The Entrust Experience
You may have noticed our new by-line: Partners in Holistic Wealth Management. ( This phrase succinctly describes the work we do with clients. But what does it mean?
It means we partner with clients using a whole client approach. We do this because we have found most affluent clients want help with more than simply their investments. They want assistance with their financial issues that go beyond investing, too.
Your investment plan serves as the foundation of your financial house. But then the work continues. We map out your concerns beyond investing. A game plan is formulated. And priorities are set.
Because wealth management can be complex, we break it down into four main categories. When formulating your plan we address wealth enhancement, wealth transfer, wealth protection, and charitable giving. Adopting these categories also helps with flexibility--especially since your planning needs may change over time.
The top of mind category for most of us right now is wealth enhancement. In essence, wealth enhancement means: Maximize what you earn and keep as much of what you earn as possible.
The reason it is top of mind is that taxes can be a big obstacle to wealth enhancement. Tax liabilities often interfere with your being able to keep what you have earned. With April 15th looming, we'll bet taxes have been on your mind.
Aim to minimize income taxes on your investments
Sybil's experience helps illustrate how insidious annual income taxes on investments can be. When we began working together she indicated a preference for just one of her existing portfolio strategists.
Her late brother had selected this strategist for her. He had favored this strategist despite the fact that lots of trading was done each year. It was not uncommon for this investment manager to trade 100% of her securities every year. This is often referred to as 100% turnover in a portfolio.
Sybil had a decision to make. If she retained this strategist, she could anticipate hefty capital gains tax bills year after year. These bills would be in addition to tax liabilities for dividends or interest she had earned.
Compare Sybil's current experience to selecting an investment strategist with similar competitive performance but a different trading philosophy. We introduced her to a strategist who typically trades just 10% of an investor's securities each year.
But she felt a sentimental attachment to the strategist her late brother had chosen. And she preferred to gloss over the probable impact of tax consequences. Thinking about taxes aroused all those negative emotions.
To help her make an informed decision, we conducted a conference call with the strategist as part of our due diligence. They did admit that the taxes resulting from all their trading diminished investor returns by 3-4% each year.
Let's think about this for a moment. Suppose performance is diminished by just 3% per year. For loyal investors who retain the strategist for a decade, 30% of their profit will evaporate into taxes. A 30% dissipation of investment gains over ten years is attention-getting.
Ultimately Sybil made the decision to change strategists. She wanted her investments positioned so she might keep more of what she earned. Wealth enhancement!
A Word about Investing
Current capital market conditions, unfortunately, cannot predict what is to come. Since 2009 investors have experienced pretty much happy days regarding our investment returns. This often leads to overly optimistic performance expectations.
An excerpt from Jason Zweig's recent article may help frame more modest performance expectations: The New Era of Lower Stock Returns.
As mentioned earlier, we believe your investment plan serves as the foundation of your financial house.  If you haven't had a check-up recently regarding your investment plan, contact us today for a second opinion: or 610-687-3515.  And stay tuned for future newsletters about how holistic wealth management may help you.
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