Investor Psychology

The Rapid Rise of Artificial Intelligence

October 19, 2023 by Hans Blake, CFA, CPA

Reading Time: 2 minutes

AI’s Ever-Changing Landscape

Larry Siegel began by highlighting the dynamic nature of AI technology. It’s a field that’s progressing at a breathtaking pace, making it challenging to keep a steady viewpoint. The implications of AI’s continuous evolution extend far beyond what we can currently anticipate.

An anecdote from Tyler Cowen’s blog, “Marginal Revolution,” left Siegel impressed. The story was written by an AI program and exuded creative writing with a flair for evoking emotions. This starkly contrasted previous AI outputs, which Siegel found unimpressive and likened to amateurish essays.

The Future of Financial Advice and AI

Despite the breathtaking progress in AI, Siegel remains cautious. While acknowledging AI’s ability to process vast data sets at remarkable speed, he is skeptical about whether it can truly mimic human intelligence. The debate rages on about the extent to which AI can replicate the intricacies of the human brain.

The interview delved into the question of AI’s role in financial advice. Could AI replace human advisors, particularly for intellectual tasks? Siegel’s cautious approach to AI’s evolution is timely given its potential impact on various professional fields, including finance.

At Intelligent Investing, we continuously explore the intersection of technology and human intelligence. As AI develops, it’s essential to strike a balance, recognizing the strengths of both humans and machines. The future will likely demand a collaborative approach to maximize the potential of both.

Larry Siegel Bio

Laurence B. Siegel is the Gary P. Brinson director of research at the CFA Institute Research Foundation and an author, consultant, and speaker on investment management and economics. Before retiring from full-time work in 2009 he was director of research at the Ford Foundation and, before that, head of research at Ibbotson Associates (since acquired by Morningstar). He attended the University of Chicago (BA 1975, MBA 1977). His book, Fewer, Richer, Greener, has been published by Wiley and is available, along with his other work, at https://www.larrysiegel.org.

The Benefits Of Working Beyond the Typical Retirement Age

September 7, 2023 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

The Financial Advantage

First and foremost, extending your career offers a significant financial advantage. Most jobs pay better than the retirement benefits that follow. By working longer, you can bolster your income, reducing the need to draw from your retirement savings. This, in turn, allows your nest egg to last longer.

For instance, if you retire at 70 instead of 62, you have eight fewer years of retirement to finance with your savings. This can translate to a more comfortable retirement lifestyle. Additionally, working longer provides you with an opportunity to save more, further strengthening your financial position.

Mental Stimulation and Social Interaction

Beyond financial considerations, working beyond the traditional retirement age offers vital mental stimulation and social interaction. Engaging in meaningful work can keep your mind sharp and active. It prevents the feeling of life becoming a waiting game, as Larry aptly puts it.

The human need for intellectual engagement and social connection remains a driving force. Continuing to work allows you to maintain a sense of purpose, contribute to society, and interact with colleagues, fostering personal growth and well-being.

Personal Fulfillment

Larry Siegel stresses how remaining intellectually active and engaged can be personally fulfilling. By continuing to write books, give talks, and interact with colleagues and clients, he not only sustains his mental acuity but also enjoys the sense of purpose and fulfillment that comes with it.

At Intelligent Investing, we understand that the transition into retirement can be challenging. Husbands and wives often have differing goals and concerns. Our mission is to unify families through effective financial communication, helping couples make a successful transition into retirement.

Explore our retirement resources on our website to gain valuable insights into this transformative phase of life. We are passionate about minimizing financial stress and maximizing the quality of life for our clients.

Larry Siegel Bio

Why People Stop Working Even When It Is Healthy For Them

July 20, 2023 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

In this episode of Intelligent Money Minute, we had the pleasure of interviewing Larry Siegel, the director of the CFA Institute Research Foundation and a prolific investment management author. The discussion revolved around why people stop working even when it may benefit them to continue working. In this blog, Larry Siegel sheds light on the reasons behind early retirement and the potential benefits of working beyond traditional retirement years.

The History of Traditional Retirement Age

Larry Siegel explains that the age at which most people stop working, typically between 62 and 67, can be traced back to the 1880s when Chancellor Otto von Bismarck in Germany established the National Pension Scheme. This age has persisted through the establishment of Social Security in the US by President Franklin Roosevelt in 1935 and the subsequent eras of defined benefit and defined contribution pension plans. Tradition and inertia have played a significant role in preserving this retirement age. Additionally, physical limitations and a desire for easier work, which often coincide with age, have also influenced the decision to retire.

The research indicates that for physically demanding jobs, retirement in the mid-sixties may be appropriate. However, for those in less physically demanding roles, retirement at this age might be premature. The concept of retirement has evolved, and now many of us are engaged in think work, which does not necessarily require physical stamina. For such individuals, retirement at this age may be too early, as their skills and productivity could still be valuable to the workforce.

Lack of Flexibility in Retirement Decisions

Despite the potential benefits of continued work, many employees face challenges in transitioning to easier roles or negotiating part-time work arrangements. Rigidity in employment laws and established customs often limit the options for workers who wish to continue working beyond the traditional retirement age. The result is that many employees are forced to retire when they could still contribute meaningfully to the workforce.

The decision to retire should be individualized, considering the unique circumstances of each person and their specific employment situation. At Intelligent Investing, we believe in customizing financial strategies to suit our clients’ goals and preferences. We leverage our proprietary Intelligrations® to help our clients run various scenarios, such as unexpected health crises or part-time work arrangements, to achieve optimal financial outcomes. Our passion is to minimize financial stress and maximize the quality of life for our high-net-worth clients.

Larry Siegel Bio

8 Key Takeaways from the SECURE 2.0 Act

January 19, 2023 by Hans Blake, CFA, CPA

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.

The age for RMDs goes up to 73 for those who turn 72 in 2023 and 75 in 2033. This is great news for those who don’t need the funds from qualified accounts. We help our clients with Roth conversions, and this allows more years to do this.
Most of the new 401(k)s and 403(b)s will be required to enroll employees automatically and escalate contributions automatically after December 31, 2024. This is what we preach about–improving investor behavior. Check out our behavioral finance page to learn more.
RMDs are eliminated from Roth accounts in 401(k)s and 403(b)s for tax years after December 31, 2023. As a result of SECURE Act 2.0, plan Roth accounts and Roth IRAs will be on more of a level playing field. It won’t be quite so obvious to determine whether or not rolling over a plan Roth account to a Roth IRA is in your best interest going forward. (We can help you with the decision)
Catch-up contribution limits will go up for those age 60 and 63 after December 31, 2024 to the greater of two: either $10,000 or 150% of the regular catch-up amount for those 50 and older. (Keep in mind that high wage earners will be required to use Roth option for catch-up contributions.)
The bill decreases the penalty for missed RMDs (or distributing too little) from 50% to 25% of the shortfall, and if the mistake is corrected in a timely manner, the penalty is reduced to 10%. (If you are a client of Intelligent Investing–we handle this automatically for you.)
There are some great (and complicated) planning options around Roth accounts inside and outside your employer plans. The Act authorizes the creation of both SIMPLE Roth accounts, as well as SEP Roth IRAs, for 2023 and beyond. Previously, SIMPLE and SEP plans could only include pre-tax funds. We help business owners setup Simple IRAs and manage their wealth in a cohesive way. (Side note: do you know it typically makes sense to put your “efficient” assets in a Roth IRA and your “less-efficient” assets in qualified accounts. It’s called tax location and something we love doing for our clients to reduce their tax bills)
Transfers from 529 plans to Roth IRAs (max amount in individual’s lifetime is $35,000) may be an area for high-net-worth families to consider. Great planning opportunity for high-net-worth families who have been funding their 529 Plans for a long time.
Those who are charitably inclined can give from qualified accounts directly to charities via Qualified Charitable Contributions (QCDs) and they can still be taken at 70.5 before reaching the new RMD ages. (We currently do this for some clients and can help you with this)

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

Matt Hougan’s ETF & FinTech Journey

December 22, 2022 by Hans Blake, CFA, CPA

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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 Bio

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.

How Did Riskalyze Work During the COVID Pandemic Selloff

December 1, 2022 by Hans Blake, CFA, CPA

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Reading Time: < 1 minute

On today’s Intelligent Money Minute, we interview Aaron Klein on how Riskalyze worked during the Covid-19 pandemic selloff. During this episode, Aaron talks about the market “snap back” and how his company prepares for various scenarios. Aaron reflects on the early days of the pandemic and how Riskalyze helped intelligent investors weather the storm of uncertainty.

If you are looking for a financial advisor who can be your accountability partner who will help you with the emotional rollercoaster of financial markets. We believe in a data-driven approach to help minimize our human tendencies to sabotage our portfolios and improve the chances for success in sticking to a long-term plan.

Intelligent Investing is a boutique wealth management firm serving high-net-worth individuals and families. We’d be honored to take the first step with you by having a complimentary and confidential call or coffee.

If you are interested in becoming our next high-net-worth intelligent investor or want to learn more about our philosophy on risk management, click here. We’d be honored to have a brief confidential call or coffee with you to learn about your needs.

Aaron Klein Bio

Aaron Klein is co-founder and CEO at Riskalyze, the company that invented the Risk Number® and empowers the world to invest fearlessly. The company is headquartered in Auburn, California, and serves tens of thousands of financial advisors.

He is husband to Cacey Steward Klein, dad to Spencer (born in South Korea), and Emma and Teddy (born in Ethiopia). Aaron and Cacey cofounded Hope Takes Root, an initiative to use vocational training and life mentoring to change the future for orphans and at-risk kids in Ethiopia. He also sits on the board of Invest in Others.

Crypto’s Impact on the War in Ukraine

October 27, 2022 by Hans Blake, CFA, CPA

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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.

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.

Matt Hougan Bio

How Riskalyze Helps Concentrated Portfolios

October 6, 2022 by Hans Blake, CFA, CPA

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Reading Time: 2 minutes

On today’s Intelligent Money Minute, we interview Aaron Klein on how Riskalyze helps concentrated portfolios. Riskalyze is an investment risk software that powers the world’s first risk alignment platform that is built on top of a Nobel-prize-winning academic framework.

You may be an executive with a concentrated stock position, or if you have a legacy stock holding with a low-cost basis that has appreciated over the years and you are afraid of selling it due to the tax ramifications. As Aaron and I mentioned, we have tools available that can help round out your portfolio and balance out the unintended tax consequences.

We’d be happy to show how we work with our high-net-worth clients and de-risk their portfolios that may have an unwanted concentrated position. As a CPA, I want to help you minimize your taxes and help build a portfolio that you will be able to stick with based on your risk tolerances.

At Intelligent Investing, we use Intelligrations™ or Intelligent Integrations to make sure that our clients’ goals-based financial plan is integrated with their portfolio and to integrate their portfolio with our clients’ risk tolerance. As Aaron mentioned, we want to transform fearful investors who make bad decisions into fearless investors who make great decisions, and over time improve their financial picture. To learn more about our philosophy, subscribe to our podcasts so you can stay informed.