VESTED Fall 2021

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It’s Easy Being Green

Cathy Heying Repairing Brakes, Mufflers, and Dignity PLUS Prioritizing Retirement Savings Long-Term Investors: Think Like a Butterfly Seasonal Blues Investors in Training FALL 2021

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

“Children are not things to be molded, but are people to be unfolded. ” Jess Lair, Author

We invite you to like the CAPTRUST Community Foundation on Facebook.

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

LETTER FROM THE CEO

Volume 7, Issue 3 | Fall 2021 PUBLISHER

As we approach the end of 2021, I would like to thank all of our loyal readers, clients, and friends for their attention and trust during this trying period.

J. Fielding Miller Chief Executive Officer EDITORS

Thankfully, the markets have been very cooperative, but—just when it appeared that some sense of normalcy would be right around the corner—COVID-19 threw us a curveball. Here’s to a healthy, productive, and normal 2022!

This issue’s Second Act hero is Cathy Heying. During her two decades as a social worker helping the homeless in Minneapolis, Heying heard countless stories from people who had lost their jobs, and subsequently their apartments, when they could not afford to get their cars repaired. She decided to do something about it: She opened The Lift Garage to provide affordable auto repairs to those in need.

This issue also features a wide range of other topics, including: • Optimizing your savings with the waterfall concept; • Finding surprising joy in fossil hunting; • Reducing your carbon footprint to live a little greener; • Using fractional shares to get kids engaged with money and investing; and • Avoiding the pitfalls of recency bias.

This issue’s must-read feature, “Seasonal Blues” by longtime contributor Kim Painter, looks into seasonal affective disorder (SAD) and related syndromes, who is susceptible, and what to do about it. Her experts’ comments may come in

John Curry Editor-in-Chief

Alysa Cronin Managing Editor

EDITORIAL ADVISORY BOARD

handy for some readers as the days grow shorter.

Lastly, in this issue’s investment feature, Chief Investment Officer Mike Vogelzang and Investment Strategist Sam Kirby take a look at the big-picture factors that investors should consider as they plan and invest for long-dated—even multigenerational—financial goals.

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

All the best,

J. FIELDING MILLER CAPTRUST Chief Executive Officer

Jeremy Altfeder Vice President, Financial Advisor

Ted Lew Vice President, Financial Advisor

Buck Beam Senior Vice President, Financial Advisor

Cara McAuley Manager, Advisor Group

Kathleen Carlson Vice President, Financial Advisor

Greg Middleton Senior Director, Advisor Group

Mark Chamberlain Principal, Financial Advisor

Steven Morton Principal, Financial Advisor

Mike Gray Principal, Financial Advisor

Kathy Waters Senior Financial Advisor

Kathleen Hopkins Manager, Advisor Group

Edward Welch Managing Principal, Head of Wealth Management

ART DIRECTION AND MARKETING Lonzetta Allen Associate Art Director Jennifer Mastrapasqua Art Director

Elizabeth Altman Distribution Manager Kaylin Nuñez Graphic Designer

WITH THE ASSISTANCE OF Azul Photography Raleigh, NC

Worth Higgins & Associates, Inc. Richmond, VA

Gabrielle Burke Pittsburgh, PA

Getty Images Seattle, WA

Justin Gartman Raleigh, NC

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CONTENT AND CONTRIBUTORS

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JOHN CURRY

NEIL DOWNING

NANCI HELLMICH

As chief marketing officer, John Curry is responsible for all areas of strategic marketing and branding for CAPTRUST. In the industry since 1986, Curry has served in senior management roles with firms such as ProShares and AllianceBernstein and has experience in areas of strategic marketing, including product development and design, market research, branding, and sales campaign management.

Neil Downing is a Certified Financial Planner™ professional 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.

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

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

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

Features 4

IT’S EASY BEING GREEN

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CATHY HEYING: REPAIRING BRAKES, MUFFLERS, AND DIGNITY

Columns 15

PASSION PURSUITS

33

MONEY MINDSET

23

GLEANINGS

36

LASTING LEGACY

PRIORITIZING RETIREMENT SAVINGS

24

EXPERT ANGLE

39

CLIENT CONVERSATIONS

LONG-TERM INVESTORS: THINK LIKE A BUTTERFLY

32

MARKET REWIND

42

CAPTRUST HAPPENINGS

by Kim Painter

Fossil Finders

by Jeanne Lee

by Nanci Hellmich

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by Neil Downing

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Seasonal Blues

by Kim Painter

Fighting Recency Bias

by John Curry

Investors in Training

by Jeanne Lee

by Mike Vogelzang and Sam Kirby

JEANNE LEE

KIM PAINTER

MIKE VOGELZANG

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.

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.

Mike Vogelzang is CAPTRUST’s chief investment officer and brings more than 30 years of portfolio management, market strategy, and investment research experience to the firm. He is frequently invited to speak at industry conferences, interview in the financial media, and contribute articles to portfolio management journals.

Vogelzang is a CFA charterholder.

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. ©2021 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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it’s easy being green

by Kim Painter

When Diane MacEachern, 69, of Takoma Park, Maryland, gave up her car a few years ago, she made some discoveries.

One was that the long walk to her favorite grocery store was not the burden she expected. Instead, it was a pleasant way to get her 10,000 steps, she says. Another was that her neighbors were even more generous than she might have guessed. “Almost to the person, they said, ‘My car is just sitting in the driveway most of the time; you are welcome to share it.’” While she only occasionally borrowed a car, those offers gave her new reasons to appreciate her community.

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That isn’t to say that there are not trade-offs, sacrifices, or challenges. But they are challenges that an increasing number of Americans, of all ages, may be willing to take on—at least, if they can sort through which actions really make a difference.

Surveys Say: Older Americans Do Care Surveys conducted by the Pew Research Center in 2021 and the Yale Program on Climate Change Communication in 2019 found that concern about climate change—the most pressing environmental issue today—is highest among young people. But the Yale survey also found that majorities of baby boomers (born 1946 to 1964) and the silent generation (born 1928 to 1945) felt that combatting the problem was personally important.

In another survey from the Massachusetts Institute of Technology Age Lab, a majority of boomers said they were more environmentally aware now than in their own young adulthoods.

Moreover, many boomers (and slightly younger generation-x adults) have better environmental records than their children and grandchildren give them credit for. The lab’s director, Joseph Coughlin, wrote in a Forbes blog post: “They are, after all, the generation that came of age in the years that included the publication of Silent Spring and the passage of the Clean Air Act …

As college students, boomers celebrated the first-ever Earth Day in 1970. Retiring boomers and gen xers may have a new job in retirement—a renewed environmental activism.”

That activism can take collective forms, such as volunteering for community efforts or getting involved in changing local, state, and national policies. But it also can take the form of individual, everyday choices: how we get around, what we eat, what we buy, and how we manage our households.

“ Giving up car ownership is not something everyone can do, says MacEachern, who has since bought her own hybrid vehicle. But her experience illustrates something she’s learned about greener living: “Almost everything you do to improve your environmental impact improves your own life.”

Living lighter on the land also tends to fatten your wallet, says MacEachern, who runs a blog called Big Green Purse (and wrote a 2008 book by that name). Whether you are talking about insulating your attic, buying energy-efficient appliances, or eating less meat, “in almost all cases, the greener choice is the choice that’s going to save you more money,” she says. “Sometimes it’s in the short run, sometimes it’s in the long run.”

In almost all cases, the greener choice is the choice that’s going to save you more money. Sometimes it’s in the short run, sometimes it’s in the long run.

Diane MacEachern

”

All of those activities help determine our carbon footprint, the extent to which each of us contributes, directly or indirectly, to the buildup of greenhouse gases, such as carbon dioxide, methane, and nitrous oxide. Those gases, generated mostly by the burning of fossil fuels for heat, electricity, and transportation, accumulate in the Earth’s atmosphere where they trap heat. The result is warmer average temperatures, more extreme weather, more polluted air, and increases in human health problems, ranging from asthma to heat stroke.

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But older adults, including retirees, are in a perfect position to limit the damage, experts say. A lot of them are looking for solutions to simplify their lives in ways that happen to be environmentally friendly, such as downsizing their homes, eating more healthfully, and moving to more walkable places, says Todd Larsen, executive co-director for consumer and corporate engagement at Green America, a nonprofit advocacy organization based in Washington, D.C.

Retirement Going Green Gail White, 69, a retired investment advisor, says she became passionate about protecting the environment more than 30 years ago, when a trip to Alaska awakened her to the planet’s vastness and beauty.

That experience inspired her to go to the Arctic as a volunteer citizen scientist to assist researchers studying climate change. When she retired in 2016, she gave up an energy-guzzling house and downsized to an apartment. Then, in 2019, she made another move—to a Shelburne, Vermont, retirement community designed for eco-conscious seniors.

On the wooded Wake Robin campus, White is surrounded by like-minded folks who garden, compost, harvest honey, and maintain walking trails. “I just decided this was the kind of place where I wanted to be,” she says. Her main job, as co-chair of the recycling committee, is green room monitor, meaning she makes sure paper recyclables, plastic bags, composting materials, and other items all end up in the right bins.

More and more retirees are seeking communities that make green living a priority, says Andrew Carle, executive director of The Virginian, a retirement community in Fairfax, Virginia.

“I think our industry is beginning to recognize that this is something that our consumers value,” says Carle, who is an adjunct lecturer in senior living administration, aging, and health at Georgetown University.

Carle says his own community gets greener all the time. One recent change: the purchase of an electric SUV to transport residents.

“They love it that it gets ‘infinity miles per gallon,’” he says. As part of an ongoing renovation, the community will seek Leadership in Energy and Environmental Design (LEED) certification, a designation for buildings that meet energy efficiency, clean air, and other green standards. Many new communities now meet those standards at opening, Carle says.

Meanwhile, at Wake Robin, “the residents are looking at all kinds of ways to improve our carbon footprint, like doing laundry at off-peak hours,” says Environmental Services Director Leslie Parker.

The community recently replaced gas lawn mowers with electric versions, and it gets 20 percent of its power from a nearby solar 6

Fall | 2021

Choosing a place to start as an individual—or a way to expand your efforts—can be daunting. A good way to get a reality check and a sense of direction is to calculate your current carbon footprint. farm. Ladybugs, released by the thousands each year, are the pesticides of choice. “It’s all part of the fabric of our community,” Parker says.

Calculate Your Footprint Still, choosing a place to start as an individual—or a way to expand your efforts—can be daunting. A good way to get a reality check and a sense of direction is to calculate your current carbon footprint.

Several online calculators are available, including one offered by Berkeley at coolclimate.berkeley.edu/calculator. The U.S. Environmental Protection Agency also offers a version at www3.epa.gov/carbon-footprint-calculator.

The calculators let you see how your household compares with others of the same size and income when it comes to generating emissions from travel, your home, your food choices, and the other goods and services you consume. Once you know where you have room for improvement, you can take on new challenges one at a time.

“It’s good to look at where your actions will have the most impact and where your interests lie and find the correlation between the two,” Green America’s Larsen says.

Alexandra Zissu, an eco-lifestyle expert and author of several books, including The Conscious Kitchen, says it’s important to acknowledge that changing lifelong habits can be difficult. She says she often hears from older adults who are mystified or angry about the environmental changes that their children or grandchildren want them to make. Her advice: “Don’t do the stuff that makes you angry. Think about what you want to do and do what’s most compelling to you.”

Start Small Recycle, of course. Check the website of your local collection agency and whatever you do, don’t guess what’s allowed in your bins. Stop wasting paper—remove yourself from catalog mailing lists, and opt for digital receipts instead of printed copies. Find new uses for old things, and throw as little into the trash as possible. It’s also a good idea to get yourself into the habit of shutting off lights when you leave a room. Once your smaller changes become habits, consider some bigger changes.

Ideas from the Experts Ready to consider a greener way of life? Get on the path toward a less wasteful and more Earthfriendly lifestyle with the tips and tricks below.

Transportation Don’t drive when you can walk or bike. Don’t drive alone when you can carpool or take public transportation. For people who love longdistance travel, experts suggest combining long flights with greener local and regional transportation—like taking trains after flying to Europe, for example. The Earth Institute at Columbia University offers these additional tips: •

When you do drive, save on fuel by avoiding unnecessary braking and acceleration, using cruise control when you can, and using the air conditioner as little as possible.

•

If you are buying a new car, consider a hybrid or electric vehicle.

•

Cut down on air travel. When you must fly, favor nonstop flights.

Home For most Americans, your house is the biggest part of your carbon footprint, MacEachern says.

“Heating and cooling, a refrigerator that runs constantly, the lighting, cooking, and washing and drying your clothes [all add up].”

Simply replacing one old refrigerator with an energy-efficient Energy Star model can make a huge difference, she says, as long as you don’t

make the common mistake of running the old refrigerator as an extra in your garage or basement. Experts also suggest that everyone: •

Get a home energy audit.

•

Take your local utility company up on offers for power from renewable sources, such as wind and solar.

•

Make the switch to LED bulbs. They use a quarter of the energy and last up to 25 times longer.

Food Eating a diet high in fruits, vegetables, grains, and beans is better for your health and better for the planet. Cows and sheep belch out methane, and it takes more land, water, and fuel to raise and process livestock than to produce plant foods. Experts say it’s also important to reduce food waste. That means planning meals more carefully and cooking with multiple meals in mind. Some other suggestions to live lighter on the land include: •

Choosing locally grown foods, in season, to cut transport emissions.

•

Growing your own produce in your yard or a community garden plot.

•

Composting your food waste.

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SECOND ACT

REPAIRING BRAKES, MUFFLERS, AND DIGNITY

by Nanci Hellmich

During her 20-year career as a social worker helping the homeless, Cathy Heying of Minneapolis noticed that broken cars often lead to broken lives. It’s like a Jenga® game, she says: “You are cautiously building your life, and, if you pull out one of those blocks, the whole thing crashes.

Car repair is an important block.”

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Heying (pronounced Hi-ing), 50, who has a Bachelor of Science degree in social work as well as a Master of Pastoral Ministry degree, grew up in Ossian, Iowa.

The youngest of seven siblings, she learned the value of caring for the less fortunate from her devout Catholic parents.

“My oldest brother has Down’s syndrome,” Heying says. She remembers her parents were told to put their disabled son in an institution and move on with their lives. “But that was not the choice they made,” she says. Instead, Heying grew up with a fierce understanding of making room for everyone.

After graduating from college, she worked for more than a decade as a social worker and pastoral minister for St. Stephen’s Human Services, an independent nonprofit organization fighting poverty and homelessness. There, she learned firsthand how important car repair is for people who are underserved.

“I heard it repeatedly,” says Heying. Clients told her, “I can’t afford to get my car fixed, and I’m going to lose my job.” Without the ability to pay rent, they could easily find themselves living on the streets.

Oftentimes, she helped someone push a broken-down vehicle around the block so it wouldn’t get towed.

Clients would live in their cars when they couldn’t get a bed at the homeless shelter, Heying says. One client stayed in his automobile so frequently that when he applied for a job, he would give his address as 1994 Nissan Maxima Avenue.

“The details of the stories were different, but everything depended on a car repair,” she says. She was plagued with a recurring thought: Somebody should do something about it.

The Pros and Cons Heying began agonizing over returning to school to become an auto mechanic.

She loved her social services career and was still paying graduate school loans.

“I wrote a pro and con list, and there was nothing in the pro column,” she says.

“You know it’s a calling—or something bigger—when you make a list and there is nothing in that pro column, but you can’t stop thinking about it,” Heying says. “There was no logical reason to do it, but I kept seeing the need and thought, ‘Somebody needs to make this happen.’”

So, at age 38, Heying enrolled in a two-year associate degree program in auto technology at Dunwoody College of Technology. “I went into the whole thing reluctantly,” Heying says. She walked into the first day of class thinking, “Why am I taking out more student loans to get a degree I don’t particularly want to get, that I don’t know if I’ll be good at, to meet a need I don’t know how to meet?”

Shutting Out Self-Doubt Heying had changed the oil in her motorcycle a few times but knew little else about auto repair. “I’m good at organizing people and talking about feelings,” Heying says. “Those are more my wheelhouse than fuel injection.”

“

Top: Heying holding her diploma from Dunwoody College of Technology Bottom: Heying and her family

You know it’s a calling—or something bigger—when you make a list and there is nothing in that pro column, but you can’t stop thinking about it.

”

Cathy Heying

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She remembers her first day of class at Dunwoody. Automotive instructor Dave DuVal told the students to face the wall where the crankshafts were hanging. Heying didn’t know which way to turn, so she followed the lead of the young men in the class. “I was very much a novice,” Heying says. “It was a huge and humbling learning experience.”

Heying doubted her decision for months, she says. “The whole thing was awful. I loved Dunwoody, let me be clear, but in a program that is designed largely for 18-year-old boys, there is a different energy and style that involves a lot of yelling and drill-sergeant-like talking.”

She often thought she didn’t fit in and considered giving up. “Halfway through the first semester, I could not flare brake lines for the life of me,” Heying says. “I couldn’t do it, and, one day, I burst into tears.”

Embarrassed and humiliated, she was ready to quit, but DuVal talked with her. Heying told him about the need in the community for reasonably priced auto repairs. That day, DuVal told Heying she had a great vision and committed to helping her every step of the way.

She finally got the brake line flared and kept forging ahead.

Showtime While attending Dunwoody, Heying continued working as a social worker. After her 2010 graduation, she honed her skills with a part-time job at a Sears Auto Center. She started to research her next steps by talking with lawyers, financial experts, executive directors of nonprofit organizations, and garage owners. Then, in April 2013, with one rented bay, Heying opened The Lift Garage in Minneapolis, a nonprofit car repair shop that offers low-cost automobile repairs and heartfelt advice to those in need.

The garage had one customer the first day. The first person appointed to The Lift Garage’s board of directors, Dunwoody automotive instructor Dave DuVal, was onsite—ready and willing to help repair an old Jeep Cherokee owned by a woman with disabilities. The car “was in shambles,” DuVal says. “It needed brakes and steering components.”

DuVal and Heying spent two weekends getting the Cherokee going. “That woman was so thankful,” DuVal says.

“Seeing [the owner’s] gratitude was the fuel that kept feeding our innate desire to help these folks.”

From there, it went crazy, Heying says. Initially staffed by volunteers, The Lift Garage now employs 12 people, including five mechanics operating five bays in a garage the nonprofit purchased in 2020. They see 130 cars a month. Appointments are scheduled a month in advance, and there are always hundreds more people wanting repairs.

Prioritizing Dignity The staff ’s work goes beyond tuneups and oil changes, says Heying. It’s the human side of the work that’s rewarding to her. “I regularly joke that we are social workers, resource specialists, grief counselors, and financial counselors— and we fix cars on the side,” she says. In fact, The Lift Garage’s core values are hospitality and dignity. “We try to meet people where they are,” Heying says. “Most people who walk through the door are in some level of crisis.”

There are a lot of pieces to it, says Heying, who helps customers think through and resolve issues in a way that honors their lives, experiences, and intelligence: “We try to leave a lot of room for grace, knowing there is always more to the story than what we see.”

In some cases, Heying has to tell customers that their vehicle is not worth repairing, or that it wouldn’t be safe to drive, even with repairs. Recently, she told a gentleman that his 1998 Buick LeSabre with 280,000 miles would cost $1,800 to repair, but the vehicle was worth only about $800. He chose to repair it because he said he couldn’t buy a better vehicle for $1,800.

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“We don’t invest in vehicles if the transmission is gone or there is catastrophic rust in structural areas,” Heying says. “People sometimes beg us to do it, but we draw a hard line. It’s a matter of liability and conscience.”

Besides repairing automobiles, the garage offers a free prepurchase inspection program, so people can have a used car evaluated before they buy it. That saves a lot of heartaches and costly repairs in the long run. The Lift Garage also has a mobile van with a crew that does small repairs onsite at people’s homes and examines broken-down cars to see if they’re worth towing to the shop.

A Look at the Ledger The finances of the organization have always been solid because the nonprofit has scaled its growth properly, says Atom Robinson, a longtime friend of Heying’s and original board member. “But every year when we pass the budget, we know there are more needs in Minnesota than we can meet.”

Customers pay $15 an hour for labor and get parts at cost. “They pay a third of what they’d pay for the same repair in a marketrate garage,” Heying says. The garage is open to anyone in Minnesota whose income meets 150 percent of Federal Poverty Guidelines or below, which is roughly $20,000 or less for a household of one and $26,000 or less for a household of two, she says. Customers provide proof that they qualify for the services—often a food stamp card is enough. “We make it as barrier-free as possible.”

Operating the business costs about $120,000 a month, with $25,000 to $30,000 coming from earned income and the rest covered by donations and fundraising, Heying says. “It costs us the same to run our garage as the commercial one down the

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street,” she adds. “We have the same overhead with insurance, mortgage, equipment, staff, and shop supplies.”

“We don’t get any government funding,” says Heying. “The money we have is privately raised through individuals and company donations and fundraising events.”

Individual donors contribute about 60 percent of funds. “I have a nun who gives us $5 a month,” says Heying, “and another person who gives $100,000 a year, but the majority of our donors give $100 to $200 annually.”

The Payoff One single mom who worked for a social service agency brought in a vehicle someone from her church had given her, Heying says. “We got the car safe and running, and she stopped by later to tell us she was able to take a job as a case manager because she had a car.” It was music to Heying’s ears when the customer told her, “I don’t qualify for your services anymore because I make too much.”

DuVal says Heying is inspiring: “I believe in her, and I will do whatever it takes to help the folks she’s helping. She’s just that giving.”

Board member Robinson agrees. “She is one of the biggesthearted people I’ve ever met. A lot of us have great ideas and think we can help people in need and change the world, but it takes a special person to stick with it and do it.”

The Lift Garage is valued by the community, Robinson says.

“Our donors are deeply invested, and the staff is top-notch.

[Heying] is an outstanding boss and an excellent community leader. The staff might make more money if they were working in a private garage, but they believe in our mission.”

As for Heying, “I would never have guessed my life would be here at The Lift Garage, but I don’t regret it,” she says. She feels lucky at the end of the day. “I am proud of myself for not giving in to the fear and all the reasons that I should not have done this,” she says. “It has been an astounding journey.”

“

[Cathy] is one of the biggest-hearted people I’ve ever met. A lot of us have great ideas and think we can help people in need and change the world, but it takes a special person to stick with it and do it.

Atom Robinson

”

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THE LIFT GARAGE The Lift Garage is a 501(c)(3) nonprofit aimed at moving people out of poverty and homelessness by providing low-cost car repair, free prepurchase car inspections, and honest advice that supports the local community.

The Lift Garage specializes in brakes, tires, suspensions, steering, starting and charging systems, fuel systems, exhaust systems, and heating systems. In addition to low-cost car repair, the garage offers express services to replace light bulbs, wiper blades, and batteries, along with free regularly scheduled car-care classes.

2401 East Lake Street Minneapolis, MN 55406 612.866.5840 theliftgarage.org

Extending Compassion Amid Chaos In May 2020, during the unrest following the death of George Floyd after being arrested by police outside a shop in Minneapolis, Minnesota, Cathy Heying and the staff of The Lift Garage offered protesters the same grace that they offer customers every day.

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“Several days and nights, we were here guarding the space,” says Heying. “If we saw someone walking up with clear intentions of harming the building, I would say, ‘Hey, could I help you?’ They’d say, ‘Is this your building? Sorry, man.’ And off they’d go.”

Heying says the Arby’s next door, which is 10 feet away, burned down to the ground one evening. “The wind was in our favor that night,” says Heying about narrowly escaping residual damages from the fire. However, her nonprofit auto repair shop was not entirely spared.

The Lift Garage was broken into, she says. “And the mobile van the crew uses to do small repairs on-site at people’s homes was broken into and robbed.” But, Heying says, “compared to most of our neighbors, we survived [the protests] quite well.”

Shortly after, a reporter from the largest newspaper in Minnesota, the Star Tribune, was onsite writing about the damage. As she cleaned up the rubble from the night before, Heying told the reporter it was her hope “to expand her garage to help more people after the Black Lives Matter protests.”

PASSION PURSUITS

Fossil finders

by Jeanne Lee

It doesn’t take a professional to find a fossil, even a very rare or old one.

Amateur—or accidental—fossil hunters around the world have made astonishingly significant paleontological discoveries. Last January, 4-yearold Lily Wilder was walking her dog on a Welsh beach with her father when she noticed an unusual footprint. What she’d spotted, embedded in a rock at the height of her shoulder, turned out to be a trace fossil from a Triassicperiod dinosaur that lived 220 million years ago. Lily will receive official credit for the amazing scientific find when the fossil goes on display at the National Museum Cardiff in the UK. Some 30 years ago, an amateur fossil collector named Kathy Wankel made a breathtaking find while camping with her family at the Fort Peck Reservoir in Montana. On a rocky island where they were boating, she saw the corner of a bone sticking out of a bank.

A month later, she was able to chip out a set of long bones and take them to the nearby Museum of the Rockies. Experts there identified them as something very rare indeed: the first arm bones of a Tyrannosaurus rex that had ever been found. The discovery led to the eventual excavation of an almost complete skeleton, and Wankel’s T. rex now resides at the Smithsonian National Museum of Natural History.

Finding a fossil in the wild—and putting your own hands on physical prehistoric remains—is a thrilling way to connect with Earth’s deep past. Collecting fossils is also an absorbing, addictive activity, one that is available to almost anyone and can make you feel like a kid digging up buried treasure. Fossils are found in

many parts of the U.S., including slabs and chunks of petrified wood in the West, ancient shark and megalodon teeth along the East Coast shorelines, and exquisite ammonite shells in the Great Plains and other regions.

A Lesson on Common Fossils Ammonites. Shells of squidlike creatures that were plentiful in the Triassic, Jurassic, and Cretaceous periods can be less than an inch in size or up to nine feet wide. They swam in the oceans that once covered the Great Plains of North America, the Himalayas, and Antarctica, until they were extinguished along with the dinosaurs 66 million years ago.

Brachiopods. Commonly preserved in rocks such as limestone, sandstone, or mudstone that formed from marine sediments, these fossils look like clams, though they aren’t actually closely related to modern mollusks. They were so abundant in the Paleozoic Era that they formed part of the ancient reefs.

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Corals. Coral fossils are found around the world, and some specimens are more than 500 million years old. Corals are relatives of sea anemones and jellyfish that secrete calcium carbonate to form their exoskeletons. The beautiful patterns of their bodies are found in fossilized form.

Shark teeth. The teeth of the giant megalodon, a relative of the modern great white shark and the largest fish ever known, are the state fossil of North Carolina. Fossilized shark teeth—which turn black in the mineralization process—are plentiful in Virginia, North and South Carolina, and Florida.

A collection of 80-million-year-old specimens was recently discovered in the remains of an Iron Age house at an archaeological site in Jerusalem, evidence of how timelessly fascinating they are to collectors.

Petrified wood. Petrified wood can be so well preserved and detailed that the bark and woody structures of the ancient tree are clearly recognizable. Sometimes, collectors don’t realize that they are fossils rather than recently felled branches until they pick them up and feel their weight.

The best fossil-hunting grounds are areas where the topsoil has been cut or weathered away—like dry creek beds, rocky outcrops, sea cliffs, beaches at low tide, or riverbanks. Old quarries are a great place to look for fossils since the underlying rock has been exposed.

How to Hunt for Fossils Look in the right kind of rock. Fossils are formed only when an animal or plant is rapidly submerged and preserved, which means they’re mainly found in sedimentary rock, such as shale or sandstone, that has horizontal layers like pancakes. If you search in igneous or metamorphic rock, which has been subjected to extreme heat and pressure that destroys any animal or plant matter, you’ll be wasting your time.

The best fossil-hunting grounds are areas where the topsoil has been cut or weathered away—like dry creek beds, rocky outcrops, sea cliffs, beaches at low tide, or riverbanks. Old quarries are a great place to look for fossils since the underlying rock has been exposed.

in

Train your eyes. Prepare for your search by looking at images of fossils you’re likely to find in your search area on museum and university websites. Learn the telltale patterns of marine creatures and plants, since most fossils are sea creatures that lived in the ancient oceans.

Consult local experts. Ask a local museum, nature center, university geology department, or fossil club to find out about fossil-rich areas, established dig sites, and rules for hunting and collecting. Budding rockhounds can also search for fossil clubs near them on Google, check an online interactive map of national fossil clubs at myfossil.org/paleosocieties, or seek out a fossil meetup group.

Gather your tools. You can spot fossils with just your eyes and some luck, but there are some optional items that might be helpful, starting with a hammer, such as a bricklayer’s hammer, a chisel, a small shovel, and a mesh screen for rinsing loose gravel. Have newspaper or tissue on hand to wrap fragile specimens and a pencil and paper for labeling and taking notes. Hunters will typically carry these items, along with a

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magnifying glass, gloves, and a map of the dig site in a backpack.

If you’re going to be chiseling or hammering, safety glasses are recommended as well as a hard hat if any rocks overhead could be unstable. Remember to wear comfortable shoes and pack some water and snacks to keep your energy up.

Know the rules. Every state has its own laws governing fossils, permits, and collection, so be sure to do your research. Some fossil sites charge admission fees or have rules about what tools you can use or how much material you can take for yourself. On private property, you’ll need to get permission from the owner before you remove or collect any fossils.

If you spot something that may be a fossil, take your time to determine your next move. Act slowly and deliberately to avoid damaging it.

Keep in mind that taking any natural objects, including fossils, from national parks is illegal. On other federal land, such as land controlled by the Bureau of Land Management or the U.S. Forest Service, you are permitted to take small amounts of common, invertebrate fossils or petrified wood for personal use (not for sale), but you can’t collect any amount of vertebrate fossils without a special permit.

Getting Started When fossil hunting at a quarry or rocky outcrop, it’s best to get really close to the rock and look carefully for spiral patterns or shell prints. A magnifying glass can be helpful. Sit or kneel down in one place at a time, and examine them for patterns or details. If you spot something that may be a fossil, take your time to determine your next move. Act slowly and deliberately to avoid damaging it.

To get at a fossil that’s embedded in rock, you can chisel carefully all the way around it—always pointing the tool away from the fossil.

The best way is to carve out a chunk of material, like a pillar, that contains the whole specimen. Then, strike at the base of the pillar to break it off. Another method, if you have a very fossiliferous chunk, is to tap with a hammer until the rock breaks away around the fossils, according to the Illinois State Geological Survey Prairie Research Institute.

However, if you find a high-quality fossil that you don’t think you can remove without damage, consider leaving it in place and taking photos only. That way, it will be preserved and may naturally loosen from the rock over time.

Label your finds, and make a note of the exact locations they were found. This information is part of the story of the fossil. At home, you can clean your fossils with a soft brush, soap and water, or a

short vinegar soak. Photographing the fossil from many angles is a good idea, as it will make it easy to share your story online or with a fossil club.

For those who want to jump headfirst into fossil hunting, consider joining a paleontology-themed field trip. For example, the Bighorn Basin Paleontological Institute offers an exciting opportunity to work alongside scientists in the fossil-rich and rugged landscapes of Southern Montana and Northern Wyoming.

Amateur fossil hunters can also get up close and personal with incredible prehistoric creatures from the comfort of their couches.

The Smithsonian National Museum of History allows virtual visitors to explore either in a web browser or in virtual reality.

While you’re there, make sure to check out the 31,000-square-foot David H. Koch Hall of Fossils to explore ancient ecosystems and visit over 700 fossil specimens, including a Tyrannosaurus rex, Diplodocus, and woolly mammoth.

Fossil hunting is a great way to expend some pent-up wanderlust, embrace your inner scientist, and perhaps even collect some bragging rights. And why not? Budding fossil hunters of all ages and walks of life are uncovering an array of paleontological treasures each and every day.

TECH TOOLS FOR THE HUNT Rockhounds can lean on a wealth of websites and apps to help them tap into the fossil community. Here are a few options.

•

Digital Atlas of Ancient Life. An openaccess online textbook about fossils and the history of life on Earth. digitalatlasofancientlife.org.

•

Digital Atlas of Ancient Life app. A free online field guide to fossils based on content from the website, available on Android and iOS.

•

MyFossil. A social paleontology app where you can add your fossils to a collaborative database, available on Android and iOS.

•

The Fossil Forum. An online community for fossil experts and enthusiasts with a Fossil ID feature that allows you to post a picture of your fossil for others to comment on. thefossilforum.com.

17

PRIORITIZING RETIREMENT

SAVINGS

by Neil Downing

Saving for retirement? Rather than take a scattershot approach, save methodically, using a road map known as the retirement savings waterfall, or the retirement savings hierarchy. It can show you which steps to take, the order in which to take them, and how you may benefit.

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First Step

Figure One: Tax Preferences of Common Savings Vehicles

Start saving through your 401(k) or similar retirement plans at work. Such plans typically let you save conveniently and automatically through payroll deduction, and they offer certain tax advantages to encourage your participation.

Figure One shows a breakdown of the tax advantages that apply to 401(k) plans as well as the other retirement savings vehicles mentioned in this article.

Start saving as soon as possible. “The first dollars you save for retirement are the most productive,” says CAPTRUST’s Steve Morton, a wealth management advisor based in Greensboro, North Carolina. This is because you have the maximum amount of time for those dollars to grow.

Note that assumptions and conditions apply. Please consult your tax and financial advisors about your specific circumstances.

An added bonus: Your employer may encourage you to save by offering to match your contributions. “That’s free money,” Morton says, so be sure to take advantage.

Consider the following example.

Suppose that your gross annual pay at work is $100,000, and your employer has a retirement plan, such as a 401(k) plan or a 403(b) plan. Suppose, too, that your employer offers to match 50 cents for every dollar you contribute up to a maximum of 6 percent of your pay.

In that case, Morton says, if you kick in $6,000 to the plan in a given year, your employer will put in $3,000 as a match, for a combined total of $9,000.

That’s an immediate 50 percent return on your money, Morton says. “So don’t pass it up. Once you get into the groove of saving, you won’t miss it.”

There’s a cap on the total amount you can elect to set aside in your 401(k) plan, but the limit can increase each year with inflation, says Patricia A. Thompson, former chair of the Tax Executive Committee of the American Institute of Certified Public Accountants.

For 2022, the total employee pre-tax and Roth contribution limit to all plans for those under 50 is projected to go up from $19,500 for 2021 to $20,500. The catch-up contribution limit should stay

the same at $6,500, so if you’re age 50 or older, your 401(k) employee contribution limit should be $27,000 in 2022.1

Roth or Not? Your employer may give you the option to save through a designated Roth account, Morton says. It’s technically a separate account in a 401(k) or similar plan to which designated Roth contributions are made.

The chief difference involves taxes. With a regular 401(k), contributions are made with pre-tax dollars, so you get an immediate tax deduction—a further incentive to save.

Withdrawals, however, are subject to tax.

With a Roth account, contributions are made from your after-tax dollars, but withdrawals are typically tax-free. In other words, with a regular 401(k), the tax break is up front; with a Roth 401(k), it’s on the back end.

A Roth 401(k) can be “a very nice rainy-day savings account,” says Geoffrey T. Sanzenbacher, a research fellow at the Center for Retirement Research at Boston College. “If your employer offers a traditional and a Roth option, you need not choose between them,” he says. “You can save in both.”

This move helps investors diversify retirement savings from a tax perspective, winding up at retirement with two pots of money from which to draw, one containing pre-tax dollars, the other after-tax money.

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Which approach you take may also depend on where you stand in the savings cycle, Morton says.

For example, if you’re just starting out in the workplace, you may only be able to afford to save enough to qualify for the full matching amount from your employer. In that case, you may want to choose the traditional 401(k) account because it’ll give you the maximum up-front tax break. If you’re in your early 50s, however, you may want to put all of your retirement savings at work into the Roth 401(k) account. Of course, your specific tax situation should also be an important part of this analysis and may lead to a different conclusion, Morton says.

The HSA Next in the retirement plan hierarchy is the health savings account, or HSA. Among its advantages: •

You can claim a federal income tax deduction for HSA contributions even if you use the standard deduction on your federal tax return (instead of itemizing deductions).

•

Growth inside the account is sheltered from tax.

•

Withdrawals (also known as distributions) are free of federal income tax if they are used to pay for certain medical expenses. The list is broad, from acupuncture and ambulance services to wheelchairs and X-rays. Physician, surgeon, and dentist services count too. And because of a change in federal law through the CARES Act, tax-free withdrawals can also be used to cover over-the-counter medicine (whether or not prescribed) and menstrual care products. Withdrawals for other purposes are subject to tax and possible penalty.

•

An HSA is portable. It stays with you if you change employers or leave the workforce.

You can claim a federal income tax deduction for HSA contributions even if you use the standard deduction on your federal tax return (instead of itemizing deductions).

Your HSA can be a valuable savings tool with some flexibility, Morton says. One strategy is to use the amount in your account to pay for medical expenses for you and your family and let your remaining HSA balance grow by selecting an appropriate investment mix, shielded from tax, he says. Another strategy is to pay all your medical expenses out of pocket, letting the entire HSA account balance grow.

Keep in mind that HSAs aren’t for everyone. For one thing, you must have a high-deductible health insurance plan to accompany it. This means that your upfront and out of pocket costs may be higher than with other health insurance plans.

Back to Work Once you’ve put enough in your 401(k) to qualify for the full employer match and you’ve stashed away money in an HSA, consider saving even more in your 401(k).

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Even if you change jobs, you typically have the option to transfer your 401(k) directly to your new employer’s plan or to consolidate it in an individual retirement account (IRA) while your funds keep growing with no immediate tax consequences.

“I’d go the full boat,” Thompson says, because any additional amount you save, up to the annual maximum (generally $19,500 for 2021, with a projected amount of $20,500 for 2022) is done on a pre-tax basis, and your earnings grow on a tax-deferred basis.

Also, Thompson says, a 401(k) or other similar retirement savings plans is portable. Even if you change jobs, you typically have the option to transfer it directly to your new employer’s plan or to consolidate it in an individual retirement account (IRA) while your funds keep growing with no immediate tax consequences.

A 401(k) is not the only way to save, of course, and there are limits, too. If your plan allows for after-tax contributions you may be able to save more. For example, the 415(c) defined contribution plan maximum annual additions for all sources is projected to increase from $58,000 to $61,000 in 2022.2 Also, your employer’s plan may impose a lower limit on contributions than the law allows. If you are a manager, owner, or highly compensated employee, the plan might limit your contributions so that it passes certain required tests.

IRA Option Another option is an IRA. With a traditional IRA, you may qualify for an income tax deduction for contributing, your account can grow on a tax-deferred basis, and your withdrawals are subject to income tax (and a penalty if you’re under 59 1/2, unless an exception applies).

With a Roth IRA, there is no up front income tax deduction for contributing, your account can grow, shielded from tax, and withdrawals of contributions are tax-free. Withdrawals of earnings may escape federal income tax if you meet certain rules—generally, if you’ve held the account for at least five years and you’re 59 1/2 or older.

For 2021, the most you may contribute overall to a traditional or Roth IRA is $6,000 (or $7,000 if you’re 50 or older). This number is projected to stay the same in 2022.

However, a potential problem involves income limits.

If you seek a federal income tax deduction for contributing to a traditional IRA, your federal adjusted gross income (AGI) for 2021 generally must be below $76,000 if you’re single and $125,000 if you’re married and file a joint return. For 2022, if you or your spouse are covered by an employer plan, these numbers are predicted to increase to $78,000 and $129,000, respectively. If you do not have access to an 21

employer plan, then there are different AGI limits that determine deductibility.

For Roth IRA contributions, your federal AGI for 2021 generally must be below $140,000 if you’re single and $208,000 if you’re married and file a joint return. For 2022, these numbers are predicted to increase to $144,000 and $214,000, respectively.

These limits may increase in future years with inflation, but you still may not qualify. That’s one reason why a retirement-savings plan at work may be your first and best option. In most cases, you can contribute no matter how high your income, and you may not be eligible to contribute to an IRA anyway, based on your income.

Backdoor Roth To sidestep income limits on regular contributions to an IRA, you may be able to make a nondeductible contribution to a traditional IRA, Thompson says.

Although you can’t put in more in any given year than the overall contribution limit that applies to traditional and Roth IRAs, your ability to contribute won’t be restricted based on your income, she says.

Once you’ve made the contribution, you can promptly move the money from the nondeductible IRA to a Roth IRA—a technique known as a backdoor Roth IRA. Assuming you have no other IRAs, tax will be due at that point only on the earnings, if any, in your nondeductible IRA, Thompson says. If you have other IRAs, however, the tax consequences can be more complicated.

It’s important to note that pending tax law changes may affect some of the options we’ve described. For example, the House Ways and Means Committee has proposed new measures that would prohibit Roth conversions for individuals with taxable income of more than $400,000 and married couples with taxable income of more than $450,000 as of December 1, 2031. Despite the 10-year phaseout, the policy change could immediately affect financial planning for people who have complex estates and generational transfers.

More Options Save in a taxable account. For example, put money directly into a mutual fund or brokerage account. You won’t get a federal tax deduction, but if you invest for growth alone, your account can grow tax efficiently. Taxes are typically due only when you cash out.

If your employer allows, set aside part of your pre-tax income at work through a nonqualified deferred compensation plan, Thompson says. Tax is deferred on your contributions and earnings.

Withdrawals are taxable. But be careful: The money is considered part of the general assets of your employer, subject to creditors’ claims in bankruptcy.

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Weigh whether to pay down any high-interest debt and then your home mortgage. “The [stock] market can go up, the market can go down, but you know what the rate is on your mortgage,” Thompson says, so you know what your rate of return will be in paying it down or paying it off.

While a retirement-savings plan at work is “a great way to save for the long-term goal of retirement,” it can be “a terrible way to save” for other long-term goals, such as college savings, Morton says.

A key issue involves liquidity, Sanzenbacher says. In exchange for the many tax advantages of a 401(k) or other such plan, you typically have limited access to your funds (until retirement or certain other life changes).

If you do make withdrawals prior to retirement, you’ll not only face federal income tax (and state tax, depending on where you live), but also a 10 percent early withdrawal penalty (depending on your circumstances), he says.

While it can be hard to figure out where to put the money you save for retirement when there are multiple types of accounts you can open, the savings hierarchy can help retirement savers prioritize. By understanding where your money should go first, and then where any extra money should be funneled, you’re making a smart decision for your future.

Keep in mind that everyone’s situation is unique. While very few people ever regret saving too much for retirement, it is always a good idea to talk to your financial advisor about a personalized strategy for your retirement savings priorities.

1 Godbout, Ted, “Major Increases Forecast for 2022 Contribution and Benefit Limits,” napa-net.org 2 Ibid

GLEANINGS

RANDOM GLEANINGS In making this issue, we discovered that the subject of our cover story rides a 2014 Honda CTX1300 motorcycle, that there is a TED Talk on building a dinosaur from a chicken, and that Clark Gable didn’t keep all of his Oscar statues.

100,000 The number of motorcycle-riding miles Second Act hero Cathy Heying has logged since 2000, including travels around Lake Superior, Glacier, and Yellowstone National Parks.

265 The number of miles the farthest-ranging monarch butterfly traveled in one day, according to the U.S. Forest Service.

10,000 The number of lux, a unit of illumination, health professionals recommend susceptible individuals receive for 30 minutes each morning to treat seasonal affective disorder (SAD). That’s the equivalent of 1,000 streetlights.

8 out of 10

Clark Gable gave the Oscar he won for his performance in It Happened One Night—Rotten Tomatoes’ top movie of all time—to a child who admired it, telling him it was winning the statue that had mattered, not owning it.

The number of people in America concerned that financial institutions and other businesses may not be able to safeguard their personal information, according to the American Institute of Certified Public Accountants.

639 The number of pounds of carbon emitted per passenger flying 2,500 miles—the distance from New York to Los Angeles—according to the International Civil Aviation Organization.

Renowned paleontologist Jack Horner has been working on a project to recreate nonavian dinosaurs using their closest living relative: the chicken. Google Chickenosaurus.

23

EXPERT ANGLE

SEASONAL

BLUES

by Kim Painter

For some of us, the onset of fall and the approach of winter are all about the upsides: those beautiful falling leaves, the roar of football crowds, the prospect of holiday gatherings, and cozy evenings at home. But for other people, these chillier, shorter days and the seasonal loss of light are ominous. In more common and less disabling forms, people call it the winter blues. In its most extreme form, this seasonal shift is known as seasonal affective disorder (SAD).

So, what should VESTED readers be thinking about if the fall and winter months start to sink their spirits? For starters, get the facts. Read on to find out what experts have to say about how to recognize, treat, and maybe even prevent seasonal sadness.

What Is SAD? SAD is a form of depression that occurs in a seasonal pattern, most often in fall and winter. The symptoms can include all the hallmarks of any depression: sadness, hopelessness, fatigue, a loss of interest in life’s pleasures, and changes in eating habits and sleeping patterns.

“People with SAD can suffer just as much as people with any other form of depression,” says Dr. Norman Rosenthal, a clinical professor of psychiatry at Georgetown University School of Medicine and the man who led the team that first recognized SAD in the 1980s.

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“They can feel suicidal and lose their jobs and lose their relationships.

It can be a big deal.”

But SAD is different from other forms of depression in some ways, says Kathryn Roecklein, an associate professor of psychology at the University of Pittsburgh. Roecklein, who has devoted her career to finding the biological, psychological, social, and environmental causes of SAD and in improving treatment, says SAD is predictable. “It happens year after year, at the same time.”

Early SAD patients were treated with daily doses of bright light delivered from a huge two-by-fourfoot box outfitted with fluorescent fixtures.

People with SAD are less likely than other depressed people to die by suicide, Roecklein says, possibly because “hopelessness is less of a problem because people know that spring will come.” She says the average bout of SAD lasts four to six months, while the average bout of nonseasonal depression lasts more than a year.

Another difference is a distinctive change in eating habits. People with SAD tend to gain weight as they binge on sweets and starchy foods, Roecklein and Rosenthal say. They also tend to report sleeping more, not less, when they are depressed, although Roecklein says her most recent study suggests oversleeping isn’t as typical as once thought.

If you are not clinically depressed, but are less cheerful, energetic, creative, and productive in winter, Rosenthal says you may be among the 15 percent or so U.S. adults who suffer from the winter blues. Researchers often use a more technical term—subsyndromal SAD—to describe the less severe condition.

What Causes These Problems?

When Rosenthal was growing up in South Africa, he says he noticed the difference in his moods between the warm summers and the cooler winters. But, as he writes in his book, Winter Blues: Everything You Need to Know to Beat Seasonal Affective Disorder, he did not really understand the way winter could deplete his spirits until he spent a year in New York City.

“I had not anticipated how short the days would be,” Rosenthal says in the book. “Then daylight saving time was over, and the clocks were put back an hour. I left work that first Monday after the time change and found the world in darkness. A cold wind blowing off the Hudson River filled me with foreboding. Winter came. My energy level declined.” In the spring, he writes, his energy and mood surged again.

Later, Rosenthal and other scientists from the National Institutes of Health (NIH) started to put the pieces together. Certain patients, they noticed, suffered as the hours of daylight declined, with some starting to feel blue by late summer, and most declining by mid-autumn and suffering most in the dead of winter.

Rosenthal and his colleagues theorized that a shortage of daylight threw some people out of whack, perhaps by disrupting key hormones and the body’s circadian rhythms, the internal clock that helps regulate alertness, mood, and appetite.

So, they tested their theory by treating some early patients with daily doses of bright light delivered from a huge two-by-four-foot box outfitted with fluorescent fixtures.

The result: These patients said they felt better.

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It would take years of research to solidify the theory, but today, seasonal loss of light is accepted as the primary trigger for winter SAD and the milder winter blues.

Is a Lack of Light the Only Cause?

SAD likely has several underlying causes that differ from person to person, Roecklein says.

In fact, many sufferers have retinas that are less sensitive to light. So, on dull winter days, their eyes might not process light in a way that keeps their circadian rhythms in sync. They feel sleepy and slow in the daytime because their brains haven’t gotten the message that it’s daytime at all.

Psychological factors also matter, Roecklein says. People with SAD, like others with depression, often report stressful or traumatic events in childhood. “I want to interview people [who have had stressful or traumatic events in childhood] and find out if the negative events happened in winter,” Roecklein says. “Maybe, each winter, the response is to hibernate, to turn inward.” That, in turn, she says, could lead to less light exposure, less social contact, less exercise, and worse symptoms.

Who Is Most at Risk?

Research has found sharp differences in the risk for SAD by latitude, at least in the U.S. The farther north of the equator you live, the more likely you are to suffer, with rates ranging from about 1 percent in Florida to 10 percent in New Hampshire. Curiously, the same clear differences by latitude are not found in Europe, suggesting factors ranging from cloud cover to culture may be at work, Roecklein says.

Women are more likely than men to be depressed, and the gender divide is especially wide in SAD, with women outnumbering men by about four to one. And, while you might suspect that older adults are especially at risk—because they spend more time homebound in the winter, particularly in cold, icy climates—that’s not true. The risk is highest in early adulthood and middle age, Rosenthal says.

One other important risk factor is family history. Forty percent of SAD risk appears to be inherited, Roecklein says.

Can You Screen Yourself for SAD?

In the U.S., the farther north of the equator you live, the more likely you are to suffer, with rates ranging from about 1 percent in Florida to 10 percent in New Hampshire.

In Winter Blues, Rosenthal includes a questionnaire he helped develop called the seasonal pattern assessment questionnaire, or SPAQ. It can be found online, and it’s one of several screening tools researchers use to determine who might have SAD or milder winter blues. While Rosenthal says using the questionnaire to screen yourself can be useful, both he and Roecklein say that anyone who believes he or she is depressed should seek medical help.

What Is the Treatment?

Light therapy remains a mainstay. Today’s light boxes are much smaller than the 1980s prototypes and provide 10,000 lux of light, with harmful ultraviolet rays filtered out. Light use is typically recommended for at least 20 to 30 minutes a day, usually in the morning.

Antidepressant medications and a form of talk therapy called cognitive behavioral therapy also show effectiveness in studies.

Daily habits also matter. Rosenthal says he starts winter days with a stationary bike ride in front of a light box. He says everyone vulnerable to winter sadness should try to exercise, eat healthfully, get outside, and keep up social ties. “You’ve got a choice whether you are going to keep your head under the covers or get up and face the day,” Rosenthal says.

Brightly lit homes and offices and an occasional sun-soaked vacation help, too, Rosenthal says. So can remembering this: Spring is always just around the corner.

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Lack of Vitamin D and Winter Depression Our bodies have three ways of getting vitamin D. We can consume it in foods, we can take a supplement, or we can trigger our bodies to make it by exposing our skin to the sun. So, the fact that we get less sun exposure in winter raises a question: Could a lack of vitamin D contribute to winter depression? Here is what our experts had to say.

There is, in fact, no statistical link between vitamin D levels and the winter form of SAD, Roecklein and Rosenthal say. And the National Institutes of Health (NIH) agrees with them, reporting that, while some studies have linked low vitamin D levels and the yearround risk of depression, giving depressed people vitamin D supplements doesn’t improve their symptoms.

And trying to prevent depression with vitamin supplements doesn’t appear to work either.

However, the low vitamin D levels seen in some depressed people may be a result rather than a cause of their symptoms, Roecklein says. For example, people who are depressed may go outside less, get less sun, and make less vitamin D. Despite such findings, some SAD patients who take vitamin D say it makes them feel better, Rosenthal says. It’s possible, he says, that a placebo effect is at work.

Both Rosenthal and Roecklein say that it’s not a bad idea to get your vitamin D levels checked if you are feeling low. Some research suggests people truly deficient in the vitamin do feel better when they raise their levels to normal. And vitamin D has benefits beyond mental health: It strengthens bones and muscles, likely helping to prevent falls, and it may boost immunity (though studies are inconclusive on whether it helps prevent colds, flus, COVID-19, or other infections).

Scientists disagree on how low vitamin D levels have to be to pose any health risk. But the NIH says that onequarter of U.S. adults have blood levels below what it considers adequate: 20 nanograms per milliliter (ng/ mL) of 25-hydroxyvitamin D. In general, vitamin D deficiency is more likely in older adults, whose bodies are less able to produce it and who may get less sunshine and nutritious food. Skin color also matters. Dark skin produces less vitamin D in response to sun exposure than lighter skin does.

Another thing to note is that, if you want to boost vitamin D production in the winter, spending time outside won’t help much if you live at a latitude above 35 degrees. That’s anywhere in the U.S. north of a line that runs through the lower edges of Tennessee and Nevada. The winter sun just isn’t strong enough.

You can more predictably maintain vitamin D levels with foods and supplements. The Institute of Medicine recommends that adults consume 600 IUs (international units) of vitamin D per day up to age 70 and 800 IUs after that. Three ounces of salmon provides about 450 IUs, and most dairy and nondairy milks are fortified with about 120 IUs per cup. Many breakfast cereals, orange juices, and other products also have added vitamin D.

Winter Blues: Everything You Need to Know to Beat Seasonal Affective Disorder Norman Rosenthal’s indispensable guide for readers who suffer from the winter blues is now more useful than ever.

This authoritative book presents a wealth of new information on remedies for seasonal affective disorder (SAD), including recent advances in light therapy, research on the effectiveness of antidepressants, and new recipes to counterbalance unhealthy winter food cravings. Rosenthal distinguishes among various degrees of the disorder, ranging from winter blues to full-blown SAD, provides a self test that readers can use to evaluate their own seasonal mood changes, and offers helpful advice, coping tips, and resources.

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INVESTMENT FEATURE

LONG-TERM INVESTORS: THINK LIKE A BUTTERFLY

by Mike Vogelzang and Sam Kirby

“

A society grows great when old men plant trees whose shade they know they

”

shall never sit in.

Greek Proverb

Some investment objectives exist far over the horizon. Planning and investing for extremely long-term goals, such as multigenerational wealth planning for children, grandchildren, or philanthropic goals, often requires a different set of strategies, habits, and tools than those used for nearer-term goals. The greatest difference is not necessarily the types of investment strategies or vehicles employed. Rather, it lies in the mindset of the investor.

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A good illustration of the long-term investing mindset comes from an unlikely source: the migration pattern and lifecycle of the monarch butterfly. In one of the most amazing feats of the natural world, each spring, these fragile insects migrate as much as 3,000 miles from a small mountainous region in central Mexico to as far north as the coastal Canadian province of New Brunswick.

However, no single monarch makes the trip—it can take up to four generations to travel the entire distance. Individual insects contribute and play their small parts knowing that, although they may not see the conclusion of the journey, a future generation will arrive safely at their destination to restart the cycle.

Environmental scientists have a term for this type of behavior: biological altruism. An organism is considered altruistic when its behaviors benefit its species at a cost to itself, as survival of the fittest makes way for the collective survival of the generous.

This analogy can be applied to the mindset of long-term investors, whether a private investor or family whose goals may extend far beyond their own lifetimes or an institutional investor, such as an endowment, foundation, or perpetual benefit plan. Altruistic investors will frequently be tested by their emotions and market volatility as they seek to provide security and opportunity to future beneficiaries.

The Long-Term Advantage The first step in developing a long-term mindset is to recognize the unique advantages and risks posed to investors with multigenerational investment objectives, then designing approaches to optimize the former and manage the latter.

The long-term investor’s greatest advantage is his or her extended time horizon. This is particularly true when the investor has limited liquidity needs from the portfolio. Because such investors can focus on objectives measured over many decades, short periods of poor performance and market volatility have minimal impact and are barely noticeable. In this way, individual investors can learn from large institutional investors, such as university endowments, charitable foundations, and public and private sector benefit plans with long time horizons.

In fact, because institutional investors are typically governed by investment policies that specify portfolio target weights and rebalancing methodology in an unemotional way, studies have shown that endowments tend to invest countercyclically during times of crisis by paring allocations to risk assets during the run-up to a crisis and increasing those allocations during periods of market stress.1 One simple way that individual investors of all types can replicate this strategy is through the use of mental accounting. Instead of

viewing and managing their investments as a single portfolio, investors divide their portfolios into several buckets with different risk, income, and liquidity profiles. For example, a three-bucket approach could include: •

Liquidity—contains a comfortable amount of cash and other highly liquid short-term securities to provide for current cash or spending needs.

•

Income—a portfolio designed to satisfy near-term income needs via higher-yielding securities, such as credit-focused fixed income and dividend-oriented equity strategies, with an eye toward tax efficiency.

•

Growth—a portfolio with higher expected risk and return for long-term growth potential. Investors will often maintain several such buckets earmarked for different objectives, such as college savings, retirement, and lifetime giving, as well as longer-term legacy objectives.

The presence of each bucket allows a longer-term perspective for each successive bucket. During times of market stress, the liquidity bucket provides the investor with the breathing room and time for recovery in the income bucket, and the income bucket reduces the liquidity required within the growth bucket.

This strategy is also intended to be dynamic so that, over time, the relative weights of each bucket can be recalibrated to meet the investor’s current situation.

The first step in developing a long-term mindset is to recognize the unique advantages and risks posed to investors with multigenerational investment objectives, then designing approaches to optimize the former and manage the latter.

Long Journeys Require a Map The annual monarch migration brings millions of butterflies, scattered across all corners of the North American continent, together to a few isolated mountains in the Sierra Madre range—a feat of navigation that biologists still don’t fully understand. Many (if not most) human beings, in contrast, require a map or smartphone app to navigate across town, let alone across long, never-before-traveled routes.

Although long-term investors measure their journeys in years (or decades) instead of miles, they still require a road map. For long-term institutional investors, this guidance takes the form of a comprehensive investment plan called an investment policy 29

Eastern North American monarchs fly south in fall using several flyways, before their paths converge in Texas for the final leg of their journey to central Mexico.

With warm temperatures and longer days, the monarchs become reproductive and begin the journey north in a trip that will span multiple generations.

Source: U.S. Forest Service, USGS National Atlas

statement (IPS). This document is a powerful tool that establishes a set of guardrails and guidelines for the long-term management of investment assets, including the roles and responsibilities of the various parties involved, clear definitions of success and risk, asset classes and investment types allowed within the portfolio, and the target, minimum, and maximum weights of each category.

Individual investors can replicate this approach through the development of a comprehensive financial plan that considers all aspects of their financial lives, their near- and long-term goals, and how they will measure progress toward those goals. Such a plan should consider not only the preferences, constraints, and risk tolerance of the individual but also the nature of the risks that jeopardize long-term success, how sensitive the portfolio is to each of those risks, and how they can be managed.

To succeed, investors need to clearly define their goals, have an objective analysis of the strategy needed to accomplish them, and then a detailed plan for execution and ongoing monitoring.

Having such a plan also provides a systematic structure for managing emotions. Rebalancing to strategic targets allows investors to harvest gains, remain in balance when returns are strong, and add to positions when markets are challenged.

The Importance of Teamwork Another example of animal altruism can be seen in the migration of Canada geese. While these birds may seem a bit mean-spirited and aggressive when encountered at a park or golf course, they exhibit incredible teamwork along their migration journeys. It’s well known that the key to their long-distance migration is the iconic V-formation that allows for much longer distances than any single 30

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bird could fly on its own. But when an individual bird is sick or injured, two other geese will fall from formation to help the injured bird until it either recovers and can rejoin the flock or dies.

Teamwork is also an important element of successful long-term investing. Other advantages enjoyed by institutional investors, such as endowments and foundations, are the presence of a team of professional investment staff or investment consultants and the oversight of an investment committee. These teams provide a diversity of ideas and perspectives that can help reduce one of the greatest threats to the long-term success of individual investors: the risk of emotional investing.

Teams of people provide a wide array of perspectives. Some members may be bullish and aggressive, while others may be more cautious. Some may seek specialized, alternative, or private investments in search of diversification and excess return, while others are laser-focused on keeping investment expenses low. The result in well-functioning committees is a diversification of emotions that helps temper the biases of any individual.

Individual investors can replicate these benefits by surrounding themselves with capable teams of advisors and professionals who bring a diversity of views but are all on the same page with regard to goals and objectives. It can also be important to include family members as part of the team to help build awareness and alignment with long-term goals and strategies.

Managing Long-Term Risks Managing emotions is, without a doubt, the greatest challenge faced by any investor. This is true when markets are on a tear—leading to the temptation to take additional risk—but is particularly important

when markets face challenges. Long-term investors must avoid the temptation to alter their investment strategies based upon current conditions. In other words, avoid market timing. However, this doesn’t mean that long-term investors should turn a blind eye to the markets, set it and forget it, and bury their heads in the sand.

Long-term investors should be far less interested in whether this year’s S&P 500 companies’ earnings estimates are 5 or 6 percent higher than last year’s or the current level of stock price valuations or investment- grade bond credit spreads.

Rather, the focus should shift to structural changes within the markets and the economy that either pose risks to accomplishing their objectives or introduce new investment opportunities.

Figure Two: 10-Year U.S. Treasury Yield (1981—2021)

Sources: CAPTRUST Research, Bloomberg

Capital market assumptions. Although the asset allocation of long-term portfolios should remain relatively stable, material shifts in the long-term risk and return expectations of asset classes, levels of inflation, and economic growth may influence how portfolios are designed for maximum efficiency and can point to the kinds of investment strategies that provide the greatest opportunities for success. For example, investing in fixed income today—after the 40-year secular decline in interest rates illustrated in Figure Two— should be different from the approach taken decades ago.

Technology. Keeping an eye on technological shifts is critically important for long-term investors as a source of significant growth and obsolescence risk. Technology has permeated all aspects of our daily lives, and technology stocks now represent the largest component of the S&P 500 by market capitalization. This does not, however, imply that the long-term investor should chase every hot innovation. Indeed, many traditional, old-economy companies may see material benefits from improving productivity and efficiency through the application of new technology.

Demographics. Perhaps no other economic force holds more power than demographic shifts. Consider the impact of the baby boom generation on the U.S. and global economy. Most of the largest countries are expected to see material declines in population in the second half of this century, along with major shifts in the age structure that may see the number of people over age 80 exceed those under age 5 by a ratio of two to one.2 More favorable demographic trends are expected to occur within emerging markets, albeit with heightened risks of political and economic instability.

Evolving to Succeed

Global conditions. One of the most significant trends of the past 50 years has been globalization and an increasing degree of global economic interconnectedness. This trend has contributed to corporate profitability and helped keep inflation low. However, it also presents increased risks of ripple effects of geopolitical or trade tensions, or economic, social, or political upheaval across the globe.

Although it’s hard to understand this behavior, we must recognize that Mother Nature—with a time horizon of hundreds of thousands or millions of years to evolve behaviors that improve the odds of survival—is the ultimate long-term investor. Even if investment goals are only a few decades away, maintaining the right mindset, building a team and a plan, and continually monitoring for environmental threats and opportunities represent the best approach to arrive at your destination.

Inflation. Perhaps the most potent risk to long-term investors is the preservation of purchasing power over long time horizons.

Stable and modest inflation also represents an important precursor to economic stability and growth.

Not all animals are wired to demonstrate the same kind of altruism as the humble monarch butterfly. Some Antarctic penguins will shove their mates from the ice to ensure that the water is safe before taking the plunge themselves. Although this may improve the odds of group survival, it only works because penguins seem to lack the ability to hold a grudge. Another example can be found in the many species of animals that are known to eat their offspring—even species that, paradoxically, also care for their young.

1 Chambers, Dimson, Kaffe. “Seventy-Five Years of Investing for Future Generations,” Financial Analysts Journal, vol. 76, no. 4, Fourth Quarter 2020 2 “Global population in 2100,” The Lancet, 2017

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MARKET REWIND

MARKETS MIXED IN Q3 Asset classes posted mixed results in the third quarter as the COVID-19 delta variant raised concerns about the sustainability of the economic reopening and recovery. Wrangling in Washington over the federal budget, infrastructure investment, tax proposals, and the debt ceiling roiled markets in September. However, despite a rocky third quarter, U.S. and international stocks, real estate, and commodities remain firmly in positive territory for the year.

• U.S. large-cap stocks rose slightly, and small-cap stocks fell modestly in the third quarter. Despite recent volatility, they have posted double-digit year-to-date gains thanks to a resilient economy and the U.S. consumer’s health.

• International developed stocks slipped in September and continue to trail U.S. stocks for the year. Emerging market stocks fell modestly and are now slightly negative for the year driven by slower growth and regulatory actions in China.

• Bonds treaded water in the third quarter. Despite their rise in September, interest rates were little changed for the period.

• Commodities were the standout performer for the quarter (and the year so far), fueled by a rebound in oil prices.

Commodity prices have risen due to supply constraints and rising demand as the economy reopened.

• Public real estate notched a small gain in the third quarter as interest rates marked time.

MARKET INDEX PERFORMANCE (as of 9.30.2021)

U.S. Bonds

Large-Cap Stocks

Small-Cap Stocks

International Stocks

Emerging Markets Stocks

Real Estate

Commodities 29.1%

21.3% 15.9% 12.4% 8.8% 6.6% 0.1%

0.9%

0.6% -0.4%

-1.6%

Q3 2021

-1.0%

-4.4% YTD 2021

-8.0%

LOOKING FORWARD Record levels of household wealth, extraordinary stimulus, and vaccine availability have set the stage for robust economic growth. While the COVID-19 delta variant has tempered growth in recent months, the economy will likely reaccelerate as the virus’s toll eases.

Meanwhile, we see several reasons for caution. The U.S. policy response has been a driver of the global recovery, but we are nearing a point where the Federal Reserve may begin to wind down its bond-purchase program. Global supply chains have faced significant bottlenecks this year, leading to supply constraints for some industries. Lastly, geopolitical tensions have risen in a number of areas, most notably in China.

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

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MONEY MINDSET

Fighting Recency Bias

by John Curry

If movie review website Rotten Tomatoes’s readers are to be believed, the last decade was a golden age for moviemaking. In fact, 59 of the films in the website’s Top 100 Movies of All Time list were released during the 2010s.

Apocalypse Now?

Figure One: Top 100 Movies by Decade

While the website’s readers included several great films from the past decade, including Parasite, The Shape of Water, Knives Out, and a few other Academy Award Best Picture nominees, they also included nine superhero movies, 12 sequels, and any number of movies that will certainly fail the test of time.

Rotten Tomatoes’s readers seem to have some fondness for classic films, as shown in Figure One, but the 50-year period from the 1960s through the 2000s appears to have been a vast movie wasteland—with only eight movies on the list.

Surprisingly, E.T. the Extra-Terrestrial and Schindler’s List are the only films on the list for the 30-year period from 1980 until 2009.

What about The Big Chill, Titanic, and Million Dollar Baby? More importantly, what is going on with Rotten Tomatoes readers?

Answer: Like most humans, they suffer from recency bias.

Source: Rotten Tomatoes

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Invasion of the Body Snatchers Recency bias is a cognitive bias that causes us to place too much emphasis on recent events or experiences—even if they are less relevant. Conversely, recency bias causes us to deemphasize events further into the past. Specifically, recency bias is a memory bias, a type of cognitive bias that enhances, impairs, or alters the recall of a memory.

In a nutshell, recency bias results from our brain’s preference for more easily accessible information over the harder work of analysis and decision-making. We prefer matching patterns from recent memory to deeper, intentional thought.

Maybe misremembering movies—like how good Road House really is—isn’t such a bad thing, but, like many cognitive biases, recency bias can also keep us from making high-quality decisions in other aspects of our lives.

For example, after an hour-long job interview, you’ll likely recall the last 20 minutes of your conversation more vividly than the first half. That means you will perceive a candidate who starts strong and finishes weaker more negatively than you would have otherwise. The converse is true as well. And candidates interviewed later in your process will be more likely to advance.

In a nutshell, recency bias results from our brain’s preference for more easily accessible information over the harder work of analysis and decision-making. We prefer matching patterns from recent memory to deeper, intentional thought.

Meanwhile, in competitions such as the Eurovision Song Contest and world and European figure skating, Wändi Bruine de Bruin, provost professor of public policy, psychology, and behavioral science at the University of Southern California, found in her research that judges gave higher marks to competitors who performed last.

Wall Street Of course, recency bias affects us as investors as well, and it can be hard to avoid, partly because it is informed by facts. Not just facts—but recent facts that may seem indisputable due to their freshness.

During a stock market selloff, it’s easy to believe that stock prices will keep falling. Think back to early last year when the first coronavirus-induced waves of selling hit the market. It seemed like the bottom dropped out. And it did … right up until the breathtaking rally that recovered all of their lost ground (and more).

Conversely, investors tend to jump on board during the tail end of a market rally only to be surprised that the rally doesn’t continue.

Here are three investing narratives supported by recency bias that will be true right up until they aren’t.

The market’s at an all-time high, so it’s not a good time to invest. If you’re prone to believe this, you will find ample proof, even as the market continues to hit new record levels. Rather than failing to

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invest, it might be more productive to create a dollar-cost-averaging program to move into the market in increments. That way, you can both participate in any future records and take advantage of an eventual pullback.

Growth stocks are doing so well, I don’t need to own value stocks. Growth stocks have, indeed, done well for the past several years when compared to value stocks. While it might be tempting to jump ship on your value stocks, mutual funds, or exchange-traded funds, ensuring that you have exposure to both is wise. This trend will end at some point, perhaps with a vengeance.

All I need is a simple portfolio of 60 percent U.S. stocks and 40 percent bonds. According to Morningstar, if you had invested $100,000 in a simple, cost-effective strategy like this in 1980, rebalanced it quarterly, and stayed the course—fees and taxes aside—your portfolio would be worth $6.8 million. That’s a 10.86 percent annualized total return over a 40-plus-year period.

Wow! Why wouldn’t you just do that?

The easy answer is that the next 40 years cannot possibly look like the past 40 years. Much of the return of that minimally diversified portfolio came from exposure to U.S. bonds during an extended period of falling interest rates. During that period, the yield on the benchmark 10-year U.S. Treasury fell from 13.6 percent to 1.3 percent today. That literally cannot happen again.

Not Mission Impossible While it might seem difficult to do, you can thwart recency bias—or at least minimize it—to help yourself make higher-quality investment decisions.

Get historical. In the immortal words of Mark Twain, “History never repeats itself, but it does often rhyme.” Pulling back the lens to view the longer sweep of history is often a helpful input into decision-making. For example, in the turmoil of a market pullback, looking at the frequency of past corrections could inform your view.

History tells us that 5- and 10-percent pullbacks happen every year or two and that a 20 percent pullback is likely every seven years or so.

Look downstream. Making sure that you understand the implications of your decision may be helpful. Are there transaction

costs? Will you owe significant taxes if, for example, you sell a highly appreciated position? How will you reinvest the proceeds? The answers to these questions may cause you to think twice.

Revisit your plan. Your financial plan can also provide important information for investment decision-making. Knowing, for example, the portfolio hurdle rate needed to fund your important life goals can be invaluable. You may find that it will be quite easy to achieve, so you can worry less about market pullbacks and won’t need to take an extraordinary amount of investment risk to get there.

Kick it around. You may want to seek opposing views to investment ideas you’re exploring. Many people process their thinking by speaking, so having a trusted sparring partner (or partners) to debate with can be a helpful way to expand your thinking. The more viewpoints, the better. This will add nuance to your ideas and help ensure you are thinking rationally.

Successful tactics to address recency bias tend to have two complementary characteristics to help you make better decisions: They provide both additional perspective on a topic, and they slow down the decision-making process.

Successful tactics to address recency bias tend to have two complementary characteristics to help you make better decisions: They provide both additional perspective on a topic, and they slow down the decision-making process.

While it is unlikely that Rotten Tomatoes is concerned about the influence of recency bias on its Top 100 Movies of All Time list, you might want to slow down and gather more information before your next movie night.

Exploring other sources—like the American Film Institute’s 100 Greatest American Movies of All Time or the Academy of Motion Picture Arts and Sciences’ list of past Oscar-nominated best pictures—can provide a much richer picture of quality films to spend your time on.

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LASTING LEGACY

INVESTORS IN

TRAINING

by Jeanne Lee

There’s no doubt about it: Passing along financial wisdom to children can help them live better lives, enjoy greater freedom, exercise more control over how they spend their time, and afford a degree of comfort and security that otherwise may not exist.

A lot of ways exist to help kids—grandchildren, nieces, nephews, godchildren, or any other young people in your life—build their financial muscles. Many of us utilize common practices like helping a child fill up a piggy bank over time, involving youngsters in small purchases using cash, helping them join the local bank or credit union to open an account, or by the different examples we set, such as sticking to a budget.

a way for the kids to connect real money to the stock market and learn about how the stock market works,” he says.

All the Action in Just a Fraction

But it’s also important to teach kids lessons in investing, says father of two and Wilmington-based CAPTRUST wealth management advisor Buck Beam.

For the Beam family, it all started with the ubiquitous delivery trucks driving through their neighborhood, dropping off brown boxes adorned with a smile logo. “How about Amazon?” Beau and Wayland asked. There was just one problem: The boys’ stock pick was totally out of their budget, with a price tag in the thousands of dollars for a single share, says Beam.

So, when it came time to pass on some of these lessons to his own two sons, Beau, 12, and Wayland, 9, Beam was “looking for

Then he looked into fractional shares. While buying entire shares of stock in big name companies can get expensive, Beam quickly

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discovered that fractional shares are a fantastic way to get young people excited about investing and to help them develop valuable financial skills that will be with them for life, without committing a lot of money.

Since then, Beam has seen his two sons bloom into precocious investors. While working from home in the early days of the pandemic, the family even got into a routine of eating breakfast together while watching the business news, which led to the kids peppering their dad with questions about companies and how the stock market works.

“The idea of investing some of their own money was thrilling to the boys,” Beam says. They already had some savings—from birthday money and allowances—and Beam was excited to foster their interest.

He even upped the ante by pledging to match their investments dollar for dollar.

A Long-Term Lesson “Fractional shares of stock are a great opportunity for young investors because it can teach kids how money actually grows,” says Beam.

“And kids are eager to learn—particularly when Disney and Apple could be involved.”

The idea is simple: Instead of buying whole shares of stock, parents, aunts, uncles, grandparents—or anyone with a young person in his or her life—can buy partial shares by the dollar amount. Also called dollar-based investing, this capability was first offered by some technology startup companies and then introduced by companies like Fidelity and Charles Schwab in 2020. With dollar-based investing, even someone with just a little bit of money can buy in and diversify his or her small-dollar portfolio.

“Investing in fractional shares is a neat activity to do with the kids,” says Beam, “and it has the long-term benefit of helping create savers and investors out of your kids and grandkids without putting a lot of money down.” According to Beam, fractional shares are for everyone—at the collective age of 21, his boys hold investments in Amazon, Microsoft, Roblox, Disney, and Apple.

Hands-On Investing For Beam’s sons, their dad’s idea of investing in fractional shares meant they could afford to get into some of the brand-name stocks that they were familiar with. And that got their attention. The boys became very engaged and excited to talk with Beam about their personal stock holdings and their own investment ideas.

Above: Buck Beam; his wife, Caroline; and his sons, Beau and Wayland.

“

Investing in fractional shares is a neat activity to do with the kids. And it has the long-term benefit of helping create savers and investors out of your kids and grandkids without putting a lot of money down.

Buck Beam

”

Beam quickly noticed a stark difference from his previous attempts to educate his kids on the workings of the stock market. In the past, his lectures were largely ignored. But kids, like adults, absorb complex concepts much better through experiencing them than by passively listening.

“A lot of kids don’t make financial decisions,” says Beam. “So it’s very interesting to them to have some skin in the game and then get to live with their decisions and see how it goes.”

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In fact, one day last winter, Beau watched a news report about the airline sector being hard hit by travel bans and pandemic restrictions. Since the sector was down, he pondered, wouldn’t it be a good time to buy some airline stocks and hold them until they recovered? Beam was delighted to encourage him to follow his instincts. “I said, ‘Maybe! For the amount of money we’re talking about, it’s worth a try.’”

Beau invested $40 in an airline stock when the share price had dipped to the high $30s, getting a bit over one share’s worth.

Since then, the stock has had ups and downs, trading above $50 at one point and back down to around $40.

When Beam comes home from work these days, Beau or Wayland will rush to him, asking, “What’s my stock worth now?”

“Beau and Wayland have seen the markets go up and go down,” Beam says. “They’ve watched Amazon trade at its highest price ever and then come down significantly.” It’s a small amount of money that they’ve invested, but to them, he says, it’s a really big life lesson.

Hungry for More When Beam comes home from work these days, Beau or Wayland will rush to him, asking, “What’s my stock worth

now?” Father and sons pull up the Fidelity mobile app and put their heads together, checking on the latest progress of their investment portfolios.

The experience has shown Beam how he can talk with his kids about the stock market. “This has been the first time in their lives they would ask me questions, instead of me just explaining what I do and why it matters. Now they’re curious. They want to understand. Once their money was on the line, they were hungry for more information,” says Beam.

What to Do with Winnings Another important lesson for young investors is what to do with winnings. “When one of the stocks went up, their natural question was, ‘Can we get the money out and buy something?’” says Beam.

While Beam and his wife, Caroline, have not allowed the boys to take any money out, they have been asked by the boys repeatedly. While we can’t blame the budding investors for fantasizing about cashing in, rightfully so, Beam has “encouraged them to look at this money as a long-term savings account, not a source of money for buying a toy or a treat or a video game.”

Beam also wanted the boys to avoid short-term gains, which might have tax consequences. More importantly, he was teaching them to become savers and long-term investors—a habit that is truly a valuable gift to impart on a child.

START WITH A CUSTODIAL ACCOUNT Depending on which stock your little one wants to invest in, fractional shares could be a practical option worth considering. Here is what you need to know about getting started.

Kids and teens can own stock by having an adult on the account with them.

If you want to open an account for someone under the age of 18, you’ll need to open a custodial account in person or online through a brokerage.

You will be the custodian, and the minor will be the beneficiary, Beam says.

“Your child will own the assets, but you’ll control the investments and have legal responsibility over the account until your child is 18 to 21, depending on your state.”

Custodial accounts for kids are easy to set up and monitor so they can embrace investing early in life, Beam says, but be sure to confirm beforehand that the brokerage allows for fractional investing, as not all of them do. Also, look for an account that offers commission-free trades. When you’re investing small amounts, fees can quickly erode your returns.

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CLIENT CONVERSATIONS

READER Q & A In this installment of Client Conversations, the team at VESTED gets into old-world and modern-day tactics crooks use to steal from 401(k), 403(b), and other retirement accounts. From contacting financial institutions

?

pretending to be the account holder to convincing the account holder to transfer funds out of the account—we’re exposing what you need to know to safeguard your accounts. Also included are insights on the potential age delay in RMDs. With change expected to become law by the end of the year or sometime in 2022, VESTED dives into the ways that the extra years could provide more time to strategize.

Are criminals targeting retirement accounts? If so, what do I need to know to protect myself?

A

Attempts to steal from 401(k), 403(b), and other retirement accounts are, in fact, on the rise. But while it might feel like crooks always seem to be a step ahead of the good guys, you should know that stealing from a retirement account isn’t easy.

Criminals try to steal from retirement accounts using both old-world and thoroughly modern techniques. They might try calling the plan’s recordkeeper and impersonating you or sending a faxed distribution request with your signature.

That’s right—crooks can even lift signatures from other documents to create an initial online identity or steal the one you have in place through hacking.

Each approach requires different knowledge about you, and there are several barriers in the way. In addition, 401(k) accounts are more difficult to steal from than typical bank accounts because they often require additional paperwork from the employer to access the money, but these retirement accounts can also be easily subject to fraud if the crook has the right information.

Crooks can lift signatures from other documents to create an online identity or steal the one you have in place through hacking.

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Experts say criminals use a few common tactics. One is acquiring an account holder’s statement or website credentials and contacting the financial institution pretending to be the account holder trying to get his or her money out.

The other way crooks make off with retirement savings is by using a technique called social engineering (which is what used to be called a con or a grift), persuading the account holder to transfer funds out of the account.

Fortunately, there are some things you can do to protect yourself from frauds like these. Taking the following steps can help safeguard IRAs and retirement plan accounts like 401(k)s.

Create an online account. Experts recommend setting up online account access even if you prefer paper statements. It’s easier for impersonators to take control of your account online if you haven’t claimed online access for yourself.

Check in regularly. Check your retirement account, including your email and street addresses, at least monthly. Sign up for text alerts that notify you of changes or transactions, and use multi-factor authentication (MFA). MFA is a security enhancement that allows you to present something you know— like your password—with two credentials when logging into an account. Credentials fall into any of these three categories:

something you know, like a password or PIN; something you have, like a smart card; or something you are, like your fingerprint.

Practice good internet hygiene. Avoid public Wi-Fi, and never click on suspicious or unfamiliar links in emails, text messages, or instant messaging services seeking personal information, including passwords.

Design good passwords. Choose unique passwords that you keep confidential. Long passwords are stronger, so make your passwords at least 12 characters. Try using a lyric from a song or poem, a meaningful quote from a movie or speech, or a passage from a book.

Dispose of printed statements carefully. Shred printed statements along with other sensitive documents. Local office supply stores offer shredding by the pound in case you have lots of old statements to dispose of.

If you see something, say something. If you are personally affected, immediately call your recordkeeper and employer and have a freeze put on your account. You may also want to report it to the Federal Trade Commission (FTC) at ftc.gov, the Treasury Inspector General for Tax Administration (TIGTA) at tigta.gov, and your local police department.

I’ve heard Congress might raise the age for taking RMDs. What do I need to plan for if the age moves to 73?

A

It is true. The age when Americans must start making withdrawals from traditional individual retirement accounts (IRAs), IRA-based accounts, and most employer-sponsored retirement plans could change again, and potentially soon.

The proposed new legislation, nicknamed SECURE Act 2.0, would increase the required minimum distribution (RMD) age to 73 starting in 2022, then to 74 in 2029 and 75 in 2032.

This change is expected to become law either by the end of this year or sometime in 2022. However, the potential impact of a higher age requirement on your RMD timing is mixed and depends on how quickly you need the money.

The majority of retirees will not be impacted. According to the Internal Revenue Service (IRS), 79 percent of retirees take more than their RMD annually because they need the money.

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However, for the 20.5 percent who take only the minimum amount required, the extra years could provide more time to strategize.

If you have income sources in addition to your IRA and company plan, waiting another one to three years can be a big plus because it allows your savings to grow on a tax-deferred basis for longer.

Another big planning opportunity related to RMDs at 73 is that the SECURE Act leaves the eligible age for qualified charitable distributions, or QCDs, intact at 70 1/2. The QCD gives charitably inclined retirees the opportunity to make tax-free gifts using assets from their tax-deferred accounts.

The mismatch between the QCD-eligible age (70 1/2) and the new RMD age of 73 provides an opportunity to use QCDs aggressively when first eligible with an eye toward reducing RMDs when they commence. However, it is a short window, and QCDs are limited to $100,000 per year.

Another big planning opportunity related to RMDs at 73 is that the SECURE Act leaves the eligible age for qualified charitable distributions, or QCDs, intact at 70 1/2.

A delay in the RMD age is also an opportunity to convert more of a traditional 401(k) or IRA over time to a Roth IRA. While taxes are paid on the converted money, withdrawals down the road would be tax-free, unlike distributions from a traditional IRA or 401(k), which are taxed as ordinary income.

Similarly, those post-retirement, pre-RMD years allow for tax-lowering maneuvers not directly related to the IRA. For example, tax-gain harvesting in taxable accounts can help reduce or eliminate capital gains taxes eventually due on those assets.

While the first SECURE Act eliminated the stretch IRA for the majority of beneficiaries who inherited IRA assets in 2020 or later, it does provide a big opportunity for Roth IRA beneficiaries.

Distributions from inherited Roth IRAs are almost always tax-free. A beneficiary could take no distribution until the tenth year after inheriting the account, leaving all the earnings in the inherited Roth IRA to grow tax-free. The account could then be emptied in the tenth year after years of tax-free growth with no tax bill for the beneficiary.

If you are considering your estate plan and are thinking about how your beneficiaries will fare under the new rules, now may be a good time to consult with a knowledgeable tax or financial advisor.

If you have a question for the VESTED team, we’d love to hear from you and see if we can help. Please send your questions to us at VESTEDmagazine@captrust.com.

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CAPTRUST HAPPENINGS

GIVING BACK

Will Froelich (center) with Elevate Phoenix staff members

CAPTRUST colleagues across the country have been getting into the giving back groove over the past several months. From writing and delivering $10,000 checks to taking days to drop off snack bags for children to delivering a stockpile of critical items for the underserved in our communities, volunteers have been on the job and active in the communities we serve.

Giving Thanks Campaign In August, the CAPTRUST Community Foundation (CCF) celebrated its second annual Giving Day by announcing a total of $510,000 in donations going to more than 55 charities across the nation.

As part of this campaign, each CAPTRUST office was given the opportunity to allocate $10,000 to charities in its local community. Each organization’s focus must align with the CCF’s mission to benefit children in the communities we serve. The event was a follow-up to last year’s Giving Thanks campaign, where the foundation gave $450,000 to 45 nonprofits. Charities that received donations this year included:

• Just Keep Livin Foundation • Mercy Foundation • Minnesota 4-H Youth Development • New Alternatives for Children • Park View Community Mission • Pediatric Cancer Foundation of the Lehigh Valley • Rainbow Days • Raleigh Dream Center • Riverside Community College District Foundation

• A Child’s Haven

• Elevate Phoenix

• Acres of Hope

• Emmaus House

• A.G. Gaston Boys & Girls Club

• Equi-librium

• Ronald McDonald House Charities of San Antonio

• Assistance League of Ventura County

• Feed More of Central Virginia

• Roots Charter High School

• BackPack Beginnings

• Food Bank of Eastern Michigan

• Rockbridge Area Relief Association

• Big Brothers Big Sisters of Greater Pittsburgh

• Foster Care Support Foundation

• Spectrum Health Foundation

• Freedom for Youth

• Stewart’s Caring Place

• Bottom Line

• Friendswood ISD Education Foundation

• St. Mary’s Center for Women and Children

• Greater Dayton Volunteer Lawyers Project

• Sussex Montessori School • The Harrelson Center

• Bradley Free Clinic

• Habitat for Humanity of Southern Santa Barbara County

• Broken But Not Destroyed

• Hands4Hope

• Truth in Nature

• Bucks County Opportunity Council

• Heart Math Tutoring

• United Way of Summit County

• Center of Hope

• Humble ISD Education Foundation

• Valiant Cross Academy

• Chicanos Por La Causa

• Interfaith Outreach & Community Partners

• Washburn Center for Children

• Children’s Brain Tumor Foundation

• Integrated Family Community Services

• White Pony Express

• Children’s Home Network

• Judson Center

• YWCA of Corpus Christi

• Boys & Girls Club of Easton • Boys & Girls Club of Santa Clarita Valley

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• Time Out Youth

Jeff and Carrie Davis, founders of Truth in Nature, with Charles Pyke

Michelle Jonk, Ginny Curran, and Janine Marks at Stewart’s Caring Place

2021 Hops for Hope For a seventh 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 31 teams. The event raised more than $290,000 to benefit Children’s Flight of Hope, a local nonprofit that provides air transportation for children to access specialized medical care. CAPTRUST’s team, The Roth IPAs, brewed a Helles Lager named Certain Circles and raised more than $3,500 for the cause. The team’s craft brew came in fifth place in the Critics’ Choice Award competition.

In August, CAPTRUST delivered 300 snack bags to the Boys & Girls Clubs of Charlotte for the club’s summer literacy program.

In July, colleagues made a meaningful donation of hygiene products, baby care items, and other necessities to Metropolitan Ministries, a nonprofit organization in Tampa.

Bond Brothers 5K The CCF again teamed up with Bond Brothers Beer Company to host the fifth annual Bond Brothers 5K race. The event went off without a hitch, with more than 450 runners, joggers, and walkers participating in the September 25 festivities in person and online. The race raised more than $31,000 for the CAPTRUST Community Foundation.

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CAPTRUST GROWTH We are pleased to announce two senior hires, three new financial advisors, and several new regional offices.

NEW COLLEAGUES Marc Hermer

Robert Miller

Marc Hermer joined the firm’s Raleigh, North Carolina, office in August. As director of portfolio trading and implementation, Hermer specializes in leading all trade processes, data management, client reporting, and portfolio management functions. Prior to joining the firm, Hermer led the overlay investment strategy team at Merrill Lynch, overseeing $500 billion in assets under management and implementing more than 600 model portfolios. Hermer earned his Bachelor of Arts degree in economics from Dartmouth College.

In August, Robert Miller joined CAPTRUST as chief financial officer, responsible for overseeing all reporting, budgeting, allocation, and financial analysis. Previously, he served as chief operating officer and chief financial officer for the Global Equities and Investment Banking Division of Raymond James & Associates.

Miller holds a Bachelor of Arts degree in economics and political science from the University of North Carolina at Chapel Hill and a Master of Business Administration degree from the Wharton School of Business, University of Pennsylvania. He is based in Raleigh, North Carolina.

Jennifer Barker

Laura Morganelli

Giovanni Tiso

Jennifer Barker joined CAPTRUST’s Boston, Massachusetts, office in July. She serves as a senior financial advisor responsible for providing investment and fiduciary advisory services to defined benefit, defined contribution, and nonqualified retirement plan sponsors. Prior to joining the firm, Barker was with TIAA for seven years, where she held multiple roles, including relationship manager and investment strategist. She earned her Bachelor of Arts degree in political science from Providence College.

CAPTRUST’s Allentown, Pennsylvania, office welcomed Laura Morganelli in May. She serves as a wealth management financial advisor responsible for providing comprehensive wealth management services to high-net-worth investors, families, and corporate executives. Prior to CAPTRUST, Morganelli served as a financial advisor with Abacus Wealth Partners. She earned her Bachelor of Science degree in accounting from DeSales University.

Giovanni Tiso joined CAPTRUST’s Lake Success, New York, office in June. He serves as a financial advisor responsible for providing financial planning and analysis and investment advice to high-net-worth individuals and their families, businesses, and organizations. Prior to CAPTRUST, Tiso was with The Colony Group, where he served as an associate wealth advisor. He received a Bachelor of Arts degree in economics from Fordham University.

Chicago, Illinois and Denver, Colorado Chicago-based Ellwood Associates joined CAPTRUST’s ranks in October. The Ellwood team brings with it around 200 clients representing $85 billion of assets. The firm serves endowments, foundations, retirement plans, hospitals, family offices, and high-networth individuals. A total of 55 Ellwood employees joined CAPTRUST, including a seasoned team of consultants with an average of 20 years of industry experience.

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Greenville, South Carolina The firm announced the addition of Nachman Norwood & Parrott Wealth Management (NNP) in July. The Greenville, South Carolina-based team adds to CAPTRUST more than $2.1 billion in assets under management. NNP provides financial planning and consulting services for high-net-worth individuals, qualified plans, and endowments and foundations. Nearly 20 financial professionals joined CAPTRUST from NNP.

CAPTRUST RECOGNITION Best Places to Work in Indiana Firm Ranks on Barron’s List

CAPTRUST ranked sixth on Barron’s prestigious Top 100 RIA Firms list for 2021, increasing two spots from 2020. The ranking is based on a formula that this year includes several new metrics, including technology spending, staff diversity, and succession planning.

Largest RIA

In July, CAPTRUST was again named the largest registered investment advisor by Financial Advisor magazine. This marks the sixth year in a row the firm has netted this honor. The ranking, which is based on year-end assets, includes more than 600 firms around the U.S.

Birmingham Ranks No. 1

The Birmingham Business Journal awarded CAPTRUST the top spot among investment brokers in the area. The Journal also placed the firm in the No. 17 spot among financial planners in the area.

Fifth Largest in Atlanta

Atlanta Business Chronicle ranked CAPTRUST Atlanta as the fifth-largest financial planning and advisory firm in the area this past September.

Second Largest in Tampa

CAPTRUST was recently named the second-largest investment services firm in Tampa by the Tampa Bay Business Journal based on its $25.89 billion of client assets in the market.

Excellence Award The Excellence Award is a way for associates to recognize coworkers who consistently perform at the highest levels. The award winners represent an elite group whose attitudes and performance have positively impacted CAPTRUST’s clients and the company overall. The following are our Excellence Award winners for the second quarter of 2021.

Deanna Bamford

Senior Financial Advisor | Relationship Manager

Kara Chase

Senior Administrative Associate | Corporate Services

The Indiana Chamber of Commerce named CAPTRUST to the 2021 Best Places to Work in Indiana list in May. Coming in at the No. 3 spot, this is the seventh consecutive year CAPTRUST’s Chesterton, Indiana, team has made the list.

Best Places to Work in Raleigh

The Triangle Business Journal again named CAPTRUST to its Best Places to Work List in the Raleigh-Durham-Chapel Hill area, with the firm ranking sixth among extra-large companies with at least 250 employees.

Doubling Down in Houston

CAPTRUST pulled in double honors from the Houston Business Journal, taking the No. 2 spot among the largest Houston-area wealth management firms with investment minimums over $1 million and the No. 15 spot on the largest Houston-area money management firms list.

On the Board in Austin

Over the summer, the Austin Business Journal placed CAPTRUST in the No. 17 spot among Austin-area investment management registered investment advisory firms. Additionally, the Journal ranked CAPTRUST as No. 13 among Austin-area financial planning firms.

CAPTRUST Women’s Leadership Forum

This summer, the Women’s Initiative hosted its inaugural CAPTRUST Women’s Leadership Forum. On August 11, colleagues from all areas of the firm took to Microsoft Teams to share stories of career growth, challenges, mentorship, and more. Before the two-hour session wrapped, attendees had an opportunity to listen in on an interview between CAPTRUST CEO Fielding Miller and CAPTRUST Board of Directors Member and Chief Administrative Officer for the National Football League Dasha Smith.

Alegeus Partners with CAPTRUST

In July, Alegeus, the market leader in consumer funding technology, selected CAPTRUST as the registered investment advisor for its modern health savings account (HSA) investment solution. The solution features real-time and fractional trading, a fully automated robo-advisor, and a range of investment strategies to accommodate investor risk levels. CAPTRUST will provide research and assist with overall program management that is a core part of the Alegeus HSA.

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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 30 years of acting as a fiduciary to some of the country’s biggest retirement

Kathy Kelly, CPA Consultant, Relationship Manager Stockbridge, GA Charles B. Pyke, Jr., JD Principal, Financial Advisor Stockbridge, GA

Matt Godleski, CFA, CFP® Principal, Financial Advisor Stockbridge, GA Shane Hunter, CFP® Principal, Financial Advisor Stockbridge, GA

Patrick Plunkett, CFP® Principal, Financial Advisor Stockbridge, GA

plans, we have gained valuable insights that we can apply to your wealth planning and investment challenges.

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

Fall | 2021