Investing in the stock market offers numerous opportunities for profit, but it also carries inherent risks. Market participants have used two popular investment approaches — the contrarian and trend following strategies — to try to enhance profits and minimize risk, to varying degrees of success.
In this blog post, we’ll explore the merits, drawbacks, and intricacies of each approach, providing insights for investors seeking to make more informed decisions in their pursuit of long-term success. We’ll also look at real-life examples of these strategies in action, including the pitfalls and challenges associated with each approach.
The Contrarian Approach: Seeking Value in Unloved Stocks
Contrarian investing involves seeking out-of-favor stocks with low valuations, as they often have most of the negative factors already priced in. While this approach may sound simple in theory, it requires a keen eye for detail, patience, and the discipline to execute an investment effectively.
Strengths: Contrarian investing can uncover hidden gems in the market, as undervalued stocks may offer significant growth potential once their true value is recognized by the broader market. This approach can also lead to lower portfolio volatility due to its focus on fundamentally strong companies trading at discounted prices.
Pitfalls: Identifying true value in out-of-favor stocks can be challenging, and investors must be prepared to weather disappointments and potentially prolonged holding periods. For instance, AT&T and Verizon are businesses that, on paper, appeared to be great contrarian investment opportunities due to their low valuations. However, the negative price action ultimately proved justified due to managerial overspending and a continuing decline in revenues. These cases illustrate the importance of being meticulous about which businesses you select for contrarian investing.
Example: Unilever, which underperformed due to the management’s search for a “purpose” for their brands, resulting in a price multiple difference between the European conglomerate and its US competitor Proctor and Gamble. Contrarian investors saw potential in Unilever’s valuable brands and the involvement of activist investors. Today, the company has caught up to P&G — and significantly outperformed this competitor — as it has focused on profit, changed its business divisions, and announced an external CEO with a great track record of growing brand-oriented businesses, who will be taking over in July 2023.
The Trend Following Approach: Riding the Momentum of High-Performing Stocks
Trend following investors seek to capitalize on the momentum of stocks with strong price performance, trusting that better-performing companies will continue to outperform their competitors. This approach requires investors to buy and hold more expensive stocks, often in the face of market noise and short-term fluctuations.
Strengths: Trend following can generate significant returns when executed well, as market leaders often continue to deliver strong performance over time. This approach can also benefit from the compounding effect of reinvesting gains into high-performing stocks.
Pitfalls: The trend following approach carries the risk of entering positions too late or failing to exit before a trend reversal. Additionally, trend followers may be prone to herding behavior, driving stock prices to unsustainable levels and creating market bubbles. In such cases, investors who do not exit in time may experience significant losses.
Example: In the beginning of the last decade, Apple began to outperform and grow bigger than Nokia, the leader in smartphone manufacturing at the time. Apple’s stock price became very expensive as it factored in a higher market share for phones, and many investors fled for less expensive Nokia shares. True trend following investors stayed invested in Apple, which dominated the smartphone industry over the next decade.
Strategies for Success in Contrarian and Trend Following Investing
To maximize the potential benefits of these investment approaches, investors should:
1. Develop a clear understanding of their risk tolerance, investment goals, and level of expertise.
2. Conduct thorough research on the companies they invest in, analyzing fundamentals, competitive position, and management quality.
3. Stay informed about market trends, economic indicators, and geopolitical events that may impact their investments.
4. Regularly review their investment portfolio, rebalancing and adjusting positions as needed based on changing market conditions and individual circumstances.
By considering these factors and understanding the potential pitfalls of each approach, investors can make more informed decisions and increase their chances of achieving long-term investment success.
At Grey Ledge Advisors, we believe that a successful investment strategy cannot be bound by a single approach but should rather be adaptive to various market environments. Our investment philosophy is rooted in a holistic blend of contrarian and trend following methodologies, allowing us to take advantage of opportunities across the full spectrum of market conditions. We strive to take a nuanced, opportunistic view of the market landscape, considering both the potential undervalued gems and the high-performing trendsetters in our decision-making process.
By integrating these complementary approaches, we aim to balance risk and reward, seek consistent returns, and ultimately, strive towards fulfilling our clients’ financial goals.
By Brant Walker
Like most processes, investment decisions moved more slowly in the pre-Internet days. When I started my investment management career nearly 40 years ago, a bank or analyst would send you a report through the mail — a multi-day process in itself — and you’d spend a day processing it before making your choices.
Today, anyone trying to invest on their own is being bombarded by information from all sides. Between 24-hour news networks, business news websites, social media chatter, and the ability to track a stock’s performance literally minute-by-minute, it can be difficult to choose how to proceed.
This noisy environment has only heightened the emotional aspects of investing. There has been extensive research into “behavioral finance,” or how human psychology affects investment decisions — often negatively. By better understanding this concept, you can put more trust into unbiased indicators, building your portfolio based on impartial information rather than gut feeling.
How emotions affect investment decisions
Many emotions come into play when you invest your money. You may be anxious about meeting your financial goals, excited to see your portfolio grow in value, eager to find investments that will produce a huge return on investment, nervous about market downturns, or depressed when an investment decision turns out to be a poor one.
Emotion-driven decisions can occur at any time. Some examples include:
- Investing in a company simply because you like their products
- Being less willing to take risks with your investment profits because you regard them as bonus income
- Stubbornly retaining a poorly performing stock rather than admitting that it was a mistake to buy it
However, emotion has the biggest impact on the market during periods of prominent gains or losses. During a strong market, people are more likely to underestimate risk, be overconfident in their own abilities, and chase after popular investments. During market downturns, people are more likely to panic and sell off investments in an effort to limit losses.
There are also several cognitive biases that affect investment decisions. One of the most common is confirmation bias, where people only consider evidence that supports their investment decisions and ignore other data, such as warning signs that a stock might be overvalued.
Anchoring bias is also a common factor that influences investment decisions. This occurs when you measure the performance of an investment on some irrelevant point of reference, like the price of a stock when you purchased it or a stock’s previous peak value.
Greed and fear
Greed and fear are the most powerful emotions affecting investment decisions. Greed spurs people to pursue higher gains by making riskier decisions, taking chances on speculative stocks, and pursuing short-term gains. Fear is the dominant option during bear markets or more volatile conditions, causing people to favor lower risk investments with smaller yields.
Concerns about losing your hard-earned money are a particularly potent factor in behavioral finance, leading to something called loss aversion bias. This occurs when a person gives priority to minimizing losses on their investments instead of actively pursuing gains.
Loss aversion bias can lead to considerably different investment decisions. Since people tend to be more risk-averse when faced with a positive income, they might sell a well-performing stock too early out of fear that its value might go down. Conversely, they may also engage in riskier behavior in an effort to avoid losing money, such as doubling down on a declining investment in hopes that it will recover.
Optimism and pessimism
Market trends drive the broader emotions of optimism and pessimism, which also tend to cause people to make buying or selling decisions at the exact opposite of the optimal time. When the market is on the upswing and stock values are rising, people are optimistic and more willing to buy. When values are declining, people are more pessimistic, less willing to buy, and more willing to sell the stocks they have in an effort to avoid losses.
You might notice that these decisions directly contradict the classic “buy low, sell high” investment strategy.
Two recent market downturns show how a pessimistic outlook can impact your investments. Tumbling stocks during the Great Recession drove investors to pull their money from the market, only for stock values to grow steadily over the next several years during the economic recovery. There was a similar response when the stock market cratered at the start of the COVID-19 pandemic, with stock values recovering even faster.
Once more, without feeling
When investing your money, you should always take the time to research your options and avoid quick decisions. While monitoring the performance of your investments is important, tune out the noise and do periodic check-ups instead of frequent adjustments; this can help you retain focus on a long-term strategy instead of responding to short-term trends.
Other strategies to take the emotion out of investing include:
- Using dollar-cost averaging, which invests a fixed amount of money at regular intervals. This guarantees that you’ll buy more shares during market lows (allowing them to capitalize during market gains) and fewer shares when prices are higher.
- Diversifying your portfolio to spread risk over different stocks and investment types. This strategy also allows you to invest more passively rather than try to pick hot stocks, which itself can lead to more stress and emotion-based decisions.
- Periodically rebalancing your portfolio to sell off stocks that have performed well and buy stocks that have not performed as strongly.
- Including stop-loss orders to set a limit on how much loss you’re willing to take on an investment. This helps ensure that you won’t hold on to an unprofitable investment too long.
- Segmenting your investments to support different goals, and creating a plan to meet these goals. For example, you might have a low-risk strategy to save money for a vacation and a higher risk strategy for long-term goals like retirement savings.
Working with an investment advisor will also help you avoid emotions when investing. This professional will provide you with unbiased recommendations and help you determine your goals and strategies.
By Scott Albraccio
Employees today have been inundated with statistics about outliving their 401(k) savings, and warnings that they need to start saving as much as they can, as soon as they can, to make sure they have enough to carry them through retirement. Life expectancy has increased as well, to 85 for men and 87 for women based on the most recent IRA actuarial tables, and this is also putting pressure on people to save.
There is an ongoing war for talent — employment levels are still low compared to pre-COVID numbers — and it is more important than ever for employers to offer a competitive benefits package to current and prospective employees.
In this blog, I’ll share the most common pitfall employers face in setting up and managing their retirement plans, and offer insights on how you can create a competitive plan that will attract and retain employees.
Eligibility waiting period
I have had the opportunity to speak with many companies’ HR executives and review their retirement plans, and there’s one pitfall I see over and over again: the 12-month waiting period for eligibility.
This, unfortunately, is no longer acceptable to new hires. Any potential employee evaluating his or her employment opportunities is going to want to start saving for retirement as soon as possible.
Employers are more concerned about their employees’ long-term well-being, too. Some are scaling back the waiting period for retirement eligibility, allowing new employees to more quickly start saving and take advantage of employer matches. I’ve been advising companies to set a waiting period of no more than three months.
Auto-enrollment and auto-escalation
I see more and more plans being amended to implement auto-enrollment and auto-escalation for new participants. As the name suggests, auto-enrollment automatically signs up an employee to make a 3% contribution to a retirement plan while auto-escalation increases this share by 1% every year to a maximum contribution of 10%.
There are opt-out clauses if a participant does not want to contribute, and they have 90 days to request a refund of their deposits. This acts as a protection for the plan sponsor (the plan’s fiduciary) so the employee cannot accuse the sponsor of not making the plan available.
Safe harbor match
Not offering a competitive “safe harbor” match can make you less attractive as an employer to
prospective employees. The basic match has always been 100% of the first 3% and 50% of the next 2% of compensation, for a total maximum employer contribution of 4%. I see more employers moving to 6%, in addition to a discretionary profit-sharing contribution.
The safe harbor match may also be an issue for your Highly Compensated Employees (HCEs). If your HCEs receive a refund of deferrals at the end of the year, you are most likely violating the testing your Third Party Administrator (TPA) is conducting.
Qualified plans need to provide balance between your lower paid workers and your HCEs. There must be equality between the two groups representative of the percentage of savings vs. earnings.
Depending on your type of business (small closely held or large employer) you have tax advantages related to the type of retirement plans you fund, defined contribution vs. defined benefit. You should consult with your TPA, CPA and financial advisor as to the best option given your situation.
SECURE ACT 2.0
The newly passed SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement) will mandate some of these options for all new plans starting in 2023 and 2024. It also offers tax credits to employers for matching contributions in newly established plans, and rewards participants with additional incentives.
The team at Grey Ledge Advisors can help ensure that you set up the best retirement plan for your current and future employees. Give us a call today at 203-458-5414.
The New Haven Business Journal has recognized Grey Ledge Advisors President and CEO Kenneth R. Russell Jr. as a member of their ‘Power 25’ list for 2023. The prestigious Power 25 for 2023 includes leaders from around the New Haven metropolitan area including New Haven Mayor Justin Elicker, Yale Ventures Managing Director Josh Geballe, and Yale New Haven Health CFO Gail Kosyla, among others.
“I am incredibly honored to be named among some of the most dynamic business and community leaders in our region,’ Russell said. “However, I don’t consider this recognition as a reflection of any personal accomplishment, but rather as the direct result of the Grey Ledge Advisors team and their extraordinary ability to find pathways to every client’s financial goals while providing outstanding client service.”
Read the New Haven Biz Journal Article here.
Financial planning begins with getting to know you, your family, and your current financial situation. We ask about your financial concerns and your goals for the future. The financial plan provides a roadmap for you to follow to achieve your financial goals. It is a living document that we review together regularly and update whenever you encounter life changes, such as a change in marital status, retirement, an inheritance, or sale of a business.
Preparing for the long term is a process that involves research and careful consideration of both your short and long-term goals. Our financial team can help you be more prepared to create financial strategies that best suit your situation and ensure long-term success.
A sound portfolio management strategy begins with asset allocation—that is, dividing investments among the major asset categories of equities (stocks), bonds, and cash. You can then make finer distinctions within each broad category. For example, within the equity category, you could diversify among large company stocks, small company stocks, and international stocks; and within the bond category, you could separate short-term and long-term bond investments. Since the various investment categories have different characteristics, they generally don’t rise or fall at the same time. Consequently, combining different asset classes can help balance risk and may improve the overall return of a portfolio.
The main objective of asset allocation is to match the investment characteristics of the various investment categories to the most important aspects of your personal investment profile—that is, your risk tolerance and your time horizon.
Investing according to your risk tolerance will help keep you from abandoning your investment plan during times of market turbulence. Finding an appropriate match means balancing your tolerance for risk against the different volatility levels of various asset classes. For example, low risk tolerance may dictate a portfolio that emphasizes conservative investments, while sacrificing the potentially higher returns that usually involve greater degrees of risk.
Asset allocation is more a personal process than a strategy based on a set formula. Building an investment portfolio that is right for you involves matching the risk-return tradeoffs of various asset classes to your unique investment profile. It may be prudent to consult with a financial professional to help determine the investment mix that is right for you.
By Brant Walker
Dear Clients, Colleagues, and Grey Ledge Friends,
Below is a synopsis of our firm’s thoughts and views regarding the economy and investment markets as we enter 2023. Our investment team continually monitors the investment environment and makes changes to your portfolio as time unfolds and economic and market conditions adapt to change in Federal Reserve policy, inflation data, and other relevant factors. We invite you to contact your portfolio manager or advisor if you would like to discuss these issues further.
Thank you for the trust you’ve placed in us.
Grey Ledge Advisors summary and outlook 2023
As we move forward in 2023, the following points relating to the U.S. economy and financial markets will be taken into consideration in the structuring of investment portfolios.
Global trade friction and inventory buildup
During the past few years, there has been a trend toward “de-globalization”, or the desire to bring manufacturing back onto American soil. This has ramifications for the inflation rate as it is generally more expensive to manufacture in the U.S. as opposed to China, for example. This trend may complicate the Federal Reserve’s desire to lower inflation via interest rate increases. In the present, more and more companies are saddled with excess inventory due in part to COVID disruptions in the supply chain, signaling a possible slowing in economic growth.
Should economic growth slow as anticipated, this will favor companies in steady growth sectors such as consumer staples (food, beverage) and health care stocks.
Federal Reserve fight against inflation and rising interest rates
The Fed’s intention to lower inflation is well underway via structured increases in short-term interest rates, namely the Fed funds rate, to slow economic growth and raise the unemployment rate a modest degree. Inflation has been running at 40-year highs, approaching 10% at times in 2022. The Fed target for inflation is the 2% to 3% range. As 2023 unfolds, particularly in the first half of the year, there is likely to be elevated volatility in the financial markets as each inflation-related data point is released in the press and parsed by the investment community.
Past periods of rising interest rates have generally created headwinds for stocks that exhibit real or perceived high growth rates and pay low or no dividends (technology and communications).
Navigating sticky inflation, slower growth, and the possibility of economic recession
The aforementioned intent by the Federal Reserve to lower inflation poses risks to the economy should the Fed push interest rates up further than the economy can withstand. Previous Fed tightening cycles have often led to a period of negative economic growth (a recession) accompanied by a bear market in stocks and ultimately, lower interest rates. We are somewhere in the middle of this cycle as we speak. Grey Ledge’s focus on quality investing should act as a buffer against possible future market volatility.
Having said this, high quality, low volatility common stocks have provided a refuge in the storm. Technology and communications stocks have suffered relative weakness and are becoming attractive on a valuation basis.
Aging populations and a shortage of qualified workers
We speak above about Federal Reserve actions to lower inflation by potentially reducing the near-term growth rate of the economy. From a demographic perspective, major world economies—including the United States, Japan, and much of Europe—are experiencing aging populations and reduced birthrates. This has profound implications for future economic growth as the number of retirees grow and is not offset by an equal number of younger people entering the workforce.
Additionally, many baby boomers have opted to retire early and live off savings and retirement benefits. This, in part, explains why the unemployment rate hovers near a 50-year low at the same time the Fed is attempting to slow the economy and create a temporarily higher unemployment rate.
Should wage growth continue to be strong, companies with pricing power can navigate with little risk to their ability to increase future earnings. Companies with pricing power can be found in many different industries. Grey Ledge Advisors’ research process seeks to identify such companies for potential future investment.
New pockets of value emerge after 2022 market weakness
2022 was a difficult year for both stock and bond investors. The broad U.S. stock market index dropped by close to 20% and the technology heavy NASDAQ index lost a third of its value. High quality, intermediate duration bonds offered little respite by dropping close to 13%. The dichotomy in performance between stock sectors was as wide as at any time since the tech bubble unwound 23 years ago in the year 2000.
Consumer oriented stocks (think food, beverage, health care) fared very well in 2022; in fact, many of these names hit all-time highs. Conversely, anything associated with the name technology likely suffered a precipitous drop in value. Many of the large technology stocks we are all familiar with dropped 50% or more in value. This is understandable during a period of rapidly rising interest rates. Investors tend to gravitate toward stable, blue-chip stocks that pay robust dividends as opposed to some of the tech names that pay no dividends and rely on future earnings growth to support their stock price. As mentioned earlier, we are starting to see value in some of these technology names and plan to reallocate to this area, on the margin, as the year progresses.
As 2023 unfolds we will be carefully monitoring events discussed above and will make adjustments to portfolios as necessary.
Chief Investment Strategist
By Ted Reagle
In December, Congress approved the SECURE Act 2.0 to enhance retirement savings. Here’s how those changes will affect your retirement planning.
Most notably, the age at which individuals must begin taking required minimum distributions (RMDs) from 401(k) or IRA accounts increases to age 73 this year. The age for initial RMDs has been creeping upward, reflecting the longer life expectancy seniors are enjoying. Just four years ago, the age for initial RMDs increased from 70 to 72; in 2033, it will increase to 75.
Furthermore, starting in 2025, the amount of the “catch-up” contribution for individuals ages 60 to 63 who are still working will increase 50 percent, from $7,500 to $11,250.
For this year, though, the maximum employee contribution to a 401(k) plan is $22,500, plus an additional $7,500 for individuals 50 and over. January is a great time to consider increasing your annual percentage contribution to your 401(k) plan to take advantage of the tax-deferred savings and power of compound interest to grow your retirement account over a long period of time.
Also in 2023, the limit on annual contributions to an IRA will increase by $500 to $6,500. The IRA catch-up contribution limit for individuals age 50 and over remains $1,000 in 2023. Hence, if you are over age 50 you may contribute $7,500 to your IRA this year. Starting in 2024, the IRA catch-up contribution will rise annually indexed to inflation.
SECURE 2.0 makes another interesting change related to 529 college savings plans. Individuals have the option to roll over up to $35,000 from a 529 plan (such as CHET) into a Roth IRA in the name of the student beneficiary. In order to take this step, the 529 plan must have been open for at least 15 years.
Find a better savings rate
If you have a significant balance in a savings or IRA account at a bank and are frustrated by the account’s low interest rate, you can set up a brokerage account to take advantage of the higher interest rates being offered on CDs and U.S. Treasuries. Presently, these low-risk investments are earning between 4 and 5 percent interest. Give us a call if you would like more information regarding putting your savings to better work.
Feeling the pinch of higher prices?
Like many families, we’ve been feeling the impact of higher prices on our household budget. To keep our living expenses down, we started grocery shopping at a local discount grocery store and have noticed significant savings compared to the large grocery chains in our area.
If you would like to reduce your living expenses, I encourage you to give a discount grocery store a try. You may be pleasantly surprised by the selection, customer service, and (of course) the extra money you get to keep in your pocket.
To our clients,
The holidays are a time for giving, both to brighten our loved ones’ days and to give back to the community. Grey Ledge Advisors has decided to honor this spirit of giving this year by asking its employees to name the nonprofits they would like us to support with an annual donation.
We were excited to see which charitable causes our employees hold close to their hearts and touched by the stories they shared about why the selected nonprofits are important to them. Our employees recognized 13 organizations specializing in food security, health care, literacy, animal rescue, and other good work.
Funds will be distributed to:
A Place Called Hope, Killingworth
Branford Food Pantry, Branford
Chapel Haven, New Haven
Connecticut Foodshare, Wallingford
Dan Cosgrove Animal Shelter, Branford
Downtown Evening Soup Kitchen (D.E.S.K), New Haven
G.R.O.W.E.R.S., New Haven
Help Willy’s Friends, Durham
Master’s Manna, Wallingford
New Haven Reads, New Haven
Paul Dostie Kare Foundation, Guilford
Toys for Tots
We’d like to extend our warmest appreciation to the employees who helped us identify ways to make our community a better place. To them, and to our clients, we wish a season full of merry rejoicing and happy festivities.
President & CEO
Grey Ledge Advisors
Follow our series of donations on Linkedin
Yes, there are good things about being older, such as increased happiness, less stress, better marriages and deeper friendships.
I’m in my early 60s and when my 20-something children tell me I’m getting old, my now familiar response to them has become, “Yes, that’s the plan!”
While it seems true that what was defined as “old” as little as 20 years ago might not seem “old” now; regardless of our definition, though, we’re going to be slowing down physically. What is important to remember, though, is that our expenses don’t necessarily slow down with us.
One of the biggest threats to a retirement nest egg, besides the possibility of outliving it, is the high cost of care for increasing health needs.
Things Get Better With Age
An article in Consumer Reports on Health found there are some things that actually get better with age:
1. You get wiser. Research conducted by the Universities of Texas and Michigan found that significantly more older people ranked in the top 20% in wisdom performance, and the group with an average age of 65 consistently outperformed younger participants.
Maybe there’s some truth to the joke about parents seeming to get smarter as their kids get older.
2. You have fewer difficult emotions. A Gallup survey found that people in their 70s and 80s reported less stress, worry, and anger than younger respondents. Stress peaks at age 25 and steadily declines, dropping rapidly from 60 to 73. Perhaps we have something to look forward to!
3. You become happier. A study by Stanford and Tufts University professors said that aging is associated with increased emotional well-being.
4. Your marriage gets better. The Journal of Social and Personal Relationships found that older couples experience greater satisfaction and positive experiences with each other. The report also says happily married older people have better health, quality of life, and relationships with their children and friends.
This may well be a case of what statisticians call selection bias, as perhaps only the better marriages actually last into old age these days; but it does give one something to think about.
5. Your relationships get deeper and richer. While younger people have more friends, the quality of older people’s relationships becomes richer. A study done by Case Western Reserve University found that volunteering was the most consistent predictor of cognitive well-being in people over age 72.
Consult Your Team
While there can be much to enjoy about a long(er) life, one key to keeping it as financially secure as possible is to keep in contact with your financial advisory team. Just like your physician and other medical experts can help keep your body working at its best (for its age), so too can your financial advisor and their team help you enjoy the security that can contribute to some of that less stressful living that awaits you!
Please feel free to contact us at Grey Ledge Advisors if you think we can help you in any way.
Your estate planning process involves a team consisting of your attorney, your Grey Ledge advisor, perhaps an insurance professional, and you. Whether you are establishing a new estate plan or revising an existing one, only you can provide the guidance, direction, and information your estate planning team needs to develop an effective plan.
Most estate planning efforts begin with a questionnaire and an asset inventory. Although the process may seem cumbersome, the more complete the information you provide, the better equipped we will be to help you achieve your goals. Even questions that seem intrusive at first have specific purposes. Following are some examples of the kinds of estate planning information you may be asked to provide:
Assets and Liabilities. A list of your assets, their estimated net value, and documentation of the form of ownership (individual, joint tenancy, tenancy by the entirety, and other forms of co-ownership). You will also need to identify your liabilities and those of your spouse. If you live, or have ever lived, in a community property state, you will need to provide information to separate your individual and community property and to determine who is responsible for the management and control of community property.
Family and Other Beneficiaries. The names, ages, relationships, and special needs of family members and other beneficiaries. A copy of property settlements, other financial agreements, and court decrees from any prior marriages of both you and your spouse.
Existing Estate Plans. A copy of your current will, along with information on any contractual or legal restrictions on the disposition of your assets. In addition, documentation of survivorship provisions and beneficiary designations on insurance policies, retirement plans, employee benefit plans, business buy-sell agreements, and other such assets.
Health Status. Information on your current health status and that of your beneficiaries. Also, the average life spans of your ancestors and their ages at death.
Objectives and Purposes. Your objectives, purposes, and hopes for yourself and each beneficiary, along with an assessment of each beneficiary’s ability to manage money.
Benefits of Team Work
Once fully informed, your team can assist you in several important ways. We can: 1) Analyze your assets to determine which you should dispose of during your lifetime, which you should retain, and whether any special expertise may be required to value and dispose of your assets; 2) Identify which assets may be subject to probate and estate taxes and estimate the potential shrinkage due to these costs; 3) Estimate and plan for the liquidity (cash) needs of your estate, your surviving spouse, and other family members and beneficiaries (for instance, cash may be needed to help cover estate taxes, probate costs, or for income replacement); and 4) Guide you in selecting the best domicile—assuming you have a choice—to help reduce the net effect of taxes on your estate.
No Plan is Final
Bear in mind that no estate plan is permanent. Marriages, remarriages, births, deaths, new employee benefits, and legislative changes may all necessitate adjusting an existing plan or creating a new one. Also, the composition of your assets may change over time. You can keep your estate plan up-to-date by notifying us of any relevant changes as they occur, and by responding when you are alerted to legislative changes that may affect your current estate plan.
How do you get started? Call your Grey Ledge advisor and we will work with you to ensure that your final future, and that of your beneficiaries’, is aligned with your wishes.