VESTED Fall 2018

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Unplugging from the Noise

Cindy Eckert Smashing the Pink Ceiling Together PLUS A Good Gig? Time's Up for Money Silence Almost Astronauts The Early Bird Gets the Worm

FALL 2018

At CAPTRUST, we believe we have a profound responsibility to share our success with those less fortunate than us. One way we do that is through the activities of the CAPTRUST Community Foundation, 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. Getty Images

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

Volume 4, Issue 3 | Fall 2018

When we launched VESTED, I was optimistic that we could find enough interesting topics and people to fill our magazine. Four years and 12 issues later, I feel like we have only scratched the surface. There seems to be an endless stream of compelling story ideas coming from readers, our editorial team, and CAPTRUST colleagues. Thank you for your help making VESTED a success. In this issue, we profile Cindy Eckert as our Second Act hero. Chief executive officer of Raleigh-based Sprout Pharmaceuticals, Cindy is a force to be reckoned with. A serial pharmaceutical entrepreneur, she has also turned her energy and attention to breaking down barriers for women entrepreneurs with The Pink Ceiling, a venture capital firm, “pinkubator,” and consultancy with a mission to support women-centric biotech startups driving social change. Also in this issue, we feature a range of topics, including: • Gifting of assets in the wake of the Tax Cuts and Jobs Act; • The challenges created by today’s connected lifestyle (and how to cope with them); • Leveraging a senior move manager to alleviate the stress of a late-in-life relocation; • The promise of space tourism and what to do today to prepare yourself for a trip to space;

PUBLISHER J. Fielding Miller Chief Executive Officer

EDITORS John Curry Editor in Chief

EDITORIAL ADVISORY BOARD

This issue’s must-read piece comes from Investment Strategist Sam Kirby. In “A Good Gig?”, Sam examines the growth of the gig economy, its future, and what it means for consumers, workers, businesses, and the economy. As always, the goal of VESTED is to provide you with timely, relevant, and actionable ideas and recommendations. Please help by sharing your thoughts, reactions, and story ideas with us at VESTEDmagazine@captrust.com. I hope you enjoy this issue. All the best,

Jeremy Altfeder Financial Advisor

Land Hite Senior Vice President, Financial Advisor

Lauren Bartholomew Senior Client Management Consultant

Greg Middleton Director, Advisor Group

Rush Benton Senior Director, Strategic Wealth

Aaron J. Morris Vice President, Financial Advisor

Hugh (Trae) Cole Financial Advisor

Mark Paccione Director, Investment Research

Ellen Crowley Vice President, Financial Advisor

Teri Parker Vice President, Financial Advisor

Nick DeCenso Manager, Wealth Strategy

Alysia Tacinelli Client Management Consultant

Karen Denise Director, Wealth Operations

Kyle Tucker Senior Vice President, Financial Advisor

Mike Gray Senior Vice President, Financial Advisor

Tiffany Walker Senior Wealth Planner

ART DIRECTION & MARKETING Lonzetta Allen Associate Art Director

John Curry Art Director

Harrison Brackett Jennifer Mastrapasqua Graphic Designer Distribution Manager Colby Warren Graphic Designer

• How to set your kids or grandkids up for retirement success; and • Breaking the money silence about women and the gender wage gap.

Alysa Cronin Editor

WITH THE ASSISTANCE OF

J. FIELDING MILLER CAPTRUST Chief Executive Officer

Azul Photography Raleigh, NC

Classic Graphics Morrisville, NC

Gabrielle Burke Pittsburgh, PA

Getty Images Seattle, WA

Justin Gartman Raleigh, NC

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NEIL DOWNING

KATHLEEN BURNS KINGSBURY

SAM KIRBY

JEANNE LEE

Neil Downing is a Certified Financial Planner™ and enrolled agent, licensed by the U.S. Treasury Department to represent taxpayers before the Internal Revenue Service. A newspaper reporter, editor, and columnist for 35 years, Downing has authored several publications focused on maximizing the value of employee benefits and retirement savings vehicles.

Wealth psychology expert Kathleen Burns Kingsbury has more than two decades of experience educating professionals and empowering women, couples, and families. Voted one of the top nine speakers in 2017 by InvestmentNews, she is the host of the Breaking Money Silence® podcast and the author of several books, including: Breaking Money Silence®: How to Shatter Money Taboos, Talk More Openly about Finances, and Live a Richer Life.

As leader of CAPTRUST’s Investment Strategist team, Kirby works with the firm’s financial advisors to assist clients with investment strategy, selection, and monitoring. He has 15 years of financial services experience. Kirby earned a Bachelor of Arts degree in journalism from the University of North Carolina and a Master of Science degree in management from North Carolina State University, and is a CFA charterholder.

Jeanne Lee is a freelance writer living in the lovely college town of Oberlin, 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 daydreams of paying off her mortgage before she has to pay for college for her two boys.

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Features 4

UNPLUGGING FROM THE NOISE

Columns PASSION PURSUITS

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MONEY TALKS

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GLEANINGS

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LASTING LEGACY

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EXPERT ANGLE

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CLIENT CONVERSATIONS

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MARKET REWIND

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CAPTRUST HAPPENINGS

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by Kim Painter

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SMASHING THE PINK CEILING TOGETHER by Sylvana Smith

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GIFTING UNDER THE TAX CUTS AND JOBS ACT by Neil Downing

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A GOOD GIG? by Sam Kirby

Almost Astronauts: A Taste of Space by Jeanne Lee

Space Race

Coping with Relocation Anxiety by Alysia Tacinelli

Time’s Up for Money Silence by Kathleen Burns Kingsbury

The Early Bird Gets the Worm: Roth IRAs for Teens by Jeanne Lee

KIM PAINTER

SYLVANA SMITH

ALYSIA TACINELLI

Kim Painter is a freelance writer specializing in health and lifestyle issues. She was a USA TODAY staffer for many years and has continued to contribute to the newspaper as a reporter, columnist, and blogger. She lives in McLean, Virginia, where she practices what she preaches: wearing sunscreen, eating broccoli, and getting at least 10,000 steps a day.

Sylvana Smith is a freelance writer living on an antebellum farm in central North Carolina. Educated in graphic design at Carnegie Mellon University and journalism at the University of North Carolina, she writes marketing communications for Fortune 100 companies. She has been a professional journalist and marketing communications writer for more than 20 years, producing books, brochures, executive speeches, and trade journal articles.

Alysia Tacinelli is a freelance writer from New York, currently living in Raleigh, North Carolina. She spent a couple of years living in London, where she earned her master’s degree in publishing studies and started her career in the editorial department at Bloomsbury Academic. Now, when Tacinelli is not working as a client management consultant at CAPTRUST, she’s tucked away trying to finish her first novel.

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. ©2018 CAPTRUST Financial Advisors. The opinions expressed in this report 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 report 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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E S I O N E H T M O R F G N I G G U PL

by Kim Painter

For journalist Catherine Price, the moment of truth came one night when she was feeding her infant daughter. She realized that her baby was gazing at her—but she was gazing at her smartphone, glued to a shopping website. “I saw the scene as it would have looked to an outsider—her focused on me, me focused on my phone—and my heart sank,” Price wrote in the New York Times recently. “This was not the way I wanted things to be.” It’s not the way a lot of us want things to be, and yet it’s how we are living our daily lives. Connected devices have worked their way into every corner of our lives. We sit at meals with family and friends, but we give our attention to our phones. We still take vacations but not from our work email and text messages. Waiting room and airplane downtimes that once left us alone with our thoughts—or led to spontaneous chats with strangers—now are occasions to work on our laptops, play games on our tablets, or scroll through social media feeds on our phones. Consider the following frightening statistics: • The average adult checks his or her smartphone 47 times a day, according to Deloitte’s most recent annual survey. The survey finds that almost everyone checks first thing in the morning and last thing at night—and 48 percent check in the middle of the night. • More than a quarter of U.S. adults report that they are online “almost constantly,” and another 43 percent are plugged in several times a day, according to a 2018 study from the Pew Research Center. Constant use is even higher among young adults and those with the highest incomes. • More than 70 percent of teens and adults admitted to at least glancing at their phones while driving, according to a survey commissioned by AT&T and researchers at the University of Connecticut. And these folks are not just texting: a followup survey found 1 in 10 drivers video chatting and 1 in 4 using Facebook. “You are making yourself more forgetful; you are making yourself more distracted, less creative, and less insightful. You are actually training your brain to be distractible,” says Price, who explored the research for her new book, How to Break Up with Your Phone: The 30-Day Plan to Take Back Your Life. In it, she offers a plan that includes a weekend “trial separation” from phones and other devices.

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She also offers advice for coexisting with those devices in a healthier way, one that turns a smartphone into a tool, rather than a constant obsession. Something more like a friend and less like a lover, Price says.

A growing body of research suggests that all this connectivity is not only changing our routines, it’s changing our brains—and not necessarily for the better.

There’s an obvious market for her book. In a recent survey, two thirds of adults agreed that unplugging for an occasional digital detox could be good for mental health. Yet the same survey found that only 28 percent had done it. In other words, breaking up is hard to do. A growing body of research suggests that all this connectivity is not only changing our routines, it’s changing our brains—and not necessarily for the better.

Our Ancient Human Brains Humans have always lived in a complex world, one in which it pays to seek out and pay attention to multiple sources of information, says Larry Rosen, professor emeritus and past chair of the psychology department at California State University, Dominguez Hills.

Thus, the title of a recent book Rosen coauthored with neuroscientist Adam Gazzaley: The Distracted Mind: Ancient Brains in a High-Tech World. When we tap our phone seeking the next new thing, “we are like animals foraging for food, but we are just foraging for information,” Rosen says.

Just knowing that emails, Facebook posts, and news stories are piling up while we are doing something else can induce a modern form of anxiety known as fear of missing out, or FOMO, Rosen says. Our smartphones are “the world’s smallest slot machines,” designed to keep us coming back for more, says psychologist David Greenfield, an assistant clinical professor of psychiatry at the University of Connecticut. Like slot machines, apps such as Twitter and Facebook offer variable and unpredictable rewards, he says. Occasionally, we find something good there, and those little thrills prime our brains to keep checking for more. “For a small slice of the population, perhaps as much as 6 percent, the urge to be online becomes so disruptive that it’s a kind of addiction, one that needs to be treated with the same techniques that work for drug or gambling addictions,” Greenfield believes.

Imagine two thirsty ancestors approaching a stream for a drink. One notices the rustle and scent of a nearby jaguar and retreats to find his drink elsewhere; the other focuses only on his thirst, ignores the warning signs, and becomes a jaguar’s lunch.

A More Mindful Approach

Throughout our evolutionary history, people with more information fared better, Rosen says. But now, he says, we live in a world where much vaster quantities of information are constantly available. Very little of that information is crucial to our survival, but our brains do not always seem to know that, Rosen says.

Tom Pierik, senior vice president at Lee & Associates Commercial Real Estate in Riverside, California, does not have a Facebook account or a phone full of gaming apps. What he does have, on most days, is an overflowing email inbox. On a typical day, he says, he gets about 400 messages. Up to 100 require a response.

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You don’t need to be a technology addict to benefit from a tech break, though.

In the past, he says, he felt he had to respond to those emails at all hours. But, a few years ago, he took a family vacation and decided to leave his phone and laptop behind. “The first time was a little scary,” he says. “But once you get through it, you realize that, ‘Oh, the world did not fall apart; my business did not fall apart.’”

The average adult checks his or her smartphone 47 times a day, according to Deloitte’s most recent annual survey. The survey finds that almost everyone checks first thing in the morning and last thing at night—and 48 percent check in the middle of the night.

Now, Pierik makes it a point to take regular hiking and biking vacations in areas with no cell service. He also goes out to weekend dinners without his phone. “It keeps you much more focused on the moment,” he says. “It allows you to leave work behind.”

Some businesses have started to encourage those breaks by enforcing email-free evenings and weekends and setting up programs that delete employees’ emails during their vacations. Senders get messages letting them know when they can try again and whom to contact in the meantime.

Here are some ideas for limiting digital distractions from David Greenfield, the technology addiction expert: • Ban phones from mealtimes—both at home and in restaurants. Focus instead on eating and socializing. • Stop using electronic devices at least an hour before bed. The light and stimulation can interfere with your sleep. • Keep your phone and other connected devices out of your bedroom—and don’t use the alarm as an excuse. Get yourself a cheap oldfashioned alarm clock.

• Turn off as many notifications as possible. • Consider graying out your screen, setting the colors to black and white. You may find it less alluring that way. • Do everything you can to reduce temptation while driving. Turn on your phone’s do-notdisturb feature, and put it away.

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Most of us must set our own limits, though. And if more of us, like Pierik, learned to focus on the moment—on what we are doing and how it makes us feel— more of us might change our ways, says David Levy, author of Mindful Tech: How to Bring Balance to Our Digital Lives.

Many people, he says, notice “a little jolt of anxiety” as they open their inboxes. They find themselves holding their breath, tensing their muscles, and careening through emotions as they go from message to message.

Levy, a professor in the Information School at the University of Washington, has for the past two decades taught a course in which he asks students to apply the principles of mindfulness to their technology use. In one exercise, he asks students to keep journals as they use email for a week, noting “their breathing, body sensations, posture, emotions, and the quality of their attention.”

Many people, he says, notice “a little jolt of anxiety” as they open their inboxes. They find themselves holding their breath, tensing their muscles, and careening through emotions as they go from message to message. Some realize they are checking email to avoid other things, like work. Levy assigns similar exercises with Facebook and other social media accounts. He also teaches his students traditional breath-noticing meditation techniques. The idea, he says, is to learn to notice what’s happening when we are on- and offline—and to start making more informed choices. Price, the phone break up author, agrees that’s the goal: “Be the person you want to be and spend your time the way you want. Any time you decide in the moment about how to use your attention, you are making a broader decision about how to spend your life.” For her part, Price no longer has a phone in hand when she’s spending time with her daughter, now age three. She’s found time to learn to play the guitar and to meditate. Like Levy, she says there’s a link between mindfulness and a less plugged-in life. “When you put your phone down, time slows down,” she says. “It’s like you put down a burden you didn’t know you were carrying.”

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THINK YOU ARE READY FOR A DIGITAL DETOX? Many experts say that the first step is to understand your use—and misuse—patterns. And, yes, there are apps for that. Among the best known is Moment. It works on iPhones and Android devices and can give you a daily report that shows how often you pick up your phone, how long you spend on it, and how you spend that time. The basic tracking app is free. Other tracking apps include Quality Time and (OFFTIME). Apple also has a new built-in version, called Screen Time, rolling out on iPhones and iPads this fall. Here are a few ideas to get you started from journalist Catherine Price: • Remove all social media apps from your phone. When you want to look at Facebook or Twitter, she says, use the clunkier website versions. • Move other distracting apps off your phone’s home screen and replace them with apps you want to use more often. For her, that includes meditation and guitar-playing apps. • Create a visual speed bump that makes you notice when you pick up your phone and think about why you are doing it. It could be a sticker on the back, a rubber band you need to remove, or an image on your lock screen that says “Notice.” • Recruit friends and family members to change their habits too. Agree that all of you will stop phubbing—snubbing real-life people by looking at your phone instead. • If you no longer have a landline, consider getting one. That will allow you to turn off your mobile phone and other devices for some stretches—whole weekends at least—without worrying about missing emergency calls.

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TOGETHER by Sylvana Smith

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Serial entrepreneur Cindy Eckert sold her last company for $1 billion, got it back for next to nothing, is launching a controversial drug that could be the next blockbuster, and is on a mission to make other women equally rich. Never underestimate @cindypinkceo. A Pharma Career Wasn’t the Plan At least not at first. As a graduating business major, Cindy Eckert was hell-bent to work for Merck Pharmaceuticals, not because of the industry but because it perennially ranked as a Fortune Magazine World’s Most Admired Company. “I wanted to work for the best business out there, and I figured I could take that and apply it anywhere,” Eckert said. She ended up falling in love with the science and how it could change people’s lives. She stayed in pharma, stepping to ever smaller companies to be closer to research and development and be heard. In 2007, she started her own company, Slate Pharmaceuticals, which redefined long-acting testosterone treatment for men. Then she heard about flibanserin, a daily pill that treats low libido in women. Boehringer Ingelheim, the pharmaceutical giant that developed the drug in the 1990s, had given up on it after the U.S. Food and Drug Administration rejected it by unanimous vote. Eckert contrasted the FDA’s ready acceptance of treatments for men while dismissing options for women. She sold Slate, acquired flibanserin (branding it Addyi), launched Sprout Pharmaceuticals— and kickstarted an improbable David-and-Goliath crusade.

A Tale of Two Genders The path to FDA approval was a journey marked by gender disparity. For example, while Viagra had been fast-tracked for approval in only six months, Addyi was again rejected by the FDA, even though Eckert had three times as much data. “I had done the work I needed to do, and then I got rejected. That was not a good weekend.” This is the point where most drug makers go away. But Eckert received a moving letter from a woman who had been in the clinical

trial. Her marriage and self-esteem were suffering, all the result of a brain chemistry imbalance outside her control. She implored Eckert to continue the fight. “For women like her to be denied a treatment option was heartbreaking and infuriating,” Eckert said. “So, on Monday I showed up in the office and told everybody we were going to dispute the FDA.” It was an audacious move for a tiny company, one so small that all the staff could fit into an elevator, Eckert quips. Could the female chief executive of a newly born startup take on the FDA with any prayer of succeeding in a third attempt at approval? Yes. In 2015, the FDA finally approved Addyi. Two days later, Eckert sold Sprout for $1 billion to Valeant Pharmaceuticals and looked forward to seeing Addyi launched worldwide. That was not to be; under its new ownership, Addyi was shelved. So, Eckert and a group of Sprout’s shareholders sued Valeant on the grounds that it overpriced the pill and made little effort to commercialize it. Valeant, which not much earlier had made Eckert a very wealthy woman, handed Sprout and Addyi back in exchange for dropping the suit. Valeant also extended a $25 million loan to restart the business, asking only for a small cut of royalties from future sales. For the second time, Eckert had won control of the drug without having to write a check. “Women with a medical condition deserve access to a medical treatment, not our value judgments on whether or not they need it or the worthiness of treatment,” said Eckert. “The science had spoken, and we needed to listen. I wasn’t in this to create the next blockbuster drug. I was in it to make sure women have access and get to choose for themselves.”

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Advocating for the Unexpected After getting a $1 billion payday from the sale of Sprout to Valeant, some of Eckert’s friends were disappointed she didn’t retire to relax on the beach with pink cocktails. You know, live the billionaire dream. But her struggles to bring Addyi to market—being routinely underestimated along the way—left her impassioned about women’s lack of access to mentoring and money in business. “I shouldn’t be in a club that’s lonely,” Eckert said. “I shouldn’t be in a club in which so few other women have gotten to exits like mine. I need to get other women there, and I need to get them there faster than I got there myself.” She knew what it felt like to always be unexpected in the room, to navigate a sea of gray suits as a female in stilettos and hot pink. To see worthy ideas sidelined because of preconceived notions. She had seen all that and made it. She also acknowledged how much help she had received along the way from powerful women—policy leaders and those who bravely spoke to a federal agency about an intensely personal subject. “I’d had a front-row lesson in what it means for women to advocate for themselves and each other,” said Eckert. “So, my next act was going to be about advocating for an earlier version of me, the young woman entrepreneur who can’t raise money because the system doesn’t give her a chance. Consider that 2 percent of venture capital is given to women. You cannot tell me that 50 percent of the population has 2 percent of the good ideas.” She resolved to champion for all of the unexpecteds in the room, those who didn’t come from Silicon Valley or didn’t attend the business school with the crowd that had inside access to capital. So, in 2016, The Pink Ceiling was born.

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The Pink Ceiling is a venture capital firm, “pinkubator,” and consultancy with a mission to support women-centric biotech startups that could drive real social change.

Consider that 2 percent of venture capital is given to women. You cannot tell me that 50 percent of the population has 2 percent of the good ideas.

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Cindy Eckert

“We put our creativity, contacts, and cash to work for cutting-edge concepts and founders,” said Eckert. “The thesis is: Let’s stack the billion-dollar club by smashing the pink ceiling together.” She’s on a mission to make women rich. It isn’t about the money for the sake of it. It’s about bright, passionate women having access to operational support and capital, so they can bring forward the next generation of advances in health tech. Money provides the freedom to make decisions, invest in what matters to them, and pay it forward again. 12

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The Pink Ceiling is a venture capital firm, “pinkubator,” and consultancy with a mission to support women-centric biotech startups that could drive real social change. Only Groundbreaking Businesses—by or for Women—Need Apply Eckert looks for companies that offer a patented breakthrough in health tech, will catalyze some important social conversation, and are unequivocally by and for women. The ideal founder also has a certain DNA that makes her scrappy. Eckert likes those who are self-made and overlooked by the system at large because they are young, female, or not connected into privileged networks. The first round of partners includes 10 innovators: • Undercover Colors produces a wearable decal that detects common date rape drugs. • Fathom produces a wearable biometric sensor that collects and interprets movement data to improve athletic performance and prevent injuries. • uMETHOD combines big data analytics and medical research to improve outcomes for those with Alzheimer’s disease. • Seal Innovation’s SwimSafe wearable technology helps prevent drowning, the leading cause of accidental death in children. • Pursuit Sleep Technology (aka Senzzz) embeds sleep center science into wearable consumer products to reduce snoring and improve sleep quality.

A DECIDEDLY PINK OFFICE The Raleigh, North Carolina, office of The Pink Ceiling is strikingly pink. Not “it’s a girl” pink. Not cotton candy pink. Not a gentle blush. It’s a fierce, hot pink, and so are Eckert’s suits. “I wear pink all the time. You should see my closet.” It’s a declaration about the dismissive way people talked about Addyi as “the little pink pill.” “You can run away from gender stereotypes, but if you’re me, you run right toward it,” Eckert said. “The idea that there isn’t something valuable and unique that a woman brings to the table and in owning her femininity—pink for me is about owning it as a woman, unapologetically pink. I like pink. I’m going to wear it. I started showing up in blazing pink to the FDA and said, ‘We are going to have this conversation.’”

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Today, I have an opportunity I never imagined, to get onto a big stage in front of all of these young women who are rising stars and help them. Cindy Eckert

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• Lia Diagnostics has created the first FDA-approved, flushable pregnancy test. • IntuiTap developed the world’s first imaging device to guide a needle for spinal taps, epidurals, and steroid injections.

heat map to find the right spot and advance the needle by itself. “When Jessica’s company is bought by one of the giants, she will change everybody’s perceptions when the next five-foot-ten blonde engineer in her 20s walks into the room.”

• Sunscreenr makes a handheld device that reveals vulnerabilities in sunscreen coverage.

Or consider Bethany Edwards, co-founder of Lia Diagnostics, makers of the world’s first flushable pregnancy test. “Bethany is about four-foot-nothing, little glasses, full of power, and she’s come to really change the world,” said Eckert. “She has masterfully patented a groundbreaking first that will be an interesting conversation starter in women’s health. And I love the idea that it will surprise everybody that it’s Bethany at the helm of this.”

The relationship with these companies is not just an investment play. “We’re very selective,” said Eckert. “We’re not playing the odds and saying, ‘we’re going to make x many investments; we figure 8 out of 10 of those are going to fail, but we’re going to have two big wins.’ We’re really picking a company to sit alongside. Almost all of them are between a year and three years out from launch, and we’re going to help them get there.”

Edwards shares the unifying principle of The Pink Ceiling—women helping women in a big way. “Not only is Cindy investing in women and really encouraging them to lead their companies, but she’s also trying to make sure they have successful exits, so they can, in turn, reinvest in other women. Her candor in wanting to help women get rich is pretty important, because that is one of the only ways you can move the needle on power structure.”

Partner companies—often led by scientists and engineers rather than business experts—have access to The Pink Ceiling space, resources, and a business team that knows how to build companies. “So much of this is walking back through my own past and what I wish had gone differently,” said Eckert. “Do I wish somebody had told me their experience? Like, ‘I’ve stepped on that land mine, step left. I’ve done that; don’t do it. You don’t need to repeat it.’”

An Opportunity to Pay It Forward

• Medolac is the only company that provides shelf-stable human milk products for babies in need. • Renovia created a non-surgical device that addresses incontinence for women by training pelvic floor muscles.

By making early bets on these companies, The Pink Ceiling also builds their credibility. “We raise money through our fund, but you want to bring in other partners with diversity of thought and strategic sense,” Eckert notes. “It helps validate these companies that somebody has already said yes.”

“I hate squandering opportunity,” said Eckert. “Today, I have an opportunity I never imagined, to get onto a big stage in front of all of these young women who are rising stars and help them. The privilege is all mine, that they’ll wait and ask me questions, and I think, you’re further ahead than I was at that same age. So, you’ve got me beat and then some.” “It’s just such an honor to get to do that. We’re doing that in a small way, but we’re loud about it. We’re loud about it so that others will do the same—and so those who come in and get to be part of it also feel their obligation to pay it forward as well.”

Changing Perceptions As an engineering student at Purdue University, Jessica Traver knew she would be one of very few girls in her classes. “I never really noticed or had an opinion on gender bias until I founded IntuiTap and started pitching to physicians, investors, or pretty much anybody. It was just so obvious then that people weren’t taking me as seriously.” “People say, ‘I never would have expected that you’re an engineer or a company founder. You just don’t look like one.’ And 90 percent of people didn’t get that what they just said is wrong,” said Traver. Traver is 20-something, five-foot-ten with long blonde waves. “When she walks into the room of a conventional venture capital firm and sits at a board table, she’s already discounted,” said Eckert—too model-like to possibly be an engineer who designed a revolutionary medical device. IntuiTap’s “stud finder for the spine,” as Eckert humorously describes it, replaces manual palpation and guesswork with a device that uses a

Unapologetically pink by nature. Helping others shatter The Pink Ceiling by choice. The Pink Ceiling, founded in 2016 by Cindy Eckert, offers strategic consulting, seed investing, and commercial support for startups creating breakthrough medical and health technologies for women. The Pink Ceiling team provides operational guidance and go-to-market strategy, operating as an extension of its partner companies. 4350 Lassiter at North Hills Avenue Suite 260, Raleigh, NC 27609 thepinkceiling.com | @cindypinkceo

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Almost ASTRONAUTS A Taste of Space

by Jeanne Lee

Did you always dream of being an astronaut? Are the stars calling you? Space tourism may be just a year or two away

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from a long-awaited reboot.

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NASA recently announced that the first two commercial spacecraft, Boeing’s CST-100 Starliner and SpaceX’s Crew Dragon, will carry U.S. astronauts to the International Space Station (ISS) next year. If successful, these test flights would bring commercial space travel for regular people one giant leap closer to reality. A slew of companies, including Jeff Bezos’ Blue Origin, Elon Musk’s SpaceX, and Richard Branson’s Virgin Galactic, are on the verge of taking private citizens to space, to be able to see for themselves the blue curve of planet Earth and its fragile layer of life-sustaining atmosphere. One of the stunning achievements of space travel has been for humankind to gain the awe-inspiring view of Earth from the vantage point of space. Astronauts describe a profound change in their life perspective when struck by the planet’s poignant beauty. Seeing the world without political boundaries, they gain a deep sense that all Earthlings are together on a shared home, moving in a black void. Called the overview effect, many who have experienced it come away with a strong feeling of wanting to work to protect the planet and make it a better place.

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“You get the sense that we’re all sailing on the same ship,” says astronaut Michael LópezAlegría. “It makes you more aware of the fragility of our planet—and also more understanding and tolerant of the rest of its inhabitants.” He should know; López-Alegría has flown three space shuttle missions, served as an ISS commander, taken 10 spacewalks, and logged more than 67 hours of “extravehicular activities” outside of the spacecraft, more than any other American. López-Alegría was there during space tourism’s first wave, when seven private citizens went to the ISS between 2001 and 2009. “I flew up with one and down with another one,” he says. They were the fourth civilian space traveler, Anousheh Ansari, in 2006, and the fifth, Charles Simonyi, in 2007. For now, due to lack of capacity on the ISS and the Russian Soyuz spacecraft, “There is no access to space for private citizens...but that should change next year,” says John Spencer, outer space architect and president of the Space Tourism Society in Los Angeles.

Space Tourism Coming Soon A company called Space Adventures, based in Vienna, Virginia, arranged all the space tourism trips to date, with the last traveler being Cirque du Soleil co-founder Guy Laliberté in 2009. Space Adventures’ many offerings include a “suite of private spaceflight experiences to suit all interest levels and budgets,” including some that have never been done before—a spacewalk by a private citizen and a mission around the Moon and back. 17

Houston-based Axiom Space plans to begin flying tourists along After 14 years of work and many delays and with professional astronauts to the ISS in 2020 and aspires to attach setbacks, Virgin Galactic still hopes to launch modules to the ISS that would eventually become an independent commercial space station. Visitors would stay in Philippe Starckspaceship by year end. designed ovoid, white-padded habitation modules, furnished with sleeping bags that tether to the walls and have stick-on pillows to mimic, in zero-gravity, the sensation of resting your head on something. “We are actively soliciting clients now, even though they wouldn’t fly for another two years or so,” says López-Alegría, who retired from NASA in 2012 and now works with Axiom. “We will buy a whole vehicle [from SpaceX or Boeing] and fill it. If it’s SpaceX, they have four seats. We would have at least one professional and up to three seats available for private passengers.” The cost? It’s $55 million, but “for the inaugural mission, the price is reduced to $50 million—a one-time good deal,” says López-Alegría. “The ‘down payment’ is part of the contract negotiation, but clients should expect it to be in the neighborhood of 10 percent.” Meanwhile, other companies are accepting reservations and taking deposits. Last year, SpaceX announced its first two paying customers for a trip around the Moon, initially scheduled for late 2018. But that flight may not happen on schedule, as the notoriously optimistic Musk has also reportedly said that SpaceX would instead focus on developing its deep space spaceship. Blue Origin is also taking names on its website for those interested a suborbital flight. Its rocket, New Shepard, had its ninth successful test flight in July, carrying a test dummy named Mannequin Skywalker. Seats on the six-passenger capsule, with large windows covering a third of its surface, will likely cost $200,000 to $300,000 each, according to Reuters. After 14 years of work and many delays and setbacks, Virgin Galactic still hopes to launch a spaceship by year end. The company has about 800 paid-up customers on its waiting list—with tickets costing $250,000 each—and Branson will ride with passengers on the first official flight, according to Bloomberg.

Space Training Available Now Space enthusiasts, there is no need to wait. You can jumpstart an astronaut adventure on Earth right away. Here’s a list of outfits currently offering space training, true microgravity experiences, and simulated missions to Mars, so you can try out being an astronaut.

NASTAR Center Space Flight Training and Centrifuge Rides Cost: Around $4,000 per course What are g forces? How does a rocket launch and what does reentry really feel like? To experience the exhilaration of gravitational forces on the human body, you can train like an astronaut at the NASTAR Center, located just outside Philadelphia. The FAA-approved center has a centrifuge and several other flight simulators that let you experience a simulated spaceflight.

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“You can absolutely do space training at the NASTAR Center for fun. No ticket to space needed,” says Brienna Henwood, director of commercial business for ETC, parent company to the NASTAR Center. “It’s the closest you can get to actual space flight—the intense g forces, the weightlessness, and the feeling of reentry.”

Space Camp is famous for kid programs, but it has immersive offerings for adults too. “They love doing the simulated missions to space, assuming the role of a flight director in mission control or an astronaut on a spacewalk,” says Patricia Ammons, director of communications at the U.S. Space & Rocket Center in Huntsville, Alabama.

In the centrifuge, you’ll be spinning at high speeds, but you won’t feel like you are. “You’ll feel as if you’re going straight up into space. It’s really intense,” she says. Over 700 astronauts have trained for space at The NASTAR Center. Henwood recommends starting with NASTAR’s two-day Basic Suborbital Space Training course, covering topics like acceleration, effects on human physiology, and what to expect during spaceflight. Serious space hobbyists can go on to Advanced Suborbital Space Training to learn about spatial disorientation and high-altitude effects that can occur during space flight. “Since there is no up or down in space, understanding how your body is going to react to various stimuli prior to actual space flight is important,” Henwood says. To participate in training, you must be 18 years of age or older and get a special medical checkup, called an FAA Medical Class 3, from an aerospace medicine physician. More details are available at nastarcenter.com.

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Space Adventures Zero Gravity Flights Cost: $4,950 Those who have escaped gravity seem to really enjoy the experience. After floating out of his wheelchair on a microgravity flight, the late astrophysicist Stephen Hawking later described the experience to NASA astronauts on the ISS, saying, “I was Superman for those few minutes.” You can experience weightlessness, too.

Space Adventures zero gravity flights use a specially modified Boeing 727, G-Force One, to create a weightless environment that lasts for about 30 seconds at a time. Pilots maneuver the plane to go up at an angle and to an altitude of 34,000 feet, causing you to feel the pull of 1.8 g. At the top of the parabolic route, you experience 20 to 30 seconds of zero gravity. As the plane descends, you descend to the floor again.

The plane flies larger arcs to create a sense of one-third gravity, as if on the surface of Mars, and one-sixth gravity, like on the Moon. G-Force One flies regularly from Orlando, Miami, Las Vegas, and San Francisco. You can charter a microgravity flight for up to 34 people for about $165,000.

Adult Space Academy Cost: $549 for three days, $1,299 for six days Space Camp is famous for kid programs, but it has immersive offerings for adults too. “They love doing the simulated missions to space, assuming the role of a flight director in mission control or an astronaut on a spacewalk,” says Patricia Ammons, director of communications at the U.S. Space & Rocket Center in Huntsville, Alabama. You can try a rings-within-rings multi-axis trainer that simulates an astronaut caught in a tumble spin. There is a simulated mission to the ISS and a mission to Mars in a model of the Orion space capsule. The six-day extended course also includes underwater astronaut training. “I believe a new generation of space naturalists and explorers will say, ‘The stars are calling, and I must go,’” says President of the Commercial Spaceflight Federation Eric W. Stallmer. For those who dream of space, a taste of zero gravity or simulated spaceflight might just prepare you to join the next wave of space tourism.

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A ticket to the stars may very well be closer than you think, as several private companies close in on offering commercial space travel. BLUE ORIGIN

The company is currently taking names on its website for flights on its suborbital rocket, New Shepard, and plans to open its super-powered rocket, New Glenn, to the space tourism industry next year. Featuring a fully reusable first stage, New Glenn will carry people and payloads routinely to Earth orbit.

When: 2019

VIRGIN GALACTIC

The spaceflight company is taking reservations for its first commercial passengers. According to founder Sir Richard Branson, the company is targeting just “two or three more flights before we're actually in space.”

When: NOW

SPACEX #DEARMOON

Elon Musk’s company plans to take its first tourists on a trip around the Moon within the next five years. Musk announced the company’s first paying customer in September— Yusaku Maezawa—a 42-year-old Japanese billionaire.

When: 2023

BOEING CST-100

The CST-100 Starliner is a reusable, seven-passenger capsule designed to autonomously dock with the ISS.

When: Mid-2019

OBAYASHI CORPORATION

Japan’s giant construction company has announced plans to build an elevator that will reach 59,652 miles into space, and use robotic cars powered by magnetic linear motors to ferry cargo and humans to a new space station.

When: 2050

SPACEX DRAGON

Currently under contract with NASA to make uncrewed resupply runs to and from the ISS, the Crew Dragon spacecraft is slated to send its first crewed flight on a test mission next year.

When: 2019 20

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GIFTING

Under the Tax Cuts and Jobs Act by Neil Downing

Planning to give away some of your money or other assets? The rules have changed—and you may benefit. Congress’s once-in-a-generation transformation of federal taxation, which President Trump signed into law in December 2017, not only affects the personal income tax, but also has an impact on gift and estate taxes. So when it comes to making gifts, it’s helpful to know what has changed—and what hasn’t. Annual Exclusion If you give someone anything of value, federal gift tax rules may apply. You generally may give your spouse an unlimited amount without triggering federal gift tax complications. But if the gift is to someone other than your spouse, there can be federal gift tax consequences. More about those consequences later. However, amid all the historic revisions in federal tax law, one of the most basic gifting techniques remains: “You can still give someone a certain amount each year without triggering federal gift tax complications, through what’s known as the annual gift tax exclusion,” said Tiffany Walker, CFP®, ChFC®, a senior wealth planner in CAPTRUST’s Minneapolis office.

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You can still give someone a certain amount each year without triggering federal gift tax complications, through what’s known as the annual gift tax exclusion.

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Tiffany Walker, CFP®, ChFC®

The amount of the exclusion can change each year, depending on inflation. In recent years, it has barely budged.

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For 2018, however, the threshold has jumped more than 7 percent to $15,000. “So any one person can give that amount to any number of people this year without incurring gift tax consequences,” said Cara H. O’Brien, editor/author with Thomson Reuters Checkpoint. 21

Suppose that in 2018, Wendy, who is single, wants to make some gifts in cash or by check. She can give a total of up to $15,000 to her son, $15,000 to her daughter, $15,000 to her nephew, $15,000 to her niece, and $15,000 to her neighbor—for a grand total of $75,000—with no federal tax consequences of any kind, either for Wendy or for the gift recipients. If you’re married and both spouses consent through a process known as gift splitting, the amount of the annual exclusion is doubled to $30,000 per recipient, said Philip D’Unger, CFP®, a wealth solutions specialist in CAPTRUST’s Consulting Solutions Group. So in the example above, if Wendy is married and her spouse consents, they can give a combined total of $150,000 in 2018. For the annual gift exclusion to work, the gift must be of a present interest. That is, the recipient must have all immediate rights to the use, possession, and enjoyment of the gift, O’Brien said.

ANNUAL GIFT TAX EXCLUSION AMOUNT 2014

$14,000

2015

$14,000

2016

$14,000

2017

$14,000

2018

$15,000

The annual gift tax exclusion amount can increase each year based on inflation. For 2018, the amount reached $15,000 for the first time. Source: Internal Revenue Service

Timing is important also. “To take advantage of the current federal gift tax exclusion, you must make the gift within the current calendar year. So checks must be cashed prior to year-end,” Walker said. “Proactive planning is really helpful,” she said. When the new calendar year begins, it’s a new season for making gifts. What to give? “Usually, cash is the best vehicle,” Walker said. If you give something other than cash that has risen in value over time—such as shares of common stock—the recipient assumes your cost basis in the asset for tax purposes. So if the recipient sells the asset, the recipient must pay income tax on any appreciation. What if the gift exceeds the annual exclusion amount? You still won’t have any federal gift tax worries if you take advantage of certain loopholes in the law, which apply without regard to the relationship between the giver and the recipient. For instance, there’s an unlimited exclusion for college tuition expenses. No federal gift tax consequences are triggered if you pay for someone’s college tuition so long as the payment is made directly to the college or university. There’s also an unlimited exclusion for medical expenses. No federal gift tax complications arise if you pay for someone’s medical expenses if the payment is made directly to the provider of medical care and if the expenses aren’t reimbursed by insurance.

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If you and your spouse have two grandchildren, for instance, you can contribute up to $30,000 this year to a 529 plan for each beneficiary—for a combined total of $60,000—without federal gift tax issues.

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Philip D’Unger, CFP®

Section 529 Plans State-sponsored college-savings plans—known as Section 529 plans—are a popular way to save for a beneficiary’s education. You don’t get a federal income tax deduction for contributing (though your state may offer a deduction), but your contributions can grow on a tax-deferred basis. Withdrawals aren’t treated as income for federal tax purposes if used to pay for the beneficiary’s education expenses. (Your state may offer a similar tax break, too.) Contributions to 529 plans count for purposes of the annual gift tax exclusion. Therefore, you can contribute up to $15,000 in 2018 to a 529 plan on a child’s or grandchild’s behalf without sparking federal gift tax concerns. 22

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The gift-splitting rules apply too. So if you and your spouse have two grandchildren, for instance, you can contribute up to $30,000 this year to a 529 plan for each beneficiary—for a combined total of $60,000—without federal gift tax issues. The old five-year rule still applies: “If you contribute more than the annual gift tax exclusion amount this year to a Section 529 plan on a beneficiary’s behalf, you can choose to treat up to $75,000 of the contribution as if you had made it ratably over a five-year period without triggering federal gift tax issues. Keep in mind that the other rules involving the gift tax exclusion still apply,” D’Unger said.

Elementary and Secondary Schools Section 529 plans have added appeal now, thanks to a recent change in the law. Formerly, withdrawals typically qualified for favorable federal tax treatment only if they were used to pay for a beneficiary’s higher education expenses, such as college tuition, fees, books, supplies, and certain computer equipment and software. However, as a result of the Tax Cuts and Jobs Act enacted in December 2017, withdrawals now also typically qualify for favorable federal tax treatment if used to pay for the beneficiary’s education expenses at an elementary or secondary public, private, or religious school. Under the new law, tax-free withdrawals for such education expenses are limited to $10,000 in the aggregate per year, per beneficiary. But that’s still enough to potentially cover some or all of the student’s costs. Nationwide, the average cost for private elementary schools is $9,398 per year and $14,205 per year for private high schools, according to Private School Review, a provider of information on private schools.

Taxable Gifts The federal gift tax exclusion is helpful, but what if the amount you give to someone other than your spouse exceeds 2018’s $15,000 annual threshold amount, and none of the strategies described above applies? It’s not the end of the world because another rule kicks in, involving your lifetime gift and estate tax exemption. In effect, the amount of your taxable gifts consumes a portion of that lifetime exemption amount. For most people, that’s not a big deal. But if you have a large estate, it could result in problems. The lower the amount of your available lifetime exemption, the less that’s available to shelter the remaining assets in your estate from federal estate tax when you die.

BASIC EXCLUSION AMOUNT 2014

$5,340,000

2015

$5,430,000

2016

$5,450,000

2017

$5,490,000

2018

$11,180,000

The basic exclusion amount—sometimes called the lifetime estate and gift tax exemption—has been increased in recent years by an annual inflation adjustment and by legislation. The Tax Cuts and Jobs Act, enacted in December 2017, nearly doubled the amount. For estates of any decedent dying in calendar year 2018, the basic exclusion amount is $11.18 million. Federal tax rates for taxable gifts and taxable estates can reach 40 percent. Source: Internal Revenue Service

Even here, though, you may catch a break. The lifetime exemption amount, which was $5.49 million for 2017, has more than doubled to $11.18 million for 2018 because of the Tax Cuts and Jobs Act (and an inflation adjustment). “That’s just a big jump,” said O’Brien. So yes, taxable gifts will erode your lifetime exemption. But because the amount of the lifetime exemption has ballooned, there’s a lot more room to maneuver. “That’s a huge benefit,” D’Unger said.

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Estate Tax Having a lower lifetime exemption amount at death may not be such a bad thing, either, because of the way the estate tax works.

The Tax Cuts and Jobs Act nearly doubled the amount of the standard deduction, making it more appealing to many taxpayers. And there’s the rub: You may claim a charitable deduction at the federal level only if you itemize.

“For example, if you’re married, and leave your estate to your spouse, there typically are no federal estate tax consequences at that point,” D’Unger said.

How about when your surviving spouse dies? Your spouse’s estate gets to take advantage of his or her own lifetime exemption amount, and his or her estate gets to apply any of the lifetime exemption amount that your estate had not used up, thanks to a feature called portability. That can protect a lot of assets from the federal estate tax. For example, if the husband’s estate used none of his lifetime exemption amount, and his spouse dies afterward, that spouse gets to shield more than $22 million from the federal estate tax. There are potential state tax issues though. Twelve states and the District of Columbia impose an estate tax, while six states have an inheritance tax, according to a recent tally by the Tax Foundation, a tax policy and research organization in Washington. Also, exemption amounts for state estate taxes vary by state. For example, in Massachusetts, it’s only $1 million. So even if the size of your estate won’t trigger the federal estate tax, it could trigger a state estate tax depending on where you live and your state’s rules. Careful planning can help you avoid both.

Charitable Contributions Making a gift to someone else may result in federal gift tax complications. What if you give to a charity? The issue is not the gift tax but the income tax: You may benefit by claiming a federal income tax deduction. The Tax Cuts and Jobs Act nearly doubled the amount of the standard deduction, making it more appealing to many taxpayers. And there’s the rub: You may claim a charitable deduction at the federal level only if you itemize. Because many itemizers will be claiming the now-more-valuable standard deduction in the future, they won’t be deducting charitable contributions. Fortunately, there are ways to deal with that if you’re charitably inclined. First, establish an annual giving plan. “That way, you can be better positioned to take advantage of certain techniques,” Walker said. “We look for creative opportunities to either get clients above the standard

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deduction threshold or reduce their income for tax purposes,” she said. For example, suppose your charitable contributions and other deductions would not, when combined, total more than the amount of your standard deduction in a given year. In that case, claiming the standard deduction makes sense.

But if you bunch two or more years’ worth of charitable contributions into a single year, that could help push you over the standard deduction threshold for that year, giving you a bigger tax break through itemizing. If you’re in your peak earning years, consider donating some of your highly appreciated assets—such as shares of common stock—directly to the charity instead of cash. “That way, you get the charitable deduction (assuming you itemize) and can avoid paying tax on the gain—generally, the amount by which the asset has risen in value,” Walker said.

Using Your IRA If you’re retired and must make annual withdrawals—also known as required minimum distributions, or RMDs—from your individual retirement account (IRA), think about having your IRA trustee move at least a portion of your account directly to a charity, through what’s known as a qualified charitable distribution. You must be at least 70½, and the amount you can donate is limited to $100,000 per year. But there are several benefits. For instance, you won’t have to pay income tax that might otherwise be due because the withdrawal won’t count as income to you (assuming the money

GIFTS NOT SUBJECT TO THE GIFT TAX • Gifts to political organizations • Gifts to certain exempt organizations (such as civic leagues; labor, agricultural, or horticultural organizations; and business leagues) • Tuition paid directly to educational organizations • Medical expenses paid directly to healthcare providers Note: For contributions to charities, other rules apply.

goes directly to the charity). Also, the distribution will count toward your RMD, so you could satisfy some or all of your RMD. With many of the techniques described here, there is another potential benefit. “Giving away some of your money or other assets while you’re alive will reduce the size of your estate, perhaps enough to reduce or even eliminate the impact of estate taxes that may be due upon your death,” O’Brien said.

Think about having your IRA trustee move at least a portion of your account directly to a charity, through what’s known as a qualified charitable distribution.

Will the tax code changes result in fewer taxpayers donating to charity? “Fewer taxpayers will probably benefit from itemizing” and, as a result, may not give as much to charity, O’Brien said. However, “A lot of people give charitably just because they want to give,” not necessarily for tax reasons, she said. So some taxpayers will end up itemizing anyway. “If people give enough, then they will itemize, so people may actually give more,” she said. Overall, “It doesn’t seem like charitable gifting is going to go away because of the new tax law,” D’Unger said. However, “People are going to be more strategic in how they give to charity,” he said.

Need to Consult and Plan The far-reaching changes wrought by the Tax Cuts and Jobs Act and other factors make it even more important to consult your legal, tax, and financial advisors, to plan ahead. For example, a number of tax changes will themselves change come January 1, 2026, so careful planning is even more vital now. “The more long-term you can be in your thought process, the greater the benefit can be to you,” D’Unger said. Even if you’re not worried about what happens with the law after 2025, the changes generated by the Tax Cuts and Jobs Act in the meantime may affect your existing estate plan, so you should consult your advisors about the possible need to make changes to your existing will, trusts, and other important documents and plans. Remember, too, that taxes, while important, aren’t the only factor to consider. “It’s a larger discussion,” one that takes into account your own goals and values, Walker said.

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COPING WITH

RELOCATION ANXIETY By Alysia Tacinelli

Moving homes at any age can be stressful. The organizational and physical tasks can be immense, and for older adults, this process can easily become overwhelming. Understanding the challenges seniors and their families will face while either transitioning to a new residence or making the necessary updates to a current home are why people are looking to senior move managers for assistance.

Before Anne Nieland became a senior move manager in Urbandale, Iowa, she was teaching art classes to senior citizens. That’s where she fell in love with their demographic. She often heard her students talking about how they needed help moving and always volunteered to lend a hand. Nieland found this work to be incredibly rewarding. Eventually, her husband suggested she turn it into a business. “I didn’t realize there was an actual industry. I went to conferences, got a mentor, and job shadowed,” Nieland says. Now, Nieland finds herself constantly busy with her thriving company, Smart Senior Transitions. She says, “I am willing to do anything and everything for my clients,” which can range from finding a trusted real estate agent within her treasure trove of contacts to the arduous job of setting up televisions. 26

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A large portion of her time is spent going through what can be decades of clutter. She asks her clients, “Do you use it?” and “Can you part with it?” If they’re willing to let it go, it ends up in the van, where Nieland’s favorite saying comes into play, “The van makes things vanish.” For unwanted items, Nieland says, “I try to keep as much out of the landfill as possible.” She can find value in just about anything. She goes on to say that ripped or stained sheets are always needed at animal shelters, partially used cleaning products can go to a women’s center, used glasses can be donated to a Rotary Club, and just about every client has a drawer full of discarded cables that can be dropped off at any Best Buy. If a client wants to try selling instead of donating, Nieland selects the best-suited consignment shop for that item.

It’s inevitable that clients’ emotions get brought to the surface while sifting through meaningful items. When Nieland was packing up a recently divorced client, they came across personal correspondence from her ex-husband. The client, understandably, got very upset. Nieland often faces clients who get angry, frustrated, and teary. She’s learned how to pay attention to triggers and knows when to ease off. Nieland says, “We’re ripping open old wounds. It’s a lot of listening and paying attention to how they’re feeling. Sometimes you sit on the couch and let them cry. It’s hard not to cry myself. The ride home is often in silence. No radio. No calls. Just deep breaths.” According to Nieland, it’s challenging not to form personal relationships in this line of work. “It’s virtually impossible not to become friends. They’re so warm and appreciative,” she says. She often hears from her clients long after a job has been completed. After hours of working together, they’ve developed a relationship, and clients will call to check on how she’s doing.

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We’re ripping open old wounds. It’s a lot of listening and paying attention to how they’re feeling. Sometimes you sit on the couch and let them cry. It’s hard not to cry myself. The ride home is often in silence. No radio. No calls. Just deep breaths. Anne Nieland

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What Exactly Does a Senior Move Manager Do? Senior move managers are experts who specialize in resettling older adults and preparing them for a different lifestyle as they age. Essentially, they’re project managers with extensive practical knowledge about the costs, available local resources, and obstacles that can arise when downsizing. While specific services vary, most senior move managers offer the following: • House cleaning • Waste removal • Shopping • Assistance with Realtor selection • Helping to prepare a home to be sold • Packing and unpacking • Scheduling movers • Donating or selling furniture • Sending special keepsakes to family members • Calling the cable company and other utilities • Preparing a new home with safety features But Nieland often finds herself going off-menu. She describes having an 88-year-old client who is in excellent health and has no intention of moving; instead, the client enlisted Nieland’s help for after she passes. When that day comes, Nieland knows where everything needs to go and, most importantly, will be the one to oversee the welfare of George, the client’s beloved dog. In addition to providing comfort and peace of mind, Nieland is helping this client’s family by relieving them of the burden and heartache of packing up their loved one’s belongings.

(Top) Movers move large items from a home. (Bottom) New home layout with furniture placement.

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Some families are geographically hindered and can’t help their loved one pack and move. Senior move managers can be useful in this type of situation. They can figure out the best and most cost-effective way to ship items to family members and friends and, perhaps most importantly, they can be there as a comfort to help with the emotional element of relocating.

Talking Through Senior Living Options Nieland assists her clients in determining whether they want to live independently in their current or new home or in an assisted senior living community. Often, older adults and their families are unaware of many of the costs associated with staying at home, while others might not know about all the options available for assisted living. However, Nieland never gets into the specifics of health care or offers financial advice regarding the cost benefits of options. When an older adult decides to age in place, a senior move manager can help turn their home into a safer dwelling. Nieland recommends modifications such as, “getting them to cook with an induction stove [which uses magnetic fields and turns off when a pot or pan is removed], widening doorways, adding ramps, and raising items such as the washer and dryer.”

A Network of Senior Move Managers The National Association for Senior Move Managers (NASMM) is an excellent resource and networking tool. For example, Nieland had a client who was relocating to a different state. She was able to use the NASMM to find a trusted senior move manager operating

in the client’s destination state. This person assisted with the unpacking and setup of the client’s new home. Both senior move managers worked as a team to accomplish the goals of the client. In another instance, Nieland found herself having to crate and ship a rather large art piece. So, she turned to the community and asked, “I have a life-size statue of a horse, what do I do?” She ended up receiving some helpful tips, and the horse made it to its new home in one piece. When asked if having the responsibility of shipping treasured items makes her nervous, she replies, “It’s like running a road race: you’ve prepared and you’re confident in your resources, but you still have butterflies.” Jokingly, she adds, “Also, I have liability insurance.” Since this is an industry based on the needs of older adults, who can at times be vulnerable, it is important for the NASMM and all their members to follow a strict code of ethics. There is usually a free in-home evaluation, followed by a written estimate of the time and cost of a job, before any payment is processed. Some senior move managers charge on an hourly basis, while others prefer to package everything together at one price. Being sensitive to this demographic, Nieland tailors each service, as well as her hourly rate, to every client’s specific need. She advises clients not to sign the contract the same day, and she encourages them to talk to their families before doing so. While uprooting oneself from a well-lived-in home of many decades can be stressful and intimidating, it is a comfort to know there are caring people, like Nieland, willing to help with the transition.

TOP TIPS TO GET A MOVE ON Moving homes at any age can be complex and stressful, but senior move managers can help. Here are a few tips from Anne Nieland of Smart Senior Transitions: • Nieland’s number one tip is to start downsizing early. Do one shelf a day if you’re feeling overwhelmed.

• Try to prepare yourself for the emotional aspect of moving. Arrange to have a support system in place.

• Realize that your kids and grandkids probably don’t want your stuff.

• If someone isn’t going to be helpful during your move, don’t involve them.

• Value has changed over the years. Something worth a lot of money 30 years ago might not be quite as valuable anymore.

• Make sure to have all your paperwork, such as health documents and power of attorney, in place.

• Somebody else can use it. Why hold onto something if you don’t use it and someone else will?

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A GOOD GIG? by Sam Kirby

A new generation of companies that provide goods and services on demand via smartphone applications has begun to reshape consumer and worker behavior, providing both groups with more choices than ever before. The growth of these services has created a gig economy, where workers are independent freelancers who choose their own hours and

Gabrielle Burke

assignments over permanent employment. Although most people, an estimated 89 percent, are not familiar with the term gig economy, the majority, more than 70 percent, have participated in it by using a shared or on-demand online service.1 When planning a vacation, you can rent a beachfront condominium directly from a homeowner rather than stay at a resort. Instead of renting a car, you can request a ride with your phone and popular ride-sharing apps such as Uber or Lyft. What if you need someone to pet sit while you’re away, or you want to come home to a detailed car or a completed landscaping project? Today, there’s an app for just about anything.

New gigs can emerge quickly in this technology-fueled environment. In the city of Raleigh, North Carolina, over the course of a single summer weekend, flocks of electric, pay-by-the-minute Bird scooters appeared, with riders soon zipping along sidewalks, leaving some less cheerful drivers and pedestrians wondering what had just happened and city officials scrambling to catch up with regulation. What isn’t as visible is the troop of paid Bird hunters who drive around town after hours to collect, recharge, and reposition the scooters, in a type of scavenger hunt meets part-time job.

29

The growth of the gig economy presents opportunities and challenges to all market participants. It has been described both as the Industrial Revolution of our age, with the potential for massive gains in productivity—and as the end of job security. It’s been hailed as a liberator for workers seeking to work on their own terms and criticized as a predatory system that leaves workers underpaid, overstressed, and more unprepared for the future than ever before.

economic historian Louis Hyman describes it, the Industrial Revolution of the 18th century saw a movement of workers from farms and artisans’ shops to centralized locations where their efforts could be coordinated and managed. They earned a wage instead of the profits of their labor. This change in labor patterns, when accelerated by the new technology of the day—steam power and assembly lines—powered massive gains in productivity.

What’s the real story? Is it a good gig?

Today, the movement is in the reverse—from formal, centralized workplaces to more flexible, loosely affiliated work arrangements. This phenomenon is not new. Hyman explains that it has been underway since the 1970s: “Over these four decades, we have seen an increase in the use of day laborers, office temps, management consultants, contract assemblers, and every other kind of worker filing an IRS form 1099.”

What’s the Gig? Services or service platforms that make up the gig economy share a few common traits, such as: • The ability for consumers to grant (or gain) temporary access to underutilized assets, such as a vacation home or a car, with idle capacity. Cars, for example, are unused for 95 percent of their lifetime.2 • Greater flexibility for both buyers and sellers of goods and services. Consumers and businesses gain the ability to buy services or contract help on demand, and sellers or providers of services can choose when to work, including nontraditional hours that fit with their lifestyles or other time commitments. • A willingness by both sides to conduct business with strangers. In a decentralized model, building mechanisms for trust becomes one of the primary roles of the platform provider, whether that’s a driver or riders given ratings in a ride-sharing app or your eBay feedback rating.

Gigs Past The comparison to the Industrial Revolution is interesting, because in some ways the gig economy seems like a 180-degree turn. As

More recently, what has changed is the pairing of workers’ appetite for short-term, independent employment with smartphone technology platforms to connect these workers to buyers. As with the Industrial Revolution, technology did not create the movement; rather, it has accelerated it. Digital gig platforms, for example, solve the challenges of efficiently linking buyers and sellers, establishing trust, setting a price, and facilitating payments.

Gigs Present The Brookings Institute has estimated that this facet of the economy will grow from $14 billion in 2014 to $335 billion in 2025.3 However, the size and growth rate of the gig economy labor force is not easily captured in official employment statistics. In 2016, the JPMorgan Chase Institute estimated that around 1 percent of adults had earned income in a given month from online platforms, and that more than 4 percent had participated over a three-year period.4 In addition to replacing a traditional full-time job, gig economy

TYPES OF GIG ECONOMY SERVICES

PERSONAL SERVICES

LABOR PLATFORMS

Homes

Ride sharing

Hospitality

Legal

Cars

eLearning

Retail

Medical

Recreational equipment

Caregiving

Moving

Accounting

Handyman/odd jobs

Warehouse

Creative

Food and grocery delivery

Event staff

Technical

Administrative

Translation

Specialized equipment

30

Fall | 2018

PROFESSIONAL SERVICES

Getty Images(4)

GOODS

Figure One: Gig Economy Workers’ Motivations

business environment where innovation has so far outpaced regulation. One such risk is the potential for new forms of discrimination. A 2017 Harvard Business School study found that guest acceptance at a leading home-sharing service was 16 percent lower for users with names that did not sound distinctly “white.”6 Future regulation is likely to focus on limiting the impact of potential discrimination on online platforms, both from the humans and algorithms involved in decision making.

28% 54%

46%

72%

Workers Primary Income

Out of Necessity

Supplemental Income

By Choice

The balance of costs and benefits to workers is perhaps the most hotly debated aspect of the gig economy. The fundamental tradeoff to workers is one of flexibility versus security. The ability to clock in and clock out with a swipe of a smartphone screen empowers workers to create a work-life balance that meets their own unique circumstances, limitations, and obligations.

Source: 2016 McKinsey Global Institute survey

workers may also use the platforms to earn extra income. Business strategy consulting firm McKinsey & Company, with a somewhat broader set of criteria for independent workers, put the number at 20 to 30 percent of the working age population. They also found that these workers participate in the gig economy for primary or secondary sources of income and either out of choice or necessity.5 Figure One breaks down the numbers.

As the Pew Research Center’s work on the gig economy shows (Figure Two), not surprisingly, alternate employment is most popular among younger and lower-income workers. The gig economy seemingly combines the more nomadic work preference of millennials with the always-connected-to-your-phone behavior of Generation Z.

Gigs Future

Another group likely to benefit from the gig economy are skilled workers that have been marginalized by the rigid requirements of traditional full-time work. As professor and author Diane Mulcahy explains, “Stay-at-home parents, retired people, the elderly, students, and people with disabilities now have more options to work as much as they want, and when, where, and how they want, in order to generate income, develop skills, or pursue a passion.”

The gig economy is likely to affect aspects of our lives and economy that are difficult to imagine today. Studies have shown that where ride-sharing services are widely available, many choose to use them in lieu of ambulances for emergency room visits. From farm equipment and private aircraft to personal and professional services and skilled trades, the gig economy stands to alter the ways in which many Figure Two: Percentage of U.S. Adults Who Have Earned Money in the Last Year services we rely on will be provided, by Using Digital Work or Task Platforms with implications for all stakeholders. Consumers The driving forces behind the growth in gig economy services are convenience, flexibility, and price. By matching providers and consumers directly, in many cases using physical or human assets that would otherwise be idle, these services can remove layers of costs. Beyond choice and price, consumers also stand to benefit from greater service availability, particularly in areas underserved by traditional businesses. But a variety of risks—beyond the risk of an inexperienced driver behind the wheel—also face consumers in this new

65+ AGE

2%

50-64

4%

30-49

10%

18-29

16%

COLLEGE + EDUCATION

9%

SOME COLLEGE

9%

$75K+ INCOME

6%

HIGH SCHOOL OR LESS

$30K-$75K

4% 8%

<$30K

10%

Source: Pew Research Center, survey conducted in 2016.

31

On the other side of the ledger are the costs and risks to workers. There is no free lunch, and the flexibility benefits of gig employment must come at a cost. Examples include: • Greater income volatility and potentially lower incomes for the same types of work; • Fewer workplace safety protections; • Lack of valuable benefits packages typically provided by employers, including paid vacation and sick leave, health insurance, and retirement programs; and

A fundamental premise of the gig economy is that suppliers and consumers of goods and services can be matched directly and efficiently through technology. a larger population of consumers, with perhaps a disinflationary impact to the economy.

Taken together, these costs cause a dollar of gig earnings to be worth less than a dollar from traditional employment. Gig-oriented work can also take a toll on health, with studies suggesting that a decade of irregular work could lead to a cognitive decline of 6.5 years (compared to those working regular hours).7

Finally, a thorough look at the gig economy must consider public benefits and security programs, such as Social Security, unemployment, and health and retirement systems. In an extension of the trend from employer-provided retirement security through traditional pension plans toward defined contribution plans like 401(k)s that share the responsibility for retirement savings between employers and workers, workers in a gig economy will bear even more of the responsibility for financial security and retirement savings.

Businesses

A Gig in Transition

As with most shifts in technology or consumer taste, the gig economy represents both opportunities and threats to traditional businesses. With unemployment at record lows and businesses of all types struggling to find qualified workers, the prospect of scaling the workforce on demand—and potentially without the overhead of benefit and employment costs—may be appealing in fields where skills are more commoditized and transferrable.

In my travels across the country for client meetings over the past few weeks, I’ve made it a point to ask ride-sharing service drivers about their experiences in the gig economy and their motivations. I’ve heard from drivers who are making ends meet while they:

• Tax complexity.

At the same time, employers may face a new source of competition for their already scarce talent pool. Against this new form of competition for workers, the gig economy may prompt employers to extend similar types of flexibility to their own workers. And against new gig economy competitors, businesses will not just compete for workers—they will also compete for customers. As always, there will be winners and losers, and the companies that thrive will be the ones most attuned to the shifting preferences of their customers. Of course, these preferences—and the challenges of how to fulfill them—are changing at a heightened pace, thanks to technology trends. The Economy A fundamental premise of the gig economy is that suppliers and consumers of goods and services can be matched directly and efficiently through technology. This has the potential to improve capital efficiency and productivity. But once again, these gains do not come without costs and risks. How does the gig economy affect the American dream of a tidy house with two cars in the driveway? If consumers can easily rent homes, cars, boats, planes, recreational vehicles, and snowmobiles on demand, then the same asset base is able to meet the demands of 32

Fall | 2018

• Take real estate and community college classes, • Interview for jobs after college, • Study for the bar exam after law school, and • Save to start a new organic produce business. In each of these cases, the gig job is not a long-term objective. Rather, it’s a means to an end. If the availability of flexible, shortterm work arrangements allows these individuals to start more businesses, retrain themselves, and acquire the skills required in our changing economy, it may be a small gig that leads to a much bigger stage. Only time will tell.

1

Smith, Aaron, Shared, Collaborative and on Demand: The New Digital Economy, 2016.

2

Yaraghi, Niam and Ravi, Shamika, The Current and Future State of the Sharing Economy, 2016.

3

Ibid.

4

Farrell, Diana and Greig, Fiona, Paychecks, Paydays, and the Online Platform Economy, 2016.

5

Manyika, James, Lund, Susan, Bughin, Jacques, Robinson, Kelsey, Mischke, Jan, and Mahajan, Deepa, “Independent work: Choice, necessity, and the gig economy,” 2016.

6

Edelman, Benjamin, Luca, Michael, and Svirsky, Dan, “Racial Discrimination in the Sharing Economy: Evidence from a Field Experiment,” 2016.

7

Marquié, Jean-Claude, Tucker, Philip, Folkard, Simon, Gentil, Catherine, Ansiau, David, “Chronic effects of shift work on cognition: findings from the VISAT longitudinal study,” 2014.

U.S. STOCKS LEAD THE WAY U.S. stocks are a standout among the major asset classes so far this year. Although it has cooled somewhat, the U.S. economy continues to grow at an elevated pace, boosting stocks to double-digit returns this year. Meanwhile, sluggish growth outside the U.S. and rising interest rates have hampered other asset classes. • U.S. stocks added to their gains for the year, as solid corporate earnings and strong economic growth offset concerns about escalating trade tensions. In the third quarter, large-cap stocks posted their best quarterly performance in nearly five years. • International developed stocks are slightly negative due to sluggish economic growth and trade tensions. Emerging market stocks continue to face pressure from a stronger U.S. dollar and economic turmoil in several countries, including Turkey and Argentina. • Bonds treaded water in the third quarter. They have logged a small loss for the year as interest rates reached their highest levels in five years. • Public real estate rose slightly in Q3 and remains modestly positive for the year despite pressure from higher rates. • Strategic opportunities notched a small loss in the third quarter but are hanging onto a small gain for the year.

MARKET INDEX PERFORMANCE (as of 9.30.2018)

2018

Q3 2018

10.6% 7.1%

2.1% 0.8%

-2.7% U.S. Stocks

International Stocks

0.0%

0.6%

1.0%

0.0%

-1.6% U.S. Bonds

Real Estate

Strategic Opportunities

LOOKING FORWARD The outlook for the U.S. economy remains positive. The labor market continues to perform well, and consumer and business confidence is at a historically high level. We anticipate another year of strong corporate earnings growth as the benefits of tax reform become evident. Meanwhile, we are monitoring the impact of higher mortgage rates and tight inventory on the housing market. In late September, the Federal Reserve raised interest rates for a third time this year and could hike rates again before year end. Looking into next year, we expect the Fed to move cautiously with further rate hikes. As always, we are on the lookout for issues that could lead to short-term market volatility, including trade disputes and political turmoil at home and abroad.

Asset class returns are represented by the following indexes: Russell 3000 Index (U.S. stocks), MSCI All-Country World ex USA Index (international stocks), Bloomberg Barclays U.S. Aggregate Bond Index (U.S. bonds), Dow Jones U.S. Real Estate Index (real estate), and HFRX Absolute Return Index (strategic opportunities).

33

TIME’S UP FOR MONEY SILENCE by Kathleen Burns Kingsbury

Over the past year, women have individually and collectively spoken out against gender inequality and decided that the cost associated with staying quiet is too high. Celebrities like Ashley Judd, Reese Witherspoon, and Oprah Winfrey declared “Time’s Up” when it comes to the sexual and financial mistreatment of women in Hollywood. This movement has sparked a dialogue that extends beyond the entertainment industry and into all our homes.

This cultural phenomenon presents a great opportunity for women and men to break the money silence and discuss taboo topics like money and power. At times like these, dialogue may cause discomfort, but there has never been a better time to engage in these conversations. Why now? Because the economic strength of women is on the rise and power dynamics at home and at work are changing. According to the Center for Talent Innovation, the number of wealthy women in the U.S. is growing twice as fast as the number of wealthy men. Currently, women oversee $11.2 trillion in investable assets. By 2030, they will control two thirds of the nation’s wealth.

The average woman earns 81 cents to every man’s dollar, and the gap widens if you are a woman of color. This pay inequality puts many women and their

Despite these positive trends, many women are still paid less than men. The families at a financial disadvantage. average woman earns 81 cents to every man’s dollar, and the gap widens if you are a woman of color. This pay inequality puts many women and their families at a financial disadvantage. Whether they are primary breadwinners, co-contributors to their families' incomes, or stay-at-home moms, this type of discrimination impacts them and often renders women silent.

34

Fall | 2018

The gender wage gap surfaced very publicly when Michelle Williams, an A-list actress, was paid $1,800 for reshooting scenes in the movie All the Money in the World. Her male costar, Mark Wahlberg, received $1.5 million for the same work. The difference? Wahlberg used his voice and demanded his contractual reshoot fee, whereas Williams accepted the standard fee without question. In the end, Wahlberg donated his salary to the Time’s Up legal defense fund and showed that men are an important part of the solution. If even the rich and famous cannot overcome this issue, how likely is it that women can advocate for themselves? This challenge may sound difficult, especially if negotiating your salary is a new skill, but it’s possible. Consider the following women’s stories... McKenzie, a 25-year-old paralegal, spoke up when she was promoted to a new position with more responsibility. Unfortunately, when she asked the human resource director for a salary increase, she was called greedy. “The worst part is the human resource director is a woman,” McKenzie said. She did receive a pay increase, but only because she was persistent, professional, and determined not to let gender bias stop her. But what if you don’t work outside the home or contribute only part of the household income? Do you still need to talk more about money and advocate for yourself? The short answer is yes. Danita is married with an adult daughter. She feels strongly that women have to have an equal stake in their financial health and wellbeing. “I remember when my father-in-law had a stroke and couldn't manage the daily tasks as he once did. My mother-in-law was lost, never having paid a bill or written a check in her life. I remember thinking, ‘I never want to be in that position, and I never want to see my daughter in that position either.’” Danita and her husband believe that managing money is an important life skill. They have made a commitment to raise a financially literate daughter and serve as role models for how couples can talk openly and honestly about money and share financial decision making. Gina also believes that women need to take part in money management. As she says: When a woman speaks up about finances and participates in money conversations, that leaves an impact of being equal—regardless of her role, whether she’s a stay-at-home mom or someone who works part time—in all decisions. It enables her sons to have respect for women and be inclusive in conversations with them—rather than feeling like financial discussions are the purview of men only—and for daughters to be raised as strong, independent women.

Different life-changing experiences spurred these women to make a change. But you don’t have to wait for a promotion or a loved one’s illness to act.

Different life-changing experiences spurred these women to make a change. But you don’t have to wait for a promotion or a loved one’s illness to act.

35

Here are a few tips on how to be an advocate for breaking money silence about women and wealth right now.

Take an Active Role in Your Financial Life

With women’s economic strength rising and dynamics at work and home changing, the time has never been better for women and men to break this money silence.

Don’t delegate your financial decision making to someone else. Instead, participate in identifying your short-term and long-term financial goals and working toward achieving these objectives. If you are a member of a couple, attend legal, tax, and financial advisor meetings with your partner. If you are single, find trusted advisors to work with. Ask questions. Learn as much as you can about how to be financially fit today—and financially secure tomorrow.

Be a Role Model Set a good example for the next generation. Show your daughters, sons, nieces, and nephews how women can play an active role in their financial lives. Set a powerful example by managing your money and discussing the impact of your gender on your finances. If you are a man, use your role as a husband, father, uncle, or brother to show your loved ones that no matter a person’s gender it is important for them to be a part of household decision making and planning.

Get Involved There are many opportunities to support the fight for gender pay equality. Get involved with organizations that advocate for gender parity. Contact your local senator and congressional representatives and encourage them to support legislation to end financial discrimination. Run for political office or support a qualified female candidate. Or volunteer to teach financial literacy to young girls. Whatever you choose to do, you will make an impact. The Time’s Up movement shows the power women can have by speaking up. Yet, silence persists around taboo topics like money and power. With women’s economic strength rising and dynamics at work and home changing, the time has never been better for women and men to break this money silence.

ORGANIZATIONS FIGHTING FOR GENDER EQUALITY Check out these organizations for more information on gender inequality and how you can help: • American Association of University Women (AAUW): aauw.org/fairpay • Equal Pay Today: equalpaytoday.org • Lean In: leanin.org/equal-pay • National Organization for Women: now.org/resource/women-deserve-equal-pay-factsheet/ • Ellevate Network: ellevatenetwork.com

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Fall | 2018

THE EARLY BIRD GETS THE WORM: Roth IRAs for Teens

Getty Images

by Jeanne Lee

Looking for a way to set your teenagers up for financial success down the road? Get them off to a good—and early—start by opening Roth individual retirement accounts (IRAs) for them as soon as they start working. Put the power of time and compounding to work on their behalf. You’ll be surprised at the result.

Mike Gray is a dad who thinks ahead. Far ahead. When his son and daughter were teenagers, he set up wonderful tax-free gifts for them to help secure their financial futures. When his kids got their first jobs, he opened Roth IRAs for them. Gray, a financial advisor in CAPTRUST’s Raleigh headquarters office, put in an amount matching their modest earnings. He continued contributing to those accounts for years. Retirement accounts for teens? It may sound premature until you consider that the golden rule of retirement savings is to start early so the savings have more time to grow. Financial advisors often point out that 20-somethings who start saving a little each month gain a big time advantage over those who wait till their 30s or 40s to get started.

By the same reasoning, why not help your child reap the benefits of an extra-long investment time horizon of 50 years or more? A Roth IRA, funded with after-tax dollars and that grows tax-free, is well-suited to help with this goal.

Eligible with a First Job Just like adults, kids of any age are permitted to contribute to Roth IRAs as long as they have wages or compensation within Internal Revenue Service limits. In 2018, the maximum contribution is $5,500 or the amount earned, whichever is less. Minors need a parent, grandparent, or other adult to open custodial Roth IRAs in their names. And it’s fine for an adult to make the contributions on the child’s behalf. 37

Gray’s daughter got her first real job at a summer camp at about age 14. She earned less than $2,000 that year, he recalls. She was allowed to keep her paychecks and spend the money as she liked. Gray opened the Roth IRA in her name and made a contribution in the amount she earned. Every year she had a job, he matched the amount. “I’ve made contributions for eight or nine years now, in whatever amount her earnings were,” says Gray. “She has a real job now, as a nurse, so I put in the full Roth amount each year.” When his son turned 15 and got a job as a lifeguard, Gray opened a Roth IRA for him, too. His kids are in their 20s now, and he hasn’t told them yet.

Lots of Time for Investments to Grow Getty Images Getty Images

Here’s why an early start is a gift in itself. Say you gave your 25-year-old child $5,500 to invest. After thirty years, the money would grow to $41,867, assuming 7 percent growth, compounded monthly. But you could double the impact of your gift by giving it to your child at age 15. After forty years, assuming the same rate of return, the $5,500 would grow to $82,360. Consider what would happen if your 25-year-old child funded a Roth IRA for 10 years, then stopped making contributions. After 30 years, the account would be worth $314,643 (assuming equal monthly contributions adding up to $5,500 a year and a 7 percent annual return, compounded monthly). What if you helped your child make the same investment a decade earlier, at age 15? The difference would be huge. After 40 years, at the same rate of return, the sum would grow to $618,951.

What if you helped your child make the same investment a decade earlier, at age 15? The difference would be huge.

“Getting started that early is really powerful as far as the value of compound growth. It’s pretty amazing the effect of another 10 years,” says Gray.

Kid-Friendly Tax Rules Roth IRA rules are great for young people. Kids generally pay little or no taxes, so it makes sense to use after-tax dollars in a Roth rather than tax-deferred dollars in a traditional IRA. Decades down the line, all withdrawals from the Roth IRA after age 59½ will be completely tax-free, barring a change to Roth IRA tax treatment.

Non-Retirement Uses of Roth IRA Funds Roth IRAs work best if the money is left to grow undisturbed until retirement. However, the rules are flexible enough to allow funds to be tapped under some circumstances. Contributions have already been taxed, so they can be withdrawn at any time.

38

Fall | 2018

Earnings, or investment returns, are treated differently. Prior to age 59½, early distributions of earnings are generally subject to income tax, a 10 percent penalty, or both—with some important exceptions:

“

Getting started that early is really powerful as far as the value of compound growth. It’s pretty amazing the effect of another 10 years.

”

Mike Gray

• Funds for a first home—A Roth IRA could help your child buy a first home, a goal that escapes many young adults. Homeownership is near 20-year lows among millennials, according to the Brookings Institute, a nonprofit public policy organization. Your child could use Roth IRA funds, within limits, toward a down payment when it comes time to buy a first home. He or she could withdraw up to $10,000 of the earnings, without tax or penalty, provided the account has been open for at least five years. Before the five-year mark, income tax would apply, but not the penalty. • Funds for college—Roth IRA contributions can be pulled out for any reason, including college expenses. When your child goes to college, he or she could also withdraw earnings without penalty if they are used toward college tuition, room and board, or other qualified higher education expenses. Earnings would be subject to income tax. • Funds for emergencies—In bad times, Roth IRAs can become emergency funds. In addition to contributions being accessible, IRS rules allow earnings to be withdrawn without penalty for specific emergencies. These include becoming disabled, having to pay for health insurance premiums while unemployed, and having high medical expenses. Gray plans to reveal his children’s Roth IRAs to them one day, though he hasn’t decided when. It might be when the balances reach a nice, round number, like $50,000, or some kind of special occasion. “Marriage might be something that triggers it. It’s a gift, but it comes with caveats,” he says. The big news will come with a serious discussion about using the money wisely.

$618,951

For now, those gifts that date back to their summer camp and lifeguarding years continue to grow, tax-free.

Hypothetical Illustration

$314,643

$314,643

Started contributions at age 15 Started contributions at age 25

$159,949 $81,310

$159,949

$81,310 $5,500

AGE 25

AGE 35

AGE 45

AGE 55

This hypothetical example, assuming 7% growth compounded monthly, is included to illustrate the impact of growth over time, but does not consider market volatility. Since general market returns fluctuate daily, an investor’s experience will be different.

39

READER Q & A In this issue we offer a few insights about the impact of rising interest rates on bonds and how you can help an adult child become a homeowner.

With the Federal Reserve raising interest rates and mortgage rates rising, should I avoid bonds?

A

No. Bonds can still deliver positive returns in a rising-interest-rate environment and remain a key piece of a diversified portfolio. Many investors are understandably concerned that rising interest rates will negatively impact their bond portfolios. While increasing interest rates may lead to price volatility, rising rates do not necessarily create bond losses. Barring a default or an early call, bonds held to maturity will generate positive returns regardless of interest rate movements. In addition, rising rates provide bond investors an opportunity to reinvest their coupons or the proceeds of maturing bonds at higher interest rates. Consider a hypothetical scenario. An investor purchases a 5-year bond that pays $5 per year in interest for $105. We don’t know how interest rates will behave in the future or how the bond’s price will fluctuate due to changing interest rates. But we do know the bond will pay the same interest amount every year—again, assuming the issuer doesn’t default or call the bond early. We also know the bond will mature at par ($100), so we know the bond’s price will decline by a total of $5. Thus, the bond earns the same total interest ($25) and depreciates the same amount ($5), regardless of interest rate movements along the way. History also provides a guide. In 1940, interest rates began an upward trajectory that lasted into the early 1980s. The 10-year U.S. Treasury yielded a mere 2 percent at the start of that climb and ended near a towering 14 percent in 1981. Yet, over that 42-year period, the 10-year Treasury’s annualized return was positive, and there were only a handful of years when bonds had a negative total return. In the worst year, the drop was only about 5 percent. While we do not anticipate trouble ahead for bonds and believe they should be part of a well-diversified portfolio, we know that investment risk tolerance is highly personal and that every investor’s circumstances are unique. So please talk to your financial advisor about your unique needs and considerations before making any decisions or changes to your portfolio.

40

Fall | 2018

?

My daughter has been saving for a down payment on her first house, but the hot real estate market has made it hard for her to afford the kind of home she wants. What’s the best way to help her out?

A

Your daughter is not alone. With rising home prices in many metropolitan areas, homebuyers—especially first-time home buyers—face several headwinds, including the challenge of coming up with a down payment, lack of credit experience, and higher debt-to-income ratios. These three intertwined issues mean that many young people are finding it challenging to get a home mortgage. The good news is that the right kind of financial help from family can help make homeownership a reality. For parents who can afford it, there are numerous ways to help a child become a homeowner: • Give the gift of a down payment—A cash gift from a parent used to fund a down payment will make it easier to qualify for a mortgage because it lowers the mortgage loan amount, improves the child’s debt-to-income ratio, and reduces the mortgage payment amount. This is the most common way parents help children buy homes. • Consolidate your child’s loans—If your daughter has student, auto, or other loans that affect her credit or ability to borrow, consolidating her loans may be a solution. By paying off her debt, you free up her credit and create debt space to allow her to qualify for a mortgage (or perhaps a larger mortgage). • Co-sign a mortgage—Co-signing a mortgage with your daughter would likely improve her ability to borrow (or borrow more). You should only consider this option if you have the confidence that she is going to be able to afford the monthly mortgage, tax, and homeowners’ insurance payments. If she defaults on the loan, as co-borrower, you will be responsible for it. One last option—although it doesn’t accomplish the mission of helping a child buy a home—is to buy the home yourself and rent it to her. If you go this route, make sure to document the rental agreement and payments she is making to help ensure that she has a good payment history when it comes time for her to apply for a mortgage. This can be a complicated issue, so please make sure to consult your legal, tax, and financial advisors for their thoughts about your specific situation.

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.

41

GIVING BACK

National Day of Service

The CAPTRUST Community Foundation is on pace for a record year of giving, and employees have been out in force supporting worthy causes in the communities we serve. 2018 National Grant Recipients

The CAPTRUST Community Foundation launched its National Grant Program in 2017 to provide a higher level of financial support to worthy causes benefiting children in the communities where we do business. The CCF board selected three recipients from the dozens of organizations that applied to receive $25,000 grants this year. This year’s National Grant recipients are:

Hoofin’ It for Hope

CAPTRUST employees were out on the grounds of Hope Reins’ beautiful 33-acre ranch on September 22 for Hoofin’ It for Hope, an interactive 1-mile hike-athon. Walkers were there to raise funds to support kids in crisis who are helped by Hope Reins and its herd of rescued horses that live on the ranch. The event raised more than $75,000 for the kids and horses of Hope Reins, nearly double the amount raised in 2017.

Triangle Hops for Hope

For a fourth year, CAPTRUST participated in Triangle Hops for Hope, an event that pairs corporate teams with Raleigh-area craft breweries to create an original beer to raise money for charity. This year’s competition featured brews from 25 teams and raised $95,000 to benefit Children’s Flight of Hope, a local nonprofit that provides air transportation for children to access specialized medical care. Participants showcased their brews at a beer festival held at Raleigh Beer Garden in late September. CAPTRUST’s team brewed a raspberry and vanilla stout and won the award for best booth.

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Season Fall | 2018 | 20XX

(Top) CCF representatives present a National Grant check to Families Together (Middle) Trivia Night at the Raleigh office mixes competitive fun and raising money for good (Bottom) CAPTRUST’s Hops for Hope team, The Roth IPAs, celebrates their Best Booth award

CAPTRUST GROWTH

Roanoke, Virginia

We are pleased to announce three new regional offices, several new financial advisors and other key hires, and an office move. Morton Wealth Management

In September, we announced that fee-based financial consulting firm Morton Wealth Management, headquartered in Greensboro, North Carolina, has joined our growing team. Led by founding advisor Steve Morton, Morton Wealth Management specializes in investment management and financial planning and offers clients a holistic approach to retirement. The team manages more than $400 million in assets for high-net-worth individuals and families and brings more than 30 years of experience to CAPTRUST. Please welcome Greensboro-based Financial Advisors Steven H. Morton, CPA, CFP®; Walter E. Abele, CFP®; and Jonathan Stoller, CFP®.

Catawba Capital Management

In July, we announced that Roanoke, Virginia-based investment advisory firm Catawba Capital Management joined the growing CAPTRUST family. Founded in 1992 and led by partners Terence Crowgey and R. Jay Irons, Catawba’s 10-member team specializes in investment management for individuals, businesses, and institutions across 21 states. They bring to CAPTRUST more than $1 billion in client assets. Please welcome the Financial Advisors Terence H. Crowgey, CFA®; Jack Gray; and Jay Irons.

FCE Group

FCE Group, a Lake Success, New York-based wealth management firm managing $1.4 billion of client assets, joined CAPTRUST in October. FCE Group was founded in 1981 by chairman David H. Schwartz and has a 37-year history of providing clients with holistic wealth management services. The FCE team brings a total of 23 new colleagues to the CAPTRUST organization.

Johnston Relocation

CAPTRUST Financial Advisor Donn Johnston, JD, CFP®, and Senior Client Management Consultant Kathy Johnston recently relocated from Lower Gwynedd, Pennsylvania, to Durham, North Carolina. The couple relocated to be closer to their children and grandchildren. Their son, Financial Advisor DJ Johnston, CFP®, works in our Raleigh, North Carolina, headquarters office.

Shira Katsir and Fooled by Magic

CAPTRUST Senior Research Associate Shira Katsir, an avid equestrian, was inspired by the VESTED Second Act story on Elizabeth Macdonald to foster and train an ex-racehorse for Blue Bloods Thoroughbred Adoption and Placement. Katsir chose Fooled by Magic, a young mare with stellar breeding (her grandsire won $6.47 million). But with career earnings of only $49,593 in 20 starts, Magic was destined for the show ring, and Katsir is helping the young mare reach that second act.

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CAPTRUST GROWTH Braxton Barnes

Braxton Barnes joined CAPTRUST’s Salt Lake City office as a financial advisor responsible for providing wealth management services to high-net-worth investors, corporate executives, and business owners and investment advisory services to corporate fiduciaries and foundations. Prior to joining the firm, Braxton was an agent at Taylor Oborn State Farm Agency. He received a Bachelor of Science degree in business with a concentration in management from Brigham Young University.

Stephanie Brown

Stephanie Brown is a financial advisor responsible for providing investment advisory services to high-net-worth individuals and families and the fiduciaries of retirement plans. She joined CAPTRUST’s Houston office in August. Prior to joining the firm, Stephanie was a vice president, retirement services at USI Consulting Group, and she has worked in the industry since 2006. Stephanie earned her Bachelor of Science in marketing from Philadelphia University.

Chad Griffeth, AIF®

Chad Griffeth joined CAPTRUST’s Minneapolis office as a financial advisor responsible for providing comprehensive wealth management services to high-networth investors and corporate executives and investment advisory services to private foundations. Prior to joining the firm, he was co-founder and president of BeManaged, a firm offering a 401(k) managed account and advice solution. Chad holds the Accredited Investment Fiduciary (AIF®) accreditation. He earned his Bachelor of Science degree in psychology from Cornell College.

Francetta (Fran) Slacum

Fran Slacum joined CAPTRUST as a financial advisor in June. She comes to us from TIAA where she was a senior relationship manager. Prior to TIAA, Fran was a senior marketing manager at TIAACREF. She earned her Bachelor of Science in mathematics from Howard University and her Master of Business Administration from Georgia State University.

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Fall | 2018

NEW HIRES We are excited to share three notable hires within the areas of human resources, investment research, and wealth operations. Mark Francher

Mark Francher joined CAPTRUST as senior director of human resources responsible for overseeing the firm’s recruitment and retention initiatives. His efforts are aimed at sustaining a work environment where talent can flourish. Prior to joining the firm, Mark was a director, human resources at Qualcomm. He earned his Bachelor of Science in professional accounting from the State University of New York at Plattsburgh and his Master of Industrial and Labor Relations from Cornell University.

Ryan Hill, CFA®

Ryan Hill joined CAPTRUST as a manager in the firm’s Consulting Research Group responsible for overseeing the firm’s alternative investment manager research and conducting due diligence on investment strategies and funds. Prior to joining CAPTRUST, Ryan was an investment officer at Minnesota State Board of Investments and an investment officer for the North Carolina Department of State Treasurer. He holds the Chartered Financial Analyst® (CFA®) designation. Ryan received his Bachelor of Science in finance from Illinois State University and his Master of Business Administration from the University of Minnesota.

Morgan Jones

In September, Morgan Jones joined CAPTRUST as a manager in wealth management operations. She comes to us from Tidewater Equity Partners, where she was director of operations. Prior to Tidewater Equity Partners, Jones was a vice president of operations at Lookout Capital. She earned her Bachelor of Science in business administration from North Carolina State University and her Master of Business Administration from East Carolina University.

CAPTRUST RECOGNITION CAPTRUST Ranks Number One (Again)

In July, Financial Advisor Magazine ranked CAPTRUST number one among registered investment advisors with assets of more than $1 billion—making it the firm’s third year running to achieve this distinction. The magazine’s annual survey analyzes several metrics, including assets under advisement, asset growth over the trailing year, and assets per client, as well as other indicators of business success.

Meyer Wins C-Suite Award

The Triangle Business Journal recognized CAPTRUST Chief Technology Officer Jon Meyer as one of its outstanding business leaders at its 2018 C-Suite Awards luncheon held in August at The Umstead Hotel and Spa in Cary, North Carolina. The C-Suite Awards identify and honor the region’s outstanding corporate leaders for their invaluable contributions to the Triangle community and the significant impacts they make toward the success of their respective organizations.

Kerschner Named to ERISA Advisory Council

The Department of Labor recently announced that CAPTRUST’s Linda M. Kerschner, CRSP, has been appointed corporate trust representative for the 2018 Employee Retirement Income Security Act of 1974 (ERISA) Advisory Council.

CAPTRUST Tops List of State’s Biggest Money Managers Business North Carolina announced its third annual ranking of companies that oversee at least $1 billion in assets. CAPTRUST came in at the top of the list with more than $270 billion in assets, marking a 57 percent increase over the past two years, driven by factors such as market growth as well as acquisitions. The list cites the biggest North Carolina-based money managers according to the amount of assets overseen by the company. Overall, the 36 companies on the list manage nearly $690 billion in assets for individuals, pension funds, endowments, and others.

TBJ’s Best Places to Work

The Triangle Business Journal again named CAPTRUST to its Best Places to Work list. This is the fifth year CAPTRUST has received this honor. A group of CAPTRUST dignitaries learned that the company placed number seven among large companies in the Triangle at an awards luncheon hosted at PNC Arena in Raleigh on September 7. Businesses on the list are scored and ranked based on the results of a survey voluntarily completed by employees.

George Kroustalis BookSigning Event

CAPTRUST Financial Advisor and author George Kroustalis signs his recently released book, Secrets to Becoming a Financial Badass, at a book-signing event at the AC Hotel in Raleigh’s North Hills.

Excellence Award Jennifer Mastrapasqua received the Excellence Award during the firm’s July SYNERGY meeting at our Raleigh, North Carolina, headquarters. During her nearly eight years at CAPTRUST, Jennifer has been instrumental in the growth and development of the firm’s marketing function. Her focus on innovation and her collaborative nature have dramatically advanced CAPTRUST’s digital marketing, business development, and marketing technology capabilities. Congratulations, Jennifer.

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We know that investors are looking for experienced and trusted advisors who can provide wealth management services that are focused on their unique circumstances and tailored to their goals. In more than 25 years of acting as a fiduciary to some of the country’s biggest retirement plans, we have gained valuable insights that we can apply to your wealth planning and investment challenges.

Chad Griffeth, AIF® Vice President, Financial Advisor Minneapolis, MN JImmy Talton Senior Vice President, Financial Advisor Raleigh, NC Brian Pollard, CFP® Vice President, Financial Advisor Raleigh, NC

captrust.com • 919.870.6822 | toll free: 800.216.0645 • 4208 Six Forks Road, Suite 1700 | Raleigh, NC 27609