INVESTMENT REPORT: What You Should Know About Cryptocurrencies

Chris Kamykowski, CFA | Director of Investment Consulting and Research

For Educational Purposes Only. Moneta does not offer investment advice regarding cryptocurrencies and does not bill clients for the education it may provide them on crypto.

2021 has been a roller-coaster ride for cryptocurrencies (“crypto”), which have continued to be in demand from many investors and traders despite rapid rises and equally precipitous falls. The persistent headlines over crypto reflect their dramatic proliferation and investor intrigue on how to engage with them. As with any new and exciting asset appearing to have the potential to provide
high returns, investors have been quick to take notice and seek answers on how to join the millions who have purchased them. Some investors see it as a “can’t miss” opportunity. Others believe crypto is a landmark innovation that will upend the global financial system over the long-term, while still others believe crypto represents a dangerous speculative asset. Whatever the motivation,
investors should at a minimum be cognizant of the aspects they should consider when developing an understanding if they desire to purchase cryptocurrency. This short piece aims to decipher the complexity of cryptocurrencies.

What is a cryptocurrency?

Essentially, cryptocurrency is a digital asset that is secured by cryptography and stored on decentralized networks over the internet, often employing a public, ongoing ledger (blockchain) to verify transactions via peer-to-peer networks. Cryptocurrencies are different from fiat currencies, such as the Dollar and Yen, which are issued by a sovereign central authority such as the Federal Reserve.
Cryptocurrencies may allow for transactions without a bank or payment processor and some transactions can happen in seconds. Some holders of cryptocurrencies are attracted to their relatively higher degree of anonymity, substitution for fiat money, and perceived benefit as a store of value or as an inflation hedge. Many are familiar with Bitcoin, which tops the cryptocurrency popularity charts; but there are many others such as Ethereum, Dogecoin, Stellar, Litecoin, Polkadot, Binance, and Cardano. These are just a sampling of the universe, which now tops out at more than 4,000 different cryptocurrencies worldwide.

Are cryptocurrencies regulated?

While many holders of cryptocurrencies believe they are not regulated, this is not in fact the case. In the United States, cryptos are regulated by either the Securities Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC) (with significant additional interest from the Federal Reserve, Office of the Comptroller of the Currency (OCC) and the Treasury Department). No
two cryptos are exactly alike, and which regulator has jurisdiction over each crypto can only be determined on a case-by-case basis depending on the crypto’s unique structure, technology deployed and purpose. The basic question that must be answered for each crypto is whether it is: a) a commodity, in which case the CFTC has primary jurisdiction; or b) a security, in which case the SEC has jurisdiction.

The legal tests to determine whether a crypto is a commodity or a security are too complex for this piece, but the SEC has ruled that the two largest cryptos by volume and dollar value, Bitcoin and Ethereum, are commodities. In addition, the SEC and CFTC are currently examining crypto exchanges such as Coinbase to determine whether and how to assert jurisdiction over them. Needless to say, regulation of this currency is uncertain and continually evolving leaving advisors and investors without clear direction.

Why are cryptocurrencies experiencing such high demand?

The last year saw a significant surge in flows into cryptocurrencies with the 12-month rolling total rising from $1B to more than $9B. Despite the modest outflows in April and May of 2021, inflows are likely to continue. Many reasons abound for why cryptocurrencies are capturing the attention of investors and serving as catalysts for increased demand. These include:

• Proliferation of Crypto Exchanges/Platforms
• Rise in Institutional Interest
• Increased Acceptance of Crypto for Payments by Financial Platforms and/or Merchants
• Investors’ Concern over US Inflation
• Investors’ “Fear-of-Missing-Out”
• Social Media

How have cryptocurrencies performed?

For the reasons noted above, we have seen immense growth in market cap over the last 12 months. To say it has been explosive is an understatement as even a cryptocurrency created as a joke (Dogecoin) has witnessed one year growth of nearly 13000%. Many market pundits argue we have reached a certain “bubble” state in cryptocurrency given the extraordinary advances in market cap, comparing the run up in crypto to past financial assets that have experienced rapid price appreciation. There is some truth to that when one looks at previous episodes; however, the recent run-up in crypto demolishes previous assets that received elevated market hype in the last five decades.

As has been seen throughout financial history, rapidly rising valuations are a key element in attracting investors and traders to crypto as anything that sparkles in the market typically does. However, despite tales of riches made, the valuation increase has not been a oneway street as cryptocurrencies have been subject to tremendous price volatility. Using the Greyscale Bitcoin Trust (GBTC) as a proxy for cryptocurrencies, one can see in the charts below the volatility and drawdown risk from crypto are multiples of other established asset classes. Some argue that crypto should be seen as a current/future substitute for either gold or the US Dollar, but at this point, from a volatility perspective, the comparison is lacking.

What are the risks with cryptocurrencies?

Beyond the obvious risks of price volatility and potential permanent impairment to capital, there are other risks buyers of crypto should be aware of before purchasing. Below are some key risks to consider that can help you decide if the risks are worth the potential reward.

• Financial Regulation – While efforts are in place across developed nations to establish a formal regulatory framework, cryptocurrencies lack well-developed, consistent, cross border regulatory standards that reliably protect investors and consumers. The slowly emerging (in comparison to popularity) regulatory regime leaves investors exposed to unquantifiable risks that could impact values of cryptocurrencies. For example, Chinese authorities recently surprised many holders of crypto with guidance discouraging financial institutions from using crypto for payments or services, which caused significant price declines(2).
• Central Bank Competition – According to Reuters(1), the U.S. Federal Reserve is considering establishing a Central Bank Digital Currency (CBDC), which would be the digital equivalent of banknotes and coins, giving holders a direct digital claim on the central bank and allowing them to make instant electronic payment. These “stable coins” could have some of the advantages
  and benefits of cryptocurrencies without the extreme price volatility and other problems. This could limit the uptake (and value) of cryptocurrencies in the future if investors seek a more stable form of cryptocurrency.
• Cyber Security / Criminal Exploitation – Fraud and cybercrime involving cryptocurrencies are growing more regular as these markets expand. For example, cybercriminals recently launched a ransomware attack against one of the nation’s largest gas pipelines, which shut down gas and caused supply disruptions on the East Coast until the pipeline paid a ransom of more than $4 million in cryptocurrency. For individual investors, usernames/passwords for crypto exchanges and security keys associated with their crypto holdings can be compromised and allow cyber criminals access to digital “wallets” containing crypto holdings. In addition, the same exchanges can come under cyber-attack or face outages limiting the ability for crypto holders to transact or
  access their crypto holdings. Knowing the security protocols on exchanges is very important.
• Tax Treatment – Currently, cryptocurrencies (or “virtual currencies” per the IRS(3)) are subject to a tax liability when used in transactions much like transactions involving property. Therefore, maintaining accurate records of cost basis, trades and gains/losses is important as the IRS includes a question on 1040s regarding transactions in virtual currencies.
• Elon Musk – While not a traditional risk in the truest financial sense, it is hard to avoid mentioning the Tesla and SpaceX entrepreneur in the list of risks. There are not many in the world who can drive prices for cryptocurrencies up or down based on Saturday Night Live monologues or singular tweets, but Musk’s whims literally move crypto markets.

How would one use crypto in a portfolio?

Many debate whether one should view cryptocurrency as a currency or an investment.

Currency should serve as a store of value and as a medium of exchange. Crypto’s store of value properties are difficult to justify given observable volatility relative to the USD. As a medium of exchange, its acceptance is rising but it lacks the widespread acceptance and regulatory protocols that major currencies benefit from today.

Investments are assets acquired with the goal of generating income or appreciation. Crypto is hard to classify as anything other than a highly speculative investment at this time. Valuation considerations are important for any investment and valuations are derived from an investment’s sum of its future cash flows discounted to today. Crypto has no cash-flow properties and relies on appreciation through another party’s desire to purchase at a higher price.

Put together, crypto’s inability to serve as a reliable store of value, lack of cashflows, and overreliance on demand/supply to drive price appreciation, means it should not be relied upon for long-term wealth accumulation.

How do I access cryptocurrency?

Having laid out several observations and risks to be aware of with cryptocurrency, one may still ask, “I understand all this but what are my avenues to access cryptocurrency?” Direct access to singular cryptocurrencies via traditional investment platforms like Schwab and Fidelity is not currently available, because they are awaiting regulatory guidance and investor safeguards.* However, Schwab and Fidelity do allow for the purchase of private placement crypto funds and secondary market purchases/trading of these funds. Direct purchase can be completed via cryptocurrency platforms such as CoinbasePro and River Financial. To be sure, engaging any of these options requires due diligence to understand the pros and cons of each. Each is unique and has its own risks one must understand. The table below walks through a few sample options and some pertinent items to be aware of when seeking to engage cryptocurrencies:

Conclusion

The proliferation of cryptocurrencies has caught the attention of many investors and caused some to experience “fear of missing out.” There are rapid changes occurring in finance due to the rise of fintech and non-bank actors entering the fray to compete with traditional financial institutions and banks. There are ample reasons why the theme and demand for cryptocurrencies makes sense and there is a plethora of interested actors seeking to make it so. While returns have stoked the envy of some and caused considerable pain for others chasing the momentum and the story, we are still in the early stages of what may be a financial transformation with highly uncertain outcomes. Significant price volatility is an ever-present danger one should respect. The risks associated with cryptocurrencies are many, including regulatory uncertainty and a lack of well-established investor protections. At this point in the cryptocurrency narrative, investors should at minimum view it as a speculative play versus an asset class one can rely on to drive long-term wealth creation and stability in one’s portfolio. Tread carefully with those that offer access to cryptocurrency and know the risks and uncertainty inherent with cryptocurrencies; remember to be very diligent in one’s oversight, storage, platform usage and tracking of cryptocurrency transactions.

Sources and Disclosures

1.  https://www.reuters.com/business/finance/digital-dollar-project-launch-five-us-central-bank-digital-currency-pilots-2021-05-03/
2. https://www.wsj.com/articles/bitcoin-and-dogecoin-prices-tumble-as-investors-sour-on-cryptos-11621435489?mod=searchresults_pos5&page=1
3. https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions
4. Morningstar; As of 4/30/2021; Representing each item are: Greyscale Bitcoin Trust (Bitcoin) is a private placement that seeks to reflect the value of Bitcoin (BTC; 9/25/2013) held by the trust. NASDAQ Composite index (Nasdaq; 1/1/1995) is a market cap-weighted index, simply representing the value of over 3,000 stocks listed on the Nasdaq Stock Market. LBMA Gold Price (Gold; 1/1/1970) is overseen by the ICE Benchmark Administration and represent gold prices as determined by regular auctions in London. The S&P GSCI Index (Commodities; 1/1/2001) is a world production-weighted commodity index that, in 2021, will be composed of 24 exchangetraded futures contracts on physical commodities across five sectors: energy, industrial metals, precious metals, agricultural, and livestock. The MSCI China Index (China; 1/1/2001) captures large and mid cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings. The Nikkei 225 Index (Nikkei; 1/1/1985) is a price-weighted index, operating in the Japanese Yen (JP¥), and measures the performance of 225 large, publicly owned companies in Japan from a wide array of industry sectors. FANGs (3/27//2014) represent the equally-weighted return stream of the following stocks: Facebook, Amazon, Netflix, and Alphabet (Google).
5. Closing market values as of 4/30/2021, Morningstar. Greyscale Bitcoin Trust (Bitcoin) is a private placement that seeks to reflect the value of Bitcoin (BTC) held by the trust. The S&P 500 Index is a market-capitalization-weighted index of the 500 largest domestic U.S. stocks. LBMA Gold Price (Gold) is overseen by the ICE Benchmark Administration and represent gold prices as determined by regular auctions in London.

^Quotation began on 6/20/2019.
*On May 25th, Fidelity filed an application with the SEC to launch an ETF linked to Bitcoin.
**Private placement investment with Bitwise is available weekly on Wednesdays.
***Digital wallets allow for storage of cryptocurrencies for holders. Two types exist: “hot” means they are held and accessed online; private keys to one’s cryptocurrency help to minimize threat of cyber theft. “Cold” wallets are offline storage devices (USB drive, for instance) that also store a user’s private key. Security is stronger given the device has to be connected to a computer/internet to allow for use of cryptocurrency holdings. One version of a cold wallet is a paper wallet which essentially means private and public keys are provided to a crypto currency holder and printed out. These keys are then stored in a safety-deposit box or a safe.

© 2021 Moneta Group Investment Advisors, LLC. These materials were prepared for informational purposes only based on information deemed reliable, but the accuracy of which has not been verified; trademarks and copyrights of materials linked or noted herein are the property of their respective owners. Given the dynamic nature of the subject matter and the environment in which these materials were prepared, they are subject to change as additional information and analyses comes forth. Nothing contained herein represents an offer to sell or buy cryptocurrencies or any other commodities or securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

The post INVESTMENT REPORT: What You Should Know About Cryptocurrencies first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/investment-report-what-you-should-know-about-cryptocurrencies/

Ask the CFP: Should I Roll my Pension to an IRA?

Hello everyone and welcome to this month’s Ask the CFP segment. This month’s question is, “should I roll my pension to an IRA?” This is a popular question and the answer may not be a clear as one would hope. Here are some topics to consider when weighing your options.

First, if your pension offers a lump-sum rollover and you decide to keep it with the pension, how well funded is that pension? A pension’s ability to pay a monthly benefit is generally only as good as it’s funding. Some pension funds have plenty of assets to pay for decades while others haven’t been funded as well. You can typically acquire this information from the pension sponsor as a participant.

Second, if you decide to roll the pension to an IRA to manage on your own, you’ll be assuming the risk of managing the money instead of the pension fund doing it for you. Some people enjoy having this kind of control over their assets while others prefer not to take on the risk.

Third, consider your longevity. If you’re not married and your health is poor, the idea of collecting a monthly pension payment for 25 years may not sound appealing. This might favor taking a lump-sum. However, if you have longevity in your family and a spouse that may depend on this income, you might prefer to have an income stream your spouse can assume once you’re gone.

Lastly and most importantly, unless the choice is obvious for health or family reasons, you’ll want to conduct an analysis on what rate of return you would need to earn on the lump-sum to make up for the lost pension payments. We have tools to easily run this type of analysis if you want help. You may notice that the average rate of return needed on the lump-sum becomes higher the longer you’re expected to live. You should also include the lump sum vs. pension options in a more comprehensive analysis looking at your full retirement picture. Sometimes including other life events in the equation will affect the projection, such as selling a business, receiving an inheritance or changing your retirement age. Because this decision doesn’t exist in a vacuum, looking at it individually and comprehensively is best. Taxes come into play that way too.

It’s not easy to make this decision, but hopefully this will help you weigh your options. If you speak with a professional, make sure they’re a fiduciary like Moneta who puts your needs first. If you have a question about this topic or have a question for next month’s video, please send it to TFreeman@MonetaGroup.com. Thanks for watching and we’ll see you next month.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please speak with a qualified tax or legal professional before making any changes to your personal situation.

 

The post Ask the CFP: Should I Roll my Pension to an IRA? first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/ask-the-cfp-should-i-roll-my-pension-to-an-ira/

INVESTMENT REPORT: Fixed Income Insights

Last week, the Bureau of Labor Statistics reported that U.S. consumer prices exploded in April by the most since 2009 – far exceeding consensus and fueling the debate about how long inflationary pressures will last. Headline CPI rose 0.8% in April from March for a 4.2% year-over-year increase, both well above consensus of 0.2% and 3.6%, respectively. Core CPI, which excludes food and energy, also rose significantly with a monthly gain of 0.9% and a 3.0% year-over-year increase, again both well above consensus of 0.3% and 2.3%, respectively.

March of this year was the first month in this cycle where the “base effect” came into play, biasing the year-over-year reading upward. From February to March of 2020, prices suffered a steep decline as lockdowns began and economic activity slowed significantly across the country. The “base,” or very low CPI figure from March 2020, distorted the March 2021 YOY figure. As anticipated, the base effect impacted the April 2021 YOY reading as well. This will continue for a few more months but the effect will naturally taper off.

While the base effect is certainly affecting YOY figures, it does not explain the monthly increases in April. Rather, the monthly increases can be attributed to a combination of supply chain disruptions, reflation, and roaring consumer demand as our economic recovery continues to gain traction. The largest contributor to the increase in core CPI came from a 10% surge in prices on used cars and trucks in April compared to March. This marks the largest monthly increase on record. Used autos are currently in very short supply and cost 20.9% more now than in February 2020.

The travel and hospitality categories also had significant price increases, with airfares up 1 0.2%, car and truck rentals up 16.2%, and hotels and motels up 8.8%. While some of these sectors had larger increases than the aforementioned used cars and trucks, they are a smaller contributor to CPI due to a smaller weighting in the calculation. These increases aren’t really inflation, but rather reflation with prices returning to levels consistent with companies staying in business. As you will see in the chart on the following page, airfare prices are still well below levels seen in 2019.

The Fed has remained steadfast in its belief that these price increases will be temporary. Shortly after April’s CPI report was released, Federal Reserve Vice Chairman Richard Clarida admitted he was surprised by the jump in consumer prices but reiterated the stance that the rise would prove to be largely transitory. He referred to April’s numbers as “one data point” and also said, “I expect inflation to return to – or perhaps run somewhat above – our 2% longer-run goal in 2022 and 2023.” Clarida also repeatedly said the Fed was prepared to act if inflation or inflation expectations rose to undesirable levels, saying, “If we saw evidence that there was a risk of a persistent upward drift in inflation expectations, we would not hesitate to use our tools to offset that.”

It’s important to note that while CPI receives most of the attention and time in the press, it’s not the Federal Reserve’ s preferred measure of inflation; that is Core Personal Consumption Expenditures (PCE). CPI and PCE are different for a variety of reasons, including the fact CPI is based on household purchase data while PCE uses data on what businesses are selling. Historically, Core PCE levels average less than Core CPI’ s, but both have generally trailed the Fed’s 2% target for the better part of the last decade. Given this specific target has shifted to an average of 2%, the Fed will now allow inflation to rise above 2% for a time in order hit the target.

April’s numbers were high, but somewhat anticipated given the unprecedented fiscal stimulus, base effects, and supply chain disruptions. One thing is certain: inflation will continue to be a hot topic in the coming months; this combined with historically low interest rates and uneven global economic recovery will lead to increased scrutiny of one’s fixed income allocation. The Fed has not wavered in its commitment to keeping yields at or near zero until 2023 as the country continues to recover. With that in mind, we recommend investors resist the urge to stay ultra-short and instead consider adding or increasing exposure to high-yield funds while maintaining a bond ladder. When bonds mature, we recommend reinvesting at the end of the ladder to take advantage of higher yields further out on the curve.

These materials have been prepared far informational purposes only based an materials deemed reliable, but the accuracy of which has not been verified. Post perfor­mance is not indicative of future returns. These materials do not constitute an offer or recommendation to buy or sell securities, and do not take into consideration your circumstances, financial or otherwise. You should consult with an appropriately credentialed investment professional before making any investment decision.

The post INVESTMENT REPORT: Fixed Income Insights first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/cwcj-investment-report-fixed-income-insights-2/

INVESTMENT REPORT: Fixed Income Insights

Last week, the Bureau of Labor Statistics reported that U.S. consumer prices exploded in April by the most since 2009 – far exceeding consensus and fueling the debate about how long inflationary pressures will last. Headline CPI rose 0.8% in April from March for a 4.2% year-over-year increase, both well above consensus of 0.2% and 3.6%, respectively. Core CPI, which excludes food and energy, also rose significantly with a monthly gain of 0.9% and a 3.0% year-over-year increase, again both well above consensus of 0.3% and 2.3%, respectively.

March of this year was the first month in this cycle where the “base effect” came into play, biasing the year-over-year reading upward. From February to March of 2020, prices suffered a steep decline as lockdowns began and economic activity slowed significantly across the country. The “base,” or very low CPI figure from March 2020, distorted the March 2021 YOY figure. As anticipated, the base effect impacted the April 2021 YOY reading as well. This will continue for a few more months but the effect will naturally taper off.

While the base effect is certainly affecting YOY figures, it does not explain the monthly increases in April. Rather, the monthly increases can be attributed to a combination of supply chain disruptions, reflation, and roaring consumer demand as our economic recovery continues to gain traction. The largest contributor to the increase in core CPI came from a 10% surge in prices on used cars and trucks in April compared to March. This marks the largest monthly increase on record. Used autos are currently in very short supply and cost 20.9% more now than in February 2020.

The travel and hospitality categories also had significant price increases, with airfares up 1 0.2%, car and truck rentals up 16.2%, and hotels and motels up 8.8%. While some of these sectors had larger increases than the aforementioned used cars and trucks, they are a smaller contributor to CPI due to a smaller weighting in the calculation. These increases aren’t really inflation, but rather reflation with prices returning to levels consistent with companies staying in business. As you will see in the chart on the following page, airfare prices are still well below levels seen in 2019.

The Fed has remained steadfast in its belief that these price increases will be temporary. Shortly after April’s CPI report was released, Federal Reserve Vice Chairman Richard Clarida admitted he was surprised by the jump in consumer prices but reiterated the stance that the rise would prove to be largely transitory. He referred to April’s numbers as “one data point” and also said, “I expect inflation to return to – or perhaps run somewhat above – our 2% longer-run goal in 2022 and 2023.” Clarida also repeatedly said the Fed was prepared to act if inflation or inflation expectations rose to undesirable levels, saying, “If we saw evidence that there was a risk of a persistent upward drift in inflation expectations, we would not hesitate to use our tools to offset that.”

It’s important to note that while CPI receives most of the attention and time in the press, it’s not the Federal Reserve’ s preferred measure of inflation; that is Core Personal Consumption Expenditures (PCE). CPI and PCE are different for a variety of reasons, including the fact CPI is based on household purchase data while PCE uses data on what businesses are selling. Historically, Core PCE levels average less than Core CPI’ s, but both have generally trailed the Fed’s 2% target for the better part of the last decade. Given this specific target has shifted to an average of 2%, the Fed will now allow inflation to rise above 2% for a time in order hit the target.

April’s numbers were high, but somewhat anticipated given the unprecedented fiscal stimulus, base effects, and supply chain disruptions. One thing is certain: inflation will continue to be a hot topic in the coming months; this combined with historically low interest rates and uneven global economic recovery will lead to increased scrutiny of one’s fixed income allocation. The Fed has not wavered in its commitment to keeping yields at or near zero until 2023 as the country continues to recover. With that in mind, we recommend investors resist the urge to stay ultra-short and instead consider adding or increasing exposure to high-yield funds while maintaining a bond ladder. When bonds mature, we recommend reinvesting at the end of the ladder to take advantage of higher yields further out on the curve.

These materials have been prepared far informational purposes only based an materials deemed reliable, but the accuracy of which has not been verified. Post perfor­mance is not indicative of future returns. These materials do not constitute an offer or recommendation to buy or sell securities, and do not take into consideration your circumstances, financial or otherwise. You should consult with an appropriately credentialed investment professional before making any investment decision.

The post INVESTMENT REPORT: Fixed Income Insights first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/investment-report-fixed-income-insights/

$27 Billion RIA Self-Funds Trust Company To Further Fortify Its Independence

Moneta responds to demand for trust capabilities to enhance intergenerational wealth transfer

ST. LOUIS — May 11, 2021 — In an enterprising move, Moneta, a 100% partner-owned firm offering advisory services through its registered investment advisor (RIA) Moneta Group Investment Advisors, LLC, has launched its own trust company.

The move aligns with Moneta’s commitment to fiduciary practices and independence.

“Our advisors and clients have been asking for this to more efficiently pass on their net worth to the next generation. True to the Moneta way, we are demonstrating our commitment to deliver on their long-term needs without the influence of outside funding,” said Moneta CEO and Chairman of the Board Eric Kittner. “Investing in your own trust company is not something a firm that plans to sell in five years does.”

Moneta Trust will enable clients to appoint a single corporate trustee for both liquid and illiquid assets held in trust. A singular trustee will simplify the intergenerational transfer of wealth at a time when it is estimated to reach $68 trillion in U.S. assets* over the next 25 years.

 “The numbers are astounding in terms of the need for advice around wealth transfer from one generation to the next,” said Moneta Partner Gene Diederich. “Because we are often in the driver’s seat with clients as they design their wealth transfer plan, we have intimate knowledge of how to execute it in a way that is best for their family, and now we can do so with the resources of Moneta Trust.”

Moneta Trust is headquartered in Kansas City, home to Moneta’s second geographic expansion, which followed the opening of the RIA’s Denver office in 2019.

 ABOUT MONETA

Moneta Trust is chartered pursuant to Kansas statutes as a non-depository retail trust company and regulated by the Kansas Office of the State Bank Commissioner. Moneta Trust is a wholly owned subsidiary of Moneta Holding Corp., which itself is a wholly owned subsidiary of Moneta Group, LLC.

Advisory services are offered through Moneta Group Investment Advisors, LLC, a registered investment advisor with $27.4 billion in assets under management, headquartered in the Midwest. Barron’s ranked Moneta among the nation’s Top 10 Independent RIAs in 2018, 2019 and 2020 for its combination of quality and scale. InvestmentNews ranked Moneta as the nation’s second-largest fee-only RIA, with more than $20 billion in AUM in 2019 and 2020. Moneta Group Investment Advisors, LLC, is a wholly owned subsidiary of Moneta Group, LLC.

Moneta consistently earns praise for the way it invests in and takes care of employees. In 2019, InvestmentNews ranked Moneta among the nation’s “Best Places to Work for Financial Advisers” for the second-straight year. In 2021, the St. Louis Post-Dispatch ranked Moneta among its “Top Workplaces” for the eighth-straight year and the St. Louis Business Journal named Moneta as one of its “Best Places to Work” for a sixth-straight year.

*Source: Cerulli Associates (2018) — U.S. high-net-worth and ultra-high-net-worth markets 2018: Shifting demographics of private wealth.

CONTACT

Gregory FCA for Moneta
Lindsay Fitzpatrick, 610-228-2127
moneta@gregoryfca.com

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC.  Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC.

The post $27 Billion RIA Self-Funds Trust Company To Further Fortify Its Independence first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/27-billion-ria-self-funds-trust-company-to-further-fortify-its-independence/

Moneta in the News: April 2021

As one of the nation’s top 10 independent RIAs, leading business and financial media outlets frequently turn to Moneta’s thought leaders for our insight and expertise on various topics, trends and industry themes.

Check out some of our top recent media highlights below:

Financial Planning: Potential tax hikes propel wealthy seniors into tax-advantaged retirement plans

• Tasha Borglum, CFP® and Senior Advisor, shared her insight on how potential tax increases may impact estate planning. In the story, Tasha noted Roth plans are being increasingly used as an estate planning tool for wealthy investors in particular.

U.S. News & World Report: Q&A: M&A is transforming the advisory landscape

• Our CEO and Chairman of the Board Eric Kittner participated in a Q&A about how M&A is transforming the advisory industry. Eric explained how high valuations, the aging advisor demographic and record-low interest rates have all served as catalysts fueling industry transactions.

Financial Planning: Reviled insurance policies aim for retirement planning comeback amid potential tax hikes

• Tasha Borglum, CFP® and Senior Advisor, shared her thoughts on how potential tax hikes might spur the use of permanent life insurance policies in financial planning – and her perception of that strategy as these policies gain traction.

Citywire: What’s the biggest misconception about RIA compliance? CCOs weigh in

• Our Chief Compliance Officer Claire Gorman discussed the biggest misconceptions about RIA compliance, noting a well-curated program must be tailored to the functions of the business, requiring constant interaction with every facet of the organization.

Barron’s: The Big Q: How would your advice change if there’s a capital gains tax increase?

• Our CEO and Chairman of the Board Eric Kittner shared strategies to mitigate potential increases in capital gains taxes. In the article, Eric noted some investors may want to consider expediting the sale of capital assets in 2021 to lock in lower rates.

Investor’s Business Daily: The kids are alright: How advisors help them succeed as planners

• Partner Jim Blair offered his thoughts on involving the next generation in the advisory business. In the story, Jim highlighted his personal experience welcoming his son into the firm as well as mentoring a colleague’s son.

For future insight from the Moneta team, check our blog and visit us on LinkedIn, Facebook and Twitter.

© 2021 Moneta Group Investment Advisors, LLC. All rights reserved. Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC.  Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. These articles do not individually or collectively constitute an offer to sell or buy securities, nor does any statement contained herein represent any specific recommendation.

The post Moneta in the News: April 2021 first appeared on Moneta | Fee Only Financial Planning | Investment Advisors | Clients Nationwide.

source https://monetagroup.com/blog/moneta-in-the-news-april-2021/

President Biden Proposes Change to Capital Gains Taxes

President Biden released some details of his proposed income tax increase, which includes among other things, calling for treating long-term capital gains as ordinary income for taxpayers with annual income exceeding $1M. Those impacted by this change would pay federal taxes on long-term capital gains at a rate of as much as 43.4%!

While the passage of this proposed bill is a long way off, and certainly not a given, it would reemphasize the importance of using long-term appreciated securities to fund charitable donations instead of writing checks.

For those not familiar with this strategy, gifting long-term appreciated securities allows you to maximize your tax benefit – securities gifted receive a tax write-off similar to writing a check, plus the appreciation on those securities gifted is not subject to capital gains taxes. In practice, instead of writing a check to the charity, please call us to identify the most highly appreciated security in your taxable accounts so your Moneta team can coordinate the donation of an equivalent amount of that security to the charity.

If you would not otherwise want to lose that investment that was donated, you could take the check that you were previously going to write to the charity and instead write it to your investment account so we can buy back the security that was donated or another appropriate security.  In this way, you forever eliminate the unrealized capital gain on the security donated and avoid the associated tax that would come at such time in the future if that security would have been sold.  It is effectively like you received a “step-up in basis” to current market value.  And since eliminating a tax-free step-up in basis at death is also being considered under the Biden tax plan, this charitable strategy would become even more valuable.  And, as noted above, that tax on capital gains could be about to get very expensive for those earning more than $1M.

Bottom line, please be aggressive at reaching out to us at any time you plan to make a charitable contribution so that we can best advise you on how to make that gift in the most tax favorable manner.

– Your Moneta Team

 

 

 

© 2021 Moneta Group Investment Advisors, LLC is an SEC registered investment advisor and wholly owned subsidiary of Moneta Group, LLC. Registration as an investment advisor does not imply a certain level of skill or training. Moneta is a service mark owned by Moneta Group, LLC. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. Given the dynamic nature of the subject matter and the environment in which these materials were prepared, they are subject to change as additional legislation and government analysis come forth. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. These materials do not take into consideration your personal circumstances, financial or otherwise.

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