CE Course Catalog

8.25.2020

• General Planning

There is little unbiased research and insight when it comes to how financial planners actually work: prepare plans, technology, and fees. Moreover, to remedy this issue and begin to fill in the gaps, Kitces Research conducted is second, bi-annual survey of financial advisors. In this research-based newsletter, we begin to answer these questions about how financial planners work and compare findings from 2018 to more recent 2020 findings.

– LO #1: Identify the different ways in which financial advisors use their time by examining advisor role as well as business model, comparing 2018 and 2020 data.

– LO #2: Identify the difference between financial advisors’ approach: calculator, comprehensive, customized, and collaborative and how that approach impacts plan delivery as well as plan components.

– LO #3: Identify how different members of a financial advisory team, depending on business channel, impact financial plan creation.

– LO #4: Identify the CFP® can impact plan development and time spent developing the plan.

– LO #5: Identify the ways in which financial planners communicate with clients.

 – LO #6: Identify the ways in which financial planning tools can impact the financial planning process and plan development, and how they don’t.

– LO #7: Identify the ways in which financial planning fees and fee structure are related to the business model and clientele.

Registered Investment Advisor (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.

Broker-Dealer (B/D): This is a type of business structure where the firm or individual trades and sells securities, from its own benefit, as well as to its customers.

Assets Under Management (AUM): This is a type of fee structure where the fee is based on how much the client has under management with his or her advisor

Retainer: This is the type of fee structure where the base retainer is a set price and then additional fees can be added on, on top of that base retainer.

Insurance Broker: This individual sells and negotiates insurance for compensation.

Calculator: Use a plan to calculate needs and recommend solutions.

Comprehensive: Use plan software output to bring together a holistic picture of a client solution.

Customized: Create a custom-written plan for an individual client’s circumstances.

Collaborative: Use planning software collaboratively/interactively life in client meetings.

Property and Casualty (P&C) Insurance: This is the type of insurance that covers your things – cars, home, ect. It also provides coverage to protect you if you’re responsible for an accident or injury.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.0 CFP hours
• 3.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

April 30, 2019

• Healthcare
• Insurance
• Taxes

There are few things more expensive than unexpected – and uninsured – medical expenses. Whether the medical expense is a sudden health event, the progression of a chronic illness, or due to a permanent disability, serious health-related expenses can wreak havoc on a family’s finances. Sadly, medical-related bankruptcy filings now account for nearly two-thirds of all bankruptcy filings. And to that end, each year, more than a half million are forced into bankruptcy as a result of medical-related events, from the high cost of care to the impact of lost wages.

As a result, to the extent that medical expenses do occur, and need to be paid, it is crucial to maximize the available tax benefits that the government provides to help support households in their time of medical need… from the income tax deduction for (qualified) medical expenses, to the treatment of paying to get into medical facilities, premiums for various types of insurance to protect against such expenses, and the receipt of those insurance benefits themselves.

LO #1: Identify how to use the income deduction for qualified (uninsured) medical expenses.

LO #2: Identify the impact of the TCJA on deductible medical expenses.

LO #3: Identify how to handle costs incurred for dependents.

LO #4: Identify the importance of the timing of qualified medical expenses.

LO #5: Identify qualified and non-qualified medical expense.

 LO #6: Identify the impact of residence-related qualified medical deductions.

LO #7: Identify the tax deductibility of upfront and ongoing continuing care retirement communities (CCRCs).

LO #8: Identify different strategies for using different accounts (tax-favored, ABLE, retirement) for qualified medical expenses.

Adjusted Gross Income (AGI): This refers to a person’s total gross income minus specific deductions.

Hurdle Rate: The specified percentage of adjusted gross income (AGI) hat the taxpayer’s medical expenses must exceed in order to be deductible.

Continuing Care Retirement Communities (CCRCs): Retirement communities that are hallmarked by providing varying levels of medical and/or long-term care within the same community and location.

Flexible Spending Accounts: This is a tax-advantaged account, but most of the money in it has to be used by the end of the year. Only $500 can be carried over.

Archer Medical Savings Accounts: This is an account designed for employees of small businesses and self-employed individuals with high-deductible health plans.

Health Savings Accounts: The “gold” standard because they allow for tax-deductible contributions and tax-deferred growth earnings, in addition to the fact that distributions made to pay for medical expenses are 100% tax free.

Achieving a Better Life Experience Act (ABLE) Accounts: These are tax-preferenced accounts that can be used to help save and invest for individuals who have already become disabled (or blind) by their 26^th birthday.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• 1.5 CFP hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

January 30, 2019

• Estate Planning
• Taxes

In the past, estate planning was a primary objective for the mass-affluent needing to avoid Federal estate taxes. Recent estate tax changes though, estate planning will really only matter to a very small minority. For everyone else, the new focus will be on tax-planning at death, specifically maximizing available step-up in basis opportunities.

LO #1: Identify the different ways in which assets are treated, receiving a step-up in basis or not, after an individual has passed.

LO #2: Identify the how IRD deductions are used and applied.

LO #3: Identify how steps-down in basis are treated.

LO #4: Identify planning considerations for when property is held jointly between spouses at death.

LO #5: Identify planning strategies to maximize step-up in basis opportunities.

 LO #6: Identify strategies for transferring assets between spouses before death.

LO #7: Identify planning strategies for capital losses.

LO #8: Identify trust strategies to maximize step-up in basis.

Income in Respect of Decedent: Any type of pre-tax asset whose ordinary income tax consequences were not already recognized before the decedent passed away.

IRD Deduction: Federal income tax deduction that can be claimed by the recipient of the IRD asset for any Federal estate tax paid attributable to the IRD asset.

Step-Up In Basis Rule: This rule essentially treats the beneficiary of an asset received due to the owner’s death as though they purchased the inherited asset for its fair market value on the date of the decedent’s death.

Portability: This term applies to the Federal estate tax exemption, made permanent by the American Taxpayer Relief Act of 2012, that allows the surviving spouse to transfer any of the deceased spouse’s unused exemption amount to the surviving spouse.

IRC Section 2038 Marital Trust: This is an advanced technique to try and secure a step-up in basis for all marital assets upon the passing of the first spouse.

Joint Exempt Step-Up Trust: This trust forms a single joint trust with separate shares for both the husband and wife, where each spouse retains the right to revoke his/her share of the trust until their death.

Capital Loss: A capital loss occurs whenever there is a loss on a capital asset, such as real estate or stock; i.e. it decreases in value.

Qualified Terminable Interest Property (QTIP) Trust: A type of marital trust designed to provide for the spouse after death that at the same time protects assets for future generations.

Medicaid: This is the healthcare coverage that covers low-income adults, children, pregnant women, and the elderly.

Boomerang Period: The one-year waiting period that applies to gifting assets.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• 1.5 CFP hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 12, 2018

• Personal/Career Development
• Practice Management

There is little unbiased research and insight when it comes to how financial planners actually work: prepare plans, technology, and fees. Moreover, to remedy this issue and begin to fill in the gaps, Kitces Research conducted a survey of over 1,000 financial advisors in the Spring of 2018. In this research-based newsletter, we begin to answer these questions about how financial planners work.

LO #1: Identify the different ways in which financial advisors use their time, and in what ways they may want to change the way they spend their time.

LO #2: Identify the difference between financial advisors’ approach to financial planning and plan delivery as well as plan components.

LO #3: Identify how different members of a financial advisory team, depending on business channel, impact financial plan creation.

LO #4: Identify the CFP® can impact plan development and time spent developing the plan.

LO #5: Identify the ways in which financial planners communicate with clients.

LO #6: Identify the ways in which financial planning tools can impact the financial planning process and plan development.

LO #7: Identify the ways in which financial planning fees and fee structure are related to the business model and clientele.

Registered Investment Advisor (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.

Broker-Dealer (B/D): This is a type of business structure where the firm or individual trades and sells securities, from its own benefit, as well as to its customers.

Assets Under Management: This is a type of fee structure where the fee is based on how much the client has under management with his or her advisor

Retainer: This is the type of fee structure where the base retainer is a set price and then additional fees can be added on, on top of that base retainer.

Insurance Broker: This individual sells and negotiates insurance for compensation.

Calculator: Use a plan to calculate needs and recommend solutions.

Comprehensive: Use plan software output to bring together a holistic picture of a client solution.

Customized: Create a custom-written plan for an individual client’s circumstances.

Collaborative: Use planning software collaboratively/interactively life in client meetings.

Property and Casualty (P&C) Insurance: This is the type of insurance that covers your things – cars, home, ect. It also provides coverage to protect you if you’re responsible for an accident or injury.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 4, 2018

• Client Trust & Communication
• Financial Psychology
• General Planning

In this month’s newsletter we look in depth at strategies for applying behavioral finance within a financial planning context, including the ways in which System 1 and System 2 decision making processes differ, the impact of saliency on decision making and behavior, behavioral patterns for following through on commitments, the impact of “herd” behavior in financial planning, and how the “End of History Illusion” affects financial planning!

LO #1: Identify the differences between System 1 and System 2 decision making processes and when they are used.

LO #2: Identify the impact of Saliency on decision making and behavior.

LO #3: Identify behavioral patterns of following through on commitments and breaking goals into smaller pieces.

LO #4: Identify the behavioral impact of “herd” or peer behavior in financial planning.

LO #5: Identify how the “End of History Illusion” affects financial planning.

System 1: Decision process that makes automatic and fast decisions.

System 2: Decision process that requires processing and thinking.

Depletion of System 2: Loss of ability to use System 2 depletion due to exhaustion.

Choice Architecture: Design of how to present choices to an individual.

Saliency: The quality of being particularly noticeable or important.

Modular Financial Planning: Financial planning that deals with subsets of goals and issues separately.

Comprehensive Financial Planning: Financial planning that deals with all goals and issues together.

Social Proof: behavior that looks for validation of or accountability to other individuals from a group.

End-Of-History Illusion: the inability to foresee a change in yourself in the future despite observing changes from the past.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 14, 2018

• Healthcare
• Insurance
• Retirement Planning

In this white paper, we explore retiree health insurance provided through Medicare, the core components of Medicare coverage, how different components of Medicare are provided and the costs of coverage to retirees, the role that Medicare Advantage can play for retirees trying to further manage down the cost of premiums, the initial enrollment periods for signing up for Medicare, and the importance of reviewing Medicare coverage annually.

LO #1: Identify the primary source of health insurance for those over age 65.

LO #2: Identify the three core components of Medicare coverage.

LO #3: Identify standard premiums for Medicare coverage.

LO #4: Identify the health insurance coverage provided by Medicare Advantage.

LO #5: Identify Medicare initial enrollment periods.

Medicaid: The program that was specifically designed to cover medical and long-term care costs for low-income individuals who cannot afford to pay for their own care, and has specific means-based income requirements for eligibility.

Medicare: Created by Congress, this program provides health insurance for anyone/everyone who was eligible for Social Security benefits as well.

Medicare Part A: Known as “hospital insurance”, it is designed to specifically cover inpatient care in a hospital. It also provides a small about of coverage for skilled nursing, home health, and hospice.

Medicare Part B: This is the more traditional “medical insurance” component of the program, covering a wide range of both preventative and medically necessary “non-hospital” medical expenses.

Medicare Part C: This can be considered an alternative to being enrolled in traditional Medicare. It is offered through private insurers, not CMS.

Medicare Part D: This is the prescription drug coverage portion of Medicare.

Centers for Medicare & Medicaid Services (CMS): This is the Federal agency that administers the single-payer national health insurance program

Medigap: These are supplemental policies designed to fill in the “gaps” of Medicare coverage.

High Deductible Health Plan (HDHP): According to the IRS, these are plans where the deductible is at least $1,350 for an individual and $2,700 for a family. Yearly out-of-pocket expenses within these plans range from $6,650 for individuals and up to $13,300 for a family.

Health Savings Account: This is one of the few “triple tax benefit” accounts available to off-set HDHPs. It allows those that qualify to have tax-deductible contributions, tax-deferred growth, and tax-free qualified distributions.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 9, 2018

• Estate Planning
• Taxes

In this white paper, we explore the rules for post-death required minimum distributions of inherited retirement accounts, how the obligation of beneficiaries to take post-death withdrawals varies significantly depending on the type of beneficiary (and whether they are a “designated” beneficiary or not), steps to take to comply with the various obligations that beneficiaries face when inheriting such accounts, and strategies for retirement account owners to consider – before death – to minimize how much beneficiaries are obligated to withdraw in the future, allowing them to maximize and “stretch”, to the extent possible, the ongoing tax-deferral benefits of (inherited) retirement accounts.

LO #1: Identify the rules for post-death required minimum distributions (RMDs).

LO #2: Identify how the obligation of beneficiaries to take post-death withdrawals varies depending on the type of beneficiary.

LO #3: Identify the steps to take to comply with various obligations that beneficiaries face when inheriting retirement accounts.

LO #4: Identify pre-death strategies for retirement account owners to consider when trying to minimize future beneficiaries’ obligation to take withdrawals.

LO #5: Identify the ongoing tax-deferral benefits of inherited retirement accounts.

Designated beneficiary: A living breathing human being

Paper beneficiary: Also known as a non-designated beneficiary, which is a trust, estate, or charity; a non-living, breathing human

Decedent: The person who has passed away.

Stretch IRA: A strategy that limits the required distribution when an IRA is inherited.

Required Minimum Distribution (RMD): This is the minimum amount that must be withdrawn from each account, each year. Roth IRAs do not require an RMD until after death, all other accounts to require yearly withdrawals starting at age 70 ½

5-Year Rule: This rule gives beneficiaries five years to grow assets inside the Roth IRA without tax, but at the end of this window the beneficiary must move all funds from the inherited account.

Required Beginning Date: April 1^st of the year following the one in which the account owner turned 70 ½

Beneficiary Designation Date: September 30^th of the year after death.

Distributable Net Income: In a trust scenario, DNI is the max amount received by an individual who owns a unit or a security in an investment trust, or beneficiary, that is taxable; any amount above this figure will be tax-free.

Roth Conversion: This is an IRA rollover that happens to land in a Roth account, such that the rollover “converts” the pre-tax account into a Roth.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• Retirement Planning
• Taxes

The fundamental benefit of a traditional pre-tax retirement account is the opportunity to enjoy tax-deferred growth. However, if withdrawals aren’t happening, eventually the government will require that a minimum amount of distributions begin (and become taxed), under the so-called “Required Minimum Distribution” (RMD) rules. In this white paper, we examine that while it’s always desirable to minimize and defer taxation to the extent possible, it’s important to recognize that a pre-tax IRA will be taxed eventually. Which means managing RMDs doesn’t avoid taxation, although it can provide at least some tax deferral value.

LO #1: Identify the age at which RMDs must begin.

LO #2: Identify the timing at which RMDs must begin.

LO #3: Identify RMD requirements for Roth 401(k) and Roth IRA accounts.

LO #4: Identify the method for calculating RMDs.

LO #5: Apply the RMD aggregation rule considering varying types of retirement accounts.

LO #6: Identify the method for calculating an RMD on a deferred annuity with a guaranteed benefit rider.

Required Minimum Distribution (RMD): The amount the retiree must withdraw from retirement accounts starting at 70 ½.

Qualified Charitable Distribution (QCD): A “Qualified Charitable Distribution” under IRC Section 408(d)(3) is a distribution made directly from an IRA to a (public) charity. The maximum amount for an individual is $100,000, but spouses may contribute up to $200,000.

Qualified Annuity: A qualified annuity is one that is purchased inside of a tax-qualified (I.e., tax-preferenced) retirement account, such as an IRA or a 401(k).

Benefit Riders: There are both living and death benefit riders. These riders are a descriptive class of contractual add-ons to insurance and annuity products. They provide additional benefits for the contract holder and are purchased at an extra cost.

Deferred Income Annuity: Also referred to as a deferred immediate annuity or a “longevity annuity”, the contract is similar to a traditional immediate annuity in that the purchaser hands over a lump sum check now, in return for receiving a stream of future payments (typically for life). The difference, however, is that while an immediate annuity has payments that begin immediately, a DIA’s payments may not begin until a distant future point in time.

Qualified Longevity Annuity: Related to the DIA, this annuity MUST begin payouts no later than age 85, provide only fixed payments, and have no cash surrender value once purchased. No more than 25% of any employer retirement plan may be invested in a QLAC, up to a cap of $125,000.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• General Planning
• Taxes

Financial planners can learn an immense amount of information about a client’s circumstances by reviewing an individual income tax return. However, the reality is that the complexity of a tax return doesn’t conform neatly to typical income tax planning strategies. In this white paper, we look line-by-line at the key parts of an individual income tax return, which lines and sections should commonly be reviewed, and the sorts of tax planning strategies (or potential tax problems) that can be identified by reviewing a tax return.

LO #1: Identify the various sections of the 1040 tax form and what information is contained within them.

LO #2: Understand the difference between “above the line” and “below the line” deductions.

LO #3: Explain how AMT is determined and when a taxpayer would be subject to it.

LO #4: Discuss the steps involved in reviewing a family’s tax return and what to look for when doing so.

LO #5: Discuss the special tax planning considerations that would applicable when reviewing a self-employed business owner’s tax return.

LO #6: Discuss the special tax planning considerations that would be applicable when reviewing a retiree’s tax return.

Alternative Minimum Tax (AMT): This is an alternative, but mandatory, standard income tax.

Adjusted Gross Income (AGI): This is the measure of income calculated from your gross income and used to determine how much of one’s income is taxable.

Exemption: This is a monetary amount that one gets to subtract from what becomes their taxable income.

Filing status: This is the category that defines the type of tax return the taxpayer uses when filing. It has a lot to do with marital status.

Qualified Charitable Distribution (QCD): This is distribution from an IRA (other than a SEP or SIMPLE) paid to a qualified charity from the IRA directly.

Individual Retirement Account (IRA): This is a tax-deferred retirement plan, meaning the individual does not pay taxes when the money goes in, but when the money comes out it is taxed as regular income.

Roth IRA: A compliment to the IRA, the Roth IRA is an after-tax savings vehicle. Taxes are paid when the money goes into the Roth IRA, but earnings on the account and withdrawals from the account after age 59.5 are tax-free.

Health Savings Account (HSA): Used in conjunction with high-deducible health insurance policies, this allows individuals and families to save money, tax-free, for medical expenses.

Personal Exemption Phaseout (PEP): This amount is adjusted annually based on inflation, and it is what a taxpayer would be entitled to claim against personal income.

Minimum Tax Credit (MTC): This is tax credit against any future regular income tax liability, but only t the extent that the credit doesn’t reduce your tax liability so low that it cause AMT exposure against you.

Tax Credits: This is the amount of money that can be used to offset a tax liability.

Required Minimum Distribution (RMD): This is the minimum amount that must be withdrawn from an account: IRA, SEP IRA, SIMPLE IRA, ect. once you have reached age 70.5. However, this does not apply to Roth IRAs, which only required distributions once the owner has passed.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 3, 2018

• General Planning
• Taxes

In this month’s newsletter we look in depth at strategies to maximize the value of tax-free Roth accounts, from doing “backdoor Roth” IRA contributions and “mega” backdoor Roth contributions through an after-tax 401(k), to doing systematic partial Roth conversions (into multiple accounts to take advantage of the Roth recharacterization rules), and why every client should get a Roth account started, even if just with a $100 contribution or conversion, to start the infamous 5-year clock for getting future tax-free Roth distributions!

LO #1: Identify the four factors that determine when a Roth IRA is the best option.

LO #2: Demonstrate a comprehensive understanding of the “Backdoor Roth” strategy and discuss how it helps high income earners contribute to a Roth IRA.

LO #3: Describe how to maximize the use of low tax brackets with partial Roth conversions.

LO #4: Clarify the separate account rules for Roth recharacterizations.

LO #5: Discuss how clients can use multiple accounts for potential recharacterization

LO #6: Explain how you can help a client satisfy the 5-year rule for tax free qualified Roth distributions

Traditional IRA: An Individual Retirement Account is a savings vehicle that provides a tax-break; they provide tax-deferred growth until the assets are withdrawn.

Roth IRA: An Individual Retirement Account is a savings vehicle that provides a tax-break. In contrast to the traditional IRA (tax-deferred growth) the Roth IRA uses after-tax dollars (taxes have already been paid) and then the money grows tax-free and is tax-free upon withdraw at retirement.

Roth Conversion: This is the process by which an investor my “convert” a traditional IRA into a Roth IRA.

Required Minimum Distribution: This is the minimum amount that must be withdrawn from each account, each year. Roth IRAs do not require an RMD until after death, all other accounts do require yearly withdrawals starting at age 70 ½.

Income in Respect of Decedent (IRD) Deduction: Allows beneficiaries to subsequently deduct for income tax purposes any estate taxes attributable to a pre-tax IRA.

Backdoor Roth: Make a traditional IRA contribution, followed thereafter by a Roth conversion. Used for high income earners that are barred from contributing to a Roth IRA.

Beneficiaries: This is the individual that will receive the benefit from a will, trust, life insurance or Roth IRA. This may be a person or it may be a trust.

Adjusted Gross Income (AGI): Gross income minus adjustments to income, i.e. personal exemptions and itemized deductions.

Recharacterization: This rule gave investors the option to switch a now Roth IRA back to a traditional IRA.

5-year rule: This rule gives beneficiaries five years to grow assets inside the Roth IRA without being taxed, but at the end of this window the beneficiary must remove all funds from the inherited account.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 23, 2018

• General Planning
• Retirement Planning

In this issue of The Kitces Report, we explore the issues to consider when evaluating the benefits and economic impact of various Social Security claiming strategies, from the importance of understanding who is eligible for benefits in the first place, to the breakeven analysis needed in deciding when to claim the Social Security benefits! We also look at how crucial, and complicated, Social Security planning is for couples. As a result, it’s necessary to gather and consider the full range of client goals and preferences to optimize Social Security planning solutions, rather than just focus on the strategy that gives the most amount of money by delaying all the way until 70, or pays the client immediately at age 62. Finally, we wrap up by identifying the various Social Security “reform” proposals, and consider how potential changes to Social Security in the future should impact the claiming decision.

LO #1: Clarify who is entitled to Social Security benefits and be able to calculate the Social Security benefit your clients will receive. Be able to explain the difference between, and understand the meanings of, the acronyms AIME, PIA, and COLA.

LO #2: Describe what the Full Retirement Age (FRA) is and explain how choosing dates to receive Social Security benefits that are before or after the FRA impact the benefit amount.

LO #3: Illustrate an understanding of the cost/benefit analysis on the decision to delay Social Security benefits. Be able to calculate the additional benefit received for delaying while also calculating the time to break even. Explain why there might be times when clients may not want to delay Social Security benefits.

LO #4: Identify the three unique factors that drive the relative benefit of delaying Social Security benefits and explain how these factors act as a hedge to a portfolio.

LO #5: Discuss why Social Security planning is more complicated for couples than individuals. Understand what a restricted application for spousal benefits is, and identify when these might be relevant. Identify challenges that pertain to couples in timing Social Security benefits.

LO #6: List the four key options for couples claiming Social Security benefits.

LO #7: Understand when the Social Security “Earnings Test” applies, and to whom it applies. Explain the impact it can have on your client’s benefits.

LO #8: Identify the various Social Security “reform” proposals that have been presented and explain how future reforms could impact the optimal claiming decision.

Social Security: A government program that provides monetary assistance to people with inadequate or no income

Averaged Indexed Monthly Earnings (AIME): AIME is used to calculate one’s actual social security benefit. It is determined by adding up the top 35 years of (inflation-adjusted) Social Security work history, and dividing by 35 years x 12 months/year = 420 months.

Cost-Of-Living Adjustment (COLA): COLA is typically equal to the percentage increase in the consumer price index, it is an adjustment for social security to help handle inflation

Consumer Price Index: This is an list or index of the variation in prices paid by a typical consumer for retail goods and other items.

Inflation: This is the general increase in price, or the fall of purchasing power, of different goods

Primary Insurance Amount (PIA): This is the benefit that is calculated using the income replacement formula. It represents the benefit the retiree would get at full retirement age.

File-and-Suspend: Allowed by the Senior Citizens Freedom to Work Act of 2000, file-and-suspend was a way to “take” one’s benefit and allow the spouse to receive the spousal benefit while spending one’s own benefit so it could continue to grow. This was ended by the Bipartisan Budget Act of 2015

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• General Planning
• Investments

In this issue of The Kitces Report, we explore the issues to consider when evaluating the benefits and economic impact of various financial planning strategies, from the importance of deciding how to measure the outcomes in the first place, to the challenging “compared to what” problem that makes it difficult to objectively assess the value of a particular financial planning recommendation and whether or by how much it will actually improve the outcome. We also look at how many financial planning strategies reduce risk enough to make them viable strategies, even though the economic impact is actually negative! As a result, it’s necessary to gather and consider the full range of client goals and preferences to optimize financial planning solutions, rather than just focus on (positive) economic value alone.

LO #1: Discuss why being able to quantify the economic benefits of financial advice is important to both you as the financial planner, and your clients.

LO #2: Clarify the importance of accurately measuring the economic outcome that is desired. Explain how selecting financial planning strategies should be aligned with the desired outcomes.

LO #3: Explain the “compared to what” problem. Illustrate an understanding of the fundamental issues when trying to assess the economic impact of a financial planning recommendation.

LO #4: Be able to evaluate research in previous studies. Explain the inherent issues of the prior studies on the financial impact of various financial planning strategies. Discuss how baseline assumptions influence the result of the prior studies, how risk management might reduce returns but reduces long-term risk significantly, and how and why “tax alpha” is different from investment alpha.

LO #5: Identify the three primary reasons as to why it is difficult to calculate the economic impact of a financial planning recommendation. Discuss how the economic consequences of financial planning strategies are relative to the client.

LO #6: Explain why and how behavioral coaching may be the greatest economic impact to a client, the significance of interpersonal communication, and why it is so difficult to measure and assess its impact.

Advisor Alpha: Vanguard defines this as “how advisors can add value, or alpha, by providing relationship-oriented services”. It is how the advisor’s knowledge and relationship with the client can improve overall investment performance.

Advisor Gamma: By Morningstar, the goal is to evaluate how the financial outcomes of retirees are improved by engaging in five financial planning strategies, for more effective asset allocation to dynamic withdrawal rate spending approaches to proper asset location decisions.

Capital Sigma: Developed by Envestnet, this is their way to quantify the value of advice between financial advisors and their client’s portfolios.

Utils: A unit of measures for utility.

Utility function: A concept derived from economics, the purpose of utility function is specifically to assign a measuring unit – “utils” – to potential outcomes. More positive spending levels means, for example, more utils.

Prospect Theory: A behavioral economic theory that identified that human beings have greater aversion to losses than the enjoyment we gain from an equal favorable result. The theory was developed by Daniel Kahneman and Amos Tversky.

Risk-Adjusted: This is referring to how one should refine investment returns based on the amount of risk one had to take to produce that return.

Tax-Alpha: Another value-ad for clients and advisors, this is the opportunity to engage in proactive tax strategies to generate tax savings either through asset location and or tax loss harvesting.

Asset location: This is when advisors decide where to hold or “locate” assets amongst taxable accounts, tax-deferred accounts, or tax-free accounts.

Tax Loss Harvesting: This is a process of selling an investment that has experienced a loss in order to capture a loss for tax purposes (offsetting a gain) without permanently changing the underlying investment/portfolio.

• CFP / IWI (formerly IMCA): Intermediate/Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• Investments
• Taxes

In this month’s newsletter, we take a deep dive into rebalancing, looking at where it actually does enhance returns, where it’s better as a risk management strategy, why a “tolerance bands” approach to rebalancing may be more effective than just doing rebalancing at regular time intervals, and why rebalancing is still be worth doing in the long run, notwithstanding all of these challenges!

LO #1: Explain how regular rebalancing can actually decrease long-term returns of a portfolio.

LO #2: Discuss the concept of a “rebalancing bonus” and how one might successfully go about achieving it.

LO #3: Describe how “tolerance bands” work and why it is that they might be more effective when rebalancing when compared to regular time intervals.

LO #4: Illustrate an understanding of the differences between absolute and relative rebalancing thresholds and how each of them impact rebalancing targets.

LO #5: Be able to explain how those that are currently saving, or are in retirement and making withdrawals, can rebalance without requiring any tax-triggering trades.

LO #6: Discuss why rebalancing might be behaviorally difficult for clients to implement.

Portfolio Rebalancing: Realigning the balance of investments in a portfolio, generally to stay in accordance with the original target weightings for that portfolio.

Tolerance Bands: In contrast to timed rebalancing (daily, quarterly, yearly), the threshold for triggering a rebalancing trade is not the passage of time, but how over-weighted or underweighted it’s permitted to become given the relative movement of the underlying investment itself.

Asset Class: A group of securities that have similar characteristics and move in similar ways in the marketplace. The three most common classes are: stocks (equities), bonds (fixed-income), and cash (money market).

Target Allocation: This is how the portfolio is being strategically designed based on risk and goals. A retirement portfolio versus a portfolio designed for a child’s education may have different target allocations. The two portfolios would likely use different mixes of asset classes at different percentages to manage the risk and term length associated with the goal.

Volatility: A statically measure of how dispersed pricing is on a particular asset or asset class. In a volatile market there may be more opportunities for rebalancing.

Correlation: This is a measure of the relationship between to assets or asset classes. Correlations nearing 1 or -1 mean that the assets are moving together, where a 0 would mean that the assets are not correlated at all.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• Estate Planning
• Taxes

In this month’s newsletter, we continue the discussion from last month’s newsletter and look in depth at the strategies that would merit the use of a trust as the beneficiary of a retirement account, and how a trust-as-beneficiary-of-an-IRA plays out with most popular types of trusts such as bypass, marital QTIP, spendthrift, or asset protection.

LO #1: Explain the challenges when qualifying a “See-Through” Trust as a designated beneficiary.

LO #2: Discuss why a “conduit” trust as a designated beneficiary of a retirement account may be problematic.

LO #3: Describe why it is crucial to monitor the beneficiaries of an “accumulation” trust as a designated beneficiary.

LO #4: Be able to identify the most common types of trusts that may end out as the beneficiary of a retirement account.

LO #5: Explain why, when leaving retirement account assets to a trust, it is generally a good idea to directly name the trust (or substrust) as a beneficiary.

Required Minimum Distribution (RMD): This is the minimum amount that must be withdrawn from each account, each year. Roth IRAs do not require an RMD until after death, all other accounts to require yearly withdrawals starting at age 70 ½.

5-Year Rule: This rule gives beneficiaries five years to grow assets inside the Roth IRA without tax, but at the end of this window the beneficiary must move all funds from the inherited account.

Conduit Trust: A situation in which the IRA distribution passes through the trust and is paid out immediately to the beneficiary.

Accumulation Trust: In contrast to the conduit trust, accumulation trusts allow assets to build within the trust and do not require immediate distribution.

Bypass Trust: A popular estate planning strategy used to reduce a couple’s exposure to estate taxes by leaving assets not to the surviving spouse, but to a trust for his/her benefit instead.

Marital Trust: In a typical “A-B” estate plan, the “B” trust is a bypass trust, and the “A” trust is a marital trust for the outright benefit of the spouse, either held in trust to the spouse, or created at the death of the first spouse but then distributed outright immediately to the surviving spouse.

Qualified Terminable Interest Property (QTIP) Trust: A type of trust that allows the grantor to provide for the surviving spouse, but also maintain control of how the trust’s assets are distributed once the surviving spouse dies. This trust takes advantage of the marital deduction but retain control over those assets for use in future generations of the grantor’s choosing.

Spendthrift or Asset Protection Trust: These trusts are virtually always an accumulation trust as they are designed to protect trust assets from a spendthrift beneficiary (one who is irresponsible with money) or to provide asset protection for the beneficiary, the trustee will generally be given discretion to limit distributions to the trust’s income beneficiary (thereby limiting access to the spendthrift/creditors).

Dynasty/Perpetuity Trusts: Only in certain states a trust can be established where funds will remain in trust “indefinitely”, or at least beyond the point of any currently living beneficiaries. These trusts are structured to capture benefits of many of the aforementioned trusts: protect funds from spendthrifts, provide protection to assets for subsequent generations, keep future growth shielded from estate taxes.

Revocable Living Trust or Testamentary Trust: These trusts are set up during the grantor’s lifetime and can be changed at any time during the grantor’s lifetime. It is an estate planning tool that enables the grantor to decide who and what is given to each beneficiary at death.

Irrevocable Life Insurance Trust (ILIT): Another useful estate planning tool, this trust is used to set aside the cash proceeds of a life insurance policy that can be used to pay estate taxes and/or beneficiaries, as the policy itself escapes taxation by being removed from the decedent’s estate.

Generation-Skipping Transfer (GST) exemption: Each individual, as of 2017, is allowed to give away during his or her lifetime up to $5,490,000 without any federal gift or estate taxes due. This amount will go up again in 2018 to $5,600,000.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• Estate Planning
• Taxes

In this month’s newsletter, we look in depth at the issues involved in naming trusts as beneficiaries of retirement accounts, from the requirements for the trust to qualify as a “designated beneficiary” eligible for stretch treatment based on the underlying beneficiaries, to which beneficiaries must be considered for stretch purposes based on whether the trust is treated as a “conduit” or “accumulation” trust, and also the income tax ramifications of choosing to use a situation in such situations. In next month’s newsletter, we will continue the discussion with an exploration of the substantive planning issues and opportunities of using a trust as the beneficiary of a retirement account, and how a trust-as-beneficiary-of-an-IRA plays out with most popular types of trusts such as bypass, marital QTIP, spendthrift, or asset protection.

LO #1: Explain how Required Minimum Distributions (RMDs) are calculated (noting when to use the Joint Life Expectancy Table instead of the Uniform Lifetime Table) and when they are due. Also be able to distinguish between the Required Beginning Date (RBD) of the RMDs and the other due dates thereafter.

LO #2: Compare the various types of beneficiaries and how the stretch IRA is calculated for each.

LO #3: Demonstrate a comprehensive understanding of the specific requirements trusts must meet in order to be designated beneficiaries of an IRA.

LO #4: Illustrate how a conduit trust varies from an accumulation trust and describe how the stretch IRA is calculated for both. Recognize the one type of beneficiary that can be ignored in an accumulation trust and explain why.

LO #5: Apply, illustrate, and explain the income tax ramifications of RMDs received by a trust as well as RMDs received by a trust and passed through to the beneficiary.

Required Minimum Distribution: The minimum amount that must be withdrawn starting at age 70 ½ from retirement accounts such as: IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts.

IRA: An “Individual Retirement Account” that allows an individual to save money for retirement. There are three main types: Traditional, Roth, and Rollovers. Their main benefits are either tax-free growth or tax-deferment.

Roth IRA: Contributions are made to a Roth with after-tax dollars. The money then grows tax-free and will be tax-free upon withdraw in retirement assuming the 5-year aging requirement has been satisfied in addition to either the owner reaching: age 59 ½, death, or disability. Further, different from other IRAs the Roth IRAs do not require RMD withdrawals until after the owner’s death.

Designated Beneficiary: Individuals (living, breath human beings)

Non-designated Beneficiary: Non-individuals (corporations, charities, and many types of trusts)

5-Year Rule: This rule requires that, in order to take a Roth IRA distribution, 5 years must have passed since the tax year of the first Roth IRA contribution if one wants to be able to withdraw earnings tax-free.

Beneficiary Determination Date: Different from the date of death, the beneficiary determination date is September 30^th in the year after the year of death. Any beneficiaries of the account as of the date of death, whose interests are extinguished by the determination date – either by already having received the beneficiary share, or by disclaiming it – are not considered.

Irrevocable Trust: This type of trust cannot be modified or terminated without permission from the beneficiary. The grantor, by moving assets into the irrevocable trust, essentially gives up his or her rights to the assets now in the trust.

Halloween Rule: A rule stipulating that the plan administrator or IRA custodian must be provided a copy of “trust documentation” by October 31^st of the year following the year the retirement account owner died.

Conduit Trust: A trust where all post-death RMDs that are distributed from the IRA to the trust will be passed through to the trust’s (income) beneficiary and cannot be accumulated for any other subsequent beneficiary.

Accumulation Trust: The opposite of a conduit trust, where the RMDs can be accumulated inside the trust and may ultimately be distributed to some other beneficiary.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 30, 2018

• Annuities
• General Planning
• Investments

In this month’s newsletter, we delve further into the longevity annuity, comparing it more directly to alternatives like immediate annuities, delaying Social Security, or simply investing in equities for the long run. We also look at some of the additional risks and caveats that longevity annuities face, both for those considering whether to purchase them, and for the annuity companies that issue them. Ultimately, the goal is to evaluate when and whether longevity annuities should be purchased for clients, and in what circumstances they can best fit as part of the retirement income puzzle.

LO #1: Define who longevity annuities might work best for and describe the material risk associated with longevity annuities.

LO #2: Be able to explain why Social Security is essentially a form of a longevity annuity and why it is superior to other longevity annuities.

LO #3: Be able to compare and contrast the Internal Rate of Returns (IRRs) on equities to those of longevity annuities and explain to a client the difference/purpose of an investment versus an insurance/risk management product.

LO #4: Understand and explain the importance of the credit quality of the insurer when reviewing longevity annuities as well as the risk to both the insured and the insurer.

LO #5: Be able to identify and explain the other risks of longevity annuities, particularly for the insurance companies.

LO #6: Explain why a retirement account may be the most favorable location to purchase and hold a longevity annuity.

Annuitant: This is the individual that receives the fixed some of money, usually for the rest of their life.

Annuity: A financial product that pays a fixed sum of money to someone, each year, usually for the rest of their life.

Longevity annuity: Sometimes referred to as a deferred income or advanced-life delayed annuity, this financial product converts a lump sum into a stream of income.

Immediate annuity: This type of annuity also converts a lump sum into a stream of income, however, it starts immediately instead of later in life.

Mortality credit: The share of the contributions from other people who did not survive.

Qualified Longevity Annuity Contract: These are purchased with pre-tax dollars, like an IRA or an employer retirement plan.

Non-Qualified Longevity Annuity Contract: These are purchased with after-tax dollars.

Risk Management: This is a term used to describe nearly any strategy that effectively handles some aspect of risk. In the case of annuities, this is often related to inflation and outliving one’s portfolio.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 9, 2018

• Annuities
• Retirement Planning

With a rising number of baby boomers facing retirement, and a rather volatile market over the past two decades, there has been an increasing interest in the use of annuity products to provide safe and secure income in retirement – with the unfortunate caveat that the simplest options like immediate annuities have generally been unpopular, and the more complex alternatives like variable annuities with living benefit riders have been criticized that many buyers may be misunderstanding what really is and isn’t guaranteed in the first place. In the past few years, a new type of annuity solution has emerged, dubbed the “longevity annuity”, which seeks to avoid carving a large portion of a portfolio into an illiquid immediate annuity, while also avoiding the complexity of variable annuity (and more recently, equity-indexed annuity) income guarantees. In this month’s newsletter, we explore the concept of longevity annuities, what they are and how they work, and where they may fit into the retirement income puzzle (especially as a longevity hedge). In next month’s newsletter, we’ll continue in further depth into the analysis of longevity annuities, how they compare to other types of retirement income strategies and approaches, and the caveats that must be considered when trying to fit them into a retirement income strategy.

LO #1: Compare and contrast the similarities and differences between longevity annuities and immediate annuities.

LO #2: Be able to accurately list and define the three components of annuity payments.

LO #3: Explain the concept of mortality credits and illustrate how they impact the annuity payment stream.

LO #4: Accurately explain the various choices a client has when considering the purchase of a longevity annuity and illustrate how those choices may impact the payments from the annuity (i.e. impact of when payments begin and/or refund guarantees).

LO #5: Understand how the inflation-adjustment feature on longevity annuity payments works.

LO #6: Describe the how the income payments from longevity annuities are taxed.

Annuity: A financial product that pays a fixed sum of money to someone, each year, usually for the rest of their life.

Longevity annuity: Sometimes referred to as a deferred income or advanced-life delayed annuity, this financial product converts a lump sum into a stream of income.

Immediate annuity: This type of annuity also converts a lump sum into a stream of income, however, it starts immediately instead of later in life.

Mortality credit: The share of the contributions from other people who did not survive.

Qualified Longevity Annuity Contract: These are purchased with pre-tax dollars, like an IRA or an employer retirement plan.

Non-Qualified Longevity Annuity Contract: These are purchased with after-tax dollars.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• CFP / IWI (formerly IMCA) hours
• NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

June 30, 2014

• Annuities
• Estate Planning
• Taxes

For the purposes of this month’s newsletter, we will focus specifically on the tax treatment of nonqualified, deferred annuities (regardless of whether they are fixed or variable, as that does not directly impact the tax treatment).

LO #1: Explain the primary tax preference for deferred annuities still in the accumulation stage while also recognizing the caveat to this tax benefit.

LO #2: Understand and articulate the taxation of distributions from an annuity.

LO #3: Explain the tax situation that occurs when a deferred annuity is surrendered for an amount that is less than the original basis.

LO #4: Describe when post-death distributions must begin for an annuity and explain the unique complications that may result for jointly held annuity contracts.

LO #5: Be able to list and explain the distribution options for the various types of beneficiaries (i.e. spousal, non-spousal, and Trust).

LO #6: Understand the importance of knowing the rules of your client’s particular annuity contract and their annuity company prior to a death occurring.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• N/A NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• Investments
• Retirement Planning
• Taxes

In this month’s newsletter, we take a deeper dive into asset location concepts and strategies, including a look at how the introduction of Roth-style accounts adds further complexity, the potential to “create” new asset location accounts (e.g., non-qualified deferred annuities) to take advantage of tax-deferral, and how viewing investments on an after-tax basis can impact not only the asset allocation itself but also the after-tax volatility of an investment that can itself further change asset location priorities. In addition, we also look at some of the practical implementation challenges, and some of the client psychology and communication issues that arise in trying to effectively implement asset location.

LO #1: Decipher which high-return investments belong in taxable versus retirement accounts based on their tax efficiency.

LO #2: Explain when and why high-return, tax-efficient investments should be placed inside a Roth IRA instead of a Traditional IRA and/or taxable brokerage account.

LO #3: Be able to describe when asset location should not be performed and why.

LO #4: Clearly illustrate why it is that an investor’s asset allocation on an after-tax basis may be materially different than their current, before-tax allocation.

LO #5: Articulate to client’s the importance of viewing assets as a household, while also mentally “accounting” for separate accounts in order to help clients overcome the psychological impact of some accounts not performing as well as others.

LO #6: Establish and maintain an asset location priority list.

Asset Location: This is the personal finance term that indicates how or that investors can distribute money across different investments, but more importantly investments with different taxation.

Taxable Account: A good example is a brokerage account, and the tax treatment for this type of account is based on what is in the account – stocks or bonds.

Tax-Deferred Account: A good example is an IRA or a 401(k), taxes are not paid when the money goes in, but are taxable as ordinary income when withdrawn, and that ordinary income treatment applies

Tax-Exempt Account: A good example is a Roth IRA or a 529 college savings plan, and these accounts grow initially tax-deferred and allow withdrawals of the growth to be tax free assuming the requirements are met.

Long-term capital gains: These can also be long-term capital losses, and different from short-term gains and losses based on taxation. For instance, long-term capital gains stem from selling an investment that has been held for longer than 12 months at the time of the sale.

Buy-and-hold: This is a passive investment strategy where once the investor purchases his or her stock, s/he then holds it for an extended period of time regardless of fluctuation in the marketplace.

Dividends: Most often paid on a quarterly basis, this is a distribution of a portion of a company’s earnings, paid to the shareholders. Dividends can be cash, stock, or other property.

Tax-efficiency: This is another way to describe an investment strategy that minimizes tax liability.

Equities: This is referring to stocks or shares of a company.

Bonds: This is a fixed-income investment. The investor loans the money and in return receives a variable or fixed interest rate in return to pay back the loan over a certain period of time.

Time Horizon: The is the length of time over which an investment can grow (or not) and is held before liquidating or selling at some point in the future.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• Investments
• Retirement Planning
• Taxes

In this month’s newsletter, we explore the concept of asset location and its prospective benefits when executed well, along with examining the available research on how to make the best decisions regarding asset location when taking into account the tax treatment of the available accounts, the tax treatment of the chosen investments, and the expected risks and returns of those investments.

LO #1: Decipher between which type of account (taxable or retirement) equities and bonds, respectively, should be held in and explain why.

LO #2: Describe why equity turnover and ongoing dividends erodes much of the value of tax deferral that is normally associated with buy-and-hold strategies.

LO #3: Explain why tax efficiency doesn’t matter all that much when expected returns are low.

LO #4: Construct an asset location priority list based on high-return assets and their level of tax efficiency.

LO #5: Be able to illustrate the “outside-in” concept for building a portfolio based on asset location.

Asset Location: This is the personal finance term that indicates how or that investors can distribute money across different investments, but more importantly investments with different taxation.

Taxable Account: A good example is a brokerage account, and the tax treatment for this type of account is based on what is in the account – stocks or bonds.

Tax-Deferred Account: A good example is an IRA or a 401(k), taxes are not paid when the money goes in, but are taxable as ordinary income when withdrawn, and that ordinary income treatment applies

Tax-Exempt Account: A good example is a Roth IRA or a 529 college savings plan, and these accounts grow initially tax-deferred and allow withdrawals of the growth to be tax free assuming the requirements are met.

Long-term capital gains: These can also be long-term capital losses, and different from short-term gains and losses based on taxation. For instance, long-term capital gains stem from selling an investment that has been held for longer than 12 months at the time of the sale.

Buy-and-hold: This is a passive investment strategy where once the investor purchases his or her stock, s/he then holds it for an extended period of time regardless of fluctuation in the marketplace.

Dividends: Most often paid on a quarterly basis, this is a distribution of a portion of a company’s earnings, paid to the shareholders. Dividends can be cash, stock, or other property.

Tax-efficiency: This is another way to describe an investment strategy that minimizes tax liability.

Equities: This is referring to stocks or shares of a company.

Bonds: This is a fixed-income investment. The investor loans the money and in return receives a variable or fixed interest rate in return to pay back the loan over a certain period of time.

Time Horizon: The is the length of time over which an investment can grow (or not) and is held before liquidating or selling at some point in the future.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 3, 2018

• General Planning
• Investments

Given the difficult ongoing investment environment, investors have increasingly been turning to various “alternatives” to support portfolio growth and manage risk, aided in no small part by a technological revolution that makes analytically complex strategies that would have been impossible 30 years ago, and difficult 15 years ago, easily implemented in today’s marketplace. A recent example of this trend is risk parity investing. Notwithstanding its long conceptual roots dating back to Markowitz, and favorable performance since the 1990s, risk parity investing has only really begun to gain momentum in the past few years. In this newsletter, we look at what risk parity investing really is (and what it’s not), the opportunities, risks, and practical challenges in implementing such strategies, and whether risk parity investing ultimately represents a short-term investing fad, or an emerging shift in how portfolios are constructed.

LO #1: Explain the fundamental principal of risk parity portfolios. Additionally, recognize that an even split of capital amongst many asset classes does not necessarily reduce risk.

LO #2: Describe how the use of leverage in a risk parity portfolio that is truly well-diversified may still be less risky than a concentrated portfolio in a limited number of risky assets.

LO #3: Illustrate an understanding of the proactive monitoring process that risk parity portfolios entail and why the proactive monitoring is necessary.

LO #4: Explain how the risk parity portfolios performed when backtested and why their extensive diversification may help the portfolios in rising rates and inflation but hurt in times when equities have considerable growth.

LO #5: List the caveats and concerns relevant to risk parity portfolios.

Risk Parity: Parity exposure to multiple risks; thus effectively diversifying a portfolio would mean it will hold multiple asset classes, and have the opportunity to take advantage of the returns from multiple risk premia.

Modern Portfolio Theory (MPT): An investment theory put forth by Harry Markowitz in 1952, that says risk-adverse investors can construct portfolios as to optimize/minimize their expected return based on the level or market risk they were willing to take on.

Efficient Frontier: This is the set of “optimal” portfolios based on MPT in that the portfolios along this continuum offer the highest return for a defined level of risk. Portfolios that either above or below the efficient frontier, a regression, are either too risky for the amount of return or not enough return for the amount of risk.

Volatility: Often measured in terms of standard deviation or variance, this is a statistical measure of return spread for a given market or particular security. How much does the asset’s trading price vary over time.

Diversification: A portfolio construction technique that reduces overall risk in the portfolio by incorporating investments across various industries, categories, places and financial instruments. Well diversified portfolios help to manage risk.

Risk Premia: Is notion or consideration that for a higher return (premium) there is a related level of risk.

Rebalancing: A process of periodically, and sometimes opportunistically, buying and selling assets in a portfolio to re-establish the portfolio’s desired level of asset allocation; i.e. 60/40 stocks and bonds.

Sharpe Ratio: This is the average return earned over and above, or in excess, of the risk-free rate per unit of volatility or total risk. In other words, how much more return is a portfolio receiving for the amount of extra risk (volatility) it is taking on.

Leverage: This is referring to the capital being borrowed to then make an investment. The return on the investment is or should be greater than the interest paid on the borrowed capital.

Backtest: This is a process of testing trading strategies using historical data. The goal is to see or understand the viability of a trading strategy in a similar market before using the strategy in real-time with actual capital at risk.

Asset Allocation: The process of dividing up and organizing investments within a portfolio across a wide range of asset categories; stocks, bonds, cash. This can minimize risk as well as personalize a portfolio based on goals and time horizons.

Risk Allocation: In somewhat of a contrast to asset allocation, risk allocation is an alternative method that weights assets based on their risk. Risk factors cross the asset class boundaries.

Capital Asset Pricing Model (CAPM): A theory of financial market behavior that allows investors to consider the relationship between systematic risk and the expected return of an asset. It is common to see this theory used to analyze asset pricing.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• Estate Planning
• Taxes

January-February 2013 issue of The Kitces Report newsletter on the now-permanent rules for portability and the planning implications that carryover of a deceased spouse’s estate tax exemption will have on the use of bypass trusts.

LO #1: Be able to explain the “permanent” changes made to the estate tax system with the passage of the American Taxpayer Relief Act of 2012.

LO #2: Discuss why the portability of the estate tax exemption renders the bypass trust as no longer necessary as it pertains to preserving a deceased spouse’s estate tax exemption.

LO #3: Be able to identify and list the many situations in which it still makes sense to use a bypass trust.

LO #4: Describe the necessary requirements in order to elect for portability.

LO #5: Explain and list the potential significant direct and indirect costs of the decision to keep using a bypass trust.

LO #6: Help clients analyze and weight the trade-offs between adverse income tax consequences versus the bypass trust planning benefits.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA): Signed into law on December 17^th, 2010 this act resolved the fiscal cliff and had a large impact on estate taxes.

American Taxpayer Relief Act (ATRA): Signed into law on January 2^nd, 2013 this act permanently resolved the series of estate and income tax planning sunsets.

Economic Growth and Tax Relief Reconciliation Act (EGTRRA): Signed into law in 2001 by President Bush, this was his first piece of tax legislation and a precursor to ATRA.

Deceased Spouse’s Unused Exemption Amount (DSUEA): This is the amount remaining of the $5.25M that the deceased spouse passes on to the surviving spouse.

Generation Skipping Tax (GST): This is an estate tax imposed on beneficiaries who are two or more generations removed from the testator

Bypass Trust: An estate planning vehicle that allows assets to be sheltered now and in the future from estate taxes

HEMS: This is the acronym that stands for “health, education, maintenance, and support” that is often a part of trust language allowing access to the beneficiary

Qualified Terminable Interest Property (QTIP): This is a type of trust or estate planning tool.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 9, 2018

• Healthcare
• Insurance

September-October 2012 issue of The Kitces Report on “The Rising Popularity Of Hybrid Long-Term Care Policies” including an analysis of how the policies and benefits are structured, the current tax laws that apply, where and how the policies are being used, and whether they represent a “good deal” or not at the end of the day.

LO #1: Explain why there has been an increased popularity of hybrid long-term care policies.LO #2: Describe how hybrid long-term care policies are typically funded and what happens if the policy is never used.

LO #2: Describe how hybrid long-term care policies are typically funded and what happens if the policy is never used.

LO #3: Illustrate an understanding of the tax laws regarding hybrid long-term care insurance policies.

LO #4: Identify and list the embedded guarantees of hybrid life/LTC policies and compare those to hybrid annuity/LTC policies

LO #5: Be able to explain the important caveats to hybrid LTC policies.

LO #6: Account for and calculate the opportunity cost of tying up funds inside of a hybrid LTC policy as compared to investing the funds separately and using those funds to pay ongoing traditional LTC policy premiums.

LO #7: Explain who should and should not consider the purchase of a hybrid LTC policy.

Asset-based long-term care (LTC) insurance: This is a hybrid of LTC coverage and a life insurance or annuity policy, allowing for a combination of partial self-insurance and “disaster coverage” from the insurance company.

Annuity: A financial product that pays a fixed stream of payments, once annuitized, often for life to the owner of the annuity or the beneficiary.

Life insurance: A financial product that protects against financial loss resulting from the death of the insured.

Pension Protection Act of 2006: The act that changed the tax laws regarding hybrid LTC insurance policies. It became effective starting January 1, 2010.

Qualified LTC Policy: Policies that confirm tax code provisions found in IRC Section 7702B(b), which dictate requirements such as guaranteed renewability of coverage to what constitutes the services covered with policy claims.

Non-qualified LTC Policy: These policies, in contrast to qualified policies, are more liberal in regard to the policy triggers necessary to claim benefits. Another difference, these policies may treat the policy as taxable income to the client; which is never allowed under a qualified contract.

1035 Exchange: The exchange of annuity policies to other annuity contracts, and of life insurance policies to other life insurance or annuity contracts on a tax-deferred basis.

Rider: An additional provision added or attached to a contract, for an additional cost. In terms of hybrid LCT these may be related to inflation, return-of-premium riders, and living benefit riders.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 9, 2018

• Investments
• Retirement Planning

In this issue of The Kitces Report, we look back and review the past 20 years of safe withdrawal rate literature, in an effort to better understand the major revelations and research innovations, and arrive at some conclusions about what this entire body of research can tell us today about what is and isn’t a safe, sustainable portfolio withdrawal.

LO #1: Be able to explain what the safe withdrawal rate is, who first published the idea, how it is determined, and what assumptions are necessary.

LO #2: Show an understanding of how the safe withdrawal rate is influenced by time horizon, taxation, expenses, risk tolerance, and market valuation.

LO #3: Describe how diversification influence the safe withdrawal rate, and why it may be difficult to determine the exact amount of the influence. Discuss why asset allocation glide paths may not actually be beneficial.

LO #4: Explain how the ability, or inability, to be flexible with spending impacts the initial safe withdrawal rate.

LO #5: Clarify the impact that annuitizing a portion of a portfolio may influence the withdrawal rate. Identify the potential benefits and risks of this strategy.

LO #6: Discuss the limitations of prior research on safe withdrawal rates. Identify the many other considerations that should be accounted for when analyzing safe withdrawal rates.

LO #7: Be able to understand and evaluate the prior research on safe withdrawal rates.

Withdrawal rate: This is a calculation that details what percentage of invested assets you could or are currently spending, related to spending down savings in retirement

Annuity: This is a fixed sum of money paid each year, traditionally for the rest of the annuitant’s life.

Legacy: This is the idea that an individual would like to leave something behind, a monetary portion of their portfolio assets, for later generations or a perhaps a charity.

Market Valuation: In the simplest terms, this is the value of an asset based on the price that would or could be paid for it, if it were to be sold

Risk Tolerance: This is a measure of a client’s preference towards taking risks.

Diversification: This is a process where by a client’s portfolio would have a wide range of unrelated assets.

Time Horizon: This is the time from now to when the person retires or the person passes. Time horizon refers to now or a give point in time to the future point in time.

Glide Path: The term used to describe decreasing equity exposure over time.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 20, 2018

• General Planning
• Human Capital
• Investments

In this issue of The Kitces Report, we look at some of the information that was taught during the 2010 “Life Cycle Investing for Financial Planners” during July 26-28, 2010, in Boston, MA. In doing so, we attempt to understand whether and how some aspects of financial planning might be changed, or improved, by incorporating some of the life cycle finance economics perspectives.

LO #1: Be able to explain what Life Cycle Finance is and why it is important to understand as a financial planner.

LO #2: Discuss what utility and utility function are. Explain why they are important considerations in financial planning, and why humans tend to exhibit a tendency for diminishing marginal utility of consumption.

LO #3: Describe how using TIPS as a baseline strategy for optimizing lifetime consumption is an ideal strategy. Explain why someone might consider using the strategy of annuitization, and discuss how the use of options can help mitigate risk.

LO #4: Illustrate how human capital changes over time. Identify the various factors that impact a client’s human capital. Explain how financial planners can begin integrating human capital into their practices. Define total wealth.

LO #5: Discuss the implications for the financial planning profession. Identify the caveats and concerns that need to be considered under the life cycle framework.

Life Cycle Finance: The name or label for the body of economic theory, models, and research that explore how individuals should make decisions about savings, investing, and spending over their lifetimes. Over the planning horizon, individuals will make decisions about how to manage their financial wealth, and what to do with their income/earnings as received, in order to fund their spending (consumption) throughout the years.

Human Capital: In LCF, human capital represents the present value of an individual’s future lifetime earnings.

Consumption: In LCF, consumption is the present value of all future spending; I.e. a liability.

Utility: An abstract measure of how much enjoyment or good an individual derives from the decision that they make.

Utility function: This is a mathematical function that ranks choices, typically goods and services, based on an individual’s utility preferences.

Diminishing Marginal Utility: This is a term that describes individual’s tendency to feel less enjoyment the more an item, good, or service is consumed. To explain another way, as income rises higher and higher we derive less and less additional enjoyment from each additional increment of income.

Habit formation: In LCF, this is when we notice consumers reaching and preferring to sustain a certain standard of living, or maintain certain spending habits.

Loss aversion: We experience more negative feelings about a loss than positive feelings about an equivalent gain. Losing $10 hurts more than gaining $10 feels good.

Risk-free rate: The theoretical rate of return of an investment with zero risk. Treasury bills, assuming the U.S. government remains a secure borrower, are an example of a financial product with a risk-free-rate.

Annuitization: The process of converting an annuity investment into a series of periodic income payments.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 30, 2018

• General Planning
• Taxes

Many financial planners do not necessarily have a firm grasp on what tax rates are really associated with certain levels of income, and often underestimate marginal tax rates and overestimate effective tax rates. In this month’s issue of The Kitces Report, we review some of the foundations of tax principles, looking primarily through a lens towards their impact on marginal and effective tax rates. We also look at what kinds of tax rates really occur at varying levels of income.

LO #1: Be able to explain how to identify what your tax rate really is. Discuss how income tax brackets are used, and how you arrive at taxable income.

LO #2: Illustrate an understanding of marginal tax rates. Describe how you arrive at the marginal tax rate, and why there is more to them than meets the eye.

LO #3: Describe how dividends and capital gains are taxed, specifically qualified dividends and long-term capital gains. Discuss how they are applied under the tax bracket tables themselves.

LO #4: Explain how the Alternative Minimum Tax (AMT) system works. In doing so, identify the various tax rates, the exemption amounts, and discuss how capital gains and qualified dividends are treated. Show an understanding of where it is applied on the tax return.

LO #5: Estimate the marginal and effective tax rates for your clients.

Marginal Tax Rate: Is the tax rate that will apply – at the margin – to the next $XX of income that the client earns, and/or the tax rate will be saved with the next $YYY of deductions.

Tax Bracket: This refers to the tax rate tiers that apply under the tax code at increasing levels of income.

Progressive Tax System: This is the style of tax system where those with higher income pay a higher percentage share of taxes.

Gross Income: Defined in IRC Section 61, Gross income is all income from whatever source derived [except as otherwise provided by the tax code]

Adjusted Gross Income: This is the income left over after eligible income types and sources have been excluded, and the negative economic adjustments have been made to account for income that wasn’t really received/earned/made.

Above the Line Deduction: These deductions are taken deducted or excluded when determining AGI

Below the Line Deduction: These are the deductions taken from AGI, after it has been determined in order to calculate one’s final taxable income

Alternative Minimum Tax (AMT): This is a supplemental income tax imposed by the federal government which is required in addition to income tax for some individuals, trusts, estates, or corporations

Capital Gains: These are the profits from the sale of property or an investment

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• Retirement Planning
• Taxes

In this month’s newsletter, we explore the necessary analytical framework to understand when and in what situations it may be more effective to contribute to a Roth IRA versus a traditional IRA and vice versa. By developing a series of rules and evaluating certain known exceptions to those rules, and by exposing certain myths along the way, planners can more clearly evaluate when a Roth IRA contribution (or conversion) may or may not be effective for a particular client situation, to maximize long-term wealth accumulation.

LO #1: Explain the basic tax rules of a Traditional IRA, a Roth IRA, and of Roth IRA conversions. Be able to explain to a client the situations in which they can withdrawal from a Traditional IRA penalty and tax-free. Calculate the amount a client can contribute to their IRAs, and explain why contribution totals are taken together.

LO #2: Be able to compare and contrast a Roth IRA versus a Traditional IRA. Illustrate when it might make sense for a client to utilize a Roth Conversion strategy. Describe the “tax equivalency principle”.

LO #3: Explain the exceptions to the Roth conversion/tax equivalency principle rules.

LO #4: Discuss how your client can apply the rules and exceptions as mentioned in this newsletter. Explain why forecasting future tax rates is important.

LO #5: Identify the strategies your clients can use to implement the rules around the decision to contribute to a Roth IRA versus a Traditional IRA, and whether or not to convert to a Roth IRA from a Traditional IRA.

Individual Retirement Account (IRA): This is a tax-deferred retirement plan, meaning the individual does not pay taxes when the money goes in, but when the money comes out it is taxed as regular income.

Roth IRA: A compliment to the IRA, the Roth IRA is an after-tax savings vehicle. Taxes are paid when the money goes into the Roth IRA, but earnings on the account and withdrawals from the account after age 59.5 are tax-free.

Roth Conversion: This is a process where by a traditional IRA is converted into a Roth IRA. In order to do this you then pay the taxes on the money earned as well as on contributions originally deducted on your taxes.

Roth IRA Re-conversion: The goal of a re-conversion is to minimize tax burden. This process re-characterizes a Roth IRA-converted, back to the traditional, and then back again to the Roth.

Required Minimum Distribution (RMD): This is the minimum amount that must be withdrawn from an account: IRA, SEP IRA, SIMPLE IRA, ect. once you have reached age 70.5. However, this does not apply to Roth IRAs, which only required distributions once the owner has passed.

Estate tax: This is a tax on the net value of a deceased person’s estate.

Income in Respect of Decedent (IRD) Deduction: IRD deductions apply to beneficiaries. After the decedent has passed, but paid federal estate taxes on IRD assets, then the beneficiary can apply for a deduction on the estate taxes.

Tax liability: This is the tax debt, or amount, owed to the IRS.

Adjusted Gross Income (AGI): This is the measure of income calculated from your gross income and used to determine how much of one’s income is taxable.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 3, 2018

• Investments
• Taxes

In this month’s newsletter we explore what economic value is (and is not) created by a tax loss harvesting transaction, as well as the complications, costs, and risks that arise when seeking to harvest tax losses.

LO #1: Understand the basic rules for tax loss harvesting, and explain the benefits of doing so.

LO #2: Discuss what a “Wash Sale” is, and identify any practical issues with, and other complications of, a wash sale.

LO #3: Describe the value of a harvested loss. Understand when value is created (or not created). Be able to measure the value of a harvested loss.

LO #4: Illustrate how to weigh the benefits of loss harvesting, and identify the three major costs/risks that must be taken into account when weighing the benefits.

LO #5: Recognize the major factors necessary to establish rules for loss harvesting.

 LO #6: Identify special situations and exceptions that may arise and be able to distinguish how to proceed should these special “factors” arise.

 LO #7: Be able to integrate all of the considerations factors discussed within the newsletter to create process/decision framework in which to implement with your clients.

Tax Loss Harvesting: The deliberate sale of a security that has experienced a loss in value, in order to realize or “harvest” the loss and offset taxes.

Wash Sale: A wash sale has occurred when a “substantially identical security” has been purchased either within, before, or after 30 days of having sold or traded a security at a loss.

Loss threshold: The minimum amount of expected annual economic gain that makes a tax loss harvesting transaction worthwhile

Transaction costs: These are the fees and expenses incurred when buying and selling securities. These may include brokers’ commissions, bid/ask spreads, and trading platform fees. In a TLH situation these should be considered as 4 transactions will be necessary to complete the process.

Substantially identical: The original wash sale rules were written in the context of “traditional” securities such as stocks and bonds, and extensive guidance has been provided to determine which of these are “substantially identical”. However, “substantially identical” is less clear when it comes to pooled investments.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 25, 2018

• General Planning
• Investments

In this month’s newsletter we will explore in greater depth exactly what risk tolerance is and what we’re trying to measure, how it fits in with other aspects of a client’s overall risk profile, and to consider what’s required to truly design a quality measurement of risk tolerance.

LO #1: Describe the current and new risk tolerance paradigms. Differentiate between the two and discuss similarities.

LO #2: Distinguish risk capacity from risk attitude. Explain why it is important to do this under the new risk tolerance paradigm and how it influences portfolio, and goal, creation.

LO #3: Define what risk perception is. Explain how, and why it is constantly changing. Describe how behavioral finance has been incorporated into the world of finance. Define what heuristics is, and identify the common behavioral finance heuristics as they relate to risk perception in particular.

LO #4: Explain how risk attitude, capacity, and perception are integrated with each other to influence a client’s overall risk profile.

LO #5: Identify problems associated with risk tolerance questionnaires, explain how psychometrics can help improve such questionnaires, and discuss alternative approaches to measuring risk tolerance.

LO #6: Illustrate how you can utilize this information to create your client’s risk profile.

Risk tolerance: This is a conflated measure of a client’s ability to withstand risk.

Risk capacity: This determines how much risk a client can afford to take, how much risk a client would be required to take to achieve the specified goal, and indirectly reveals whether the risk in the portfolio should be driven by a need for risk or by the client’s decision to take more or less.

Risk attitude: This is or could be considered an upper limit of acceptable risk in the portfolio, above which the client’s portfolio should not roam.

Risk perception: This is the wildcard of the client experience. It operates independently of the client’s underlying risk attitude, causing them to potentially misjudge whether the risk they’re actually taking is more or less than they intended.

Heuristic: These are mental short-cuts that individuals use to make decisions faster.

Availability heuristic: When a person uses the most “available”: convenient, easy, most accessible information.

Overconfidence: When a person prefers to credit themselves for success, but not take the same responsibility for failures.

Loss aversion: When a person experiences a loss (loses $10 dollars) then hurts more than it feels good to have a success (find $10 dollars).

Familiarity: When a person prefers to use the information that they are most comfortable with when make a decision. We like when things are familiar.

Recency: When a person weighs more heavily recent events, over older events.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

3/14/2020

• Client Trust & Communication
• Practice Management
• Regulation

When markets get volatile, clients get anxious. Yet while it’s often said that one of the primary value propositions of advisors is to “talk clients off the ledge”, and avoid the mistakes revealed by the research on behavioral finance… remarkably little guidance exists about how, exactly, to have conversations with clients to ease their fears and help them to stay the course. In this webinar, we’ll share what tools advisors are actively using to talk through Coronavirus and market volatility fears with clients, hear from real experts about how to have effective client conversations during times of stress, and explore best practices in what advisors should, and shouldn’t, be doing to help clients stay on track.

LO #1: Identify tools that support financial advisors when having conversations about market volatility.

LO #2: Identify the way financial advisors use tools to support them in having client conversations about market volatility.

LO #3: Identify strategies for engaging in client conversations that help to ease client anxiety.

LO #4: Understand the communication techniques and common talking points that make market volatility conversations go more smoothly.

LO #5: Understand when and how to implement effective communication strategies with clients.

Normalize: Reassuring the client that what they are feeling is normal and common, not in a way “you’re just like everyone else sort of way”, but in a, “it is human to be fearful in these times” sort of way.

Self-care: Taking time for the self to heal, rest, and digest. It is hard work listening and responding to another person’s fears and anger. In order to be with clients fully, it is important to take good care of yourself.

Trauma: This can be anything to anyone. Thus, even if your client has “only” lost $10,000 where others have lost much more, trauma isn’t a competition. If it hurts, it hurts.

Stress: Stress is brought on by an external event and the person’s self-realization as to whether they can handle that situation.

Anxiety: This is an internal event. A person with anxiety may not want to attack the stress, but instead actually shy away and distance themselves and put up resistance to change.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Client Communication
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP / IWI (formerly IMCA) hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

11.9.2020

• Client Trust & Communication

This month we review the four October blogs. This quiz includes: (1) Coordinating Social Security Couples’ Benefits For The Self-Employed: The False Promise of Salary-Splitting, (2) Cross-Border Financial Planning: Issues When Advising International Clients, (3) How ‘Free’ RIA Custodians Make It Difficult to Determine Which is Actually The Most Expensive (4) Growing Your Question Game: 21 Questions To Ask Clients And Prospects And How To Structure Them For Better Client Engagement.

LO #1: Identifying concerns with the common salary splitting strategy for Social Security benefits.
LO #2: Identifying the few instances where salary splitting strategies could be profitable for Social Security benefits.
LO #3: Identify the unique challenges of working with international clients.
LO #4: Examine business strategies to consider for how best to help clients and actually become an expert in working with international clients.
LO #5: Identify how custodians are still getting paid even if they say their offering is “free”.
LO #6: Examine question structure and how to use different types of questions

Federal Insurance Contributions Act (FICA) Tax: Paying this tax on earned wages is what makes up the Social Security retirement benefit.

Primary Insurance Amount (PIA): This is the amount the worker is entitled to receive as a Social Security retirement benefit at their Full Retirement Age.

Average Indexed Monthly Earnings (AIME): This is used to calculate someone’s Social Security benefit. The AIME is calculated by taking the average of the 35 highest-earning years, indexed for wage inflation.

Inbound planning: This type of planning applies when clients and/or their assets move into a country (e.g., an individual moving from abroad to the US).

Outbound planning: This type of planning caters to clients and/or their assets moving out of a country, such as an American moving abroad.

Cross-border planning: This type of planning describes a comprehensive financial planning approach that accounts for a client and their assets from the perspectives of both countries involved in an international move, or with clients who have dual citizenship or residency statuses in another country who need both inbound and outbound advice on an ongoing basis.

12b-1 Fees: This is an operational expense for mutual funds related to the marketing of their offering. The fees range from .25% to .75% and include the fund’s expense ratio.

Net Interest Income: This is the interest generated by the banking arm of a brokerage firm, using the client’s cash allocations.

National Best Bid or Offer (NBBO): This represents, in aggregate, the highest limit order to buy, combined with the lowest limit order to sell, available across exchange limit books. Said another way, it is a spread of available prices.

Close-ended Questions: Questions that can often be answered with just a single word, such as “Fine”, “Great”, or “Okay”.

Open-ended Questions: Questions that can or would be difficult to answer with a single-word and usually involve really thinking about an answer.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

10.2.2020

• Client Trust & Communication

This month we review the five September blogs across two quizzes. This quiz includes: (1) Improving Advisor Team Efficacy by Overcoming the Many Minds Problem Of Group Conversation, (2) Helping Business Owners Clients Cope with Feelings of Shame and Guilt Arising From Making Difficult (Or Unpopular) Financial Decisions, (3) Fostering Healthier Advisor-Client Relationships By Mitigating Transference And Counter-Transference

LO #1: Identify the issues that ‘Many Minds’ present for advisor teams.

LO #2: Examine the ways that advisors can overcome the ‘Many Minds’ issues with clients and each other.

LO #3: Identify the difference between shame and guilt

LO #4: Identify strategies for working with shame and for working with guilt.

LO #5: Identify how transference and counter-transference work.

LO #6: Examine how transference and counter-transference impact the advisor-client relationship and how to handle it.

Many Minds Concept: Based on research from Harvard, the concept describes what happens to conversation when we compare a two-person conversation (dyad) to a multi-person conversation (3+ persons).

Back-channel Feedback: This involves examining body gestures (e.g., head nods) and or simple speech cues (e.g., ‘uh-huh’, ‘yes’, ‘hmmm’) that are made to the speaker to let them know we are listening.

Objective Financial Strain: This is an absolute or at-the-margins measure of a person’s financial ability to make ends meet. It is someone who is unable to feed their family and, at the same time, keep their lights on. For a business owner, this may be a case of keeping the business going and not being able to keep all of their staff employed

Subjective Financial Strain: This is a feeling of financial inadequacy and can be thought of as a mix of both financial (dis)satisfaction as well as financial worry

Transference: When the client transfers feelings, likely from someone important in their past, onto their current relationship with their financial planner.

Counter-transference: When the advisor transfers feelings, likely from someone important in their past, onto their current relationship with a client.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

10.2.2020

• Investments
• Regulation
• Taxes

This month we review the five September blogs across two quizzes. This quiz includes: (1) Isolating IRA Basis for More Tax Efficient Roth IRA Conversions, (2) The Biden Tax Plan: Proposed Changes and Year-End Planning Opportunities

LO #1: Identify when it would make sense to do a Roth Conversion and potentially pay some taxes now.

LO #2: Examine when isolating basis using roll-ins to employer plans can reduce the amount of pre-tax dollars in a client’s traditional IRA.

LO #3: Identify key elements of presidential candidate Joe Biden’s proposed tax plan.

LO #4: Examine how Biden’s proposed plan would impact high- and low-income earners.

LO #5: Identify strategies for mitigating the impact of many of Joe Biden’s proposed plan that would impact income taxes for high-income earners should he take office and his plan be passed.

Pro Rata Rule: This is a rule governing how, when accounts such as a Traditional IRA have both pre- and after-tax dollars, distributions from these mixed accounts can be made. The distributions will consist of a ratable (proportionate) amount of each.

Qualified Charitable Distribution: This is a normally taxable distribution from an IRA owned by an individual who is age 70.5 or older that is paid directly from the IRA (or SEP or Simple IRA) to the qualified charity.

Tax Cuts Jobs Act (TCJA): In late 2017 this piece of legislation marks what is one of the largest reforms of the tax code, simplifying the IRS code and the burdens of annual tax filing.

Progressive Tax System:  A tax policy that means lower taxes rates on lower-income individuals and higher tax-rates on higher-income individuals

Qualified Business Income (QBI): Internal Revenue Code Section 199A, allows eligible taxpayers (small business owners of qualified businesses) to receive a tax deduction equal to 20% times the lesser of: (1) their combined qualified business income, or; (2) their taxable income (before applying the 199A deduction itself).

1031 Exchange: This allows taxpayers to ‘swap’ tangible property held for investment with similar property, and avoid triggering a tax bill.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

8.31.2020

• Client Trust & Communication
• Investments
• Regulation
• Taxes

This month we review the four August blogs which includes: (1) Using A Family Dynasty 529 Plan For Multigenerational College Planning (2) Preserving Capital Losses At Death By Gifting Embedded Loss Assets To Avoid A Step-Down In Basis (3) Maximizing Premium Assistance Tax Credits For Self-Employed Health Insurance Costs (4) Helping Client Couples Practice Gratitude To Reduce Money Disputes

LO #1: Identify the rules that govern how to pass 529 funds to new beneficiaries within a family.
LO #2: Examine the strategy and pitfalls of implementing a family dynasty 529 plan
LO #3: Identify the rules for capital losses at the death of the owner
LO #4: Examine how best to receive the benefit of capital losses for spouses and non-spouses
LO #5: Identify varied income reduction strategies for small business owners, in order to maximize premium assistance tax credits
LO #6: Identify the importance of gratitude when it comes to personal finance
LO #7: Identify strategies to bring gratitude into meetings and activities with clients

Family Dynasty 529 Plan: This is the concept of ‘overfunding’ one or more 529 plan accounts that – between contributions and earnings – can be used to pay for multiple family members’ education expenses or even many generations of family and future family members’ education expenses.

Income in Respect of a Decedent (IRD): IRD assets include a deceased sole proprietor’s or pass-through business owner’s outstanding accounts receivable, embedded gains on U.S. savings bonds, other accrued but unpaid bond interest, embedded gains on non-qualified annuities, and gain associated with outstanding installment sales payments, net unrealized appreciation, final employment bonuses or paychecks that were not paid prior to death, and most commonly, all pre-tax retirement accounts. These assets receive NO step-up in basis.

Premium Tax Credit (PTC)/Premium Assistance Tax Credit (PATC): This is a Federal income tax credit provided specifically to help offset the premium cost of health insurance purchased through state insurance exchanges. PTCs are generally paid in advance.

Qualified Business Income: This is the income, which under Section 199A, business owners as well as some trusts and estates may be able to reduce through a QBI deduction up to 20%.

PERMA Framework: Developed by Dr. Martin Seligman, this framework is a positive psychology framework for thriving versus just surviving or recovering.

Health Savings Account: This is a type of savings account that can be used in conjunction with a high-deductible health insurance policy. Users of this account get to save money, tax-free, that can then be used pay medical expenses.

Federal Poverty Level: This is an income measure use by the US government which establishes who, individuals and households, is eligible (or not) for subsidies, programs, or benefits. This number is reviewed every year for inflation.

Generation Skipping Transfer Tax (GSTT): Introduced in 1976, this is a federal tax that happens as a result of, for example, the grandparent generation, skipping the parent generation, and gifting assets directly to the grand-child generation.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

7.30.2020

• Client Trust & Communication
• Investments
• Regulation
• Taxes

This month we review the four July blogs which includes: (1) How Rising ETF Investing By RIAs Triggers The SEC’s 13F Reporting Requirements, (2) When Clients Fight: How To Handle Conflict When It Erupts In A Client Meeting, (3) Navigating Income Harvesting Strategies: Harvesting (0%) Capital Gains Vs. Partial Roth Conversions and (4) How Certain Successor Beneficiaries Are Actually Better Off Thanks To The SECURE Act

LO #1: Identify the impact of the SECURE Act on Successor Beneficiaries.
LO #2: Examine the intricacies of the 13F reporting requirements and SEC law.
LO #3: Identify expectations for 13F reporting requirements and strategies to mitigate the difficulty of the reporting process.
LO #4: Examine conflict language and how advisors can recognize that certain types of language may solicit different responses from clients to help them get back on track.
LO #5: Identify opportunities for income-harvesting strategies.
LO #6: Identify potential factors that need to be considered, such as Social Security, when considering an income-harvesting strategy.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Rule 13f-1: The rule mandating that institutional investment managers disclose and report on a quarterly basis their equity holdings of certain “13(f) securities” as identified by the SEC.

13(f) Security: These are mainly equities that trade on a national securities exchange (including not only traditional stocks, but also certain equity options and warrants, closed-end investment company shares, and importantly in today’s world ETFs).

Institutional Investment Manager: Defined by the Exchange Act, this is any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person.

Conflict Theory: A framework for understanding and examining the reasons why arguments arise in relationships.

Tax-Rate Arbitrage: The opportunity to shift income from higher-tax-rate years to lower-tax-rate years.

Capital Gains Bump Zone: This is when ordinary income crowds out favorable capital gains rates.

Successor Beneficiary: The beneficiary of an inherited account owned by a primary beneficiary. For example, Tim passes and leaves his retirement account to his wife (primary beneficiary) and soon after his wife also passes and leaves the retirement account to a child (successor beneficiary).

Contingent Beneficiary: This is an individual’s second-choice beneficiary if their first-in-line (primary) beneficiary predeceases them.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

N/A

• Planning Profession
• Practice Management
• Regulation

This month we review the June 2020 blog posts, which fulfill the requirement for CFP Board approved Ethics CE. The blogs and quiz have been designed to educate CFP® professionals on CFP Board’s new Code of Ethics and Standards of Conduct effective October 1, 2019.

At the end of the course, participants will be equipped to: Identify the structure and content of the revised Code and Standards, including significant changes and how the changes affect CFP® professionals; Act in accordance with CFP Board’s fiduciary duty; Apply the Practice Standards when providing Financial Planning; Recognize situations when specific information must be provided to a Client; Recognize and avoid, or fully disclose and manage, Material Conflicts of Interest.

• CFP: Basic Ethics

• CFP: Ethics

• CFP hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

6.3.2020

• Client Trust & Communication
• Estate Planning
• Taxes

This month we review the four May blogs which include: (1) Using Coronavirus-Related Distributions To Reduce The Tax Impact Of Distributions From Retirement Accounts, (2) Using Behavioral Finance Principles To Behaviorally Coach Clients To Make Better Decisions, (3) Border Wars: Helping Clients Set Financial (And Emotional) Boundaries To Avoid Enabling Dependent Family Members , and (4) How The SECURE Act Impacts Discretionary (Accumulation) See-Through Trust Planning

LO #1: Identify the rules that surround use of Coronavirus-Related Distributions.
LO #2: Examine tax-reduction strategies using Coronavirus-Related Distributions.
LO #3: Identify behavioral finance implications and how to address them in the client relationship.
LO #4: Examine the components of a true boundary.
LO #5: Identify ways to help support clients in setting and enforcing boundaries.
LO #6: Identify tax-planning strategies for see-through trusts post-SECURE Act

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Coronavirus Aid, Relief, and Economic Security (CARES) Act: Passed by Congress in March of 2020, this piece of legislation introduced a $2 trillion emergency fiscal stimulus package to provide relief to individuals, businesses, healthcare providers, and government entities from the economic damage resulting from the Coronavirus pandemic.

 Coronavirus-Related Distributions: These are distributions up to $100,000, taken in 2020, that can be made from an account owner’s retirement accounts by qualifying individuals who have been impacted by the Coronavirus.

Behavioral Finance: An area of academic study that examines irrational behavior in the context of personal finances, and examines how individuals may irrationally react to markets, market behavior, portfolios, and investing.

Financial Enabling: This is a cyclical relationship in which a financially dependent person, such as an adult child or adult family member, is provided for by an enabler who continually yields and provides money or other resources, which then results in limiting the dependent person’s personal development.

Discretionary Trust: This is any See-Through trust that does NOT meet the conduit requirement and instead, grants the trustee discretion about when or whether to make distributions.

Conduit Trust: This is a type of See-Through Trust that requires that any distribution received by the trust from an inherited retirement account be passed right out from the trust to the trust beneficiaries.

Eligible Designated Beneficiary: These are individuals who continue to be able to ‘stretch’ retirement account distributions.

Non-Eligible Designated Beneficiary: Due to the changes brought about by the SECURE Act these individuals are not able to stretch retirement account distributions and are stuck with the 10-year rule.

10-Year Rule: Rule that requires all funds to be distributed from an inherited retirement account by the end of the 10^th year after death.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

4.29.2020

• Debt & Liabilities
• Industry News
• Retirement Planning
• Taxes

This month we review April blogs and a special regulation blog from March in two parts, part 2 includes: (1) Financial Planning Research Highlights from the 2020 CFP Board Academic Research Colloquium, (2) Fixing Unwanted RMDs Taken Before The CARES Act Waiver of 2020 RMDs (3) Student Loan Interest Forbearance Planning Strategies Under The CARES Act

LO #1: Identify the practical insights from the 2020 ARC; for example, are more or less investment options better when it comes to 401(k) menus?

LO #2: Examine how researchers investigated how much individuals were willing to pay for financial services and if FinTech innovations really prevent overspending.

LO #3: Identify the available options for undoing an unwanted RMD taken in 2020 for individual account owners.

LO #4: Identify the available options for undoing an unwanted RMD taken in 2020 for inherited account owners.

LO #5: Identify the rules provided by the CARES Act impacting student loans.

LO #6: Identify strategies that financial planners can use to help clients take advantage of the student loan provisions provided by the CARES Act.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Coronavirus Aid, Relief, and Economic Security (CARES) Act: Passed by Congress in March of 2020, this piece of legislation introduced a $2 trillion emergency fiscal stimulus package to provide relief to individuals, businesses, healthcare providers, and government entities from the economic damage resulting from the Coronavirus pandemic.

Choice Overload: When a person is unable to choose because they become overwhelmed by the number of options being presented.

Ostrich Effect: This is a type of self-deception where individuals try to avoid exposing themselves to information that could provide discomfort.

Still-Working Exception: This exception is for individuals who continue to work beyond the age at which RMDs are generally required and allows them to continue to benefit from the tax deferral offered by their employer’s 401(k) or similar plan throughout their ongoing employment years.

5-Year Rule: The rule for non-designated beneficiaries that says all assets in the inherited retirement account must be distributed by the end of the fifth calendar year after the year of death, when death occurs before the decedent’s required beginning date.

Once-Per-Year IRA Rollover rule: This rule limits an individual to only one IRA-to-IRA or Roth IRA-to-Roth IRA 60-day rollover to be completed in any 365-day period.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

4.21.2020

• Debt & Liabilities
• Financial Psychology
• Taxes

This month we review April blogs and a special regulation blog from March in two parts, part 1 includes: (1) Analyzing The CARES Act: From Rebate Checks To Small Business Relief For The Coronavirus Pandemic, (2) Why More Emotion – Not Less – May Be Needed To Make More Rational Financial Decisions, and (3) Using Economic Injury Disaster Loans (EIDLs) And Payroll Tax Breaks To Supplement (Or Replace) Paycheck Protection Program Loans

LO #1: Identify the different aspects of the CARES Act, such as student loans, rebate checks, and small business loans.

LO #2: Identify potential planning strategies related to the provisions provided by the CARES Act, such as those related to student loans, 529 payments, small business loans, and unemployment.

LO #3: Identify recent studies outlining why more emotion may be required to change behavior.

LO #4: Identify how advisors may use emotional activation with clients to bring about behavior change in the face of resistance.

LO #5: Explore the details of the different small business provisions of the CARE Act.

LO #6: Identify strategies to utilize different small business provisions provided by the CARES Act together.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Coronavirus Aid, Relief, and Economic Security (CARES) Act: Passed by Congress in March of 2020, this piece of legislation introduced a $2 trillion emergency fiscal stimulus package to provide relief to individuals, businesses, healthcare providers, and government entities from the economic damage resulting from the Coronavirus pandemic.

Qualified Charitable Contribution: This is the new above-the-line charitable contribution that can be made thanks to the CARES Act to support charitable giving.

Deconsolidation: Process of activating an emotional memory.

Reconsolidation: The process of changing an emotionally activated memory.

Money Script: This refers to an unconscious belief, often formed in early childhood, that we hold about money and that influences behavior.

Miracle Question: A key component of solution-focused therapy that allows the client to envision their life without some financial problem interfering.

Paycheck Protection Program: One part of the CARES Act that made available $349 billion dollars to support small businesses during the Coronavirus pandemic in an effort to keep small businesses running and more individuals employed.

Economic Injury Disaster Loan (EIDL): Another part of the CARES Act that offers solutions for small businesses by offering loans up to $2 million.

Employee Retention Credit: A fully refundable credit against an employer’s payroll taxes for wages paid from March 12, 2020, through December 31, 2020.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

3/28/2020

• Client Trust & Communication
• Estate Planning
• Financial Psychology
• Retirement Planning

This month we review the following four March 2020 blog posts: Restructuring Conduit Trust Beneficiaries Of Retirement Accounts To Avoid The SECURE Act’s 10-Year Rule, Accommodate Real World Dynamic Retirement Goals By Projecting Retirement Dates Instead Of Retirement Wealth, Self-care And Self-compassion In Times Of Financial Stress And Anxiety, and 10 Conversations To Have With Clients During The COVID-19 Crisis

LO #1: Identify the new SECURE Act regulations pertaining to retirement accounts

LO #2: Identify the strategies for restructuring conduit trusts to avoid the new 10-year rule

LO #3: Identify various methods that advisors can use to provide more dynamic pictures of retirement dates

LO #4: Identify the strategies and types of images (graphs, plots, charts) that are useful in explaining retirement dates

LO #5: Identify the different ways clients and their advisors may be impacted by trauma

LO #6: Identify strategies for implementing self-care during stressful and traumatic events

LO #7: Identify common client questions in the midst of COVID-19

LO #8: Identify ways to prioritize which clients need these conversations, and which strategies to use for each client

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Conduit Trust: This is a See-Through Trust which requires that any distributions from an inherited retirement account to the trust that are made each year be passed right out from the trust to the trust beneficiary.

Waring Siegel Rule: Based on a paper by Laurence B. Siegel and M. Barton Waring, this is a rule used to balance an investor’s portfolio concerns, suggesting the use of a personal annuity structure, created by relating an asset portfolio’s value to a stream of annual spending over a term related to the remaining lifespan of the investor.

Trauma: A deeply distressing or disturbing experience.  While trauma is usually associated with horrendous events, it can represent different things to different people. Moreover, magnitude is not important in defining trauma.

Post-Traumatic Stress Disorder: This is a direct form of trauma-related stress where an individual has been directly involved in the stressful event.

Vicarious Traumatization: This is an indirect form of trauma-related stress, and it happens when a mental health provider or caregiver (or financial planner!) actually develops or takes on their client’s trauma after repeated exposure, leading to a profound (and negative) transformation of the professional’s own inner experience.

Compassion Fatigue: This is an indirect form of trauma-related stress, and it happens when a mental health provider or caregiver (or financial planner!) empathizes with the client so completely that, at a subconscious level, the professional’s brain is actually triggered as though they themselves are experiencing pain.

Self-esteem: This construct is an assessment of self-worth, but one that involves subjective judgment. It is often comparison-based and fleeting.

Countertransference: This is a therapy term that describes when the mental health practitioner (or financial advisor!) over-identifies with the client and, through over-identification, loses their ability to be objective.

Self-compassion: This construct is a person’s ability or capacity to comfort and soothe themselves. It is also key to motivating oneself through pain, failure, or feeling inadequate. What is more, the research is crystal clear that self-compassion is really important to self-care and the ability to rebound through stressful, traumatic setbacks. Self-compassion has been linked to higher levels of optimism, curiosity, and initiative, and, at the same time, associated with lower levels of anxiety and depression.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 3 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

February 29, 2020

• Client Trust & Communication
• Financial Psychology
• Retirement Planning
• Taxes

This month we review the following four February 2020 blog posts: (1) The Fredo Effect – Mitigating Toxic Relationships In A Family Business, (2) The (Partial) Death Of The Stretch IRA: How The SECURE Act Impacts Inherited Retirement Accounts, (3) Strategies To Mitigate The (Partial) Death Of The Stretch IRA (4) When A Client’s Financial Problems Are Beyond Financial Advice: How (And When) To Refer Clients To A Mental Health Professional

LO #1: Identify the issues that can come about for small business when they have a “Fredo”.

LO #2: Identify the opportunities financial advisors have to help support families and small businesses that are dealing with a “Fredo”.

LO #3: Identify the new SECURE Act rules and how they impact inherited retirement accounts.

LO #4: Identify strategies financial planners can help clients implement to lessen the impact of the SECURE Act changes on stretch IRAs.

LO #5: Identify the difference between doing therapy and being therapeutic.

LO #6: Identify strategies for knowing how and when to give a mental health referral to a client.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Fredo Effect: The term used to describe the person in the family business who can be seen as a problem child or an obstacle to progress. The poor performer.

Dual-Role Dynamic: This is when a person’s work role and family role begin to mix together. For example, you can fire your child, but you would still see the child at family events.

“As Rapidly” Rule: Pre-SECURE Act rules specified that a beneficiary just had to distribute the funds from their inherited IRA at least “As Rapidly” as the owner would have been required.

See-Through Trust: This is a type of trust that is subject to the new 10-year rule. These trusts must be valid under state law, irrevocable upon the retirement account owner’s death, contain identifiable beneficiaries, and submitted to the IRA custodian or plan administrator by Oct. 31 of the year following the year of death (or in the alternate, a certified list of trust beneficiaries can be provided by the same date).

Psychologists:These individuals hold doctoral degrees in clinical psychology or other specialties such as counseling. They are qualified to carry out specific forms of behavioral therapy such as Cognitive Behavioral Therapy. They are licensed by state.

Psychiatrists: These individuals are medical doctors who, unlike psychologists, are able to prescribe medication and diagnose illness. They are qualified to treat complex and serious mental illnesses such as schizophrenia, severe depression, and bipolar disorder.

Counselors, Clinicians, and Therapists: These individuals have a master’s degree in mental health, counseling, psychology, therapy, or other related fields. These individuals have varied specialties which can often be identified based on their licensure, which is also held at the state level. For example, a Licensed Marriage and Family Therapist (LMFT) is different from a Licensed Clinical Alcohol and Drug Abuse Counselor (LCADAC). Many counselors, clinicians, and therapists are also able to carry out specific forms of behavioral therapy.

Clinical Social Workers: These individuals also have a master’s degree, but in social work. They are also licensed at the state level and work with individuals to improve and/or manage mental health. Social workers differ from counselors mainly based on the types of clients they work with, and often focus on how the individual integrates into their community; therefore, they often work on different types of issues with clients.

Financial Therapists: These individuals have at least a master’s level education in both mental health and finance. As licensed mental health practitioners, they are licensed to practice in their respective states.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 3 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

January 31, 2020

• Financial Psychology
• Practice Management
• Regulation
• Retirement Planning
• Taxes

This month we review the January 2020 blog posts in two parts, part 2 will specifically cover following three: (1) Coordinating QCDs With Post 70 ½ IRA Contributions Under The SECURE Act, (2) Practical Cybersecurity Steps For (Independent) Financial Advisors To Better Protect Client Data, (3) Distinguish Financial Stress From Anxiety And Client Communication Strategies To Help

LO #1: Identify the concerns with the new QCD legislation.

LO #2: Identify strategies for how to help clients be charitable even in light of the new QCD rules.

LO #3: Identify the different aspects of a cyber-security plan.

LO #4: Identify strategies and planning to address each part of a cyber-security plan.

LO #5: Identify the differences between financial stress and financial anxiety

LO #6: Identify the strategies for working with clients that may be experiencing stress or experiencing anxiety and how to tell the difference.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Qualified Charitable Distribution (QDC): One of the most tax-efficient ways of giving to charity, this distribution allows IRA owners and IRA beneficiaries (only as such transactions may not be made from non-IRA-based employer-sponsored retirement plans) who are (actual-age) 70.5 or older to transfer up to $100,000 per year from their IRA/inherited IRA accounts directly to charity.

Personally Identifiable Information (PII): Information such as a Social Security number, a bank account number, and maybe even a home address. PII should not be used in email communication with clients if avoidable.

Write Once, Read Many (WORM): This is a compliance acronym meaning, the original document cannot be editable (write once) even if it is referenced frequently in the future (read many) for audit purposes.

SOC2: A reporting framework developed by AICPA to assure systems are set up with appropriate standards addressing security, privacy, and confidentiality.

Financial stress: A situation in which someone runs into a financial situation, receiving an unexpected bill in the mail, and upon evaluating the situation and ability to pay the bill they find that they cannot do it.

Financial anxiety: A psychological syndrome that results in someone having an unhealthy attitude toward thinking about, engaging with, or administering their personal financial situation in an effective manner.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

January 31, 2020

• Debt & Liabilities
• General Planning
• Retirement Planning
• Taxes

This month we review the January 2020 blog posts in two parts, part 1 will specifically cover following three: (1) Helping Affluent Clients Develop A Money Mission Statement To Facilitate Generational Wealth Transfer, (2) How Required Minimum Distribution (RMD) Changes Under The SECURE Act Impact Retirement Accounts (3) Selecting Income-Driven Repayment (IDR) Plans To Manage Student Loan Obligations

LO #1: Identify the concerns surrounding wealth transfers for clients and their families.

LO #2: Identify strategies for helping clients to prepare themselves and heirs for successful wealth transfers.

LO #3: Identify the changes the SECURE Act made to Required Minimum Distributions (RMDs).

LO #4: Identify strategies for working with clients as it pertains to the new RMD rules.

LO #5: Identify other client changes that are ultimately impacted by the changes to the RMD rules.

LO #6: Identify the different types of Income-Driven Repayment (IDR) plans and potential planning strategies surrounding them.

Affluenza: A research term used to describe when young, wealthy people suffer from a lack of motivation and a sense of isolation.

Paralysis by Analysis: When a person has too many options to choose from the choice becomes overwhelming and they default to doing nothing.

Money Script: These are beliefs about money that are learned in childhood, passed down from generation to generation and are typically subconscious.

Money Mission Statement: A statement written by the family about the goals for their wealth.

Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Gap Years: These are the years between when an individual retired and when they began receiving Social Security benefits and taking RMDs.

Direct Loans: Federal government loans provided through the William D. Ford Federal Direct Loan program

Federal Family Education Loans: The most common form of education loan prior to 2010, ultimately phased out by the Healthcare & Education Reconciliation Act

Income-Driven Repayment plan: School loan payment plans calculated based on the borrower’s discretionary income

Negative Amortization: This is where the principal-and-interest balance amortizes higher as the excess unpaid interest accrues and compounds.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 2 CFP hours / IWI (formerly IMCA) hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 23, 2019

• Healthcare
• Insurance
• Retirement Planning
• Taxes

This month we review the December 2019 blog posts in two parts, part 1 will specifically the following three: (1) Navigating Social Security’s “Government Pension Offset” (GPO) Rule For Retirees With Non-Covered Pensions, (2) Assisted Reproductive Technology (ART) Tax And Insurance Planning For Individuals With Fertility Challenges, (3) How Parsing The Difference Between Indirect Rollovers, Direct Rollovers, And Transfers Helps Avoid Penalties And Confusion

LO #1: Identify the impact of the GPO and who is impacted.

LO #2: Identify strategies for mitigating the impact of the GPO.

LO #3: Identify the tax opportunities when working with clients interested in ART.

LO #4: Identify the insurance strategies when helping clients with fertility challenges.

LO #5: Identify and organize the rules pertaining to indirect rollovers, direct rollovers, and transfers.

Government Pension Offset (GPO): An amendment to Social Security to address policymakers’ concerns that workers who received a pension from a Federal, state, or local government job not covered by Social Security were “double-dipping” by also receiving spousal or survivor benefits that were nominally intended for beneficiaries who hadn’t worked and were financially dependent on a working spouse for benefits.

Dual Entitlement: A provision of Social Security stating that a person’s benefit amount can never exceed the highest single benefit to which that person is entitled.

Last-60-Months Rule: This rule states that the GPO reduction doesn’t apply if you are receiving a government pension and the last 60 months of your government employment were covered by both Social Security and the pension plan that provides your government pension.

In Vitro Fertilization (IVF): The most dominant form of Assisted Reproductive Technology (ART), which involves extracting a woman’s eggs, fertilizing the eggs in a laboratory, and planting the resulting embryos in the uterus through the cervix.

Mandate-to-Cover Law: A law that requires an insurer to cover certain fertility treatments that are specified by individual state legislation.

Mandate-to-Offer Law: A law that requires an insurer to let employers know that coverage of infertility treatment can be provided and allows the employer to decide whether to include any of the offered services in their insurance policies.

• CFP / IMCA: Intermediate
• NASBA: Basic

• 1.5 CFP hours / IWI (formerly IMCA) hours
• 2 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 23, 2019

• General Planning
• Healthcare
• Insurance
• Retirement Planning
• Taxes

This month we review the December 2019 blog posts in two parts, part 2 will specifically the following two: (1) HSA Planning When Both Spouses Have A High-Deductible Health Plan (HDHP), (2) SECURE Act And Extenders Make Dramatic Changes To Retirement Planning.

LO #1: Identify which clients are eligible for High-Deductible Health Plans

LO #2: Identify how to maximize benefits for clients when both spouses have a HDHP plan.

LO #3: Identify the changes brought about by the SECURE Act

LO #4: Identify how the SECURE Act changes will impact client retirement planning.

LO #5: Identify how the SECURE Act changes will impact education and charitable planning.

Health Savings Account (HSA): A savings account specifically designed for medical expenses that can reduce taxable income and provide other tax benefits. In order to contribute to an HSA, an individual would need to be covered by an HSA-eligible HDHP.

High-Deductible Health Plan (HDHP): A healthcare plan that has a higher deductible requirement than a traditional health insurance plan. In order to be an HSA-eligible HDHP, a plan must have a minimum annual deductible and a maximum annual out-out-pocket amount that meets the limits set by the IRS.

SECURE Act: Passed in December of 2019, this is the largest tax legislation since TCJA.

Conduit Trust: A trust that requires that all required RMDs collected from the IRA will pass through directly and immediately to the underlying income beneficiary, that only the income beneficiary’s life expectancy must be considered. This allows subsequent remainder beneficiaries to be ignored.

Discretionary Trust: Trusts that often require that all, or a substantial portion of retirement account distributions remain in the trust and not distributed out to the trust beneficiaries.

Multiple Employer Retirement Plans (MEPs): These are single retirement plans that are maintained for the benefit of two or more unrelated employers.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours / IWI (formerly IMCA) hours
• 2 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 5, 2019

• General Planning
• Retirement Planning
• Taxes

This month we review the November 2019 blog posts, specifically the following two for part 1: (1) Splitting An IRA With Ongoing 72(t) Distributions In Divorce, (2) IRS Proposes New RMD Life Expectancy Table To Begin In 2021.

LO #1: Identify how to correctly navigate the rules for 72(t) distributions.

LO #2: Identify how to handle 72(t) distributions in a client divorce.

LO #3: Identify the new IRS Proposed RMD Life Expectancy Tables

LO #4: Identify the impact of the new IRS Proposed RMD Life Expectancy Tables

LO #5: Identify potential planning issues (or lack thereof) associated with the new IRS Proposed RMD Life Expectancy Tables

Grey Divorce: Divorce later in life, normally after age 50.

72(t) distributions: Distributions that are part of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and their designated beneficiary.

Private Letter Rulings (PLRs): These are sort of like mini Tax Court cases, in which a taxpayer argues their position (in writing) to the IRS, and then the IRS decides how to treat the situation, providing clarity for the taxpayer. While these letters become publicly available after the ruling has been made, they are not technically applicable to anyone other than the taxpayer requesting the ruling.

Qualified Domestic Relations Order (QDRO): This is a legal document, a court order, that splits funds in retirement accounts for divorcing couples.

Uniform Life Table: This is the life expectancy table that is generally used to determine the life expectancy factor for calculating RMDs during an account owner’s lifetime.

Single Life Table: This is used only by beneficiaries to calculate the (“stretch”) RMDs from their inherited retirement accounts.

Joint Life and Last Survivor Expectancy Table: This is for married couples who have large age differences; specifically, when the owner of the IRA must name a spouse who is more than 10 years their junior as their sole beneficiary for the entire year.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP hours / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

December 5, 2019

• Investments
• Retirement Planning
• Technology & Advisor FinTech

This month we review the November 2019 blog posts, specifically the following two: (1) Navigating Social Security’s Windfall Elimination Provision (WEP) With A (Non-Covered) Government Pension (2) Why It’s Best To Measure Risk Tolerance With #FinTech Questionnaires Instead Of (Just) Risk Conversations.

LO #1: Identify the rules associated with WEP and how they impact client’s social security.

LO #2: Identify strategies for working through WEP issues for clients.

LO #3: Identify the different positions normally associated with WEP issues.

LO #4: Identify the different issues associated with different risk-testing modalities

LO #5: Identify the different gender bias issues associated with different risk tolerance assessment modalities.

Non-covered Employers: Employers who do not pay into Social Security. This often includes Federal, state, and government employers.

WEP Guarantee rule: A rule that states that an individual’s Social Security benefit cannot be reduced by more than half of the amount of their non-covered pension, regardless of the WEP calculation amounts.

Narrator Effect: A concept commonly found in marketing research, it is simply the (sometimes) subtle authoritative influence that comes through voice.

Risk literacy: A client’s ability to understand mathematically-based probabilistic tradeoffs.

Risk capacity: How much risk a client can actually afford to take.

Risk tolerance: How much risk a client is willing to tolerate.

Risk composure: How well a client can handle/remain calm during market turbulence.

Psychometric: A type of risk measure that assesses personality and behavior.

Econometric: A type of risk measure that focuses on probabilities and trade-offs.

Risk Gender Gap: The well-documented finding that women tend to have consistently lower risk tolerance compared to men.

• CFP / IMCA: Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

11/5/2019

• Client Trust & Communication
• Debt & Liabilities
• Retirement Planning
• Taxes

This month we review the October 2019 blog posts, specifically the following five: (1) Splitting Pensions In A Divorce: Shared Payment Vs. Shared Interest QDROs, (2) Maximizing The Value Of Public Service Loan Forgiveness (PSLF) By Minimizing Debt Repayment, (3) Future Self-Continuity: How Envisioning The Future Is Important To Financial Planning, (4) The ‘Behaviorally-Enlightened’ Fiduciary’s Dilemma In Serving Clients Best, (5) Optimizing 529 ABLE Plan Contributions and Distributions To Benefit Individuals With Disabilities

LO #1: Identify the two options for QDROs and determine which option makes sense given different client scenarios.

LO #2: Identify how to qualify for Public Service Loan Forgiveness.

LO #3: Identify different strategies to reduce AGI, which in turn lowers student loan payments under an income-driven repayment plan.

LO #4: Identify the dilemmas that come with “behaviorally-enlightened” fiduciary advice and considerations for how to remain ethical.

LO #5: Identify strategies for using ABLE accounts most effectively.

Qualified Domestic Relations Order (QDRO): This is a formal, judicial order that is used as part of a divorce or legal separation agreement for how to divide up property; specifically retirement or pension plans.

Temporary Expanded Public Service Loan Forgiveness (TEPSLF): This is a ‘first-come, first-serve’ offshoot program of PSLF which according to the GAO Congress funded with $700 million for borrowers who made the mistake of paying on plans ineligible for PSLF.

Future Self Continuity (FSC): The connection and perceived association between who you are today and who you will be in the future.

Poor Affect Forecaster: When a personis bad at guessing how they will feel in the future and to what magnitude they will feel those emotions.  This applies to all humans to varying degrees.

Contractarian: A common ethical school of thought which says fiduciary duties arise purely out of contractual or quasi-contractual obligations.

Achieving a Better Life Experience (ABLE) Account: A tax-favored account aimed at helping certain persons with disabilities and/or blindness save on a tax-favored basis without impacting any means-tested disability-related benefits they might receive.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.0 CFP/IWI hours
• 3.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

10/3/2019

• Client Trust & Communication
• Retirement Planning
• Taxes

This month we review the September 2019 blog posts, specifically the following four: (1) How S Corporation Owner-Employees Can Adopt An Accountable Plan To Preserve The Home Office And Other Business Expense Deductions, (2) The New Blended Retirement System For Military Employees, (3) When Heuristics And Biases May Actually Improve Financial Decision-Making, (4) Ambiguous Loss: Helping Clients To Grieve Even Before A Loved One Passes Away

LO #1: Identify the benefits of Accountable Plans for S-Corps and tips for how to use them.

LO #2: Identify strategies for working with military service members and their different retirement plans.

LO #3: Identify how and when heuristics may be useful in financial decision-making.

LO #4: Identify the 2 types of ambiguous loss and how they impact financial decision-making.

LO #5: Identify how financial planners can prepare for ambiguous loss planning with clients.

Accountable Plan: A simple reimbursement program, established by an employer, that allows employees to be reimbursed for business expenses they incur as part of their work.

Final Basic Pay Retirement System: The original standard calculation for retirement compensation which was based on a percentage of base pay and the number of years of service, assuming the servicemember serves 20 years.

High-36 Retirement System (High-3): The revised military retirement program starting in 1981 which mandates that all military members meet a 20-year service requirement in order to qualify for a defined benefit and that the defined benefit would be based on the servicemembers’ average highest 36 months.

Thrift Savings Plan (TSP): This is the federal employee and military member’s version of the 401(k).

Blended Retirement System (BRS): The military retirement system that was developed out of an effort to create flexibility and mirror what retirement benefits are available to civilians.

Combat Zone: This is a general term, defined by the IRS, that includes all of the following hostile areas where military may serve: actual combat areas, direct combat areas, and contingency operations areas.

Heuristic: A problem-solving approach using practical shortcuts that don’t necessarily consider all available information.

Human Bias: A tendency toward some behavior or belief.

Data Bias: Systematic deviation in estimation due to the particular model being used.

Variance: How far data tend to spread out from their given average.

Noise: Variability in the data that cannot be explained.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.0 CFP / IWI hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

9/4/2019

• Annuities
• Healthcare
• Practice Management
• Taxes

This month we review the August 2019 blog posts, specifically the following four: (1) Figuring Out The “Best” Healthcare Option For “Early” Retirees, (2) Fee Severability: The Next Big Issue In The Regulation Of Financial Planner Compensation?, (3) How Qualified Opportunity Zone Funds Create Unique Estate Planning Challenges For Beneficiaries, (4) New PLR Allows RIA Advisory Fees To Be Paid Pre-Tax Directly From Non-Qualified Fee-Based Annuities

LO #1: Identify viable insurance options for early retirees.

LO #2: Identify strategies for navigating insurance coverage for early retirees.

LO #3: Identify the ways in which both severability and saliency can play a role in consumer protection regulation.

LO #4: Identify the benefits and caveats of QOFs as well as review other tax-deferral strategies.

LO #5: Identify the benefits and potential issues with the recent PLR’s on annuities.

Qualified Opportunity Zone: These are low-income census tracts that have been specially nominated as such by the state, DC, or the US territory in which they are located.

Tax Cuts and Job Act (TCJA): Passed by Congress in late 2017, this was the largest tax reform meant to simplify the IRS code and the burdens of annual tax filing.

Consolidated Omnibus Budget Reconciliation Act (COBRA): This is an insurance program that gives some employees the ability to continue their health care coverage after leaving employment.

Medicare Part A: This is hospital insurance. It covers care received at a hospital, skilled nursing facility and in some circumstances at home care.

Medicare Part B: This covers doctors and outpatient visits and associated services which could include: preventative care, X-rays, ER services, mental health services and others

Medicare Part D: This is prescription drug coverage that helps to lower costs of prescription drugs, and protect against higher costs.

Income-In-Respect-Of-A-Decedent (IRD): One of the largest, and most commonly overlooked, itemized deductions. It provides beneficiaries of inherited retirement accounts (and other inherited pre-tax assets) an income tax deduction for any (Federal) estate taxes that were caused by that IRD asset.

1031 Exchange: This is a process by which a taxpayer can defer paying capital gains and federal income tax through the exchange of certain types of property.

Private Letter Ruling (PLR): This is a response from the IRS that gives guidance on how to interpret or apply tax laws.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

8/1/2019

• General Planning
• Retirement Planning
• Taxes

This month we review the last two July 2019 blog posts, specifically the following two: (1) How To (Correctly) Fix A Forgotten, Missed, Or Miscalculated Required Minimum Distribution (RMD), and (2) The 6 Types of Itemized Deductions That Can Still Be Claimed After TCJA

LO #1: Identify common Required Minimum Distribution errors.

LO #2: Identify how to correctly remedy common RMD errors.

LO #3: Identify how to fill out Form 5329.

LO #4: Identify the important changes brought on by TCJA.

LO #5: Identify the six types of itemized deductions that can still be claimed after TCJA.

Tax Cuts and Job Act (TCJA): Passed by Congress in late 2017, this was the large tax reform meant to simplify the Internal Revenue Code and the burdens of annual tax filing.

Income in Respect of Decedent (IRD) deduction: One of the largest, and most commonly overlooked, itemized deductions. It provides beneficiaries of inherited retirement accounts (and other inherited pre-tax assets) an income tax deduction for any (Federal) estate taxes that were caused by that IRD asset.

Adjusted Gross Income (AGI): This is a calculated measure of income based on one’s gross income which is used for determining deductions and credits.

Form 1040: This is the form individuals use to file their annual income tax returns.

Itemized Deduction: This is an expenditure that may be subtracted from AGI to reduce a taxpayer’s tax bill.

Above-the-line deduction: These are the deductions that a taxpayer takes out of gross income in order to arrive at one’s AGI.

Below-the-line deduction: These are the deductions that can be taken from AGI.

Individual Retirement Account (IRA): These are retirement accounts that have tax benefits such as tax-free growth and/or the ability to defer taxation to a later date (hopefully when one’s individual tax rate is lower).

Ponzi Scheme: This is a financial scheme and ultimately a form of fraud often where the person falling for the fraud believes s/he will receive a quick return.

Health Savings Account (HSA): Used or available in conjunction with high-deductible health insurance plans, this is a way to save money tax-free against future health expenses.

Required Minimum Distribution (RMD): This is the amount that one must withdraw each year from some types of retirement accounts once the owner has reached age 70 and ½.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

8/1/2019

• General Planning
• Healthcare
• Retirement Planning

This month we review the July 2019 blog posts, specifically the following three: (1) Options For Allowing Family Members To Help Manage Accounts In The Event Of Diminished (Or In) Capacity, (2) Choosing The Right 529A Plan For A Special Needs Beneficiary, (3) The Problem With FIREing At 4% And The Need For Flexible Spending Rules

LO #1: Identify the best solutions for navigating incapacity planning.

LO #2: Identify the benefits of 529A accounts for special needs planning.

LO #3: Identify how to select and work with the right 529A accounts.

LO #4: Identify strategies for dealing with FIRE.

LO #5: Identify the issues surrounding retirement periods that extend past 30 years.

Convenience Accounts: An account in which an additional owner is added purely for the sake of giving them the ability to access the funds on behalf of the “real” owner.

Power of Attorney (POA): This is a legal document that grants an individual (or group of persons, or even an organization) the right (i.e., the power) to act on another person’s behalf.

Principal: Person who creates the POA document.

Attorney-In-Fact: Person who is appointed by the principal in a POA document.

Limited Power of Attorney: Compared to a general POA which would generally allow the agent to work on the principal’s behalf, the limited POA was developed to limit the scope and restrict the agent from certain activities.

Nondurable Power of Attorney: This is a general style POA, but the issue with it is that it does not allow the agent to act in the principal’s best interest once the principal has become incapacitated.

Springing Power of Attorney: This type of POA only comes into action, i.e., it springs into action, at the event of incapacitation.

Durable Power of Attorney: This type of POA becomes effective as soon as it is signed and continues to be effective even after or through the principal becoming incapacitated.

Revocable Living Trust: Sometimes referred to as an “Inter Vivos Trust” is a legal entity that is created upon the execution of the trust document that provide for a trust relationship between the trust creator and a trustee of the trust.

Gray Divorce: Divorce of individuals age 65 and older.

529A: Also known as an ABLE account, created in 2014 as part of the “Achieving a Better Life Experience” (ABLE) Act.  This account allows families to save and invest funds for the care of a disabled family member while maintaining eligibility for public benefits such as Social Security, Medicaid, and public housing.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

7/1/2019

• Client Trust & Communication
• Regulation
• Retirement Planning
• Taxes

This month we review the June 2019 blog posts, specifically the following four: (1) Finding Your Own Money Story To Better Communicate With Clients, (2) Segmenting Retirement Expenses Into Core Vs. Adaptive To Create Retirement Buckets, (3) Unique Planning Challenges Of Directly Owing Real Estate Inside An IRA, (4) Advisor’s Guide To The SEC’s Final Regulation Best Interest And Form CRS.

LO #1: Identify financial therapy/psychology practices and the benefits of those practices that facilitate improved client communication.

LO #2: Identify the varied client benefits of the Core vs. Adaptative strategy versus a Essentials vs. Discretionary strategy.

LO #3: Identify the hurdles of owning real estate inside of an IRA and potential work-arounds for these hurdles.

LO #4: Identify the changes associated with the SEC’s final version of Regulation Best Interest

LO #5: Identify how the SEC’s final version of Regulation Best Interest impact the work with clients.

Money Egg: A therapeutic exercise based on the “trauma egg” that allows individuals to get in touch with not only the financial memory, but the emotion and lessons associated with that memory.

Money Script: Messages and lessons we learn about money while we’re growing up, that become ingrained in us as “scripts” that we may unconsciously follow as adults.

Narrative Financial Therapy: This type of “therapy” or therapeutic technique creates a separation between the person and their problem, while encouraging the individual to use their strengths to overcome or minimize the issue.

Core Spending: These expenses constitute the “essentials” of the household’s entire lifestyle.

Direct-owned Real Estate: Properties in which an owner (or a company controlled by that owner) has direct title to the property.

Non-Recourse Loan: A loan where an asset is pledged as collateral to secure the loan, but in the event of a default, the borrow is not personally liable for any additional unpaid amounts (beyond the lender’s ability to foreclose on the pledged asset itself).

Disclosure: Providing certain prescribed disclosure before or at the time of recommendation, about the recommendation and the relationship between the retail customer and the broker-dealer.

Care: Exercising reasonable diligence, care, and skill in making the recommendation.

Conflicts of Interest: Establishing, maintaining, and enforcing policies and procedures reasonably designed to address conflicts of interest.

Compliance: Establishing, maintaining, and enforcing policies and procedures reasonably designed to achieve compliance with Regulation Best Interest.

Form CRS: Customer/Client Relationship Summary document that explains the nature of services, relationship, fees, costs, standard of conduct, and conflicts

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.0 CFP / IWI (formerly IMCA) hours
• 3.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

5/31/2019

• Debt & Liabilities
• General Planning
• Retirement Planning

This month we review the May 2019 blog posts, specifically the following two: (1) Navigating The Social Security Earnings Test When Only One Spouse Is Retired, (2) When Does It Make Sense To use An Income Share Agreement.

LO #1: Identify the ways in which timing of social security benefits may impact the social security benefit that a client receives.

LO #2: Identify situations in which a client may be able to exclude net earnings from self-employment and/or W2 wages as it relates to the earnings test.

LO #3: Identify the rules for different types of retirement benefits as it pertains to the retirement earnings test.

LO #4: Identify the ways in which income share agreements versus federal student loans may be better or worse for different individuals.

LO #5: Identify the ways in which income share agreements versus private student loans may be better or worse for different individuals.

Income Share Agreement: This is a contract that a student enters into with their school (or some other institution) that obligates the student to hand over a certain percentage of their future income in exchange for dollars to put toward their education today.

Full Retirement Age (FRA): This age varies by the day and year of one’s birth. It is the age in which one is eligible to receive all of one’s social security benefit.

Retirement Earnings Test: This test relates to claiming social security benefits before reaching full retirement age and continuing to work; making above a certain threshold brings individuals subject to the retirement earnings test.

Grace Year: This refers to the first year in which an individual is entitled to Social Security benefit and earns less than the “monthly limit” in at least one month.

Survivor Benefit: This benefit is generally collected by a survivor (spouse or child) of a worker once the survivor is age 60, ranging in rates from 71.5 to 100% of the late spouse/parent, depending on the survivor’s age.

Spousal Benefit: A spouse can claim a “spousal benefit” that allows them to collect 50% of their spouse’s social security benefit based on their full retirement age.

Child-of-a-Retired-Worker Benefit: Another auxiliary benefit where the child (minor, adult, or high school student under the age of 19) can receive their parent’s benefit.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

5/31/2019

• Insurance
• Investments
• Regulation

This month we review the May 2019 blog posts, specifically the following three: (1) NY Insurance Regulation 187: Are Life Insurance Policy Illustrations Too “Misleading” For Comparison Purposes, (2) Risk Literacy And Interpreting The Probabilistic Risks Of Investing And Retirement Planning, (3) Due Diligence For Life Insurance: Going Beyond The Hypothetical Policy Illustration,

LO #1: Identify implications from NY Insurance Regulation 187 as they apply to “working in the client’s best interest” and what those implications mean to financial advisors.

LO #2: Identify issues that make it difficult to compare and contrast across insurance products.

LO #3: Identify what risk literacy is and how it plays a role in financial decision-making.

LO #4: Identify the impact of risk literacy on client communication.

LO #5: Identify the things advisors should look into while comparing and contrasting insurance policies for clients in order to comply with due diligence.

Policy Accounting Pages: Background information that can be requested from the insurance company that will help an individual and financial professional to better ascertain policy appropriateness and make “apples-to-apples” presentations.

Risk Literacy: The ability to understand probabilities and the risks that those probabilities imply.

Cost of Insurance Charges (COIs): These are deductions from permanent life insurance policy cash values to cover anticipated payments by the insurer for death claims.

Fixed Administration Expense (FAE): These are the fees that are charged to cover expenses related to actuarial design, underwriting, and new business processing, service, and administration and are calculated as some fixed amount set at the time the policy is issued.

Premium Loads: These fees are calculated as a percent of premiums paid in a given year, and typically range between 0% and 35%.

Cash-Value-Based “Wrap Fees”: These are insurance fees charged as a percent of policy accounts value.

Gross Rate of Return: The gross policy interest/earnings rate is that rate of return credited to policy cash values reported before deduction of investment-related fund management and before deduction of cash-value-based insurance.

Net Rate (Investment Rate of Return): The net policy interest/earnings rate is that rate of return credited to policy cash values reported after deduction of investment-related FMEs but before deduction of cash-value-based insurance.

Net-Net Rate (Policy Rate of Return): The net-net policy interest/earnings rate is that rate of return credited to policy cash values reported after deduction of both investment FMEs and cash-value-based insurance “wrap-fees.”

Cash Surrender Value: This is the value available to the policyholder for withdrawal or upon policy termination and is equal to the policy account value minus the surrender charge.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

5/9/2019

• Client Trust & Communication
• General Planning
• Practice Management
• Taxes

This month we review the April 2019 blog posts, specifically the following four: (1) How Business Owners Get Preferential Tax Rates With 199A QBI Deduction-Production Income, (2) How Divvying Up Household Financial Responsibility Impacts Financial Knowledge Over Time, (3) How The Financial Planning Process Differs For Young Clients: Not Simpler, But Different Complexities, (4) Key Tax Considerations When Advising Non-US Citizen Clients

LO #1: Identify ways that a business owner can take advantage of deduction-production income.

LO #2: Identify how financial knowledge changes over a lifetime and why this is pertinent to financial planning relationships.

LO #3: Identify the ways in which an advisor can and should provide financial planning services to next-generation clients.

LO #4: Define the different ways non-US born residents may be taxed.

LO #5: Identify common financial planning issues and strategies for working with non-US citizen clientele.

Tax Cut and Job Act: In December of 2017, this act was passed, and it represents the most massive changes to the Internal Revenue Code in more than 30 years.

IRC Section 199A: The new rule created by TCJA, which provides small business owners with an up-to-20% deduction on the profits of their business.

Financial self-efficacy: This is a term that refers to one’s beliefs in his or her own abilities to accomplish a financial goal or task.

Financial literacy: A term developed describe how financial knowledge and financial ability or confidence work together in order to apply the financial knowledge.

Alien: A non-citizen living in the United States.

Domicile: This is defined as living within a country with no definite present intent of leaving. In general, Domicile means (i) having a physical presence, and (ii) present intention to remain indefinitely.

Qualifying Domestic Trust (QDOT): This is a trust that allows non-US Citizen spouses who survive a deceased spouse to still take the (otherwise unavailable) unlimited marital deduction on estate taxes.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

April 1, 2019

• Financial Psychology
• Industry News
• Practice Management
• Taxes

This month we review the March 2019 blog posts, specifically the following four: (1) Maximizing The Pre-Tax Treatment Of Investment Advisory Fees After TCJA, (2) How The Tools Of Financial Therapy Can Improve The Delivery (And Follow-Thru) Of Financial Planning Advice, (3) Tax Rules And Strategies For Claiming 2018 Cryptocurrency Loss Deduction, (4) Financial Planning Research Highlights From The 2019 CFP Board Academic Research Colloquium

LO #1: Identify ways in which financial advisors can help their clients to legally retain the pre-tax nature of advisory fees, pre-TCJA.

LO #2: Identify the difference between financial therapy and other related disciplines.

LO #3: Identify tools of financial therapy and how they impact the client relationship.

LO #4: Identify the history of Bitcoin and strategies for how to handle current losses.

LO #5: Identify the latest research in financial planning and its impact on financial planning practices.

Tax Cut and Job Act: In December of 2017 this act was passed, and it represents the most massive changes to the Internal Revenue Code in more than 30 years.

Financial Therapy: The combination of financial planning and mental health to assist clients with the emotional and relational sides of money.

Evidence-based: An evidenced-based practice means that the practice itself has been tested and validated within a real-life context.

Solution Focused Therapy: A style of therapy that looks forward in time and works through its emphasis on building self-efficacy in clients.

Genogram: A tool used in psychology to explore family structures and relationship dynamics and to recognize the impact of familial patterns on behavior and beliefs.

FIFO: First-in-first-out. This is a type of accounting method where the oldest costs will be removed from the balance sheet and will be the first costs of goods to be sold for income.

LIFO: Last-in-first-out. This is a type of accounting method where the newest costs will be removed from the balance sheet and will be the first costs of goods to be sold for income.

Wash-sale Rule: This rule prevents an investor from claiming a loss for any stock or other security sold if that stock or security (or one that is substantially identical) is (re)purchased anytime during the period beginning 30 days before the date of the sale (of the stock or security for which there would be a loss) and ending 30 days after the date of the sale.

Risk Aversion: A style of risk measurement generally used by economists. It measures risks through gambling or lottery style questions.

Psychometric Risk: A style of risk measurement generally used by psychologists, it uses psychological scales that assess one’s broad willingness to take financial (or other) risks.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.5 CFP hours
• 3.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

March 10, 2019

• Investments
• Retirement Planning
• Taxes

This month we review the February 2019 blog posts, specifically the following four: (1) How The New QBI Deduction-Reduction Ruins The Value Of Pre-Tax Retirement Plans For Small Business Owners, (2) Qualifying A Real Estate Enterprise As A “Business” For The 20% 199A QBI Pass-Through Deduction, (3) The Extraordinary Upside Potential Of Sequence Of Return Risk In Retirement, (4) Reboot, Rewire or Retire? Personal Experiences With Phased Retirement and Managing A Life Portfolio

LO #1: Identify tax-saving strategies for small business owners given the recent changes to Qualified Business Income.

LO #2: Identify nuances and strategies for clients that may wish to consider their rental property as a “business” and therefore, be able to capitalize on the 199A QBI pass-through deduction.

LO #3: Identify issues with simply sticking to a particular (“safe”) withdrawal rate.

LO #4: Identify important aspects related to creating a “life portfolio”.

LO #5: Identify best-practices for helping clients to establish and discuss a “life portfolio”.

Tax Cut and Job Act: In December of 2017 this act was passed, and it represents the most massive changes to the Internal Revenue Code in more than 30 years.

Tax credit: Dollar-for-dollar reduction in one’s taxes, regardless of tax bracket.

Tax deduction: As opposed to a tax credit, the value of a deduction generally varies in direct proportion to the marginal tax rate.

Triple-Net Lease: When the tenant is responsible for all taxes, maintenance, and insurance on the property as well as the monthly rent check.

Notice 2019-07: Released concurrently with IRC Section 199A Final Regulations, it contains the proposed Revenue Procedure providing a safe harbor for treating a renal real estate enterprise as a business for purposes of the Section 199A deduction.

Sequence of Return Risk: a phenomenon which reveals that even if long-term returns average out in the long run, it doesn’t necessarily mean the portfolio can sustain ongoing withdrawals with volatile returns in the meantime.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

January 31, 2019

• Financial Psychology
• Retirement Planning
• Taxes

This month we review the January 2019 blog posts, specifically the following five: (1) Scarcity: How This Rather Innocuous Sounding Economics Concept Actually Impacts Decision-Making, (2) The Importance of Finding Your Tax Equilibrium Rate for Retirement Liquidations, (3) Why Evolutionary Psychology May Be Better Than Behavioral Finance Research To Understand Financial Behaviors, (4) How To Effectively Change Domicile For Tax (And Other Benefits), (5) Navigating The Capital Gains Bump Zone: When Ordinary Income Crowds Out Favorable Capital Gains Rates

LO #1: Identify the ways in which “tunneling” and the “bandwidth tax” could impact decision-making.

LO #2: Identify best practices for finding, determining, and then acting on tax rate equilibrium.

LO #3: Identify ways in which Evolutionary Psychology can explain financial behavior.

LO #4: Identify how to change one’s domicile and the potential strategic benefits of doing so.

LO #5: Identify strategies for how to coordinate long-term capital gains with ordinary income.

Scarcity: When the supply of a resource does not match the demand on that resource.

Tax Bracket Arbitrage: Where income that will be taxed someday is shifted from higher-tax-rate years to lower-tax-rate years without changing the underlying nature of the income or risk, just where/how the assets are held for tax purposes.

Natural selection: A core element of Darwinian evolution. The tendency for organisms that are better suited for their environment to pass more genes on to future generations.

Domicile: This definition varies slightly from state to state, but generally there are two key concepts. One, the domicile is a person’s fixed, permanent, and principal home. Two, the person intends to return or remain in this home.

Leave and Land rule: It is impossible to leave one’s old domicile until s/he has established and arrived in their new domicile.

Bump Zone: This refers to where additional non-capital-gains income still increases the taxes on capital gains by driving them up into higher tax brackets.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2.0 CFP hours
• 3.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

10.23.2020

Determining a “safe” amount of retirement spending is an increasingly popular topic amongst financial planners, yet a great deal of confusion exists about the current state of research and how it should be applied. In this session, we will explore the problems with traditional linear projections, the impact of the sequence of returns on the ability to safely retire, the current state of research on safe withdrawal rates, and the uses and potential concerns of applying the research in client situations.

– LO #1: Identify and distinguish the difference between the “safe” withdrawal rate and the “initial” withdrawal rate.

– LO #2: Illustrate the impact that return sequencing has on a portfolio’s end result? Explain how inflation impacts the portfolio’s end value as well.

– LO #3: List potential adjustments to Safe Withdrawal Rates

– LO #4: Describe the various caveats to the safe withdrawal research that need to be considered.

– LO #5: Illustrate how the safe withdrawal rate can be an effective anchor for setting reasonable client expectations

4% Safe Withdrawal Rate: This is essentially the worst possible scenario based on historical data; it is the withdrawal rate that would have worked in the worst scenario we have ever seen.

Inflation: This is the general increase in prices of goods and the corresponding fall of purchasing power that inches up every year. In some environments, it can move up or down dramatically.

Dividends: These represent how much money is paid by a company to its shareholders, normally on a quarterly basis. Dividends come out of the company profits.

Capital Gains: These are the profits (if realized) from stock, land, or a business that result when the fair market value of the asset increases over its original purchase price. The gain (or loss), when realized, is a taxable event.

Principal: This refers to the initial monetary corpus that is contributed to an investment account (e.g., savings that are set aside for retirement or in a trust account).

Sequence of Returns: This is the order in which investment returns (or lack thereof) take place, which ultimately impacts withdrawal strategies and is used in some fields of retirement research that analyze portfolio returns in retirement accounts.

Risk Tolerance: This is how much risk an investor is able to tolerate within their portfolio.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

9.24.2020

Executive compensation is confusing financially and emotionally. In this webinar advisors will learn not only about the trends associated with executive compensation and some of the common concerns those with executive compensation plans face, but also how to think about, strategy wise, what different opportunities the different executive compensation plans may bring.

– LO #1: Identify the financial as well as emotional concerns driving the need for executive compensation planning.
– LO #2: Identify trends in executive compensation planning
– LO #3: Identify similarities and differences between restricted stock and employee stock option plans
– LO #4: Examine the timing of different executive compensation planning options
– LO #5: Identify the differences between restricted stock and RSU grants
– LO #6: Examine the characteristics of Non-Qualified Deferred Compensation and employee stock purchase plans

Overconfidence: The tendency to overestimate or exaggerate one’s ability to successfully perform a given task.

Status Quo: Status quo bias is the preference for choosing a more familiar option rather than a less familiar option, even if the less familiar option is more beneficial.

Home Country: The tendency to favor companies in one’s own country over those from other regions and countries.

Endowment: Tendency to give holdings that are owned a disproportionate value because they are already owned versus purchasing outright.

Non-qualified stock options (NSOs): The more common type of employee stock options, provided to many types of employees. NSOs can also be granted to individuals who are not employees of the company or on the company payroll. NSOs are not as advantageous tax-wise as ISOs, as the profit on NSOs is taxed as ordinary income.

Incentive stock options (ISOs): ISOs are a less common type of employee stock options, provided mainly to C-suite or top-level executives. ISOs can only be granted to employees of a company, and they are tax-advantaged as the profit on ISOs is taxed at the capital gains rate.

Bargain Element: A bargain element is an option that can be exercised below the current market price, providing an immediate profit.

100,000 Rule: The $100K ISO limit caps employees at receiving a maximum of $100K worth per year of exercisable options (based on the stocks’ aggregate fair market value) as incentive stock options. Stock options in excess of $100K in one year are treated as NSOs by the IRS.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

8.25.2020

• General Planning

There is little unbiased research and insight when it comes to how financial planners actually work: prepare plans, technology, and fees. Moreover, to remedy this issue and begin to fill in the gaps, Kitces Research conducted is second, bi-annual survey of financial advisors. In this research-based newsletter, we begin to answer these questions about how financial planners work and compare findings from 2018 to more recent 2020 findings.

– LO #1: Identify the different ways in which financial advisors use their time looking at both role as well as business model and CFP status.

– LO #2: Identify the difference between financial advisors’ approach to financial planning and plan delivery as well as plan components and compare this information to findings from 2018.

– LO #3: Identify how different members of a financial advisory team, depending on business channel, impact financial plan creation.

– LO #4: Examine how the financial planning relationship progresses over the first year as a client and how advisors spend their time during this first year.

– LO #5: Identify the ways in which financial planning tools impact the financial planning process and plan development.

– LO #6: Examine the practices of top producing financial planners.

Registered Investment Advisor (RIA): A firm or individual registered with the Securities and Exchange Commission or state authorities and working in the investment advice business.

Broker-Dealer (B/D): This is a type of business structure where the firm or individual trades and sells securities, from its own benefit, as well as to its customers.

Assets Under Management (AUM): This is a type of fee structure where the fee is based on how much the client has under management with his or her advisor

Retainer: This is the type of fee structure where the base retainer is a set price and then additional fees can be added on, on top of that base retainer.

Insurance Broker: This individual sells and negotiates insurance for compensation.

Calculator: Use a plan to calculate needs and recommend solutions.

Comprehensive: Use plan software output to bring together a holistic picture of a client solution.

Customized: Create a custom-written plan for an individual client’s circumstances.

Collaborative: Use planning software collaboratively/interactively life in client meetings.

Property and Casualty (P&C) Insurance: This is the type of insurance that covers your things – cars, home, ect. It also provides coverage to protect you if you’re responsible for an accident or injury.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

7.26.2020

• Debt & Liabilities

43 million Americans have outstanding student loans, with the total debt at 1.6 trillion and growing. As college costs have risen and student debt has exploded, so have the options to repay the debt.

In this webinar, Ryan Frailich, CFP, CSLP, covers an introduction to student loan financial planning. He starts by reviewing the variety of loan types as well as the different repayment plan options borrowers have. He then shows the different repayment options via a case study, highlighting the different planning considerations given the client’s unique circumstances. He also highlights the benefits of the Public Service Loan Forgiveness (PSLF) program, which offers many borrowers substantial savings if they follow strict rules and regulations surrounding the program.

LO #1: Identify the differences between private and federal student loans.
LO #2: Examine the differences between different federal student loans, as there are more than one kind.
LO #3: Identify different repayment strategies.
LO #4: Examine the differences between consolidation and refinancing.
LO #5: Examine Income Driven Repayment plans
LO #6: Examine Public Service Loan Forgiveness programs and why it will or can work for many borrowers.

Subsidized Loans: This is a type of loan where the interest will not accrue assuming that the student meets the loan requirements.

Unsubsidized Loans: This is the type of loan where interest accrues at all times.

Consolidation: This is when the Federal government provides the borrower with a Direct loan large enough to pay off all of the old loans, and forms what is called a Direct consolidation loan which borrowers must now pay back to the Federal government.

Refinancing: Similar to consolidation in that it creates one loan for the borrower, it is different from consolidation in that refinancing is not done through the Federal government by another third-party company.

Negative Amortization: A common concern for Income-Driven Repayment plans, this is when the principal balance of the loan continues to increase, even if the borrower is making their monthly payments on time.

Federal Family Education Loans (FFEL): The most common form of education loan prior to 2010, ultimately phased out by the Healthcare Education Reconciliation Act.

Income-Driven Repayment Plan: School loan payment plans calculated based on the borrower’s discretionary income.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

6.30.2020

• Healthcare
• Insurance

Healthcare and healthcare costs can be difficult conversations to have, let alone difficult financial planning issues to tackle. In this webinar, Dr. Carolyn McClanahan, a medical physician as well as a personal financial planner, covers how to help clients control costs by discussing (a) healthcare cost challenges and factors such as inflation, (b) health insurance choices (COBRA vs. Affordable Care Act), (c) how clients should use health insurance to be most cost effective, and finally (d), from her unique perspective as a physician, she discusses how to help clients to be empowered patients.

• LO #1: Identify important considerations that pertain to the current inflation rate of medical expenses.
• LO #2: Understand how health care is charged and how that relates to health care costs.
• LO #3: Identify pros and cons of different insurance options from employer-based insurance, COBRA coverage, and individual plans.
• LO #4: Identify the differences between high deductible versus copay plans.
• LO #5: Identify the most important question one should always ask when making appointments and, if possible, in emergencies to best use healthcare.
• LO #6: Identify tips for how to help clients become an empowered patient.

Fee-For-Service-System: This is how the healthcare system in the United States runs and it simply means the more services performed the more the system gets to charge.

Medical Mindset: This is a term that describes how certain people may be more or less prone to using medical services. For instance, some people go for any and all issues no matter how large or small, whereas others avoid going to the doctor at nearly all costs.

Guaranteed Issue: This is the rule that requires insurance companies to sell a person insurance regardless of a pre-existing condition.

Medical Underwriting: This is the rule that although guaranteed issue may exist, insurance companies can decide what to charge, which may be extremely expensive.

Deductible: The amount that the insured must pay out-of-pocket before insurance coverage kicks in and the insurance company begins to pay.

Copay: A fixed amount that the insured pays out-of pocket to pay for part of the care while the deducible is being met.

Balance Billing: When an individual uses an out-of-network provider and whose insurance company pays for the service but covers only the in-network rate, the individual will be billed for the difference between the out-of-network service expense and the covered in-network limit.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

06/01/2020

• Retirement Planning
• Taxes

The number of individuals with large portions of their wealth in retirement plans is growing. What is more, even though most individuals have a handful of options once they have separated from service or once they can access to their retirement plan funds (401k, 403b) many choose what is typically the worst option, a lump sum distribution. In fact, research finds that this happens about 30% of the time! In this webinar advisors will learn how to make the most out of the worst situation by taking a deep dive into Net Unrealized Appreciation. Learn when and why utilizing NUA makes sense as well as when it does not make sense.

• LO #1: Understand what Net Unrealized Appreciation is and its rules.
• LO #2: Examine the benefits and advantages of utilizing NUA.
• LO #3: Identify the drawbacks of NUA.
• LO #4: Understand when to avoid an NUA strategy.
• LO #5: Identify the triggering events for NUA.

Net Unrealized Appreciation (NUA): This is the difference in value between the average cost basis of shares of employer stock and the current market value of the shares.

Employee Stock Ownership Plan (ESOP): This is a type of plan that benefits employees in that it allows employees to gain an ownership interest in their company. These types of plans are often formed in companies to allow employees to buy stock of a closely held business entity.

Lump Sum Distribution: A distribution of money from an account that consists of one single payment (usually the balance of the account) instead of a series of multiple payments over time.  This includes when an individual distributes all of their retirement plan assets from an account in a single calendar year.

20% Mandatory Withholding Rule: A rule that requires 20% of a distribution taken from an employee’s employer-sponsored retirement account to be withheld from the distribution, and that will be used to pay Federal income taxes. This rule applies when an individual takes a distribution from their employer plan and the distribution is made payable to the individual directly or is moved in-kind to a taxable account. In other words, when the distribution is not rolled over to another retirement account, the employer plan is required to withhold 20% taxes to pay for Federal income taxes.

Triggering Event (for NUA): There are four triggering events provided by the IRS that allows for NUA distributions. These events are important in regard to the opportunity to take advantage of tax-breaks for NUA funds within retirement plans.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

4.21.2020

• Financial Psychology
• Practice Management

The financial services industry is stuck in a misguided era of telling people what to do and how they need to behave without taking the next steps of guiding them through a process of understanding why those actions are important. Advisors then find themselves baffled as to why their clients aren’t motivated to make good decisions and engage in positive habits. Yet, the reality is that the keys to effectively motivating clients are actually quite simple. In this educational webinar, Tim, a researcher and a practitioner, uses stories grounded in scientific research and evidence to explain how advisors can apply behavioral science and economics best practices and principles to help them engage, motivate and guide clients to better financial outcomes.

LO #1: Identify the two different systems at work in one’s brain.

LO #2: Identify the ways in which loss impacts the client’s decision-making.

LO #3: Identify the best ways to motivate clients.

LO #4: Identify how habits are formed and why they are useful in decision-making.

LO #5: Identify strategies that financial planners can employ that use habits to help clients.

System 1: This is the fast, automatic, impulsive gut feeling that drives decision-making

System 2: Slower, more thoughtful and rational system that also drives decision-making

Behavioral Economics: The intersection of economics and psychology.

Empathy: The ability to put one’s self in the client’s shoes.

Analysis by Paralysis: When an individual becomes unable to decide because they become overwhelmed by the number of potential outcomes and options.

Loss Aversion: The finding that losses hurt more than gains feel good when looking at the same magnitude of loss and gain.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

4.1.2020

• Financial Psychology
• Retirement Planning

This presentation examines how real retirement spending patterns change traditional retirement withdrawal strategies. Specifically, commonly used retirement spending assumptions are compared to actual retirement spending patterns of retirees. This comparison reveals that typical assumptions of constant real spending often overstates retirement spending. As a result, commonly assumptions may overstate retirement savings need. Accounting for more realistic retirement spending results in higher safe withdrawal rates than prior research has typically indicated. Typical assumptions also fail to account for the potential to make adjustments in retirement that can keep a retirement spending plan on track.

LO #1: Identify the traditional financial planning retirement spending assumptions.

LO #2: Identify the traditional assumptions underlying safe withdrawal rate (SWR) research.

LO #3: Identify how historical retirement spending data deviates from traditional assumptions.

LO #4: Identify the implications that result from adopting more realistic assumptions.

LO #5: Identify how adjustments in retirement spending can keep a retirement spending plan on track.

Monte Carlo Analysis: These are analyses that consider multiple trials and variables designed to model the probability of an outcome.

Nominal Value: An economics term referring to a value that is not adjusted for inflation.

Real Value: An economics term in which a value has been adjusted for inflation.

Replacement Rate: This refers to the ratio of an individual’s pension or average income in a given time period.

Safe Withdrawal Rate: This is the rate at which one can withdraw from a portfolio and have a high probability of never running out of money.

Risk Tolerance: This is the degree of market fluctuation a person is able to withstand.

Consumer Expenditure Survey: This is a large, nationally representative database of US consumer trends with which many studies in financial planning have been conducted.

Longitudinal Study: A type of study that involves several observations of the same person over a certain period of time, which allows researchers to look at how changes happen to that person over the time period examined.

Cross-Sectional Study: A type of study that allows researchers to compare groups of people (eg., 50-year-olds versus 70-year-olds) at one snapshot in time.

RAND Health and Retirement Study: A large, nationally representative database with longitudinal data that allows researchers to study individual behavior leading up to and through retirement years.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP / IWI (formerly IMCA) hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

3/26/2020

• Regulation
• Retirement Planning
• Taxes

In response to the sudden onset of a pandemic-induced recession, Congress has passed what may be the largest economic stimulus legislation in history. In this webinar, the experts at Kitces.com will walk through the details of the new coronavirus stimulus legislation, key new rules and provisions that advisors should be aware of, immediate planning strategies that can be implemented with clients given the new rules and additional planning opportunities that may be available going forward.

LO #1: Identify the provisions in the relief that impact retirees.

LO #2: Explore the impact of the bill on student loans and education.

LO #3: Determine the amount of recovery rebate a family will receive.

LO #4: Understand the payroll tax relief for businesses.

LO #5: Discover other important provisions of the bill, such as: enhanced access to retirement account funds, new qualified medical expenses, and expanded unemployment insurance.

Coronavirus-Related Distributions: Very similar to a disaster relief distribution to help individuals survive this hardship.

Qualified Charitable Contribution: The new above-the-line charitable deduction that must be made in cash and go directly to a 501( c )(3) and limited to $300.

Pandemic Unemployment Insurance: Unemployment compensation for those who don’t qualify for anything else.

CARES Act: The largest stimulus bill ever passed and signed into law on March 27, 2020 by President Trump.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA/CPA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA/CPA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP/IWI (formerly IMCA) hours
• 1.5 NASBA/CPA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

3/14/2020

• Client Trust & Communication
• Practice Management
• Regulation

When markets get volatile, clients get anxious. Yet while it’s often said that one of the primary value propositions of advisors is to “talk clients off the ledge”, and avoid the mistakes revealed by the research on behavioral finance… remarkably little guidance exists about how, exactly, to have conversations with clients to ease their fears and help them to stay the course. In this webinar, we’ll share what tools advisors are actively using to talk through Coronavirus and market volatility fears with clients, hear from real experts about how to have effective client conversations during times of stress, and explore best practices in what advisors should, and shouldn’t, be doing to help clients stay on track.

LO #1: Identify tools that support financial advisors when having conversations about market volatility.

LO #2: Identify the way financial advisors use tools to support them in having client conversations about market volatility.

LO #3: Identify strategies for engaging in client conversations that help to ease client anxiety.

LO #4: Understand the communication techniques and common talking points that make market volatility conversations go more smoothly.

LO #5: Understand when and how to implement effective communication strategies with clients.

Normalize: Reassuring the client that what they are feeling is normal and common, not in a way “you’re just like everyone else sort of way”, but in a, “it is human to be fearful in these times” sort of way.

Self-care: Taking time for the self to heal, rest, and digest. It is hard work listening and responding to another person’s fears and anger. In order to be with clients fully, it is important to take good care of yourself.

Trauma: This can be anything to anyone. Thus, even if your client has “only” lost $10,000 where others have lost much more, trauma isn’t a competition. If it hurts, it hurts.

Stress: Stress is brought on by an external event and the person’s self-realization as to whether they can handle that situation.

Anxiety: This is an internal event. A person with anxiety may not want to attack the stress, but instead actually shy away and distance themselves and put up resistance to change.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Client Communication
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1 CFP / IWI (formerly IMCA) hours
• 1 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

2/28/2020

• Estate Planning
• Retirement Planning
• Taxes

On December 20, 2019, President Donald Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act, ushering in the most significant direct changes to the laws for retirement accounts since the Pension Protection Act of 2006. The ‘headline’ from the SECURE Act is its changes to the ‘stretch’ rules for designated beneficiaries, but that’s far from the only change that will impact advisors and their clients. The SECURE Act also changes the starting age for RMDs, eliminates the age limit for Traditional IRA contributions, creates a new exception to the 10% early distribution penalty, eliminates burdensome rules that prevented wider-spread adoption of MEPSs, reversed changes to the so-called “Kiddie Tax” made by the Tax Cuts and Jobs Act, and much more!

In this session, attendees will learn about each of the major changes made by the SECURE Act, exploring both the new challenges, and planning opportunities, it creates.

LO #1: Understand how the SECURE Act does (and does not) change the rules for beneficiary RMDs.

LO #2: Discover how the change to the starting age for RMDs impacts has ripple effects to other areas

LO #3: Explore how the QCD anti-abuse rule can negate much of the benefit to making deductible Traditional IRA contributions at 70 ½ and beyond.

LO #4: Prioritize clients whose plans may need to be revised as a result of the SECURE Act’s changes.

LO #5: Identify the SECURE Act’s non-retirement-related changes.

Required Minimum Distribution (RMD): The is the required minimum amount an investor must withdraw from retirement accounts like an IRA, SEP IRA or SIMPLE IRA once a person becomes 72.

Required Beginning Date (RBD): This is the official date by which a retirement plan owner must start to take or receive their RMDs.

“As Rapidly” Rules: Pre-SECURE Act rules specified that a beneficiary just had to distribute the funds from their inherited IRA at least “As Rapidly” as the owner would have been required.

See-Through Trust: This is a type of trust that is subject to the new 10-Year Rule for inherited retirement accounts. These trusts must be valid under state law, irrevocable upon the retirement account owner’s death, contain identifiable beneficiaries, and submitted to the IRA custodian or plan administrator by Oct. 31 of the year following the year of death (or in the alternate, a certified list of trust beneficiaries can be provided by the same date).
Setting Every Community Up For Retirement Enhancement (SECURE) Act: Signed into law by President Donald Trump on December 20, 2019, this piece of legislation will have the largest direct impact on retirement accounts since the passage of the Pension Protection Act in 2006.

Gap Years: These are the years between when an individual retired and when they began receiving Social Security benefits and taking RMDs.

Qualified Charitable Distribution (QCD): One of the most tax-efficient ways of giving to charity, this distribution allows IRA owners and IRA beneficiaries (only as such transactions may not be made from non-IRA-based employer-sponsored retirement plans) who are (actual-age) 70.5 or older to transfer up to $100,000 per year from their IRA/inherited IRA accounts directly to charity.

Multiple Employer Plan (MEP): This is a retirement savings plan that has been adopted by two or more unrelated employers for income tax purposes. These plans may be defined benefit pension or defined contribution plans, such as a 401(k) plan.

529 Plan: This is a college-savings program. Each state has their own 529 plan. The plans are tax-beneficial in that both growth of the account and distributions, assuming they are for qualified expenses, are tax-free. Depending on their state of residence, some contributors can also receive a state income tax deduction.

Auto-Enrollment Plan/Automatic Contribution Arrangement: Retirement plan features common in 401(k) plans that allow employers automatically to enroll employees in their retirement plans (auto-enrollment) and initiate elective contributions (automatic contributions) for employees. Enrollment/Contribution arrangements are automatically established unless employees affirmatively elect not to participate.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 2 CFP / IWI (formerly IMCA) hours
• 2 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

9/2/2019

• Investments
• Retirement Planning
• Taxes

Managing a client’s accumulation stage is relatively straightforward – gather the dollars as they come in, and invest them. When it comes to the decumulation stage, though, it’s not enough to merely manage the retirement portfolio; it’s also necessary to figure out how to generate the cash flows to fund retirement itself from that portfolio, and how to invest into and draw liquidations from a wide range of different types of accounts. In this session, we explore strategies to actually fund a spending plan from a client’s retirement portfolio, as well as how to generate those cash flows in a tax-efficient manner, and exploring the key elements of a withdrawal strategy, including identifying cash-flow sources (and costs), account sequencing (and finding tax equilibrium), coordinating portfolio implementation (not just asset allocation but also asset location), and making the necessary ongoing annual adjustments. Along with how to create better buy-in from clients into their retirement spending plan by developing a Withdrawal Policy Statement to go alongside the client’s Investment Policy Statement.

LO #1: Identify and evaluate income revenue sources.

LO #2: Identify and evaluate account sequencing strategies.

LO #3: Identify the benefits and strategies associated with partial Roth conversions.

LO #4: Identify how to find and establish tax-equilibrium.

LO #5: Identify asset allocation strategies that fit with tax-equilibrium strategies.

LO #6: Identify the importance and convenience of a Withdrawal Policy Statement.

Investment Policy Statement: An agreement between a client and the portfolio manager that documents general rules and information such as asset allocation and risk tolerance.

Withdrawal Policy Statement: An agreement between a client and a financial advisor that lays out the parameters of how portfolio withdrawals will be implemented to generate retirement cash flows.

Tax Equilibrium: This is the point where enough income is created or recognized now to avoid “too much” in the future, but not so much is drawn into the present that it would have been better to just defer the income and wait until later when tax rates might have been lower.

Asset Location: This concept refers to how investors can distribute their investments across different types of savings vehicles.

Roth Conversion: A Roth conversion is when one converts a traditional IRA to a Roth.

Required Minimum Distribution (RMD): The is the required minimum amount an investor must withdraw from accounts like an IRA, SEP IRA or SIMPLE IRA once a person becomes 70.5.

Tax Efficient: This is the attempt to minimize tax liability.

Bond Coupon: This is the amount the bondholder receives from the bond’s issue date until it matures.

Dividend: This is the amount that an investor receives (typically quarterly) from a company for being a shareholder.

Capital Gain: This is the profit that results from the sale of a capital asset such as a stock, bond, or real estate, where the sales price exceeds the purchase price.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

5/7/2019

• Estate Planning
• Taxes

Given recent changes in the law, “tax planning” for one’s estate at death has become a lot less about estate tax planning, and far more about the income tax planning opportunities at death… particularly with respect to maximizing available step-up in basis opportunities. With that in mind, attendees of this session will explore topics including how pre-death asset transfers can help maximize step-up in basis, how other types of pre-death transfers can help avoid the potential for a step-down in basis, complications associated with these strategies for clients living in community property states, and the disadvantages of traditional credit shelter trusts that emerge in an estate planning environment driven by income- (rather than estate-)tax planning.

LO #1: Describe the different ways a decedent’s assets may be treated for income tax purposes after death.

LO #2: Examine how the post-death tax treatment of IRD assets differs from other assets.

LO #3: Identify planning considerations for when property is held jointly between spouses at death.

LO #4: Learn planning strategies to maximize step-up in basis opportunities and to avoid losing capital losses.

LO #5: Explore complications and opportunities that can present themselves when trusts are used for estate planning purposes

Income in Respect of Decedent: Any type of pre-tax asset whose ordinary income tax consequences were not already recognized before the decedent passed away.

IRD Deduction: Federal income tax deduction that can be claimed by the recipient of the IRD asset for any Federal estate tax paid attributable to the IRD asset.

Step-Up In Basis Rule: This rule essentially treats the beneficiary of an asset received due to the owner’s death as though they purchased the inherited asset for its fair market value on the date of the decedent’s death.

Portability: This term applies to the Federal estate tax exemption, made permanent by the American Taxpayer Relief Act of 2012, that allows the surviving spouse to transfer any of the deceased spouse’s unused exemption amount to the surviving spouse.

IRC Section 2038 Marital Trust: This is an advanced technique to try and secure a step-up in basis for all marital assets upon the passing of the first spouse.

Joint Exempt Step-Up Trust: This trust forms a single joint trust with separate shares for both the husband and wife, where each spouse retains the right to revoke his/her share of the trust until their death.

Capital Loss: A capital loss occurs whenever there is a loss on a capital asset, such as real estate or stock; i.e. it decreases in value.

Qualified Terminable Interest Property (QTIP) Trust: A type of marital trust designed to provide for the spouse after death that at the same time protects assets for future generations.

Medicaid: This is the healthcare coverage that covers low-income adults, children, pregnant women, and the elderly.

Boomerang Period: The one-year waiting period that applies to gifting assets.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

10/30/2018

• Annuities
• Retirement Planning

A common fear for nearly every investor, and probably becoming more popular everyday as life expectancy continues to grow, is will I outlive my money? This webinar will help to provide a possible solution to that question, the longevity annuity, while also discussing its benefits and drawbacks. The longevity annuity is a newer retirement planning tool and can offer a number of benefits. However, like all retirement products, perhaps especially annuities, there are caveats, concerns, and additional planning strategies to consider before actually purchasing a longevity annuity.

LO #1: Define who longevity annuities might work best for and identify the material risk associated with longevity annuities.

LO #2: Know why Social Security is essentially a form of a longevity annuity and identify why it is superior to other longevity annuities.

LO #3: Be able to compare and contrast the Internal Rate of Returns (IRRs) on equities to those of longevity annuities and explain to a client the difference/purpose of an investment versus an insurance/risk management product.

LO #4: Understand the importance of the credit quality of the insurer when reviewing longevity annuities as well as the risk to both the insured and the insurer.

LO #5: Be able to identify the other risks of longevity annuities, particularly for the insurance companies.

LO #6: Know why a retirement account may be the most favorable location to purchase and hold a longevity annuity.

Annuitant: This is the individual that receives the fixed some of money, usually for the rest of their life.

Annuity: A financial product that pays a fixed sum of money to someone, each year, usually for the rest of their life.

Longevity annuity: Sometimes referred to as a deferred income or advanced-life delayed annuity, this financial product converts a lump sum into a stream of income.

Immediate annuity: This type of annuity also converts a lump sum into a stream of income, however, it starts immediately instead of later in life.

Mortality credit: The share of the contributions from other people who did not survive.

Qualified Longevity Annuity Contract: These are purchased with pre-tax dollars, like an IRA or an employer retirement plan.

Non-Qualified Longevity Annuity Contract: These are purchased with after-tax dollars.

Risk Management: This is a term used to describe nearly any strategy that effectively handles some aspect of risk. In the case of annuities, this is often related to inflation and outliving one’s portfolio.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

June 30, 2018

• Estate Planning
• General Planning
• Regulation
• Retirement Planning
• Taxes

The Tax Cuts and Jobs Act of 2017 created a new qualified business income (QBI) deduction. The reality is that this deduction may impact any owner of a pass-through entity business, and while there is still some additional clarification needed from the IRS on how some rules will be applied, there is a tremendous amount of opportunity for financial advisors who wish to assist their clients in navigating the new complex rules associated with the QBI deduction. In this presentation, we review the technical mechanics of the QBI deduction, including who the deduction impacts, what the thresholds are for applying the deduction, some important caveats for qualifying for the deduction, as well as some strategies that can be applied the maximize the benefit a taxpayer receives from the QBI deduction.

LO #1: Identify the percentage of qualified business income potentially eligible for a QBI deduction.

LO #2: Identify which business entities are eligible for a QBI deduction.

LO #3: Identify the thresholds for the phaseout of the QBI deduction.

LO #4: Identify businesses classified as specified service businesses.

LO #5: Identify the main categories of QBI deduction planning strategies.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 27, 2018

• General Planning
• Taxes

The Tax Cuts and Jobs Act of 2017 (TCJA) represents a major shift in tax law beginning in 2018. Although originally proposed as a way to simplify the complex tax system in the U.S., the changes under the TCJA arguably present even more tax planning complexity. The tax reform has implications for key tax components such as a wide range of popular deductions and credits, as well as the personal income tax, capital gains tax, the and Alternative Minimum Tax systems. These changes present new financial planning strategies for advisors and their clients.

LO #1: Identify how the tax code has evolved over time.

LO #2: Identify the new personal income tax brackets under the TCJA.

LO #3: Identify changes in the AMT tax system under the TCJA.

LO #4: Identify deductions available to pass-through entities under the TCJA.

LO #5: Identify the deductibility of advisory fees under the TCJA.

Tax Cuts and Job Acts: Signed into law on December 22, 2017 by President Trump. This act permanently changed Corporate Taxes and created a number of individual tax reforms that will sunset in 2025.

Marriage Penalty: This is when, if filing individually, two people would have a lower total tax bill than if they filed married, simply combining the income they made as individuals, and end up with a higher tax bill.

3.8 Medicare Surtax: This is a tax on unearned income, i.e. net investment income, that applies to high-income earners. This tax covers a broad swath of investment income from dividends and interest to most forms of passive income to capital gains.

Capital Gains: This the profit from the sale of property or an investment.

Alternative Minimum Tax (AMT): This is a supplemental income tax that sits on top of baseline income tax for certain individuals, corporations, estates, and trusts

Kiddie Tax: This is the rule that applies the parent’s tax rates to the taxes on a child’s investment and unearned income.

Pass-Thru Business: Covered in Section 199A, these types of business structures receive special treatment that allows the business to deduct a certain percentage of Qualified Business Income

Qualified Charitable Distribution: This is an otherwise taxable distribution from an IRA, where the owner is over age 70.5 and has decided to pay that distribution directly to a qualified charity.

• CFP / IWI (formerly IMCA): Intermediate
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.5 CFP / IWI (formerly IMCA) hours
• 2.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 1, 2018

• Retirement Planning

Nearly every prospective retiree faces the decision about when to begin receiving Social Security payments, which can begin as early as age 62, or be delayed as late as age 70. The good news of delaying benefits is that they receive a guaranteed increase for each month and year of waiting; the bad news is that during the waiting period, no payments are received! This trade-off creates a “breakeven” period that must be reached in order for delaying to be beneficial. And for married couples, the situation is further complicated by the fact that the timing of when one spouse takes benefits can impact both the timing of spousal benefits and the size of survivor benefits. In this session, we look in depth at the trade-offs of Social Security timing, especially for married couples, the interplay between retirement, spousal, and survivor benefits, and strategies to optimize and maximizing Social Security retirement benefits for couples (includes divorced ex-spouses).

LO #1: Identify how how starting Social Security benefits early or late affects the benefit that the individual receives.

LO #2: Identify how to do an accurate breakeven analysis of Social Security benefits.

LO #3: Identify the similarities and differences between Spousal Benefits and Survivor Benefits.

LO #4: Identify how the Bipartisan Budget Act of 2015 has affected the File and Suspend.

LO #5: Identify when the new rules of the Bipartisan Budget Act of 2015 kick in.

Averaged Indexed Monthly Earnings (AIME): Calculated using top 35 years of earning history. Average of inflation indexed monthly earnings of your highest earning 35 years for your life.

Bendpoints: Income thresholds for determining replacement rate use a tiered system called a bendpoint. Bendpoint 1 is at 90% on first $896, Bendpoint 2 is at 32% for the next $4,507, and Bendpoint 3 is at 15% for $5,326 up to $10,725 a month. Replacements “bend” down from 90% to 32% and then 15% as income grows.

Primary Insurance Amount (PIA): Full benefit that you get at full retirement age, as income rises, your benefits also rise.

Spousal Benefit: based on 50% of a living spouses’ PIA, and available to ex-spouses as well. Individuals must meet both entitlement requirements and eligibility requirements.

Survivor Benefit: based on a deceased spouses PIA, and available to ex-spouses. Individuals must meet both entitlement and requirements and eligibility requirements

File & Suspend: This was the rule, killed by the Bipartisan Budget Act of 2015, that allowed a person who has reached their full retirement age, normally 66, the ability to claim or file for their social security benefit, but at the same time immediately put in the request to suspend the payments. In doing so, this allowed spouses the ability to claim the spousal benefit immediately and having suspended the benefit payment, accrue extra benefits through delaying actual payment

Restricted Application: This is a rule, being phased out by the Bipartisan Budget Act of 2015, that allows individuals of Full Retirement Age, 66 or 67, to apply for their spousal benefit while delaying their personal benefit to grow by 8% a year.

Bipartisan Budget Act of 2015: This is the act that ended file-and-suspend strategy as well as began the phasing out of restricted application.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 1, 2018

• Retirement Planning
• Taxes

In this section, we are going to delve into not only the question of when to choose a Roth IRA versus a traditional IRA, but also when you want to conduct a conversion.

LO #1: Compare and contrast the basics of a Traditional versus Roth IRA.

LO #2: Explain the tax equivalency principal and calculate the amount of after-tax contributions needed to equal the same amount of pre-tax contributions given various tax rates and pre-tax contribution amounts.

LO #3: Identify the “Backdoor” Roth IRA strategy and the considerations for using it.

LO #4: Identify the Mega “Backdoor” Roth IRA Strategy and the rules for successfully implementing the strategy.

LO #5: Explain partial Roth conversion strategies and the additional tax planning flexibility they provide.

Bar Bell Strategy: Similar to a bond barbell strategy, one conversion will be done early and one conversion later in the year.

Tax Cuts & Job Act (TCJA): Passed on December 22^nd of 2017 this major tax reform closed the “loophole” on Roth recharacterizations. The TCJA eliminated the recharacterization of Roth IRA conversions made in 2018 or later.

Roth Conversion: This type of transaction can take place when the client has money in a traditional IRA and s/he decides to move it into a Roth IRA. The decision to make this move is based on when the client will be able to pay the least amount of taxes. When they put the money in or when they plan to take the money out.

Roth IRA: Like a traditional IRA, this is still an individual retirement account. However, instead of being taxed when the money comes out, Roth IRAs pay tax when the money goes in. Then, later, when the money comes out is not taxed, assuming withdrawals begin after 59 ½ and all growth in the account avoids taxation.

Roth recharacterization: Originally created to “undo” a Roth conversion for someone who later discovered they were over the conversion income limit.

IRA Aggregation Rule: IRC 408(d)(2): Requires that all IRAs aggregate for tax purposes: contributory, SEP, simple, and any other individual IRAs. However, this does not apply to spouse’s IRAs, inherited IRAs, Roth IRAs, or any retirement plans.

Actual Contribution Percentage (ACP) Testing: A test required by the IRS to ensure that 401(k) plans are nondiscriminatory.

Pro Rata Rule: This is the formula that determines how much of a distribution is taxed when an individual owns both after-tax and pre-tax IRAs. This is related to the IRA Aggregation rule.

5-Year Rule: A person must have a Roth account for at least 5 years in order for it to be tax-free.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 31, 2018

• General Planning
• Investments

The conventional view of rebalancing is that it’s a way to enhance long-term returns for investors while keeping their portfolio on target to achieve long-term goals. The reality, though, is that when rebalancing across different asset classes like stocks and bonds, systematic rebalancing is more likely to reduce returns, albeit with the benefit of also reducing risk. And for those who wish to engage in the strategy, it’s still necessary to consider the optimal frequency for rebalancing – which, as it turns out, is not based on a fixed time horizon like monthly, quarterly, or annual rebalancing, but instead is best done by targeting asset allocation thresholds at which a rebalancing trade will trigger (however long it takes to get there!).

LO #1: Understand why rebalancing does not necessarily improve returns in the long run, but may improve risk-adjusted returns instead

LO #2: Be able to determine which types of asset class rebalancing are potentially able to enhance returns, versus merely reducing risk

LO #3: Understand why fixed time period rebalancing strategies are not necessarily optimal for most portfolios, especially when considering transaction costs

LO #4: Be able to apply a tolerance band approach to portfolio rebalancing, and know how to set targets for rebalancing thresholds

Risk-Adjusted return: This is the amount of return refined by how much risk the investor or portfolio had to take in order to achieve that return.

Diversification: A portfolio with multiple asset classes, some of which would be similar but many of which would be different in terms of risk and movement increase the diversification of a portfolio.

Asset class: This is a group of securities, for example bonds, that behave similarly in the marketplace. Other classes would be equities or cash equivalents.

Asset allocation: Associated with investment strategy, an asset allocation is trying to balance the amount of risk in a portfolio with the goal and time associated with that portfolio.

Rebalancing: The act of setting the portfolio back to its original asset allocation, after market returns distort the original allocation, by selling high and buying low.

Tolerance band rebalancing: Rebalancing strategy based on extremes, not timing or frequency.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.0 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 31, 2018

• General Planning
• Investments

For long-term investors, the reality is that even if markets are volatile for a period of time, as long as the portfolio stays invested, returns can average out in the long run. In the case of retirees, however, ongoing spending withdrawals introduce the possibility that if the portfolio experiences weak returns early on, it could be depleted entirely before the good returns finally show up. As a result, retirees must consider this “sequence of returns” risk when planning for retirement, and strategies to manage it, from reducing spending in the first place, to engaging in more dynamic asset allocation to reduce risk exposure, or dynamic spending strategies to adapt spending withdrawals to market changes along the way!

LO #1: Understand what sequence of return risk is, and how it affects a retirement portfolio

LO #2: Know the origin of the “safe withdrawal rate” and how to apply it in today’s low-return environment

LO #3: Be able to compare different types of dynamic asset allocation strategies and ways to create spending “floors” for retirees

LO #4: Be able to apply dynamic spending strategies with clients, and understand how to set the parameters for retirees to manage along the way

Return Sequencing: A risk to retirement spending based on trusting an average return.

Safe Withdrawal Rate: Developed in 1994 by Bill Bengen, this is ultra-conservative 4% withdrawal rate based on the lowest returns.

Bucket Strategies: This is a retirement withdrawal strategy that avoids spending down equities until after cash or a conservative portfolio (bonds) has been depleted, giving time for the equities to grow or recover from any potential loss.

Equity Guidepath: Different, but related to the bucket strategy, this is when clients spend down fixed income assets in early years in order to purposefully let their equity exposure rise throughout their retirement.

Ratcheted Spending: The process of potentially bringing spending up (ratcheting up 10%), after reviewing the portfolio every three years, from the 4% rule floor. This starts out ultra-conservatively.

Inflation: This is a sustained increase in the general level of prices for goods. Prices rise over time; what is worth $10 dollars today will be worth more in the future.

Dynamic Spending Strategy: This is a methodology of solving a larger problem by breaking it down into smaller problems. In terms of retirement and retirement projects, it is taking the long term retirement plan and breaking it into a series of sequential retirement years, each of which can then be optimized based on what happened (or didn’t happen) in the preceding years.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

November 9, 2018

• Debt & Liabilities
• General Planning

For most of their history, reverse mortgages have been rather unpopular with financial planners, due both to their relatively high costs, and the fact that they are typically viewed as a resource or tool of last resort. Yet the reality is that use of reverse mortgages has exploded over the past decade, aided more recently by a newer, lower cost option, and several recent research articles in the Journal of Financial Planning have shown ways that reverse mortgages can be used proactively to enhance retirement income sustainability. In this presentation, we review the technical mechanics of HECM reverse mortgage loans, the costs involved, the emerging reverse mortgage strategies and applications that should be considered for clients, and the caveats and concerns that remain.

LO #1: Discuss the requirements for someone to be able to use a reverse mortgage.

LO #2: Understand how a reverse mortgage works and list the various “triggering events”.

LO #3: Explain the costs associated with a reverse mortgage.

LO #4: Describe the tax treatment of reverse mortgages.

LO #5: Discuss when a reverse mortgage may a good idea and when it may not be ideal.

LO #6: Identify the caveats and concerns of reverse mortgages.

Reverse Mortgage: Originating in the 1960s, but gaining in popularity before the crash in 2008, this is an agreement between the homeowner and the bank to relinquish the homeowner’s equity in the home in exchange for payments.

Maximum Claim Amount (MCA): The is the maximum dollar amount that the FHA will insure for a reverse mortgage.

Prime Mortgage Insurance (PMI): This is insurance the protects the holder against loss resulting from default on a mortgage loan.

Federal Housing Administration (FHA): This the government agency, created by the National Housing Act of 1934, and they set the standards for construction and underwriting and insures loans made by banks and other private lenders.

HO-2: This is the perils insurance for one’s property

HO-3: This is the insurance that protects dwellings and structures connected with the dwelling, as well as personal property that may not be in the main dwelling

Home Equity Conversion Mortgages (HECM): This is the FHA’s reverse mortgage program.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.

October 30, 2018

• Investments
• Retirement Planning
• Taxes

While it is ‘standard’ for advisors to diversify into an asset allocated portfolio, the question of where to locate those asset classes is more challenging. In this session, we will explore the various ways to handle asset location, taking into consideration tax efficiency, expected returns, and time horizons. We also take a look at how to build, use, and implement an asset location priority list based on the expected return and the tax efficiency of various assets. Finally, we review the caveats and concerns of asset location and approximate the value of utilizing an asset location strategy with your clients.

LO #1: Identify the ways to “asset locate” and the impact of each.

LO #2: Describe the impact that turnover has on the final portfolio value and how it changes the optimal location of stocks in a portfolio.

LO #3: Be able to explain where various types of assets fall within the asset location priority list.

LO #4: Identify the factors in building an asset location priority list

LO #5: Illustrate how a financial planner can implement an asset location strategy.

Asset Location: This is the personal finance term that indicates how or that investors can distribute money across different investments, but more importantly investments with different taxation.

Taxable Account: A good example is a brokerage account, and the tax treatment for this type of account is based on what is in the account – stocks or bonds.

Tax-Deferred Account: A good example is an IRA or a 401(k), taxes are not paid when the money goes in, but are taxable as ordinary income when withdrawn, and that ordinary income treatment applies

Tax-Exempt Account: A good example is a Roth IRA or a 529 college savings plan, and these accounts grow initially tax-deferred and allow withdrawals of the growth to be tax free assuming the requirements are met.

Long-term capital gains: These can also be long-term capital losses, and different from short-term gains and losses based on taxation. For instance, long-term capital gains stem from selling an investment that has been held for longer than 12 months at the time of the sale.

Buy-and-hold: This is a passive investment strategy where once the investor purchases his or her stock, s/he then holds it for an extended period of time regardless of fluctuation in the marketplace.

Dividends: Most often paid on a quarterly basis, this is a distribution of a portion of a company’s earnings, paid to the shareholders. Dividends can be cash, stock, or other property.

Tax-efficiency: This is another way to describe an investment strategy that minimizes tax liability.

Equities: This is referring to stocks or shares of a company.

Bonds: This is a fixed-income investment. The investor loans the money and in return receives a variable or fixed interest rate in return to pay back the loan over a certain period of time.

Time Horizon: The is the length of time over which an investment can grow (or not) and is held before liquidating or selling at some point in the future.

• CFP / IWI (formerly IMCA): Advanced
• NASBA: Basic

• CFP: General Principles of Financial Planning / Investment Planning / Retirement Planning
• NASBA: Specialized Knowledge (Personal Financial Planning)

• 1.0 CFP / IWI (formerly IMCA) hours
• 1.5 NASBA hours

All self-study courses will be available at least through December 31, 2020.
Live courses are only available for the scheduled date.
All of our courses are reviewed on a yearly basis and renewed or discontinued every December.