VESTED Summer 2023

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Connections Across Generations

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Bob McCutcheon Reopening the Vault PLUS Summer and Fall Preserved Who Is Your Financial Ally?

Bonds: A Comeback Story Planning to Pledge SUMMER 2023

“ The CCF’s financial

stewardship and gift doesn’t just make a difference for our children—it is the difference. Today’s wonderful moments are tomorrow’s cherished memories thanks to CAPTRUST.

CAPTRUST Community Foundation

”

Volunteer, Mothers and Their Children (MATCH), the CAPTRUST Community Foundation’s 2023 Charity of Choice

At CAPTRUST, we believe we have a profound responsibility to share our success with those less fortunate than we are. One way we do that is through the activities of the CAPTRUST Community Foundation (CCF), our in-house, employee-run charitable foundation. Its mission is to enrich the lives of children in communities we serve. The foundation, a registered 501(c)(3) charity, was formally organized in 2007 to provide our employees with opportunities to participate as a group in community outreach efforts and to offer their time, passion, and financial support as a way to give back.

captrustcommunityfoundation.org | toll free: 855.649.0943 4208 Six Forks Road, Suite 1700 | Raleigh, NC 27609 2

Winter | 2023

DEAR FRIENDS,

PUBLISHER

I hope you’re having an enjoyable summer. For CAPTRUST, it has been pleasantly busy. As always, we are thankful for clients like you who have spread the word and recommended our firm to friends and loved ones. I hope this issue of VESTED is both helpful and inspiring to you as you begin looking forward to fall.

One exciting thing about this issue is that we’ve been experimenting with artificial intelligence (AI). You’ve probably heard at least a little about the various AI tools coming to market. Right now, we’re experimenting with how these tools can help us become more efficient and impactful. If you pay extra-close attention while you’re browsing this issue, you may be able to spot some places where we’ve used AI-generated images.

For this issue’s Second Act story, we connected with a corporate leader turned recording studio owner: Bob McCutcheon of Pittsburgh, Pennsylvania.

Bob put music on the back burner for a while but returned to his passion after retiring from a Big Four accounting firm to reconnect with his family and to remember his late son, Ryan, who passed away in 2017.

J. Fielding Miller Chief Executive Officer

EDITORS John Curry Editor-in-Chief

Roxanne Bellamy Managing Editor

EDITORIAL ADVISORY BOARD

In this issue’s Lifestyle Feature, “Connections across Generations,” longtime contributor Kim Painter investigates the benefits of creating stronger relationships with younger family members and colleagues. Her experts offer advice on how to understand Gen Z and bridge age-based cultural gaps.

Lastly, in this issue’s Investment Feature, Investment Strategist Sam Kirby explores recent events in the bond market for those who are rethinking their fixed income investments. His explanations of bond categories and strategies may be a good starting point for future conversations with your financial advisor.

As always, we appreciate your article ideas, reactions, and feedback. Please keep them coming.

This issue also features a wide range of other topics, including: • protecting your money as you age;

Volume 9, Issue 2 | Summer 2023

All the best,

Jeremy Altfeder Financial Advisor

Kathleen Hopkins Senior Manager

Frank Bub Senior Director

John Keeton Financial Advisor

Catherine Currin Advisor Group

Marcus Magyar Financial Advisor

Nick DeCenso Director

Christeen Reeg Financial Advisor

Philip D’Unger Manager

Anthony Scarpo Financial Advisor

Karl Eggerss Financial Advisor

Fred Sloan Financial Advisor

Matt Godleski Financial Advisor

Eddie Welch Managing Director

Mike Gray Financial Advisor

Jennifer Wertheim Tax Director

ART DIRECTION AND MARKETING

Lonzetta Allen Associate Art Director

Elizabeth Altman Distribution Manager

Jennifer Mastrapasqua Art Director

Kaylin Nuñez Graphic Designer

WITH THE ASSISTANCE OF

• focusing on what’s essential in life; • pickling, canning, and preserving food; • cultivating financial independence in adult children; and • leaving a major philanthropic legacy.

J. FIELDING MILLER CAPTRUST Chief Executive Officer

Azul Photography Raleigh, NC

Worth Higgins & Associates Richmond, VA

Mike Richardson Wake Forest, NC

Getty Images Seattle, WA

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6

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ROXANNE BELLAMY

NANCI HELLMICH

SAM KIRBY

Roxanne Bellamy is a member of the CAPTRUST editorial team. She has a Bachelor of Arts and Master of Philosophy in English and has written for many industries, including beer, textiles, and finance. Bellamy’s work has appeared in Fast Company, Inc., Forbes, and more. Her retirement dream is to be a National Geographic Explorer.

Nanci Hellmich, an awardwinning multimedia reporter, covered personal finance, retirement, nutrition, and health for USA TODAY for more than 30 years. She now enjoys writing for AARP, encore.org, and other organizations. She has been named a top online influencer on weight loss and nutrition.

Hellmich has appeared on numerous television shows, including NBC’s TODAY show.

As a leader of CAPTRUST’s Investment Strategist team, Sam Kirby works with the firm’s financial advisors to assist clients with investment strategy, portfolio construction, and monitoring. He has 15 years of financial services experience.

Kirby earned his Bachelor of Arts in journalism from the University of North Carolina and his Master of Science in management from North Carolina State University. He is a CFA charterholder.

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Content and Contributors | Summer 2023

Features 6

Columns

CONNECTIONS ACROSS GENERATIONS

18

BOB MCCUTCHEON: REOPENING THE VAULT

26

WHO IS YOUR FINANCIAL ALLY?

27

BONDS: A COMEBACK STORY

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by Kim Painter

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36

RANDOM GLEANINGS

39

LASTING LEGACY

EXPERT ANGLE

42

CLIENT CONVERSATIONS

MARKET REWIND

44

CAPTRUST HAPPENINGS

by Nanci Hellmich

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by Nanci Hellmich

30

MONEY MINDSET

PASSION PURSUITS

Summer and Fall Preserved

by Jeanne Lee

Only the Essentials

by Roxanne Bellamy

Cultivating Financial Independence

by Roxanne Bellamy Planning to Pledge

by Kim Painter

by Sam Kirby, CFA

JEANNE LEE

KIM PAINTER

Jeanne Lee is a freelance writer living in a lovely college town in Ohio. She has written about consumer and business topics for 20 years, including stints at Fortune and Money. Her work has appeared in publications like USA TODAY, Fortune Small Business, and Health. She loves thinking about ways for people to hack their finances, and she daydreams of paying off her mortgage before she has to pay for college for her two boys.

Kim Painter is a freelance writer specializing in health, wellness, and retirement lifestyles. She was a USA TODAY staffer and contributor for many years, working as a reporter, columnist, and blogger. She now writes for AARP and other outlets. She lives in McLean, Virginia, where she practices what she preaches: wearing sunscreen, eating kale, and getting at least 10,000 steps a day.

All publication rights reserved. None of the material in this publication may be reproduced in any form without the express written permission of CAPTRUST: 919.870.6822. ©2023 CAPTRUST Financial Advisors. The opinions expressed in this magazine are subject to change without notice. This material has been prepared or is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. CAPTRUST does not render legal, accounting, or tax advice. If you require such advice, you should contact the appropriate legal, accounting, or tax advisor. The information and statistics in this magazine are from sources believed to be reliable but are not warranted by CAPTRUST Financial Advisors to be accurate or complete.

Performance data depicts historical performance and is not meant to predict future results.

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LIFESTYLE FEATURE

ACROSS GENERATIONS

by Kim Painter

Baby boomer Christeen Reeg doesn’t know a lot about TikTok or social media influencers. But she does have one thing in common with her four grandchildren, ages 13 to 18: “We all love to dance.”

That’s why Reeg, a CAPTRUST financial advisor based in Folsom, California, says she converted her garage into a dance club, equipped with a big-screen TV, lighting, and karaoke equipment. She dances with her family every chance she gets.

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Lifestyle Feature | Summer 2023

Research suggests Reeg is on to something. Older adults who build meaningful bonds with younger people, whether in their families, workplaces, or communities, live longer and happier lives. In fact, one long-running Harvard study recently found that social connection is the strongest predictor of well-being as we age. Bonds with younger people are particularly powerful happiness boosters, the research shows.

“Connection of any kind counters loneliness, which is especially common among youth and older adults,” says Kasley Killam, founder and executive director of the nonprofit Social Health Labs. Loneliness in older adults is linked with dementia, heart disease, and premature death, according to the National Institute on Aging.

Connecting with younger people is “a chance to be in touch with where the world is going” and to feel a greater sense of purpose in that world, says Katharine Esty, an 88-year-old psychologist and author of the book Eightysomethings. But to bridge the gaps, it helps to understand more about who is on the other side.

Beyond Bashing Baby boomers were once viewed as being too revolutionary. Gen Xers were slackers.

Millennials were entitled. And today’s young adults, members of Gen Z, are often branded as overly sensitive snowflakes, writes Megan Gerhardt and her colleagues in their recent book Gentelligence: The Revolutionary Approach to Leading an Intergenerational Workforce.

A few years ago, Gen Zers hit back with the “OK, boomer” retort to dismiss “older people who just don’t get it,” The New York Times reported. Gerhardt, also a Miami University business professor, says this type of generation bashing is downright unproductive, pushing people farther apart instead of helping them find a middle ground.

But understanding how each generation is different and unique can help people build stronger social ties, says Roberta Katz, a senior research scholar at Stanford University and co-author of Gen Z, Explained: The Art of Living in a Digital Age. The book is based on interviews, surveys, focus groups, and social media posts from teens and young adults born after the mid-1990s.

The young people who Katz and her colleagues spoke with when writing the book pushed back on the idea that they are fragile, coddled, and unable to deal with the world beyond their phones, she says.

Everyone who is alive today is experiencing the same technological and social upheaval, says Katz. “The difference is that’s the only world Gen Z knows. And we don’t know what the world looks like from their vantage point. We assume we do because we were young once, but we don’t really know.”

People born into Gen Z—that is, between 1997 and 2012—are “burdened by what feel like existential threats to their future,” such as climate change and school shootings, Katz says. They are wary of authority and hierarchy, something their schools and employers are grappling with. But, she says, they are eager to work collaboratively to solve the world’s problems.

They also are less glum than generally thought, says Sophia Pink, a 26-year-old doctoral student at the University of Pennsylvania’s Wharton School of Business. As an undergraduate at Stanford, Pink spent a summer interviewing fellow 21-year-olds around the country and learned that “they were pretty optimistic about their own lives and their own plans,” even as they despaired for the wider world.

It is true, Katz says, that younger people spend a lot of time on their phones. They can be impatient when older people don’t understand or follow their digital ways—for example, when their parents or grandparents send emails and leave voicemails although a simple text would do. But, she says, they do crave meaningful connections with others, including older people in their lives.

Reeg says she’s learned exactly that by spending time with her grandchildren. “If I have one of my grandkids in the car with me, and they’re looking at their phone while I’m talking, I just want to scream, take the phone, and throw it out the window. But I’ve learned that they can multitask better than we ever could.

And actually, they are listening.”

There’s some truth to the idea that younger and older people “live in different worlds” and “speak different languages,” says Esty. Misunderstandings and hurt feelings can go both ways, she says. “Older people can feel ignored and not taken seriously,” just as younger people can.

Understanding how each generation is different and unique can help people build stronger social ties.

But overcoming these barriers is worth it.

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GENERATIONS, DEFINED

The most widely used names and dates for each generation come from the Pew Research Center. Here’s how Pew defines and describes six American generations: •

Gen Alpha: Ages 10 and under, born after 2012.

They are still young, but so far, children of this generation seem solitary, self-sufficient, and technologically proficient.

•

Gen Z: Ages 11 to 26, born 1997-2012. The most diverse generation and the first to grow up in an always-on technological environment.

•

Millennials: Ages 27 to 42, born 1981-1996. The largest living U.S. age group, they remember the 9/11 terrorist attacks and entered the workforce during an economic downturn.

•

Gen X: Ages 43 to 58, born 1965-1980 during a dip in birth rates. These individuals grew up during the first computer revolution and experienced lingering effects from the global financial crisis.

•

Baby Boomers: Ages 59 to 77, born 1946-1964. They were first to grow up with TVs in their homes and experienced a countercultural revolution. As of 2020, more than half were still in the workforce.

•

Silent Generation: Ages 78 to 95, born 1928-1945.

These are the children of the Great Depression and World War II, known for their civic-mindedness.

•

Greatest Generation: Ages 96 and over, born before 1928. This dwindling group won World War II and saved the world from multiple disasters.

Photo above: Christeen Reeg and her grandchildren

“Older adults have wisdom and experience,” Killam says. “The younger generation brings a fresh perspective.” And connecting across generational divides can bring a greater sense of happiness and purpose for people of all generations.

Jumping the Chasm Sometimes, bridging generational gaps can be particularly challenging. For example, consider a family in which grandparents and young adults have become estranged from each other for any number of reasons. In these cases, it’s important to remember that big emotions tend to fade over time and that past hurts can be easier to resolve than most people expect.

The more common problem, Esty says, is that “people don’t make the effort.” Since the first steps are usually the hardest, it helps to make them small.

That might mean doing what many older people did for the first time during the pandemic: using Zoom and FaceTime to meet up virtually with family, friends, and colleagues. People were craving human connections and leaping over technological divides to make them, social scientists say.

Older adults who now play online video games, use apps to watch movies with faraway friends, 8

Lifestyle Feature | Summer 2023

or swap daily Wordle scores with their children and grandchildren have made similar leaps. So have those who’ve become avid texters—even if they do use more punctuation and fewer emojis than their younger contacts would prefer.

Reeg says she tries to text each of her grandchildren at least once a week. “I’ll go through pictures, and I’ll see a memory picture, and I’ll just send it and say, ‘Thinking of you.’”

But older adults should not feel obligated to use digital technologies they don’t like. “Be true to yourself, and if you hate it, then don’t do it,” Esty says.

Pink says younger adults do understand that not everyone wants to use text or video chat. That’s why she calls her own grandparents on their landline.

Likewise, older workers don’t have to adopt all the technological tricks and habits of their younger colleagues, says Marci Alboher, a vice president at CoGenerate, a group that focuses on bringing multiple generations together to do good work. But, she says, everyone benefits when they can share favorite tools, like Zoom, Google Meet, or WhatsApp.

Beyond Tech Tools Alboher says it’s wrong to assume that all younger people prefer texts and instant messages or that all older people prefer emails and phone calls. It’s better, she says, to ask. “If you are starting to

“

Be true to yourself, and if you hate it, then don’t do it.

Katharine Esty

”

work with someone or you’re joining a team, you can have a conversation about norms and preferences. You may expose yourself to some new communication styles, and you may find that people are suddenly more responsive to you.”

But don’t discount the value of a good in-person conversation.

Katz says, in her research, one revelation was that young people valued in-person interactions above all others. “They are very much about human connection,” she says. “They want to be seen, and they want to be heard, just like everyone else.”

When you have those conversations, she says, be sure to listen, not just talk. “Don’t be judgmental. Ask them about their lives.”

Sometimes, connecting with younger people means “stepping out of your own comfort zone” and getting past the way they are “dressed or groomed or adorned,” says Lauren Lambert, a CAPTRUST financial advisor based in Boston, Massachusetts, who has advised multigenerational households, mentored younger colleagues, and raised two millennial children. “It’s important to respect them and their struggles. You really have to listen to them and remember what it was like to be their age.”

REACHING OUT

Not all older adults have younger people in their lives. If you don’t have grandchildren, younger colleagues, or younger friends, here are a few things to consider: Formal matching programs. One program, Sages & Seekers, matches high school and college students with adults over 60 for online or in-person gab sessions. Another, a membership organization called CIRKEL, connects professionals from different age groups who want to share career advice.

Volunteering. Look for opportunities to mentor younger people or for causes that attract people of all ages, from knocking on doors for political campaigns to stocking the shelves at your local food bank.

Neighborhood outreach. If you have neighbors you don’t know well, invite them to a block party or a potluck meal. You could also organize a neighborhood walking group.

When you plan something, “be explicit that people of any age are welcome,” social scientist Kasley Killam suggests. With apps such as Meetup and Nextdoor, “it’s easier now to start those conversations,” she says.

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Second Act | Summer 2023

SECOND ACT

B O B M CC U TC H E O N

REOPENING T H E VAU LT

by Nanci Hellmich

At the peak of a successful corporate career, Bob McCutcheon of Pittsburgh, Pennsylvania, decided it was finally time to rerelease his artistic side and commit to his lifelong dream of owning a recording studio.

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In 2018, McCutcheon left his position as the U.S. industrial products and Pittsburgh office leader at PwC, one of the Big Four accounting and consulting firms, to turn his family hobby, The Vault Recording Studio, into a commercial venture.

As founder and president of The Vault, McCutcheon found the ideal track for his second act.

“I learned early on that I had an artistic, creative side to me,” he says. “In the world of art, it’s called creativity. But in the world of business, it goes by a different name. It’s called innovation. It’s your ability to see the abstract and bring it to life.”

The Vault is a place where people tap into their innovative sides.

“A recording studio is a magical place to be,” McCutcheon says.

“There’s a feeling you get seeing a project come to life. It’s rewarding. Musicians know it. They don’t often have time to spend in a studio, so when they do, they make the most of it.”

A Long Time Coming

recording arts is, technically, it’s art, not science, but there is a lot of science behind the physics of sound. It’s experimentation. If it sounds good, it is good.”

In 1991, he graduated from Robert Morris University, near Pittsburgh, with a double-major bachelor’s degree in business and finance. He chose those subjects because he wanted to run his own recording studio.

But instead, he landed a job with PwC and worked his way up the corporate ladder, enjoying every rung. “I realized I had an interest and a talent for business, accounting, and consulting. It was something I enjoyed. It happened to be an opportunity that was presented to me, and I took it.”

A couple of years after graduation, he met and married his wife, Dana. After their two children—Ryan and Brett—came along, McCutcheon’s daily time with music started to wane. He couldn’t juggle it all. “My hobby became almost nonexistent,” he says.

Many of McCutcheon’s life experiences laid the groundwork for where he is today.

He figured his musical aspirations had been a phase of his life that was going to fade. “I kept a lot of my gear, but my guitars were in the closet collecting dust.”

As a child, he pretended to be Glenn Campbell while strumming a toy guitar. In high school, he got a real guitar and played classic rock music in a band. He worked his way through college recording other artists’ music in his first recording facility, Alternative Studios, which he built in his mom’s garage.

McCutcheon says his career fulfilled him, so he was comfortable letting music fall to the back burner. “The firm offered me the ability to change jobs every couple of years. I was never doing the same thing twice. I was always able to innovate and find new and interesting things to do.”

Although he didn’t have formal training, he learned by trial and error. “A lot of it was experimentation,” he says. “The beauty of the

But when his boys started to show an interest in music, his passion was rekindled.

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Second Act | Summer 2023

Bob and Dana’s younger son, Brett, began taking piano lessons at age four.

Later, Brett took up the saxophone and drums, started writing and recording music, and created his own YouTube channel.

Ryan found a passion for drums. He was drum captain in his high school marching band and played in a rock band in college.

As a way to spend time with them, McCutcheon built a small studio in their home, and the family played and recorded music together.

In 2016, on a flight home from Europe, he was flipping through the in-flight movie choices and stumbled on a documentary about the history of Sound City Studios in California. “It brought everything back,” he says.

“I got off the plane, and thought, I’m in a position where I can do this now.

Why am I not doing it?”

This was his aha moment. Finally, the time was right to do what he had always wanted.

Because of his role at PwC, McCutcheon knew how to conduct in-depth studies of different companies. “To serve my clients, I had to understand their industries,” he says. “My approach to starting the studio was no different. I studied the industry to learn about it.”

Once he felt he’d done enough research, McCutcheon wrote a plan, purchased an old bank building on Neville Island near Pittsburgh, and hired a firm that specialized in designing high-end recording facilities.

“At the time, it was still a personal studio project,” he says. “I was going to do my own recording on the weekends and evenings, but I knew I wanted to build it to commercial studio standards.”

The McCutcheon family funded the studio themselves. It was a passion project for all of them. In 2016, construction was complete, and The Vault was born, taking its name from the old bank vault in the basement of the building.

But he was still working in his corporate roles. “I was as busy as I had ever been with the firm. But we enjoyed the studio on the weekends with bands that I knew and with the kids. We were having fun doing recordings.”

Then, tragedy struck.

Loss and Clarity In September 2017, Ryan, 19, was killed in an automobile accident while returning to his college campus after a long day assisting high school drum students at a local band festival.

“The best we can tell is that he fell asleep at the wheel,” McCutcheon says.

“Everything was turned upside down in a heartbeat. Everything just froze.”

McCutcheon took several months away from the firm. “I started to question what I wanted to do and what was important in life. It probably took me a year or so to assess where my heart was,” he says.

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“

The things I value are very different now. You realize it’s about relationships. It’s about community. It’s about family.

Bob McCutcheon

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Second Act | Summer 2023

”

The loss changed him. “I just don’t look at things the same way I did prior to that. It was a defining moment. The things I value are very different now. You realize it’s about relationships. It’s about community. It’s about family.”

In December 2018, he retired, determined to spend more time with Dana and with Brett, who was still in high school. To cope with their loss, the McCutcheons found ways to give back to the community, often via music, with Ryan in mind.

The family established the Ryan McCutcheon Rhythm19 Fund with The Pittsburgh Foundation to support children’s love of music in a variety of ways. “We are keeping Ryan’s memory alive,” Dana says. “We mention Ryan’s name every day.”

Pumping Up the Volume Trying to get back on track after the loss of their son was difficult. “We had just started The Vault label,” McCutcheon says. “It was hard to reenergize.”

He began expanding the studio beyond a small family affair to a world-class recording facility. Although Brett and Dana are still intricately involved in The Vault, McCutcheon also hired a roster of world-class producers and engineers.

One big step was the addition of Grammy Award-winning Jimmy Hoyson—who had previously worked with Michael Jackson, Eric Clapton, B.B. King, and other famous artists—as the studio’s chief engineer.

Hoyson told McCutcheon, “If you want to play big, you should find a Neve recording console.” And McCutcheon agreed.

“Anybody who knows anything about vintage gear would love to get their hands on a Neve,” he says. “It offers such a warm, punchy vintage sound.”

They figured it would take 12 to 18 months to find one, but they hit the jackpot when, just a few weeks later, they discovered a restored Neve 8058. Later, they learned it once belonged to George Harrison of the Beatles.

McCutcheon’s goal for The Vault is to provide opportunities and services for those who are trying to make a living in the world of music. In the past five years, he estimates that hundreds of artists, many from Pennsylvania, Ohio, and West Virginia, have worked in the studio, including Chris Jamison, who finished third on NBC’s The Voice.

“When we first opened the studio, most days, I was the only one in the building,” McCutcheon says. “Now there are people walking in the halls every day.”

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“

I learned early on that I had an artistic, creative side to me. In the world of art, it’s called creativity. But in the world of business, it goes by a different name. It’s called innovation.

Bob McCutcheon

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Second Act | Summer 2023

”

REMEMBERING RYAN Bob, Dana, and Brett McCutcheon created The Ryan McCutcheon Rhythm19 Fund with The Pittsburgh Foundation in memory of their son and brother who died in a car accident at age 19.

The purpose of the fund is to support children’s passion for music by hosting field trips to The Vault Recording Studio, as well as hosting a summer music camp where students learn how to write, record, produce, release, and market a song.

“The Rhythm19 Fund is an integral part of what we are doing,” McCutcheon says.

“It’s giving us all purpose and bringing us together as a family. It’s giving back,” Dana adds.

Brett, now 21, and his friend, June Bracken, wrote five songs about the stages of grief. He composed the music; she wrote the lyrics.

The songs will be released in an extendedplay format as The Ocean, with proceeds going to the fund. “The whole thing is an allegory for the grieving process and how the ocean moves and acts like the stages of grief,” Brett says.

In his father’s words, “It’s an emotional roller coaster of a musical piece. It demonstrates how he has felt as a young teenager going through the grief process.

And he’s found just a beautiful way to express that through music and then turned the project into something that can raise awareness for others. We’re really proud and excited about it.”

For more information, go to pittsburghfoundation.org/ ryan-mccutcheon-rhythm19-fund

The Vault is drawing impressive professionals in sound engineering to build a powerful roster of producers.

About half a dozen independent engineers and producers work out of the facility, as does McCutcheon, who also produces and engineers music.

Does he think The Vault has a chance to discover a breakout artist with a hit record? “That’s not why we do what we do,” McCutcheon says, “but it would be nice to have.”

“In the back of your mind, you hope it’s something that’s going to happen,” he says. “I’m surrounded by people who have had that happen multiple times. It just hasn’t happened from this building yet. But having these people here increases our odds.”

McCutcheon says he learned early in his career that successful people surround themselves with good teams, so that’s what he has done at The Vault.

Financially, the studio is self-sustaining, he says. “But I’m not getting rich doing this, and I’m not using this to support my family, which it was never intended to do.

Even when it is making money, I’m putting that money back into the business. I’m funding my passion.”

Continuing to Grow The McCutcheons recently renovated a second property, an old gas station across the street, to use as a multipurpose facility for charitable events, plus camps and other activities for students who want to learn about the music industry.

McCutcheon says he hasn’t had any doubts about his decision to open The Vault. “One of the things that I’ve learned throughout my career, and to be honest, solidified in my mind after the passing of my son, is that your passions define the core of who you are.”

“I feel fortunate that I had a clear understanding of what my passion was,” he says. “Then, I had a life event that made me slam on the brakes and question what I was going to pursue. I decided I was going to pursue what I was passionate about.”

“I wouldn’t say that my journey went according to plan,” he says. “But it’s ironic that things have completely turned around, and here I am after my retirement, still doing what I originally wanted to do.”

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PASSION PURSUITS

SUMMER AND FALL

by Jeanne Lee

Sticky and dark, jammy and seedy, homemade fig preserves are a mouthwatering joy, whether spread on a warm biscuit, paired with a soft cheese, or baked into the signature cake of Ocracoke Island, part of North Carolina’s Outer Banks.

“They’re a real treat,” says Andrea Weigl, author of Pickles and Preserves.

An avid home canner for more than 15 years, Weigl goes to great lengths to acquire a stock of ripe fruit to make preserves every summer. Figs are expensive and can be difficult to find in large quantities. Plus, fresh-picked figs beat store-bought figs any day.

“In the South, fig trees are plentiful, but many people don’t know what to do with them,” she says.

“Until recently, my octogenarian neighbor and I would stalk the fig trees in our neighborhood,” she says. Each day, her late friend Ralph, a master gardener who lived across the street, would track the ripening of each neighbor’s trees—people who were obviously not picking their figs. When the branches were heavy and laden, he would text her: “Lilian’s trees are ready to be picked,” or “The Moody’s fig tree is looking good.”

Of course, their neighborhood fig watch was polite. “We always asked permission,” says Weigl. Once they had it, they’d pick figs by the pound and freeze them at peak ripeness. Later, Weigl would methodically process them in her water bath canner, turning them into lovely jars of luscious preserves.

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Passion Pursuits | Summer 2023

Sadly, her partner in figs passed away earlier this year. Weigl says she misses Ralph terribly, but the jars that line her shelves are full of beautiful memories.

Bittersweet Longing Home canning is an almost-magical process that turns humble fruits and vegetables into delectable treats that far outshine mass-produced jellies and pickles. Canning, pickling, and fermenting have surged in popularity with a new generation of foodies who didn’t necessarily grow up with these kitchen skills but delight in acquiring them. The homely acts of washing, chopping, simmering, and stocking a pantry can be a balm for the mind at a time when news reports are filled with calamities.

“I see, within myself and my peers, this nostalgia for the homemaking skills that our grandmothers and mothers had. We want to master these skills, not out of necessity but just out of the desire to have them,” says Weigl. She recalls a similar resurgence of interest in food preservation as a hobby around 2008, when mass anxiety about the markets and economy spurred a desire to get back to basics—to plant gardens and make pickles from seasonal fruits and vegetables.

“I do think canning is having a moment, probably related to the pandemic when we were all stuck at home, looking for things to do, and wanting to be selfsufficient,” says Weigl.

Pickles & Preserves by Andrea Weigl.

Photo credit to UNC Press

A Healthy Connection with Food Nikki Evers, a real estate agent in Folsom, California, makes her special salsa from jalapenos, bell peppers, and onions and gives it to her friends and family. She grows her own peppers, then enhances their goodness by fermenting them in a salt and water brine. “The natural lacto-fermentation process cultivates good bacteria,” says Evers. She puts her salsa on eggs or in salad dressing. “It’s really good for your gut health because when you eat it, you introduce healthy microorganisms into your system.”

The homely acts of washing, chopping, simmering, and stocking a pantry can be a balm for the mind at a time when news reports are filled with calamities.

Nikki Evers in her kitchen

While Evers’s mother, aunts, and grandmother all knew how to preserve food, Evers didn’t become a canning and fermenting enthusiast until she was in her 40s and faced some troubling health issues. A marathon runner who had always been a healthy eater, “I started to get sick with stomach issues, inflammation, and achy joints,” says Evers. She found it puzzling that her doctor’s prescription medications couldn’t quell her bothersome symptoms. In fact, they didn’t resolve until she committed to some major changes in her style of eating.

A self-proclaimed “food nerd,” Evers began reading everything she could find about the science of gut health and the nutrients in organic, heirloom vegetables. “I wanted to have a direct relationship with my food.”

Evers's vegetable harvest

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She began to grow much of her family’s food herself on their 10 acres. The large garden she has developed is both her dream and her salvation. Learning to grow and preserve tomatoes, peppers, cabbage, and other vegetables from her own land has given her the ability to eat healthy and seasonal foods all year round.

Each year, she looks forward to starting her seedlings indoors in winter, using grow lights. By mid-March, she’ll have 320 plants in her house. “It’s very satisfying to have a little seed that I planted in a container in my house, then put it in ground when the season allows,” says Evers.

“From July to September, I’m in my garden for two hours every morning,” says Evers. “I bring in the vegetables I’ve harvested, and that determines whether I’m going to can tomatoes or do fermenting that day. I’ll can and preserve in the evenings, making sure the vegetables don’t sit too long. Even if you have a small backyard, you can still plant a garden and benefit from growing your own food.”

Getting Started Most beginners do what’s called water bath canning, which is a safe method for processing foods with high acid content. This includes most jams, jellies, pickles, and chutneys. These recipes typically include an acid, such as vinegar or lemon juice, and are brought to a boiling temperature to eliminate any potentially harmful bacteria.

Low-acid foods, like meats, poultry, or soups, require a more advanced method that uses a pressure canner to reach temperatures of 240 degrees or higher. You can find detailed information on food safety and canning methods by searching

for the words home canning on the Centers for Disease Control and Prevention (CDC) website.

As a general rule though it’s always safest to use tested recipes from reliable sources because old-fashioned recipes aren’t always up to modern food safety standards. For example, a family recipe from generations ago may call for sealing jars with paraffin, but this material can develop pinholes and let bad bacteria in, says Weigl.

Water bath canning requires some basic equipment: •

Pint- or quart-sized canning jars, such as from Ball, Anchor Hocking, or Weck

•

Canning lids

•

A water bath canner—essentially a large, deep pot with a lid and a rack—available at suppliers like Ace Hardware or Walmart and often packaged in a kit together with other essential tools

•

A rack and dividers for holding the jars

•

Tongs for placing and lifting jars

•

A funnel for filling jars

•

A small ruler

An easy first canning project is homemade strawberry jam. The Ball brand offers a low-sugar strawberry freezer jam recipe on its website at ballmasonjars.com, and numerous other beginner recipes are available online. “It’s the perfect entry point for lots of people. Homemade strawberry jam is 10 times better than anything at the store, and it’s a fleeting fruit,” says Weigl.

TRUSTED HOME CANNING RESOURCES Websites: •

Visit ballmasonjars.com for a helpful beginner video on raspberry jam, and find many tested recipes.

•

Find info for beginners from the National Center for Home Food Preservation at nchfp.uga.edu.

Books: •

Food in Jars: Preserving in Small Batches Year-Round, by Marisa McClellan

•

Pickles and Preserves: A Savor the South Cookbook, by Andrea Weigl

•

Put ’em Up!: A Comprehensive Home Preserving Guide for the Creative Cook,

by Sherri Brooks Vinton

Scan this QR code with your mobile device camera for a beginner’s guide to canning food.

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Passion Pursuits | Summer 2023

PLANNING FEATURE

WHO I S YOUR

FINANCIAL ALLY?

by Nanci Hellmich

In 2022, more than 2.4 million people became the victims of financial fraud, losing a total of nearly $8.8 billion, according to the Federal Trade Commission. People of all ages lost money, but the amount was highest for people over 50, and it increased in correlation with the victims’ ages. In other words—and not surprisingly—as we age, we are more likely to be taken advantage of financially.

This is a problem that Marti DeLiema, a University of Minnesota researcher, has spent years trying to solve. In her research, DeLiema surveyed and interviewed thousands of older adults and heard stories about losses ranging from $50 to millions of dollars in scams perpetrated over the phone, through email and social media, and on the internet. Some of the worst ones involved investment-romance scams, in which schemers acted romantically interested in their victims.

In one scenario, the con artist talked about how he “just made half a million dollars in a crazy new coin offering on a crypto exchange.” He was charming and flirtatious, offering to share the opportunity with the other person, DeLiema says. They had multiple long conversations. But it seems he had the same conversations with numerous people.

Victims sent money, and “when the scam finally unraveled, the older adults had lost thousands of dollars, as well as a person they had a deep romantic connection with. It’s a double whammy of

pain,” says DeLiema, an interdisciplinary gerontologist and an assistant professor in the School of Social Work at the University of Minnesota, Twin Cities.

Enlisting a financial ally, often a family member or close friend, could be the best defense against these attacks and other fiscal missteps, DeLiema says.

A financial ally, sometimes called a financial advocate, is someone who assists you in managing your financial responsibilities, like paying bills and taxes, filing insurance claims, monitoring retirement accounts, and applying for government benefits.

Financial allies can run interference on other potential problems as well.

“There are many examples of financial exploitation or abuse by people who misuse an older person’s debit and credit cards, forge signatures, improperly transfer property, or change beneficiary designations,” says DeLiema.

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Almost everyone knows at least one friend or family member who has experienced identity theft or financial fraud. In the investmentromance scam, a financial ally “might not have stopped the first $1,000 from leaving the account, but they could have prevented the deeppocket losses,” DeLiema says.

An ally could be a spouse or partner, an adult child, a grandchild, a niece or nephew, a close friend, a fellow church member, or a paid professional, such as a trust officer, attorney, or accountant. Generally, this should be someone you have known for a long time and are sure you can rely on to make good decisions.

“Your ally is someone you can depend on to have your best interest at heart,” says John Keeton, a CAPTRUST financial advisor in San Antonio, Texas. “You can lean on them to help you make wellinformed decisions. This sets the groundwork for your ally to take on more responsibilities if you start to lose interest in decision-making or experience some cognitive decline.”

Cathy Seeber, a CAPTRUST financial advisor in Lewes, Delaware, agrees. She says many advisors will ask clients to name a trusted contact in case questions arise and the client is unreachable or seems to need financial intervention.

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Winter | 2023 Planning Feature | Summer 2023

Similar to a financial ally, a trusted contact is someone your financial institution is authorized to communicate with if you’re unavailable. “Ideally, this contact will have a close relationship with your financial advisor, who is often the first one to notice unusual transactions or behaviors,” Seeber says.

Selecting the Right Person Although some people remain financially sharp as they age, many will experience some cognitive decline, dementia, or an illness that impacts their ability to make critical choices.

And those who don’t are still at risk of financial mistreatment, as new methods of money transfer; new markets, such as cryptocurrency; and new types of communication technology allow scammers to target thousands of people simultaneously.

To help people navigate these issues, DeLiema and her colleagues created the Thinking Ahead Roadmap, a website and booklet, which provides a step-by-step guide to keeping money safe as you age. One of its strongest recommendations: Identify a financial ally by the time you retire, or sooner.

“

A small group of people working together can also reassure other family members and friends that decisions are being made in the individual’s best interest.

Cathy Seeber

”

When it comes to selecting the best candidate, people often automatically select their spouse or partner as a first choice because they believe that person understands their finances and will put their needs first. But because of the likelihood of serious health issues or the loss of a partner, DeLiema recommends that everyone choose a backup ally as well—someone who is organized and reliable. This should be someone you’re comfortable being honest with and who will listen to you.

At first, the person might play a consulting role and offer guidance only when asked. In these early stages, they can act as a sounding board and provide assistance if you think you’ve been the victim of fraud or exploitation. Your ally can then assume additional responsibilities over time as their competence grows and as they become more familiar with your financial situation.

However, unless you give them legal authority via a financial power of attorney (POA), they will not have the power to act on your behalf. A financial POA is a legal document that gives someone the right to make decisions about your money and property. DeLiema suggests preparing a POA document early on but signing it only when you think you need regular assistance with daily tasks, such as paying bills and taxes and monitoring investments.

It’s a lot of responsibility, so you want to select the right person to take the driver’s seat at the right time, instead of leaving things to chance.

“If you don’t make a decision, you may be manipulated into giving power of attorney to a child who should never be trusted with money,” DeLiema says.

Most parents know which of their children they can rely on to make good financial decisions and which ones they think might try to cash in early on their inheritance, she says. In one interview, DeLiema says a woman told her that she clearly understood her adult son’s limited financial decision-making capabilities and her own responsibility to protect herself in light of them. The woman asked, “If he can’t take care of his money, how is he going to take care of our money?”

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POTENTIAL MISSTEPS

Sometimes people choose financial allies in a way that seems logical to them but doesn’t always lead to the best results. For example, you might run into problems if you choose: •

The oldest of your adult children instead of the best qualified;

•

The child who lives closest instead of the one best suited for the work;

•

Everyone in the family to avoid hurt feelings while leaving it unclear whom you want to be in charge; or

•

A spouse or partner who is close to your age without also naming a younger person who can step in when needed.

Navigating Family Dynamics Instead of choosing just one contact, some people choose to enlist two or more people as their financial allies, Seeber says. “It’s almost like having a personal financial board of directors.” A small group of people working together can also reassure other family members and friends that decisions are being made in the individual’s best interest, she says.

For example, Seeber knows one elderly woman who was experiencing short-term memory loss and turned over control of her finances to a son who lived nearby. But a second son, who lived farther away, was also given access to all her accounts so that he could keep an eye on transactions.

“This way, they share accountability,” Seeber says.

When one adult child is given the authority to supervise a parent’s finances, it can cause hard feelings between siblings. But there are ways to navigate these dynamics by giving everyone separate responsibilities, says Keeton.

For example, you might ask the most monetarily savvy adult child to take over your finances while calling on another to be responsible for healthcare issues and asking a third to plan family events, he says. “You can build a role for each child, based on their interests.”

DeLiema recommends bringing your family together to tell them about their potential roles in a single group discussion. This way, everyone will know the plan comes straight from you, reducing the risk of future disagreements about how you want your money managed and by whom.

She also advises walking your allies through your current accounts, assets, income, expenses, liabilities, and long-term goals.

Building the Foundation for Success Throughout the process, communication is key. Your ally will need guidance to understand and accomplish what you’re trying to achieve, says Keeton. “Think of the ally as the family’s chief financial officer. You may want to consider coaching your children to manage the family finances. And ideally, you would phase them into that role, not just give them the keys overnight.”

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Planning Feature | Summer 2023

A FINANCIAL INVENTORY

Creating a financial inventory makes it easier for your ally to assist you. Here is an overview of what you may want to include: Checking, savings, and credit card accounts Regular monthly and annual expenses Income tax returns Insurance policies Investment and retirement accounts Other sources of retirement income, such as Social Security, pension, and annuities Debts Safe deposit boxes or in-home safes Valuable personal belongings, such as cars, jewelry, art, and antiques Deeds, including those for real estate, rental properties, and vacation homes, and titles to all vehicles Email addresses, physical addresses, and phone numbers for professionals who handle your money Your last will and testament and any prepaid funeral arrangements Any trust documents Documents that grant medical or financial power of attorney

You can lay the groundwork when your children are young by teaching them about earning, spending, gifting, and saving, he says. Consider letting them use kids’ financial apps, like Greenlight, PiggyBot, or iAllowance, to organize their budgets and track their spending. “It’s a great way to develop financial awareness and acumen,” says Keeton.

Keeton recommends people introduce their financial ally to their financial advisor. Adult children can be included in financial planning sessions and tax meetings to show them what you’re trying to accomplish and how you think through big decisions, he says.

Some people are uncomfortable sharing financial information with others, including their children. “One fear I’ve heard is that people don’t want to disclose the scope of their wealth to their adult children out of fear that their children will choose to live a more lavish lifestyle or won’t pursue their own career goals knowing how much they are going to inherit,” DeLiema says.

Utilizing the services of a corporate trustee is an alternative option if you feel that your family members aren’t wellequipped to manage your estate. “This trustee will have a fiduciary responsibility to ensure that decision-making is aligned with your overall estate plan,” says Keeton. Eventually, your ally could become well-positioned to be the executor of your will, he says.

To make things easier for your ally, DeLiema recommends simplifying your finances as much as possible and creating an inventory of your income, debt, and other money needs. Keep this information in one place to make it easier for this person to assist you in the future.

Most people who have a designated financial ally say the arrangement gives them confidence and peace of mind. “For many people, it’s a huge relief not to have to manage their day-to-day financial matters when things become challenging,” says DeLiema.

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RANDOM GLEANINGS While making the Summer 2023 issue of VESTED, we came across some interesting factoids too good not to share.

MESOPOTAMIA The first known bond dates to 2400 BC in what is now Iraq. It guaranteed payment in corn, a popular currency of the period.

Source: Cummans, Jared. "A Brief History of Bond Investing"

PEN PALS Since 2020, pen pal programs have seen a resurgence in popularity.

Organizations like Project Pen Pal, Home Instead, and Global Pen Friends pair seniors with younger letter-writing correspondents to create bridges across generations.

DENIED

TOMATOES

In 2014, when Rachel Canning’s parents refused to pay her out-of-state college tuition, the 18-year-old sued them for $650 a week in financial support. The judge denied her request, citing both her age and the 529 college fund her parents had gifted her.

Source: U.S. Department of Agriculture

In 1975, 73 percent of American households were canning their own tomatoes. Today, although canning has declined, they’re still the most popular food to preserve at home.

PHISHING Coined in 1996 by hackers who sought to steal America Online (AOL) passwords, the term phishing refers to cyberscammers using online lures to fish for financial data from the sea of internet users.

DUTY-FREE Former billionaire and co-founder of the airport retailer Duty Free Shoppers, Charles Feeney exemplifies giving-while-living philanthropy, and he inspired the creation of the Giving Pledge. At 92 years old, with a goal to “die broke,” Feeney now has a lifetime giving total of more than $8 billion, bringing his net worth to under $2 million.

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Random Gleanings | Summer 2023

EXPERT ANGLE

ONLY THE

ESSENTIALS

by Roxanne Bellamy

In 1854, when Henry David Thoreau first published the now-famous Walden, the book sold only 300 copies and, by historical accounts, did not influence even one person to follow his example of moving to the woods for a simplified life. In the 170 years since, as Americans became routinely overwhelmed by modern life, Thoreau’s writings grew more popular. Still, few people followed in his footsteps.

Although Thoreau is inspirational, his actions are difficult to emulate. Most people cannot quit their jobs, give up most of their friends and possessions, and build a cabin in the woods with their bare hands.

Effortless: Make It Easier to Do What Matters Most. He says it’s natural for people to assume that the solution to feeling overwhelmed is to escape, do less, or become more efficient. His philosophy, essentialism, rejects those options.

What they can do is simplify the patterns of their lives to make things more manageable and meaningful. This is something Greg McKeown has studied extensively for more than a decade.

“Essentialism isn’t about getting more done in less time, and it doesn’t mean doing less for the sake of less,” says McKeown. “Essentialism is about getting only the right things done. It’s about making the wisest possible investment of your time and energy in order to operate at your highest point of contribution by doing only what is essential.”

McKeown is a New York Times bestselling author of two books: Essentialism: The Disciplined Pursuit of Less and

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Creating Alignment The first step in becoming an essentialist is to determine your personal values and goals. Think of this as if you are writing a business plan for the next five years. Name your mission, vision, and core values. To begin, “Ask yourself, What is essential?,” McKeown says. “Then figure out what you need to say no to.”

Learning to say no strategically is a key tenet of essentialism. With almost limitless options for how to spend money and time, McKeown says it helps to remember that every choice also carries an opportunity cost. Each decision means shutting a door and making a trade-off. And that’s a good thing.

“Trade-offs are not something to ignore or avoid; they are something to embrace and explore,” says McKeown. By consciously accepting trade-offs, people can let go of nonessential distractions and focus on what truly matters to them. When there are fewer options available, it’s easier to create alignment between your daily actions and long-term goals.

This seems simple on paper, but it can be tricky in real life. For example, let’s say you’ve defined your values as family, faith, and self-care. A friend asks you to help organize a community litter pickup event on an upcoming weekend. You have nothing planned for those days. It’s a worthy cause, and volunteering is important to you. But it isn’t one of your essentials.

“

By saying no, you could create Essentialism is about getting only the right things done. time to do things that better It’s about making the wisest possible investment of your align with your essential values: taking a long walk with your time and energy in order to operate at your highest point grandchildren, for instance, or of contribution by doing only what is essential. simply writing a letter to a friend. Or you could say yes, Greg McKeown bring your grandchildren along, and use the physical activity that litter pickup entails as a form of exercise and self-care for the day.

”

How do you know which is the correct response? “If it isn’t a clear yes, then it’s a clear no,” says McKeown. In other words, follow your gut.

“Nonessentialists get excited by virtually everything and thus react to everything,” McKeown says. “But because they are so busy pursuing every opportunity and idea, they actually explore less.” Essentialists commit to deep exploration of what McKeown calls “the vital few” versus “the trivial many.”

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Expert Angle | Summer 2023

By Design, Not Default However, McKeown warns, because social expectations encourage busyness, multitasking, and hyperproductivity, even people who know their vital few can get distracted over time by exciting but nonessential opportunities. That’s why the next step is so important.

Essentialists don’t just commit to the essentials.

They structure their daily lives around them.

“To get it right, we have to build essentialism into the design of our lives so that we make it easy for ourselves to prioritize what matters to us, instead of having somebody else decide what we will prioritize,” says McKeown. This means breaking ingrained patterns to live by design, not by default.

For McKeown, play and sleep are two key examples. While the nonessentialist often gives up play and may sacrifice a few hours of sleep to be more productive, essentialists know that play and sleep are necessary to reach their highest potential. So they set aside time each day for both.

“Routine is one of the most powerful tools for removing obstacles,” says McKeown. “Without routine, the pull of nonessential distractions will overpower us. But if we create a routine that enshrines the essentials, we will begin to execute them on autopilot.”

Regardless of what your essentials are—work, travel, fitness, time outside, improving your community, learning a new skill, or more— building your schedule around these priorities will help you keep focused and accomplish what really matters to you. “Almost everything is noise,” McKeown says. “Only a few things really matter.”

SAYING NO WITH GRACE

For beginner essentialists, it can be difficult to reject opportunities. As McKeown says, “We need to learn the slow yes and the quick no.” Here are just a few ways to say no with grace: •

Insert an intentionally awkward pause before giving your answer.

•

Give a soft, short-term no that includes a long-term maybe. For example, “I have other commitments right now but might have time in a few months.”

•

Say no with humor.

•

Renegotiate the terms. For instance, if a friend asks you to keep her dog while she’s out of town, you might say, “I’d be happy to stop by and check on him after dinner each night.”

•

Deflect. “I can’t do it, but X might be interested.”

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INVESTMENT FEATURE

BONDS:

A COMEBACK STORY

by Sam Kirby, CFA

Comebacks are not a new phenomenon in financial markets. In fact, a souvenir of one of the greatest comebacks in corporate history might be in your pocket right now: the iPhone.

In the mid-1990s, after a string of product failures, Apple teetered on the brink of bankruptcy. But in 1997, one of the company’s founders—the legendary Steve Jobs, who had been ousted a decade earlier because of internal conflict— returned to the company and launched what has become an almost unbelievable story of resurgence.

As shown in Figure One, the investment result has been astounding. Over the past 23 years, the market capitalization of Apple alone has eclipsed that of the entire Russell 2000 Index. To wrap your head around the size of this rebound, consider this: $1,000 invested on the day before Steve Jobs’s return as interim CEO in 1997 would now be worth more than $1,000,000.

Fast forward to 2023, and it’s not just one company or security that is standing on the brink of revival. Rather, it is broad swaths of the largest and most liquid investment asset class: the bond market.

30

Investment Feature | Summer 2023

Figure One: Apple’s Market Capitalization vs. the Russell 2000 Index $10,000

$ Billions, Log Scale

$1,000

$100

$10

$1 2000

2002

2004

2006

2008

Apple

2010

2012

2014

2016

2018

2020

2022

Russell 2000 Index

Sources: Bloomberg, CAPTRUST

The Bond Market Slump Following the first back-to-back negative annual returns for core bonds since the inception of the Barclays U.S. Aggregate Bond Index in 1976, conditions now seem ripe for a rebound.

Core bonds are experiencing positive returns so far this year.

But even more promising is the view that today’s significantly higher yields, coupled with the added potential for price appreciation, have increased the prospects for future returns more than at any other time in recent history.

Several factors weighed on markets last year, including an inflation shock and the Federal Reserve’s aggressive policy response. Inflation plays a major role in the bond market because it erodes the purchasing power of fixed income payments and can drive real yields—that is, the income from bonds after adjusting for inflation—into negative territory.

To fight inflation in 2022, the Fed acted forcefully, raising the fed funds rate a total of seven times, from 0 percent to

4.25 percent. This was followed by three more hikes in the first half of 2023, bringing the rate to 5 percent, with the potential for further increases.

While stocks were impacted in this rising-rate environment, it was bond investors who were most surprised by the setback.

Core U.S. investment grade bonds, for instance, suffered a 13 percent loss, their worst return since the inception of the Barclays index.

Here, it is important to note that bonds offer two distinct sources of return: coupon payments and the potential for price appreciation. While coupon payments represent a steady source of income until a bond matures—assuming the issuer does not default—the price of a bond adjusts continuously based on prevailing interest rates.

For an investor who holds a bond to maturity, these price fluctuations are irrelevant. However, they’re an important piece of understanding the total return of a bond.

KEY TERMS •

A coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from the issue date until maturity.

•

Price fluctuations refers to the increase or decrease in the market value of the bond, based on prevailing interest rates.

•

Total return represents the combination of coupon payments and price fluctuations.

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The Opportunity

Bonds and Fed Tightening Cycles

Compared to the past decade, when yields were exceptionally low, the income generated by bonds now provides a more substantial cushion to counterbalance price declines caused by rising rates. Today, intermediate investment grade corporate bonds yield approximately 5.5 percent, up from 2.4 percent at the end of 2019.

The rate-hiking cycle that began in March 2022 represents the fastest and most aggressive move by the Fed since 1981. However, a significant distinction exists between now and then. While the fed funds rate was 16 percent at the start of the 1980s hiking cycle, it began 2022 at 0 percent. Essentially, the Fed’s tightening policy has begun to normalize interest rates amid its ongoing battle against inflation. This process of normalization has created a wide range of scenarios that could benefit bond investors through both higher yields and greater potential for price appreciation.

This means that even if interest rates continue to rise gradually, bond yields have a much better chance to offset price declines, making a repeat of steep 2022 losses less likely in the near term.

Additionally, the current rate environment has improved the risk-reward trade-off for bonds compared to stocks. When corporate bond yields were below 3 percent, as was the case for most of the 2010s, even conservative investors seeking income had to explore alternative options. This led to a phenomenon known as there is no alternative (TINA), prompting many people to invest in stocks. However, with bonds now offering robust yields that exceed inflation, the mantra has shifted to there is now an attractive alternative, or TINAA. The takeaway: Despite continuing economic uncertainty, bonds may now represent a more compelling opportunity than they have in years.

Recently, investors have grown anxious that higher rates, among other economic challenges, will push the U.S. into a recession. When anxiety grows about the state of the economy, investors tend to seek safe-haven investments and often flock to Treasury bonds. Higher demand for Treasurys drives their yields lower but their prices higher—a pattern that has repeated itself across previous hiking cycles.

As shown in Figure Two, bond returns are typically subdued during hiking cycles, with short-term bonds and Treasury bills outperforming longer-maturity bonds because they can be swiftly reinvested in the rising-rate environment. The left chart illustrates the combination of low initial yields and aggressive rate hikes. Since 2022, intermediate-term U.S. Treasury bonds have lost nearly 7 percent, while short-term (1 to 3 month) Treasury bills have shown positive returns of 3 percent. Adding

Figure Two: Treasury Total Returns during and after Hiking Cycles

Sources: Bloomberg, CAPTRUST

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Investment Feature | Summer 2023

to investor pain is the elevated level of inflation, represented by the red horizontal lines. This dynamic could compel investors to concentrate their bond investments in shorter-term securities like Treasury bills or even money market funds.

However, history shows a significant shift once the Fed’s hiking cycle is over. The right chart illustrates this trend. When the Fed maintains steady rates or begins cutting rates, it can trigger a bond rally that benefits longer-duration bonds, resulting in substantial price increases for those bonds.

Strategies for Investors With money market funds now yielding 5 percent, investors may be tempted to load up on short-duration bonds to take advantage of these high yields with little or no price risk. This is particularly true given the current inverted yield curve, a relatively uncommon phenomenon when shorter-maturity bonds provide higher yields than bonds with longer maturities.

However, as with any investment strategy, there are risks in overconcentrating on any single type of investment, even safe, short-term Treasurys. Specifically, such investors face reinvestment risk—the risk that when a bond matures, interest rates may be lower than when it was bought, forcing the investor to reinvest at a lower yield.

There are three primary strategies bond investors can use to take advantage of attractive short-term yields while constructing a durable portfolio that is well-positioned for a range of potential future environments.

•

•

•

A barbell is a tactical strategy that pairs bonds at different ends of the maturity curve—that is, both short- and long-term bonds. A barbell strategy represents a compromise, providing investors with the benefits of low-risk, higher-yielding short-term securities plus the lower reinvestment risk of longer-term bonds. If recession fears rise and investors rush to safe-haven assets, such as 10-year Treasurys, the barbell strategy could provide an effective hedge against risk.

A bond ladder is a portfolio of bonds with staggered maturities. This serves to mitigate reinvestment risk and smooth out yield fluctuations. As bonds mature, the cash returned can be reinvested at the end of the ladder, allowing the investor to benefit if rates have risen. But even if rates have fallen, the investor can still benefit from earlier rungs on the ladder that retain higher yields. In addition, bond ladders can be structured to generate a consistent monthly income stream.

Sector diversification across different bond categories is another way to enhance portfolio resiliency and tap into the potential for attractive risk-adjusted returns. However,

navigating some corners of the fixed income market can be challenging due to nuanced risks and often hard-to-access information. Institutional-quality active managers with specialized expertise and resources may represent the best way to access these more specialized sectors.

As interest rates normalize from artificially low levels, the bond market seems well-positioned for a triumphant return. However, this does not mean investors can simply choose a bond strategy and then set it and forget it.

A wide range of dynamics will influence the fixed income landscape in 2023 and beyond. A prudent approach to the new bond market means intentional diversification in terms of maturity, sector allocation, and management style that matches investors’ risk tolerance and time horizon. Fortunately, the enormous size and robust diversity of the bond market provides a variety of securities that can be employed to create a diversified strategy.

Investment success is rarely achieved by chasing opportunities and avoiding challenges. Instead, it requires creating a financial plan and a resilient portfolio prescribed by that plan to transform setbacks into opportunities.

Catching the Comeback Today, most people view Apple as a rousing success—both as an investment and as an innovator. But this doesn’t mean the business has not suffered its share of setbacks. For instance, consider the Newton, the Lisa, and the Pippin: devices that each presented a litany of faults, or perhaps ideas that were simply ahead of their time.

Yet companies, like people, should not be defined solely by their setbacks. And neither should investments. Many of us are familiar with the standard legal disclaimer used in investment advertisements: Past success does not guarantee future results.

But the opposite is true as well. Past failures are not certain to be repeated.

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NAVIGATING BOND CATEGORIES At approximately two-and-a-half times the size of the stock market, the bond market is, frankly, enormous. And it’s a highly diverse asset class. Each sector and subsector exposes investors to different risk and return dynamics that can serve as building blocks for portfolio diversification.

Below is a brief description of the major bond categories and their risk and return dynamics today. Note that these categories provide just a glimpse of the fixed income securities available to investors.

Treasury bonds: Bonds and bills issued by the U.S. Treasury are considered the safest and most liquid fixed income investments.

The liquidity component is vital, as it provides both security and dry powder available to investors to capitalize on market dislocations or short-term opportunities during times of market stress. One challenge with Treasurys lies in their reaction to interest rates and supply and demand dynamics, as they are assumed to carry no risk of default. Consequently, when market expectations for the path of future interest rates differ from reality, unexpected shocks can occur.

Investment grade corporate bonds: The high-quality corporate bond market has been buffeted by changing expectations about economic risks, future rate hikes, inflation, and economic growth. Recently, shrinking deposits have led to cracks in the banking system, causing credit spreads—the compensation that investors demand for default risk—to widen due to fears that bank stress may be just the first casualty of the Fed's tightening campaign. Nonetheless, investment into corporate bonds increased in early 2023, resulting in outperformance compared to Treasurys.

High yield bonds: Banking sector turmoil has already contributed to stricter lending standards. If this trend continues, it could lead to increased default rates among lower-quality

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Market Rewind Investment Feature | Winter | Summer 2023 2023

issuers. Selectivity and a deep understanding of company fundamentals are essential.

Municipal bonds: Even though 2022 was the worst year for municipal bonds since 1981, they still managed to outperform most other sectors. Currently, municipal bonds are seeing their highest yields in more than a decade. State and municipal bond issuers have benefited from improved revenue and credit quality, supported by a robust housing market and federal pandemic aid.

International bonds: International bonds faced similar challenges to U.S. bonds in 2022 as global central banks tightened monetary policy. Bond yields in Europe and Japan turned positive after a decade of hovering near or below zero. Investors in foreign bonds may benefit if the weakening trend of the U.S. dollar continues. Emerging market bonds usually perform well in rising-rate environments, offering higher yields and shorter durations. As inflation moderates and global central banks stabilize their policies, both confidence and capital could return to this category.

Bank loans: As banks grapple with deposit outflows into higher-yielding money market funds and Treasury bills, lending standards are likely to tighten, especially for higher-risk borrowers. Bank loans offer the advantage of a floating-rate structure. But if rates continue to rise, borrower stress may contribute to higher loan loss rates.

MARKET REWIND | RESILIENCE, PLUS A BOOST Over the past year, labor markets remained strong despite the Federal Reserve’s aggressive actions to slow the economy to combat inflation. This labor market strength has given consumers the confidence to continue spending, and the economy has continued expanding in response. In the second quarter of 2023, this economic resilience received an artificial-intelligence-fueled tailwind, sending stocks sharply upward.

• Despite dramatic surface-level success across large- and small-cap U.S. stock markets, under the surface, there has been extreme dispersion across market sectors. The technology sector soared ahead, while four sectors sit in negative territory for the year.

• While equity investors have cheered economic resilience, bond investors have been forced to raise their interest-rate expectations this quarter, putting downward pressure on bond prices.

• Outside the U.S., developed equity markets in Europe and Japan have enjoyed strong absolute results.

• Meanwhile, emerging market stocks have underperformed their developed market counterparts, weighed down by disappointing economic activity in China.

• Despite modest gains for the year, real estate uncertainty remains high, especially in the office and retail sectors.

• Commodities posted a second consecutive quarterly decline with both oil and precious metals prices sinking.

MARKET INDEX PERFORMANCE (as of 06.30.2023)

Commodities

U.S. Bonds

Real Estate

Emerging Markets Stocks

U.S. Small-Cap Stocks

Developed International Stocks

U.S. Large-Cap Stocks

16.9% 12.1%

2.1%

2.4%

5.1%

4.0% 1.0%

5.2%

8.7%

8.1% 3.2%

-0.8%

-2.6% -7.8%

Q2 2023

YTD 2023

LOOKING FORWARD We expect short-term market volatility as a higher debt burden for consumers, corporations, and the government may impact economic growth. Tighter lending standards and the Fed’s commitment to lowering inflation to 2 percent will likely add further pressure.

Also, geopolitical challenges persist, including war in Ukraine and slower-than-expected post-pandemic recovery in China. Given these uncertainties, we remain cautious in our portfolio positioning.

Asset class returns are represented by the following indexes: Bloomberg U.S. Aggregate Bond Index (U.S. bonds), S&P 500 Index (U.S. large-cap stocks), Russell 2000® (U.S. small-cap stocks), MSCI EAFE Index (international developed market stocks), MSCI Emerging Market Index (emerging market stocks), Dow Jones U.S. Real Estate Index (real estate), and Bloomberg Commodity Index (commodities).

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MONEY MINDSET

CULTIVATING FINANCIAL

INDEPENDENCE

by Roxanne Bellamy

The stereotype of the ambitionless adult child living in their parents’ basement is firmly entrenched in American culture. A less predictable scenario is the married college graduate with two children and an established career who still relies on their parents to help pay bills. Yet this is a reality for nearly half of parents from the baby boomer generation.

According to a savings.com survey, 45 percent of parents with adult children provide financial support for at least one child, regardless of whether the child lives at home. Many of these parents are making significant sacrifices to help their children. They’re buying investment properties for their kids to rent at prices below market rates, 36

Money Mindset | Summer 2023

withdrawing money from savings accounts to cover unexpected bills, and sending monthly allowances to help repay student loans.

The danger for some parents is that as their bank accounts dwindle, so do their chances of a secure retirement. In fact, the same study found that parents who are in the final decade before retirement are now providing the highest amount to their children—about $2,100 a month. The result: They’re depositing only $643 a month into their retirement accounts.

“As financial advisors—and fellow parents—it’s not our job to judge people for the way they spend their money,” says Joe Scarpo, a CAPTRUST financial advisor in Pittsburgh, Pennsylvania. “After all, it feels good to be able to provide for your kids. But if parents are risking their own financial health, it’s time to have an honest conversation.”

When Scarpo sees a client making poor financial decisions to support an adult child, “I try to explain to them, ‘It’s your choice if you want to continue allowing this. Just remember that if you go broke, then your kids will go broke too, because you’re helping them live a lifestyle they can’t really afford.’”

Breaking the Habit If you’re a parent who has been providing regular financial assistance to adult children, the first step is to pause, step back, and ask yourself why. While the obvious answer might be because you love your children, for many it goes deeper than that.

“

After all, it feels good to be able to provide for your kids. But if parents are risking their own financial health, it’s time to have an honest conversation.

Joe Scarpo

”

Typically, the root cause lies in a parent’s own financial upbringing. Early money memories shape each person’s subconscious and emotional responses to financial decision-making. Many parents want to make things easier for their kids, helping them overcome small financial obstacles so they can go further in life. Others believe that providing lifelong financial support is simply a part of the job.

A 2021 research study from Stanford University, led by Associate Professor Jelena Obradović, showed that parents often assume their help will create better outcomes.

But in fact, parental involvement can be counterproductive, interfering with the child’s ability to practice self-regulation skills and build independence.

Once you have a grasp on why you want to support your adult children financially, you can make a more conscious decision about how to move forward.

This starts by taking a fresh look at your own financial picture. While there’s no specific age when children age out of needing financial support, there are thresholds beyond which parents might be putting their own financial goals at risk.

Understanding how much and how often you can give means considering factors like your retirement age, expected retirement income, lifestyle, and philanthropic intent. In the same way you might anticipate early retirement, extra healthcare expenses, or a market pullback in retirement in your financial plan, your financial advisor can help you model different giving scenarios.

This provides you with a more complete view of how gifts to your children can impact your future. Then you can adjust as needed. It also gives you guardrails to work within or may help you understand if you need to break the habit altogether.

Space to Grow After years of help, some adult children develop a sense of entitlement to family money. Some may even believe they are not capable of solving financial problems on their own. As a parent, weaning them off support means resetting expectations for your relationship with each other and reteaching skills for financial independence.

Think of this process as tending a garden. By pulling out the weeds of entitlement, you create more space for good things to 37

them clarify their own financial goals and create steps to achieve them. Introducing your children to your financial advisor can be another helpful step, especially if you plan to leave an inheritance.

Consider trusts and family foundations. These entities can protect adult children from themselves and from others who might try to take advantage of them. Parents who are worried about an adult child’s financial behavior might want to explore trusts and family foundations as a safer way to leave behind assets while instituting limitations. Trusts can also keep money growing and reduce or eliminate estate and gift taxes.

grow, including gratitude and independence. Over time, children learn how to cultivate their own financial wellness.

Here are a few first steps parents can take to reinforce financial lessons, build financial independence, and uproot entitlement in their adult children.

Tell financial stories. Talking about money can be uncomfortable. Even if you don’t want to share specific numbers, like your net worth or salary, personal anecdotes can help teach the importance of hard work, persistence, and frugality. Tell your children about some of the financial decisions you’ve made and the reasoning behind them. When did you start saving and investing? How much debt do you have? Did you get an inheritance from your own parents? What are some of the best—and worst—financial decisions you have made?

Acknowledge uncertainties. Make sure your children understand that your financial situation is not set in stone.

Your assets, investments, and even your will could change, so they shouldn’t rely on your assets as a safety net. Instead, help

Let them fail forward. It’s tempting to shield the people you love from their own financial missteps, but it’s important to let them experience the natural consequences of their decisions. These lessons will have a lasting impact and help shape their future relationship with money. Along the way, you can be there to offer guidance but don’t have to bear the burden financially. If you start to feel like you’re enabling bad decisions, trust your instincts and let your kids fail a little—or a lot. Mistakes are just another part of the learning process.

Other Ways to Help Every parent-child relationship is unique, so the way that each parent chooses to support each of their children will be different.

“Some people choose to help their children by giving them seed money to get started,” says Scarpo. “Others give financial help all along the way. And others choose to help their kids by making them earn everything on their own. All those people believe they’re doing the right thing for their children.”

In other words, there is no right or wrong way to help your children. But if you’re considering working extra years or dipping into retirement accounts to support them, it might be time to make a change. That way, when the time comes, you can both feel confident that they have what they need to bloom on their own.

WHEN TO ASK FOR HELP

Some adult children are unable to live independently due to disability. This includes adult children with physical, mental, or previously undiagnosed cognitive conditions.

If there are medical issues that limit your child’s ability to work, they may qualify for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) through the Social Security Administration. These programs provide financial assistance for adults who are unable to work full time.

Parents who need help navigating financial issues for adult children with disabilities should visit ssa.gov/benefits/disability/.

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Money Mindset | Summer 2023

LASTING LEGACY

PLANNING TO

PLEDGE

by Kim Painter

In 2010, 40 of the world’s richest people made a collective promise, known as the Giving Pledge. They would give the majority of their wealth to philanthropic causes, either during their lives or soon after their deaths, in an attempt to solve some of society’s most complex problems. Warren Buffett, Bill Gates, and Melinda French Gates were among the first to sign on. As of the end of 2022, 233 more people have also signed, including Elon Musk, Sheryl Sandberg, Mark Zuckerberg, and George Lucas.

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Giving away most of your money is something that anyone with significant assets can consider.

But the Giving Pledge is open only to billionaires—2,540 individuals worldwide, according to Forbes’ most recent list—or to those who would have billions if they hadn’t already given so much away, as are the handful of similar pledges that follow similar philanthropic principles. For instance, some billionaires who find the Giving Pledge too modest have made a different vow to give away at least 5 percent of their wealth each year.

prognosis, he says the experience “helped me realize I probably should get my plan in order.”

The core idea among these pledges is that great wealth should benefit the collective good, not only a small number of family members. And that’s a principle that anyone can follow, billionaire or not.

Right now, the Phillipses plan to give money to several charities, including a local nature conservancy, the schools and colleges they attended, and the civic club where they met. They are also planning bequests to a few extended family members.

In fact, financial and estate planners say giving away most of your money is something that anyone with significant assets can consider—although few do. “In my experience of 22 years, it’s exceedingly uncommon,” says Eido Walny, a Milwaukee lawyer who serves on the board of directors of the National Association of Estate Planners and Councils.

The Phillipses developed their plan in partnership with their financial advisors, as well as an estate attorney, a certified public accountant, and an executor. They call this their A-team and call the executor their quarterback. “Our plan is solid,” David says, “and everyone knows who will take the lead when the time comes.”

Mike Gray, a CAPTRUST financial advisor based in Raleigh, North Carolina, says that while many people include charities in their estate plans, most have a family-first mentality, leaving most of their wealth to their adult children. But some people do put charity first. For instance, one couple that Gray works with plans to give away about $25 million, most of their assets, upon their deaths.

Planning a Major Legacy

Meet the Phillips David and Adele Phillips (using pseudonyms to protect their privacy) first met through a civic club and found they had a lot in common. Married for more than a decade now, David, 79, and Adele, 52, have no children. They live an active outdoor life dedicated to faith, community service, and each other.

The plan to give away most of their money, they say, has evolved over the years but has been driven by those values.

“Charitable work has always been a part of our lives,” says David, who made his money in real estate and banking. Adele, who inherited some of her wealth and still works in order to maintain her independence, says she has volunteered since childhood. “My grandfather was a pastor, so service was a very big part of our family.”

With that background, Adele says, “It would never occur to us to spend everything we have on ourselves.”

David and Adele have always been active fundraisers and donors.

But the plan took on extra urgency, David says, after he was diagnosed with Parkinson’s disease in 2016 and was told he might have just a few years to live. While he’s outlived that initial

40

Lasting Legacy | Summer 2023

Inspired by the Giving Pledge or the Phillipses? To follow in their footsteps, you’ll need a plan and a team to help you execute it.

“There are a lot of different ways to go about this,” Walny says, and it’s more complicated than just updating a will.

Wills, in fact, may not be the best way to make major bequests, in part because the probate process can put unwanted public focus on your estate, says Walny.

Other, potentially more efficient, ways to boost lifetime giving or leave assets behind include setting up trusts, creating a family foundation, or putting money in a donor-advised fund (DAF). A DAF is a charitable investment account, administered by an established nonprofit organization. Donors recommend gifts from their accounts but don’t directly control the money. For many people, a DAF is more appealing than a family foundation because it eliminates administrative expenses and duties, Walny says.

However, control of both family foundations and DAF accounts can be passed down to heirs, if that’s desired, giving adult children and other family members asset pools to meet their own charitable goals.

Some people also choose to name different charities as the beneficiaries of each of their assets, such as life insurance policies or retirement accounts. Designating a charity as the beneficiary of a traditional individual retirement account (IRA) can be an especially smart move because otherwise your heirs will pay income taxes on the proceeds. “Going this path doesn’t change the amount the charity receives but effectively increases what the heirs will net,” Gray says.

Choosing Charities Most people know what they are passionate about, so choosing which causes they’ll support isn’t a difficult task. But it can take some homework to vet specific organizations that support those causes. Groups such as Charity Navigator and Charity Watch are good sources of information, according to Consumer Reports.

Even if you’ve designated a recipient, it’s smart to dig deeper, Walny says. Anyone planning a major gift should meet with charity administrators to talk about how they might align their philanthropic intentions with the group’s needs.

He had one client, he says, who wanted his money spent on guide dogs—until the recipient organization told him that the dogs attracted so many donations that they were “living in 24-carat-gold dog houses,” while other programs were severely underfunded. The donor opted to redirect his money to those needs. In other cases, a small nonprofit may not be able to fully capitalize on a large gift if it’s a surprise, so starting the conversation early can ease the planning process for both giver and recipient.

Some lifetime gifts, including charitable ones and those that pay direct educational and medical expenses, are exempt from annual gift and estate taxes, and there is no limit to how many such gifts you can make.

Giving While Living Sometimes, it makes more sense to give now instead of giving after your death.

Of course, there are tangible tax benefits to giving while you’re alive. Some lifetime gifts, including charitable ones and those that pay direct educational and medical expenses, are exempt from annual gift and estate taxes, and there is no limit to how many such gifts you can make. By reducing the size of your estate, you also reduce the federal estate tax your heirs will pay.

But there is also the intangible benefit of witnessing your positive impact on the world. Also, the causes you care about may need the money sooner rather than later.

Still, Walny says, most people are concerned about running out of money by giving too much away while they’re still alive. A financial advisor can be a helpful resource in figuring out how much and how often you can give and how much you will need to conserve.

For those who are considering large-scale philanthropy, Gray says, it can also help put your mind at ease to remember that your giving plans are flexible. “So long as you’re alive and mentally competent, you can generally change your mind about where your money goes or how much you will donate.”

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CLIENT CONVERSATIONS

READER Q & A This edition of Client Conversations discusses ways to get the most

?

from permanent life insurance, how the FDIC protects cash deposits, and a tax strategy that may be helpful for people with large amounts of company stock in their retirement plans.

I bought whole life insurance when my kids were little.

Do I still need it?

A

In brief, maybe you don’t. If your kids have finished college, your mortgage is paid off (or you plan on downsizing), and your retirement savings are on track, you may no longer need your life insurance policy. Still, there are reasons you might want to keep it.

For instance, consider that—simply due to aging—you are now at a higher risk of health complications. Even with health insurance in place, it’s easy to amass tens of thousands of dollars of uncovered healthcare expenses, especially if you need long-term care. Life insurance is one way your spouse and heirs can replenish any depleted savings accounts after these expenses are paid.

You can also use life insurance to pay for estate taxes.

Typically, this is done by establishing an irrevocable life insurance trust (ILIT), which is shielded from creditors and the Internal Revenue Service. Or you can leverage life insurance to leave an inheritance for your loved ones by naming them as the beneficiaries of your policy. Another option is to sell the policy through a viatical settlement, but there are some very specific requirements you’ll have to meet before this can happen. Also, a viatical settlement is

42

Reader Q&A | Summer 2023

only recommended if the lump-sum payout you’ll receive is more than the cash value of the policy.

No matter what you decide to do, talk to your financial advisor to be sure your actions are aligned with your financial goals. If your policy is paid up so you’re no longer paying premiums, then you won’t have to do anything to keep it, so you might as well get the full benefit from it. An advisor can help you understand the best way to do that.

Can you explain how FDIC insurance works?

A

The Federal Deposit Insurance Corporation (FDIC) offers insurance coverage to banks as a way to protect your cash deposits against the risk of bank failure. The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.

In other words, if you have multiple individual accounts at the same bank, the combined total of these accounts is protected up to $250,000. However, if you have more than $250,000 spread across multiple individual accounts at the same bank, only $250,000 would be insured.

Banks aren’t required to participate in FDIC insurance, and they aren’t insured automatically. They apply for coverage and pay monthly premiums, just like you pay for your health or auto

insurance. Banks that choose not to participate in FDIC insurance are extremely rare, but they do exist, so it’s a good idea to confirm that your bank is a member.

Credit unions use a separate form of insurance offered via the National Credit Union Administration (NCUA) instead. NCUA coverage is similar to FDIC insurance coverage, guaranteeing up to $250,000 per person, per institution, per ownership category.

To take full advantage of FDIC or NCUA insurance, consider spreading your cash deposits across multiple banks and diversifying your account ownership. These two strategies can help you increase your total insured amount at each bank. And if you’re uncertain about how much cash you should have in checking and savings accounts, talk to your financial advisor.

I work at a company that gives me stock as part of my retirement plan. A friend told me about NUA. How does that work?

A

Net unrealized appreciation (NUA) is a tax strategy that allows you to convert what would usually be considered ordinary income into long-term capital gains instead. Since income tax rates can go as high as 37 percent (plus applicable state income tax), but long-term capital gains tax is capped at 20 percent, this swap can make a big difference to your tax bill.

The strategy allows you to claim long-term capital gains on the difference between the current value of the company stock in your retirement plan and its price when it was originally acquired, also known as its cost basis.

One of the other advantages of this strategy is that you do not have to pay both types of tax—income tax and capital gains tax—at the same time. Although income tax will be due when

you take your stock out of your company’s retirement plan, the long-term capital gains tax on appreciation above the cost basis, known as net unrealized appreciation or NUA, does not happen until the appreciated stock is sold.

Of course, an NUA strategy won’t be the right move for everyone. Your plan may not have the necessary features available, or you may not have a low enough cost basis. Also, NUA can only be done after certain triggering events, and you have to follow specific rules to capture the benefits.

As always, the best idea is to consult your financial advisor or tax professional. They can help you understand whether an NUA strategy is suitable for your circumstances and what next steps you’ll need to take.

If you have a question for the VESTED team, we’d love to hear from you and see if we can help.

Please send your questions to us at VESTEDmagazine@captrust.com.

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GIVING BACK

Our Raleigh, North Carolina, colleagues at the NC Diaper Bank

This Year’s Charity of Choice and National Grant Recipients Each year, the CAPTRUST Community Foundation (CCF), the firm’s in-house, employee-run nonprofit organization, selects a Charity of Choice and five additional organizations to receive national grants.

The core missions of these organizations must align with the CCF’s mission to enrich the lives of children in the communities we serve. The CCF collects applications from charitable organizations throughout the country, and each qualified applicant goes through a stringent vetting process.

For 2023, the CCF selected MATCH as its Charity of Choice. This Raleigh, North Carolina, organization is on a mission to address the needs of children with incarcerated mothers. The organization will receive a $100,000 grant and regular support from CAPTRUST employees throughout the year. MATCH says it will deploy the grant to cover travel costs for family visits and to create an on-site children’s center within the North Carolina Correctional Institution for Women.

The CCF also selected five additional nonprofits to receive $25,000 national grants:

44

CAPTRUST Happenings | Summer 20233

•

A Touch of Understanding encourages awareness, acceptance, and respect for individuals with disabilities in the Sacramento, California, area.

•

Haven House Services benefits youth experiencing homelessness through intentional programming in and around Raleigh, North Carolina.

•

The Children’s Place is a specialized trauma treatment center in Kansas City, Missouri, that focuses on children’s mental health needs.

•

Oakland County Foster Closet supports foster children and at-risk youth by providing clothing, shoes, and hygiene items in Oakland County, Michigan.

•

Catie’s Closet allows school-age children in Massachusetts, Rhode Island, and New York the opportunity to shop, free of charge, for clothing and other essentials inside their schools.

VOLUNTEER MONTH Each April, CAPTRUST celebrates Volunteer Month with virtual and in-person volunteer opportunities across the country. This year, 398 CAPTRUST colleagues volunteered more than 1,388 hours of their time to help nonprofit organizations from California to Texas to North Carolina. Here’s a small sampling of some of their volunteer efforts.

•

The Boerne, Texas, office volunteered at Hill Country Daily Bread Ministries Service Project. The team sorted and packed products and processed orders of food and other resources for families in need.

•

Our team in Charlotte spent time volunteering at Beds for Kids, a nonprofit providing a safe place for children to sleep.

•

CAPTRUST employee resource groups WISE and BP Network volunteered at Raleigh nonprofit No Woman, No Girl.

•

The Georgia offices joined together to volunteer at Christian City in Atlanta.

•

Colleagues in Raleigh sorted clothing donations at last year’s CCF Charity of Choice, Note in the Pocket.

Our New Podcast for Nonprofits

VESTED Voices

Hosted by CAPTRUST Director of Endowments and Foundations Heather Shanahan, each episode of Mission + Markets gives insights and best practices for nonprofit board members, leaders, and donors. The podcast is available on all major platforms, including Apple and Spotify. Scan the QR code with your mobile device camera to learn more.

Through the nonprofit organization Battlefields to Ballfields, NFL Sports Analyst Mike Pereira is creating a lasting legacy—one that helps both veterans and the sports community. Scan the QR code to learn more about Pereira’s nonprofit work and some first steps for launching your own charitable organization in the onlineonly VESTED article “A Real Game Changer.”

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CAPTRUST GROWTH Since you received the last issue of VESTED, CAPTRUST has added six new teams, expanding its nationwide presence by more than 160 colleagues and nine offices. Teams added so far this year include: •

TrustCore Financial Services in Nashville, Tennessee

•

Monroe Vos Consulting in Houston, Texas

•

QA Wealth Management in Minnetonka, Minnesota

•

Aevitas Wealth Management in Wellesley Hills, Massachusetts

•

Omega Wealth Partners in Fort Worth, Texas

•

Southern Wealth Management in Dallas, Midland, and San Antonio, Texas, and in New Orleans, Louisiana

“

The wide array of resources we gain by joining CAPTRUST will give us an edge as we continue to provide a top-notch client experience. We knew right away that becoming a part of CAPTRUST was a good decision—at our core, we both prioritize the relationship with each client.

Tom Hardgrove, Co-owner, Omega Wealth Partners

46

CAPTRUST Happenings | Summer 2023

”

CAPTRUST RECOGNITION CAPTRUST Institutional Advisors Win Big Included in Barron’s 2023 rankings for the Top 100 Institutional Consulting Teams are 22 CAPTRUST teams. These awards consider revenue, assets, and practice quality. Adding two CAPTRUST teams to the list since last year, the firm now represents more than 20 percent of the 100 spots, including four spots in the top 10. These CAPTRUST teams and their key advisors were ranked as follows: #2: Team Chicago, led by Tim Egan, Dan George, and Dan Simon #5: Team New York/Boston, led by Michael Volo and Michael Sanders #7: Team Warren, New Jersey, led by Michael Sasso, Attila Toth, and Richard Torbinski #9: Team Allentown, led by Jim Edwards, Wes Schantz, and Jeff Loehwing #16: Team Dallas, led by John Pickett and Travis Whitten #21: Team Schott, led by Stephen Schott #24: Team Doylestown, led by Chris Kulick, Paul Schaffer, Scott Wertheim, and Sean Teesdale #25: Team Stanicek, led by Jason Stanicek #28: Team Strodel, led by Jim Strodel #32: Team Atlanta, led by Philly Jones, Evan Melcher, Zack Sadler, and Drew McCorkle #37: Team Schmitt, led by Barry Schmitt #38: Team Eskamani, led by Shaun Eskamani #42: Team Esch, led by Dan Esch #44: Team Strickland, led by Jon Strickland #50: Team South Michigan, led by Dori Drayton and Susan Shoemaker #53: Team Wilt, led by Steve Wilt #54: Team Birmingham, led by Paul Owen, Phil Anderson, and Beau Williams #60: Team DiGiacomo, led by Dan DiGiacomo #62: Team Bailey, led by Eric Bailey #63: Team Des Moines, led by Jean Duffy and Andrew Shimp #76: Team Pratico, led by Mike Pratico #93: Team Duex, led by Devyn Duex

No. 2 on Wealth Management List CAPTRUST Charlotte was named No. 2 on the Charlotte Business Journal’s 2023 Largest Wealth Management Firms list.

2023 Advisors to Watch Seven CAPTRUST wealth management-focused financial advisors were named to AdvisorHub’s 2023 Advisors to Watch list. This list considers scale, growth, and professionalism as core criteria and is open only to advisors with seven or more years of experience, a clean regulatory record, at least two years at their current firm, and a minimum of $100 million in assets under management: #2: John Keeton in San Antonio, Texas

#32: Christina Lecholop in San Antonio, Texas

#8: David Akright in San Antonio, Texas

#75: Christina Burroughs in Phoenix, Arizona

#25: Jay Irons in Roanoke, Virginia

#80: Mike Gray in Raleigh, North Carolina

#26: Rebecca Pouliot in Boston, Massachusetts

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CAPTRUST 4208 Six Forks Road, Suite 1700 Raleigh, NC 27609 captrust.com | 800.216.0645

For more than 30 years, CAPTRUST has shown an unwavering commitment to excellent service, beyond expectation.

Our nationwide team of expert advisors offers a wide range of financial services for individuals, families, institutions, and nonprofit organizations. No matter where you are, you’re never far from expert financial advice.

Michael Passalinqua, CFP® Vice President, Financial Advisor Pittsburgh, PA Keith Biskup, CFP® Vice President, Financial Advisor Pittsburgh, PA Nicholas Wilson Vice President, Financial Advisor Pittsburgh, PA