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Proactively Optimizing Client Investments, Taxes and Financial Planning Through This Downturn

A note from Kelly Olson Pedersen, CFP®

This has been a crazy couple of months. Not only are the markets having fits and starts, but we are in an unprecedented time having been asked to self-quarantine for about six weeks with many businesses completely shut down. More and more we are hearing of the emotional distress this is having. People have lost wages, have not had an outlet to release their tensions or opportunity to visit friends and loved ones. It is truly, a very tough time physically, mentally and emotionally.

At CAISSA, we are in the business of guiding our clients through these times. Our role right now is to help make good decisions and also to avoid poor ones. We often stress that we always make portfolio decisions when we are in healthy markets. However, that doesn’t mean we sit on our hands and plug our nose during a difficult time. Quite the contrary. While it may not be front and center, we are extremely hard at work for you. There have been a few phases of this downturn where we have been able to proactively analyze your financial plan, tax situation and investment strategy to optimize performance.

PHASE I: We bought the dips. If you had cash, we were putting it to work. As the markets moved into their depths, we turned to tax loss harvesting where we sell the loss to capture it on the tax return and buy investments immediately back to maintain our position in the market – a double win.

PHASE II: Reviewed financial plans for potential ROTH conversions to utilize client tax brackets and we were buying more of the dip (sort of a crater by now).

PHASE III: The CARES Act was signed into law. With that new piece of legislation, we are looking for more proactive opportunities. Clients who took their RMDs were able to replace them if we did it within 60 days and other clients now do not have to take the RMD. Clients are now eligible to withdraw $100,000 from their IRAs penalty free if they needed access to cash. Some of our clients that own small businesses were eligible for the Paycheck Protection Program loans and we helped them act quickly on this and understand all the rules surrounding this loan that could become forgiven (IF you use it properly).

PHASE IV: The market rebounds almost 28% since March 23, so we started to look for liquidity options for anyone who was seeking more liquidity.

The reason that we get to work proactively for our clients at CAISSA is because of one thing: We are doing detailed financial planning with you in all markets so that we ALWAYS have a proactive plan and we always know what we want to do next. In the past six weeks, we have analyzed dozens of tax projections, financial plans and asset allocations to make sure we are taking advantage of everything this market and CARES bill had to offer our clients. We already had the plans and the tax projections completed for our clients, so we were able to get all of those tasks in those phases done without having to run any napkin analysis or bothering clients during this time. Whether or not we were able to act on all or none of the above strategies for your particular portfolio, I can assure you that we assessed the options for you. We just didn’t have time to tell you, until now.

If you have a chance to click on my chart of the month, it also sheds a little light on why we, as seasoned investment advisors, are able to desensitize to huge market swings and instead look at them as opportunities here and there (LONG TERM GREEDY is our motto!). Of course, this is in addition to our Tranches of Income approach which is the foundation of our ability to strip out anxiety from the market.

While we have sent out a number of memos, emailed and have tried to call our clients, I would still like to offer to connect in any manner you should need. If you just want to chat, we will chat. If you’d like to talk about your business, your portfolio returns, your taxes or financial plan, we will do that. Please let me know if you would like me to connect with you. Even if you don’t ask, you might still get another call from us.

From the CAISSA team to your families, good luck, stay healthy and call us when you need to hear our voices. WE ARE HERE.