2021 Investment Insights and Best Practices
With Popular Bank Director of Wealth Management Joseph Culotta
Joseph Culotta is the Director of Wealth Management for Popular Bank and registered representative of Infinex Investments, Inc. Leveraging more than 18 years of industry and wealth management experience, he leads the Popular Investments customer-centric service to provide access to a comprehensive range of wealth-related products and services to our consumer and commercial clients. The following article shares his expertise and industry insights.
As we enter 2021, savvy wealth management strategies will be increasingly important in navigating current unique and challenging circumstances. At this time, we continue to see socioeconomic flux amid the ongoing COVID-19 health crisis. We additionally anticipate meaningful policy changes to follow the transfer of leadership in the White House early in the year. In navigating volatility and uncertainty in the coming year, investors will do well to calibrate their financial approach. Particularly, now is the time to leverage working relationships with seasoned industry experts, creating a strong foundation to navigate challenges and opportunities with agility and success.
Here are some thoughts for consideration.
1. Focus on long-term success with your wealth management team.
Throughout 2020, we saw erratic global market behavior as investors reacted to economic downturn and speculation. Early into the pandemic, the S&P 500 index fell 34% in just over one month.1 Investors reportedly pulled a net $326 billion from mutual funds and exchange-traded funds.2 This common knee-jerk response to uncertainty is oftentimes an expensive mistake, sidelining funds for potential long-term portfolio growth opportunities. However, investors can grow from these experiences to avoid short-sighted transactions going forward. It is increasingly important to seek professional guidance to create a strategic and personalized roadmap to success during these times.
At Popular Investments, our vision is to serve as a strategic partner. We believe in leveraging our deep bench of industry experts with optimal client service. In times of challenge, it is the responsibility of a financial advisor to serve as a sounding board to understand unique client needs, circumstances and opportunities. This year, personalized consulting will become increasingly important. With this in mind, investors must make a point to lean into their relationships with their financial teams to ensure a deliberate and holistic approach in mitigating risk to ensure short- and long-term goals.
This success starts with the development and refinement of a financial plan. Under normal circumstances, we recommend investors review their financial and investment plans on quarterly basis. However, considering the quickly changing environment, investors should consider increasing the frequency of their touchpoints in the next 12-18 months. Arrange a standing meeting with your wealth manager or financial advisor once a month to discuss changing needs and external influences that may impact your investment goals.
2. Consider your tax planning for 2021.
Experts continue to anticipate the Biden administration to engage Congress to enact new tax legislation in 2021. These policies will likely aim to raise revenue to support the ongoing health crisis and other government programs. Importantly, this may result in a reduction in the estate, gift and Generation-Skipping Transfer tax exemption amounts. Similarly, experts anticipate an increase in Income, Capital Gains and Transfer tax rates.
These policy changes could have a significant impact on how you choose to manage your wealth or succession plans. To ensure that you are continuing to build the blueprint of your legacy with the most tax-advantaged strategies and financial options, now is the time to speak with your financial advisor and engage a trust advisor to understand how to effectively navigate potential and ongoing changes to federal and state tax codes.
3. Include your loved ones in your estate planning process.
As the country’s largest generation moves more deeply into retirement, we are seeing the start of a massive generational transfer of wealth. Baby Boomers are anticipated to transfer approximately $68 trillion to their beneficiaries within the next two to three decades.3
As families prepare for this transition, now is the time to consider including your beneficiaries in the wealth and succession planning process. Introduce your current plans to children, grandchildren and other family members. Provide them with the financial tools needed to help them manage funds in the future, problem-solve potential financial challenges, and strategically use a team of financial professionals. Younger generations will have different goals, challenges and expectations in managing wealth. Additionally, financial professional can walk them through their financial lifecycle. Similarly, we encourage families to include their children and beneficiaries in meetings with financial professionals to build and grow relationships. In doing so, financial professionals will more effectively identify intergenerational needs and goals that will help us to continue to create and refine a plan that can ensure long-term success.
1. Jason, Julie. “The Coronavirus Stock Market: A Market Gone Wild.” Forbes, 15 Dec. 2020
2. Thomas, Tony, and Nick Watson. “Long-Term Fund Outflows Amid Volatility Triple ’08 Figures.” Morningstar, Inc., 15 Apr. 2020
3. Cerulli Associates. U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2018: Shifting Demographics of Private Wealth, 2018
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The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person’s situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Popular Bank does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content.