s and IRAs offer tax benefits, but also come with limitations on when and how funds can be withdrawn. On the other hand, taxable accounts (i.e., brokerage account) offer more flexibility, but may have higher tax implications. By integrating your 401k, financial advisors can assist clients in balancing the tax location of investments and create a more diverse portfolio that takes into account both qualified and non-qualified (taxable) accounts.
If you’re like most employees, you do not know what kinds of risk there are in your 401ks at any given point in time. If you don’t get the risk right, then you may not stick with the portfolio and financial plan.
Risk management is a critical component of any successful investment strategy. By integrating held-away assets, financial advisors can help clients better manage risk and achieve their investment goals. One of the primary benefits of incorporating held-away assets into an overall investment strategy is that it allows for a more comprehensive view of your financial situation. This increased visibility can help financial advisors make more informed decisions about the allocation of investments, allowing them to manage risk more effectively.
For example, you might have a bunch of U.S. large cap equities in your brokerage account, and then you decide to buy a U.S. stock market ETF index for your 401k. By not considering both buckets, you could essentially “double-up” and have a concentrated risk position.
When financial advisors have access to all of a client’s 401k and retirement plan information, including held-away assets, they can better track investment performance and rebalance as needed to manage risk. This can be especially important in times of market volatility, when swift action may be needed to protect a client’s investments.
Employees are often busy with their job or their family and don’t have time, nor the expertise to research 401k options or rebalance their 401ks.
Incorporating held-away assets into an overall investment strategy can streamline the investment process. When assets are held in multiple accounts at different institutions, it can be time-consuming for clients to manage their investments and keep track of their portfolio performance. By considering held-away assets, financial advisors can provide clients with a more comprehensive view of their investments, reducing the need for them to constantly monitor multiple accounts. This can save clients time and increase efficiency, allowing them to focus on other aspects of their lives.
Managing a 401(k) can be a complex and challenging task for individual employees who lack the necessary knowledge, skills, and experience in trading and asset allocation. Without a proper understanding of the markets, investment risks, and the various investment options available, employees may make costly mistakes that can have a significant impact on their retirement savings.
For example, an employee may be too aggressive or too conservative in their investment decisions, leading to a portfolio that is either heavily invested in risky assets or lacking the diversification needed to mitigate risk. In some cases, employees may even miss out on investment opportunities due to a lack of knowledge or a tendency to make emotionally driven decisions based on short-term market movements.
Moreover, managing a 401(k) involves more than just selecting investment options. Employees must also monitor their portfolios, rebalance as needed, and make trades based on their long-term investment goals and risk tolerance. Without the expertise and resources of a professional financial advisor, it can be difficult for individual employees to effectively manage these tasks and make informed decisions that align with their investment objectives.
Studies have shown the shortcomings for investors managing their own 401(k)s and retirement accounts. These studies by Vanguard, Russell, and Envestnet conclude that having professional management on these accounts may generate up to 3% better performance each year net of fees.
At Intelligent Investing, our passion is to minimize financial stress and maximize lives. Efficiency is a critical component of any successful investment strategy, as it allows clients to minimize their time and effort.
Previously, the tools were not available to fully manage held-away assets, which can be a significant part of clients’ overall portfolios. However, recent technology has allowed us to be able to manage these assets alongside the other assets we manage, giving us a fuller understanding of our clients’ financial picture.
Using our proprietary Intelligrations®, we now can use innovative technology to provide even better service on these accounts. Intelligent Investing is now able to make sure the entirety of our clients’ portfolios are taken care of including their 401(k), 403(b), and other retirement accounts. Our clients receive a personalized risk number that encompasses their entire portfolio in real time (assets we are directly managing, and assets that we manage in their held-away accounts (i.e., your 401(k), 403(b), etc…)
When markets get fearful or greedy, we can trade assets including the ones in their 401(k) or 403(b). We think this is a fantastic way to minimize their financial stress and maximize their lives.
Now our clients don’t have to wonder, should I be doing some rebalancing or making trades inside my 401(k), or wondering what their asset allocation should be inside their 401(k).
We can now proactively manage, monitor and trade these accounts just like your other assets with us. We are really excited about what this can do for our clients to make sure all of their assets align to their goals. This truly is intelligent investing.
Learn More About Intelligently Integrating Your 401K or 403b
In conclusion, considering held-away assets can provide numerous benefits for both financial advisors and their clients. It can improve investment diversification, allowing for a more comprehensive and balanced portfolio. It can also improve risk management by providing a more complete picture of a client’s financial situation and reducing the risk associated with an over-reliance on any one particular investment. Additionally, considering held-away assets can increase efficiency by streamlining the investment process, reducing the need for frequent transfers, and allowing financial advisors to more effectively track investment performance. By considering held-away assets and incorporating them into an overall investment strategy, financial advisors can help clients achieve their investment goals with greater ease and confidence.
At Intelligent Investing, we have the ability through our proprietary Intelligrations® to monitor, manage, and trade within accounts that are held-away (401k, 403b, etc…).
One of our unique factors is to leverage technology, and we have leveraged financial technology such as artificial intelligence to help craft the above blog. We have modified the results of the blog to reflect our opinions. Leveraging this technology helps us be more efficient and serve our high-net-worth clients in other ways.
If you would like to learn more about our proprietary Intelligrations®, we’d love to have a complimentary call or coffee with you. Click here to get started.
Credits: This blog was written in part by ChatGPT, an AI language model developed by OpenAI. The content of this blog reflects the knowledge and opinions of ChatGPT, may or may not reflect the knowledge and opinions of Intelligent Investing, and is protected by copyright laws. Please do not reproduce or distribute without giving proper credit to ChatGPT and OpenAI.
Reading Time: 2 minutes
Top Tips to Keep Your Financial New Year’s Resolutions
If you are like me, it is easy to set a bunch of new year’s resolutions for the new year, only to struggle to keep them until the end of January. Did you know that making New Year’s resolutions possibly started 4,000 years ago by the ancient Babylonians? And I bet they didn’t do a good job of keeping their resolutions either. In fact, I saw a t-shirt that said, “My new year’s resolution is to do last year’s resolution, which was also the previous year’s resolution. Today, I’d like to share with you a resource that should help you as you consider making your New Year’s resolutions. Though the following video was created last year, the truths mentioned are still true.
New Year’s Resolution Facts
This is the time of year where most people make New Year’s Resolutions. According to the University of Scranton, only 8% of those who make New Year’s resolutions actually keep them. In fact, research conducted by Strava using over 800 million user-logged activities in 2019 predicts the day most people are likely to give up on their New Year’s Resolution is January 19. Well that’s depressing. Wouldn’t it be better to just not have resolutions, that way there isn’t the associated guilt of not keeping them?
As Zig Ziglar says, “If you aim at nothing, you will hit it every time.”
I’ve found that one of the best ways to meet your financial goals is to break them down into smaller chunks.
I tend to start with writing down annual goals (including some stretch goals) that are a little beyond my reach.
Let’s say you want to pay off a $50,000 loan next year, you can break that down into quarters, months, and even paychecks. Remember, there is only one way to eat an elephant: a bite at a time.
Intelligent Investing believes in minimizing financial stress to maximize your lives. We created this financial freedom plan that includes monthly tasks as well as things to consider buying and things to avoid buying each month.
For example, the Financial Freedom calendar suggests that in January you should consider automation. Recently, I decided to automate all my bills to be paid and I can already tell you that the stress has been reduced instead of wondering, did I already pay that bill? When is that one due?
We love organizing our clients’ “financial junk drawers” and would love to organize yours as well. Feel free to share this Financial Freedom Plan with others.
A Resolution You Can Keep
One last resolution to consider…becoming more financially educated. You can start by simply subscribing to our Intelligent Insights Newsletter. You can also subscribe to our Intelligent Money Minute podcasts.
If you are ready to get some accountability partner and are looking for a new financial advisor, we’d love to have a complimentary call or coffee with you. Click here to get started.
Reading Time: 3 minutes
Do you have questions about SECURE 2.0 Act that passed in the final hours last year? You are not alone. I’ve been reading a lot about it and I too even have some questions for lawmakers.
As we wrapped up 2022, President Biden signed the SECURE 2.0 Act into law on December 29th.[1] The new act is being called SECURE 2.0 based on the name of its thematic predecessor, the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”). This legislation makes notable changes to qualified retirement plans. These will increase the age for RMDs, make enrollment and escalation automatic for most new 401(k)s and 403(b)s, and increase tax credits for low-income retirement savers, among other changes. Here’s a summary of some notable changes that occurred.
This summary scratches the surface on what all is in the SECURE 2.0 Act. Taxpayers (and especially those approaching retirement) are all but guaranteed to continue to have an endless stream of questions with respect to this complicated area.
Ask yourself: Do I have a trusted advisor who specializes in tax planning? Does my financial advisor have the right credentials (such as being a qualified CPA?) Is my advisor a true fiduciary? (i.e., do they put your interest AHEAD of their own at ALL times?)
Why don’t you make a new year’s resolution to get your “financial junk drawer” in order this year. We would love to help. We love serving our high-net-worth clients by minimizing financial stress and maximize their lives using our proprietary Intelligrations™.
You can start by subscribing to our Intelligent Money Minute podcasts or by subscribing to our Intelligent Insights blogs. Or if you are finally ready to get some professional help, please let us know.
If you want to collaborate or outsource this to qualified fiduciary professionals, please click here to reach out for a complimentary call or coffee.
Reference: Michael Kitces’ Perspective on the Secure Act 2.0
Podcast: Play in new window | Download
Reading Time: 2 minutes
In this episode of Intelligent Money Minute, we interviewed Matt Hougan, Chairman of Inside ETFs, on his journey in the ETF and FinTech industry. As Matt Hougan states, his passion is identifying and developing technology that elevates the finance industry. Matt used this passion to build the world’s first ETF data and analytics system. During this episode, Matt shares the backstory of his financial career and how he landed in the ETF and FinTech industries.
As a reminder, the views and opinions expressed on the Intelligent Money Minute podcast are those of the interviewee and do not necessarily reflect the views of Intelligent Investing, LLC. Intelligent Investing does not imply any endorsement or approval of any of the investments mentioned on the podcast. This podcast is to educate the public, and the investment strategy and themes discussed may not be unsuitable for investors depending on their specific investment objectives and financial situation.
Our boutique firm serves high-net-worth individuals and families. We would be honored to sit down with you to discuss your investment objectives and financial situation.
We are excited to be interviewing Matt Hougan, and we have several more episodes where we explore the ins and outs of ETFs, bitcoin, and blockchain, so be sure to subscribe to our podcasts to hear all the interviews.
Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is the Global Head of Research for Bitwise Asset Management, creator of the world’s first cryptocurrency index fund. Hougan is also Chairman of Inside ETFs, the world’s largest ETF conference. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system. Hougan is co-author of the CFA Institute’s Monograph on ETFs. He’s also a crypto columnist for Forbes and a three-time member of the Barron’s ETF Roundtable. For more resources from Matt Hougan click here.
Podcast: Play in new window | Download
Podcast: Play in new window | Download
Reading Time: 2 minutes
In this episode of Intelligent Money Minute, we interviewed Matt Hougan, Chairman of Inside ETFs on the crypto’s impact on the war in Ukraine. During the war in Ukraine, Ukraine President Zelenskyy called upon other nations to donate via cryptocurrency in an effort to combat Russia. As Matt Hougan states, war is chaotic derailing standard infrastructure while crypto remained intact. Matt highlights the potential positives of an established cryptocurrency as a means of anti-fragility in the midst of uncertainty.
As a reminder, the views and opinions expressed on the Intelligent Money Minute podcast are those of the interviewee and do not necessarily reflect the views of Intelligent Investing, LLC. Intelligent Investing does not imply any endorsement or approval of any of the investments mentioned on the podcast. This podcast is to educate the public, and the investment strategy and themes discussed may not be unsuitable for investors depending on their specific investment objectives and financial situation.
Our boutique firm serves high-net-worth individuals and families. We would be honored to sit down with you to discuss your investment objectives and financial situation.
We are excited to be interviewing Matt Hougan, and we have several more episodes where we explore the ins and outs of ETFs, bitcoin, and blockchain, so be sure to subscribe to our podcasts to hear all the interviews.
Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is the Global Head of Research for Bitwise Asset Management, creator of the world’s first cryptocurrency index fund. Hougan is also Chairman of Inside ETFs, the world’s largest ETF conference. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system. Hougan is co-author of the CFA Institute’s Monograph on ETFs. He’s also a crypto columnist for Forbes and a three-time member of the Barron’s ETF Roundtable. For more resources from Matt Hougan click here.