VESTED Winter 2024 by CAPTRUST

Health on Track

Mayor Jacques Gilbert An Unlikely Assignment PLUS You Should Be Dancing Tax-Smart Retirement Blockbuster or Bust Second Home Succession WINTER 2024

CAPTRUST Manager Tranita Alexander teaches at Haven House’s Second Round Program in Raleigh, North Carolina.

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Teaching financial literacy to teenagers— because it creates a ripple effect—has the potential to transcend generations. There is no greater sense of achievement than watching the lightbulbs turn on for these teens. Andrew Costello CAPTRUST Financial Advisor Roseville, CA

CAPTRUST Community Foundation (CCF) Financial Literacy Program

Since 2021, the CCF has provided financial literacy presentations and financial education free of charge to nonprofits and organizations across the country. Aligned with its mission to benefit the lives of children, the foundation’s financial literacy program supports a sturdy financial foundation for children, teens, and their families.

” Request a presentation for your organization at captrustcommunityfoundation.org.

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

Winter | 2023

DEAR FRIENDS,

PUBLISHER

I hope this letter finds you healthy and rested, with your spirit filled for a new year. Welcome to 2024!

J. Fielding Miller Chief Executive Officer

EDITOR-IN-CHIEF

Thank you for your continued readership of VESTED and for inspiring us to improve our content with your feedback and article ideas. For this issue, our Second Act star is Jacques Gilbert, a retired police captain who is now the mayor of Apex, North Carolina—a small town just a short distance from our headquarters in Raleigh. Gilbert grew up in Apex, worked 29 years on the force, then transitioned to community leadership to fulfill his strong desire to help. His story is a good reminder that we can do so much to improve the lives of others when we take the time to show up and serve. This issue also features a range of other topics, including: • planning for taxes in retirement, • improving your trivia knowledge, • handing down your second home, • the complex benefits of dancing, and • understanding the emotional value of a dollar through different stages of your financial plan. In this issue’s must-read Lifestyle Feature, “Health on Track,” Editor-in-Chief Roxanne Bellamy investigates the healthtracking trend, including the potential benefits of wearable devices, regular bloodwork, and more. Her experts offer their personal stories and advice for both how and why you might want to pay more

Volume 10, Issue 1 | Winter 2024

Roxanne Bellamy Marketing Manager

EDITORIAL ADVISORY BOARD

attention to your health data. Plus, they explain how to work with your healthcare providers to improve your outcomes. Lastly, in this issue’s Investment Feature, “Blockbuster or Bust,” CAPTRUST Investment Strategists Justin Pawl and Sam Kirby explain some of the most likely economic scenarios that may unfold in 2024. While the range of potential outcomes is still wider than usual, their predictions help to frame the full spectrum of what could happen this year and how investors can prepare to stay resilient. As always, keep the feedback, reactions, and ideas coming. Onward and upward! All the best,

Jeremy Altfeder Financial Advisor

Mike Gray Financial Advisor

Frank Bub Senior Director

Kathleen Hopkins Communications

Catherine Currin Communications

John Keeton Financial Advisor

John Curry Chief Marketing Officer

Marcus Magyar Financial Advisor

Nick DeCenso Senior Director

Christeen Reeg Financial Advisor

Philip D’Unger Wealth Planning

Anthony Scarpo Financial Advisor

Karl Eggerss Financial Advisor

Fred Sloan Financial Advisor

Matt Godleski Financial Advisor

Eddie Welch Managing Director

Jennifer Wertheim Tax Director

ART DIRECTION AND MARKETING

Lonzetta Allen Associate Art Director

Elizabeth Altman Distribution Manager

Jennifer Mastrapasqua Art Director

Kaylin Nuñez Graphic Designer

WITH THE ASSISTANCE OF

Azul Photography Raleigh, NC

J. FIELDING MILLER CAPTRUST Chief Executive Officer

Worth Higgins & Associates Richmond, VA

Getty Images Seattle, WA

ROXANNE BELLAMY

CATHERINE CURRIN

NEIL DOWNING

NANCI HELLMICH

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

Catherine Currin is a Raleigh, North Carolina, native and currently works on the brand team at CAPTRUST. A graduate of Wake Forest University, she has written for lifestyle publications such as WALTER Magazine, Eater Carolinas, and Apartment Therapy. Outside of work, Currin is involved in her community through the YMCA of the Triangle.

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.

Content and Contributors | Winter 2024

Features

Columns

HEALTH ON TRACK

PASSION PURSUITS

LASTING LEGACY

MAYOR JACQUES GILBERT: AN UNLIKELY ASSIGNMENT

EXPERT ANGLE

CLIENT CONVERSATIONS

TAX-SMART RETIREMENT

TRIVIA GLEANINGS

CAPTRUST HAPPENINGS

BLOCKBUSTER OR BUST

MONEY MINDSET

by Roxanne Bellamy

You Should Be Dancing by Kim Painter

Stay Sharp with Trivia by Nanci Hellmich

Second Home Succession by Nanci Hellmich

by Kim Painter and Catherine Currin

by Neil Downing

by Justin Pawl, CFA, CAIA, CFP® and Sam Kirby, CFA

The Values of a Dollar by Jim Underwood

SAM KIRBY

KIM PAINTER

JUSTIN PAWL

JIM UNDERWOOD

As a leader of CAPTRUST’s Investment Strategist team, Sam Kirby works with the firm’s financial advisors to assist clients with investment strategy, portfolio construction, and monitoring. Kirby earned his Bachelor of Arts in journalism from the University of North Carolina and his Master of Science in management from North Carolina State University. He is a CFA charterholder.

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

Based in San Antonio, Texas, Justin Pawl is a financial advisor and a member of the CAPTRUST Investment Committee. He has a Bachelor of Arts in environmental science and a Master of Science in biogeochemistry from the University of California, Santa Barbara. Pawl serves clients in complex sectors of the financial services industry and specializes in investment, financial, estate, and tax planning strategies.

Jim Underwood is a member of CAPTRUST’s Investment Committee and leads the firm’s Portfolio Management team. He has a Bachelor of Science in finance from Auburn University and a Master of Business Administration from the University of Alabama at Birmingham. Underwood is a CFA charterholder with more than 20 years of investing experience.

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. ©2024 CAPTRUST Financial Advisors. The opinions expressed in this magazine are subject to change without notice. This material has been prepared or is distributed solely for informational purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. CAPTRUST does not render legal, accounting, or tax advice. If you require such advice, you should contact the appropriate legal, accounting, or tax advisor. The information and statistics in this magazine are from sources believed to be reliable but are not warranted by CAPTRUST Financial Advisors to be accurate or complete. Performance data depicts historical performance and is not meant to predict future results.

LIFESTYLE FEATURE

health on TRACK

by Roxanne Bellamy

One weekend last March, Judy Budesheim of Titusville, Florida, awoke with what she thought was indigestion but turned out to be a heart attack. “I felt funny all weekend,” she says. “But I thought, Well, I’m not going to the ER. I’ll just wait to see my own doctor on Monday.” Budesheim’s doctor gave her an electrocardiogram, also called an ECG or EKG, to measure the electrical activity in her heart, plus a blood test to check cardiac enzymes that can indicate a heart attack. The ECG looked good, but the blood test didn’t.

Budesheim, 79, ended up in the emergency room and then a catheterization lab, where doctors found that one of her arteries was fully blocked. Afterward, Budesheim’s daughter bought her an Apple Watch to keep track of her heart health. The watch includes an ECG app and can measure blood oxygen saturation, heart rate, and more. Of course, the ECG in her watch is not as sophisticated as the ones used in hospitals, but Budesheim says it’s still comforting to have in reach. “It won’t detect a heart attack,” she says. “But it will tell me if I go into atrial fibrillation. And if that happens, I know I need to get in touch with the hospital or the doctor very quickly.” Since Budesheim lives alone, fall detection is another important feature of her Apple Watch. “My watch does a whole lot of things,” she says. “But I am worried more about my heart than anything else.” This worry puts Budesheim in good company. According to data from Johns Hopkins University, a desire to track their heart health is one of the top two reasons why people use wearable healthtracking devices. (The other is exercise tracking.)

Lifestyle Feature | Winter 2024

Budesheim tests herself for atrial fibrillation at least once a day, and sometimes more. “If I get stressed or something just doesn’t feel right to me, I’ll think, Let me just check my watch,” she says. “I get some reassurance that if something happens, the watch is going to give me a little heads-up.”

Fact Finding As technology advances and prices decrease, health-tracking apps and wearable devices are becoming increasingly popular. In 2023, 40 percent of American adults reported using healthrelated apps as part of their daily routines, and 35 percent used at least one wearable device, such as a Fitbit, Apple Watch, WHOOP band, Oura Ring, or digital pedometer, according to Morning Consult. David Stewart, 65, of Park City, Utah, says apps and wearables are only part of the larger health-tracking trend. As host of the SuperAge podcast and founder of ageist.com, a media site that aims to break stereotypes of aging, Stewart keeps his finger on the pulse of health-tracking trends for people aged 50 and older. But health is also one of his personal passions.

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I get some reassurance that if something happens, the watch is going to give me a little heads-up.

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Judy Budesheim

A desire to track their heart health is one of the top two reasons why people use wearable health-tracking devices.

Stewart tracks his own health with multiple wearable devices plus quarterly blood work through InsideTracker and an array of yearly check-ins with various physicians. His annual exams include a bone density scan, hearing test, and “all the usual” recommended physical examinations for people his age, such as a colonoscopy, prostate cancer screening, dental visits, and eye exams. He says the greatest benefit of consistent tracking is that it helps identify potential issues before they become bigger problems. For instance, Stewart says, his latest blood work revealed low iron and calcium levels, and various tests have made him realize he struggles to metabolize vitamin D. So he supplements with all three and hones the dosage of his supplements based on each quarter’s blood test.

“You can only improve what you can track,” Stewart says. “If you’re not tracking, you’re just guessing. It’s great to be intuitive. But feelings are not facts.”

Prioritizing Prevention Stewart says he thinks health care today is oriented toward disease treatment, not prevention. This is a common criticism within the circles of experts and consumers who support health tracking. “Health tracking is about optimizing your health before you can ever get to a disease state,” he says. Evan Melcher, a CAPTRUST financial advisor in Alpharetta, Georgia, says health-tracking data provides a starting point for planning. “We can’t shape the future if we don’t know where we’re starting from,” he says. “These tests and check-ins and devices, they’re not complete solutions. They are tools that can help guide you to make more informed decisions and, hopefully, create better health outcomes.” Budesheim agrees. In fact, she says she knows the exact moment when she really started paying attention to her health

TRACKING TOOLS

There are dozens of health-tracking wristbands, watches, and rings available today. To choose the one that’s right for you, consider these four steps: 1.

data—long before her heart attack. “I was never a real health nut until my husband passed away.” “It was very sudden,” she says. “We found out he was sick on a Friday, and Monday, he was gone. In my head since then, I’ve always had this voice saying, Nothing is going to sneak up on me. I’m going to be listening to my body. I’m going to be proactive with my health care. All the tests you have to get, the preventive stuff, I’m there. Sign me up.”

Name your goals. Think about what you actually want to track, and make a list of your top three needs.

2. Know your budget. Wearable trackers from established brands can range from $20 to over $500. 3. Compare features. Some devices are geared toward beginners, while others target advanced athletes. 4. Find your style. Look for something you love that’s comfortable to wear.

In addition to the data she gathers from her watch, Budesheim keeps a folder that contains years of results from cholesterol tests, mammograms, and more. She uses this information to make sure her new healthcare providers have a robust picture of her health history and trends. But health tracking isn’t only about long-term disease prevention. It might also help you create healthier daily habits.

More Good Habits “What I’ve found over time is that I’m either spiraling up, or I’m spiraling down,” Melcher says. “It’s not one thing you do that keeps you healthy for life. It’s a lot of little things that add up, and they are all connected like dominos.” Melcher says health tracking has shown him how his daily choices impact his health. “I had back surgery a few years ago,” he says. “When I was recovering, I couldn’t exercise or anything, so I put on some unwanted weight. Also, I was indulging in too much red wine at night, which was affecting my sleep. There were all these trends that were going in the wrong direction.” When he was able to exercise again, Melcher says he started to feel better. “I was seeing improvements in almost all my metrics, except in sleep quality. So I quit drinking. My sleep score improved significantly, and my LDL-C cholesterol level also started to drop.” Melcher began to view his wearable devices as accountability partners, encouraging him to keep up his good habits and avoid bad ones. Now, he uses an Oura Ring, an Apple Watch, a Qardio at-home blood pressure monitor, and a body composition scale. Plus he gets regular blood work through his cardiologist. Heart disease runs in his family, so he stays attuned to his heart health, like Budesheim. 8

Lifestyle Feature | Winter 2024

Most of Melcher’s tools report directly to his phone, which he uses as the central location for all his health data. “I try to keep moving in the right direction with baby steps that add up to a lot of good things because I want to be here for my wife and kids,” Melcher says. By paying attention to his metrics, then tweaking his habits slightly but consistently, Melcher says he’s seen dramatic health improvements. His resting heart rate has dropped by 10 beats a minute on average over the past year. “That’s more than five million heartbeats a year that I’m saving,” he says. “My heart is thanking me over and over again.”

The New Doctor-Patient Partnership Culturally, the relationship between healthcare professionals and consumers is shifting, perhaps in part because of health-tracking tools. Patients have access to more information than ever, and many are eager for a more collaborative relationship. “There’s no longer just a physician behind a curtain interpreting your information and handing down advice,” Stewart says. Instead, consumers are becoming equal partners in the decisionmaking process. But of course, consumers also have access to misinformation and poorly interpreted studies. In a survey conducted by Merck Manuals, 97 percent of primary care providers said patients have come to them with misinformation they found online. For Stewart, learning more about how his body works is part of being an informed healthcare consumer. “Having health data allows a greater sense of partnership with the practitioner,” he says.

BEYOND WEARABLES

For people with specific diagnosed conditions and those who are interested in more advanced tracking, the following tools may also be helpful. Continuous glucose monitors. Typically stuck to the back of one arm, these patch-type devices measure blood sugar levels throughout the day so you can track changes and identify trends. Smart blood pressure cuffs. Compact and portable, these at-home devices can report directly to your phone and your physician for remote monitoring between visits.

“But we have to remember that those practitioners are infinitely more skilled than we are.” Mutual respect and humility are important to the doctor-patient partnership. Budesheim says she feels empowered by what she’s learned but tries not to obsess over the details. “If I see or I feel something that isn’t right, I check it out,” she says. “I’m not obsessive about it. I don’t diagnose myself. But understanding what might be happening gives me peace of mind.” She has some friends who disagree. For these people, health tracking feels like opening Pandora’s box. They worry about what they might discover and whether they’ll be equipped to handle it. Tracking like Budesheim, Melcher, and Stewart do is not for everyone, and people can rely too heavily on their devices for predicting or managing health outcomes. Also, when it comes to sleep specifically, there is some evidence that tracking can have a negative impact on outcomes. The Journal of Clinical Sleep Medicine calls this orthosomnia: a fixation on achieving perfect sleep data that leads to anxiety and disrupted sleep. For some, information can create fear. For others, it can lead to obsession. Those who most enjoy and benefit from health tracking seem to avoid both extremes. “If we’re willing to be informed and not alarmed by information, we can make better lifestyle choices,” says Melcher. “We can hack the system a little bit. And when we do, we give ourselves a better opportunity to live longer, healthier lives that can impact more people.”

Body composition scales. Using weak electrical pulses, these smart scales can automatically calculate your fat mass, bone mass, muscle mass, total body water, and more. Regular blood tests. After age 60, government recommendations for yearly blood work include a complete blood count (CBC), glucose test, hormone panel, nutrient panel, and electrolyte count. Companies like InsideTracker provide independent blood tests and biomarker analysis with customized recommendations for behavioral changes and supplementation.

SECOND ACT

M AY O R J A C Q U E S G I L B E R T :

A N U N L I K E LY ASSIGNMENT by Kim Painter and Catherine Currin

Mayor Jacques Gilbert often says that no one invited him to become a leader. “I just showed up,” he says. And that is a practice he highly recommends. Five years ago, Gilbert cleaned out his locker at the Apex, North Carolina, police department and officially retired from what he calls a highly unlikely 29-year career in law enforcement. Gilbert grew up in a culture where people distrusted and sometimes disliked police officers. Yet by all measures, he’d become a hugely successful one.

Second Act | Winter 2024

Gilbert revisits his childhood home.

After a lifetime in the force, he put his uniform and badge away, turned off the lights, and walked out the door into charming, historic downtown Apex. “It’s been a great ride,” Gilbert wrote at the time. “On to my next assignment.” This sign-off, he says, contained a hidden message. Gilbert was about to do something he once thought was even more unlikely than becoming a police officer. Seven months later, he was elected mayor. Gilbert, now 54, grew up in Apex. His neighborhood, Justice Heights, was on the other side of what he says was a clear dividing line marked by State Highway 55. Most Black people lived on one side, he says, and people on the other side didn’t see the neighborhood or the people who lived there as part of their town. Now, Apex is different—more diverse, more developed, and much larger. In 2023, the town’s total population was 77,000. In the 1970s, when Gilbert was a child, it hovered around 3,000. Gilbert lived in public housing, where he witnessed repeated hardships in his community. He had friends and relatives who got in trouble with the police. Although he never had any personal run-ins with law enforcement, he got the message that police officers were not to be trusted. He certainly never dreamed of becoming one.

Learning to Serve When Gilbert graduated from high school in 1987, he went to work as a water meter reader for the nearby town of Cary. “It was just a job,” Gilbert says, and he wanted something that felt meaningful.

Second Act | Winter 2024

“A friend of mine became a police officer,” Gilbert says. “At first, I thought, that’s not for me. In the community where I was raised, being a police officer, that’s not what we do. It’s not who we are. But my friend kept sharing all the great things he was doing, and it just really intrigued me.” Gilbert let his curiosity lead the way, enrolling in criminal justice courses at a community college and working his way through the North Carolina Coastal Plains Police Academy. After graduation, he says, “Everything just started opening up.” In 1990, Gilbert joined the Apex Police Department, eventually becoming the town’s first Black police captain and later graduating from the Federal Bureau of Investigation (FBI) National Academy.

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Gilbert leads his family, constituents, and former colleagues through downtown Apex in summer 2020.

In the community where I was raised, being a police officer, that’s not what we do. It’s not who we are. But my friend kept sharing all the great things he was doing, and it just really intrigued me. Mayor Jacques Gilbert

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Suggesting Solutions His path toward becoming an elected official began by responding to a noise complaint. A teenager was annoying neighbors by doing skateboarding flips in his driveway. Gilbert found the teen, whom he recognized as part of a local skateboarding group that often got in trouble around town. He told the young man, Tracy Stallworth, that he would have to stop. “He looked at me and said, ‘I can’t skateboard in my own driveway?’ And I said, ‘Nope.’ So, he picked up his skateboard, walked in his house, and slammed the door.” Gilbert drove a few blocks away before he realized he had missed an opportunity. “I hadn’t offered him any solution,” he says. Gilbert was troubled by what felt like an unfair outcome. So he rekindled the conversation with Stallworth, and they started dreaming of solutions. Their biggest idea was a downtown park where skateboarders could practice and hold competitions or events without disturbing neighbors. But a skate park seemed impossible at first.

Gilbert with his family in 2019.

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Jacques, who had never skated a day in his life, put almost a year into this thing. Tracy Stallworth

Second Act | Winter 2024

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In the meantime, as police captain, Gilbert helped organize weekend skateboarding events for the community—a short-term solution that often drew more than a hundred skateboarders and spectators of all ages. Over time, momentum for a skate park grew. Stallworth’s skateboarding friends helped raise funds and community support. Making it real meant asking the town council for a significant amount of money, Gilbert says. “One night, they all skated to a town council meeting, and we filled the council chamber,” he says. Three of the skateboarders spoke, showing their enthusiasm and the growing demand for a safe skateboarding space. The council saw their vision and, at the next meeting, approved $750,000 in funding—a huge amount, especially for a relatively small town. The council asked Gilbert and the skateboarders to raise another $250,000. With the help of a local benefactor, they did it. Since it opened in summer 2015, the Rodgers Family Skate Plaza— often called Trackside because of its location between two historic rail lines—has become one of the most popular gathering spots in Apex. For their efforts, Gilbert and Stallworth were invited to the White House, where they received a Champions of Change award from President Obama. Stallworth, now 28, says he was awed by the energy and passion Gilbert gave to the project. “Jacques, who had never skated a day in his life, put almost a year into this thing,” he says, and in the process, inspired Stallworth to show up and be a leader himself. Stallworth now gives free skateboarding lessons to kids. He wants to pay forward what he learned from Gilbert. The skate park project got Gilbert thinking too. “If a young police officer, just a shy kid from the ’90s, can end up at the White House, perhaps he can inspire others to show up where they’re not invited,” he says.

Why Not You? In Gilbert’s mind, becoming an elected official was farfetched and improbable. Community leadership didn’t feel like it was open to people from his background, and he had little understanding of what those jobs entailed. But others saw his potential. Nicole Dozier, a local health policy advocate, says she was attending regular town meetings back in 2013, when Gilbert and Stallworth were campaigning for the skate park. She was there the night the skateboarders filled the chamber, and she was impressed. Later, Dozier became a town council member and served eight years as Apex’s mayor pro tempore. During her second campaign, she says, she heard Gilbert was approaching police force retirement and asked him if he might consider running for office. “I thought he could be really inspiring,” she says. “People liked him so much.” Gilbert’s first response was, “Absolutely not.”

He was already focused on another big project: the Blue Lights College, a post-high school program for young people considering police careers. Gilbert was also busy training new officers, coaching youth basketball, and teaching self-defense classes. He likes to stay busy and meet as many people as he can. One of the people he met was Jennifer Kopras. At the time, Kopras was 46 and hoping to fulfill her lifelong dream of becoming a police officer. Now, she’s a Blue Lights College graduate and has been a part of the Apex police force for more than a year. She says meeting Gilbert was a big part of her journey. “Jacques sees a spark in someone and ignites it,” Kopras says. “He saw something in me and helped me follow my dreams. He gave me a little more hope to push through.”

Gilbert, the 32nd mayor of Apex, North Carolina, in his signature shoes.

Dozier saw a similar spark in Gilbert and kept encouraging him to run for office. “At some point, he finally said, ‘OK, I’ll think about it,’” she says.

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A few months later, Gilbert was watching Apex’s annual State of the Town address when he says he heard a voice in his head asking, “Why not you?” He went home and talked to his wife Meshara; daughter Kalabria, now 27; and son Logan, now 21. They loved the idea. “My son said, ‘You’re already the mayor! You just don’t have the title yet.’” Kalabria, a public relations professional, signed on as his campaign manager. With his family behind him, Gilbert felt confident and capable. Stallworth says he heard the news through the grapevine and was glad but not surprised. “It just made so much sense,” he says.

A Golden Year Gilbert is now in his second term, after winning an unopposed election in November 2023. Since he was first elected in 2019, his list of wins includes writing the town’s first-ever 10-year strategic plan, negotiating tens of billions of dollars of deals with big and small businesses that are relocating to Apex, instituting diverse holidays and better benefits for town workers, and leading the town through the intense period of COVID-19 shutdowns and racial unrest that have defined the last few years. Throughout, he has maintained his focus on providing solutions and building community. Dozier says at the height of the pandemic, when schools were holding all events outdoors, she ran into Gilbert at her daughter’s prom, wearing what by then had become his trademark gold-toned shoes. “He says he wears those golden shoes for golden moments,” she says.

Second Act | Winter 2024

If a young police officer, just a shy kid from the ’90s, can end up at the White House, perhaps he can inspire others to show up where they’re not invited. Mayor Jacques Gilbert

”

Online, there are pictures of Gilbert wearing the shoes at the opening of a park, a community event at a local mosque, a dance contest to benefit people with disabilities, and a party celebrating the town’s 150th birthday. He says he hopes the gold shoes make him feel approachable so people won’t feel intimidated to talk to him. They’re one small part of his overall strategy to listen, learn, and provide solutions. Gilbert says he wants residents of Apex to know that he is there for them. At its core, he says, the role of mayor is not so different from that of a police officer. “Our campaign slogan was ‘People First,’” he says. “And that's how I look at everything. It’s always about the people.” The difference is, as a police officer, Gilbert was often working reactively, responding to a crisis or an isolated incident after it happened. As mayor, he can strategize and be more proactive. He can get closer to the root of things. Supporters say Gilbert’s charisma is contagious, and the changes he’s making are genuine—a direct result of what he hears from his constituents. Officially, “it’s a part-time gig,” he says. “But for me, it’s a full-time job.” “Jacques’ purpose, you can see clearly, is to help others,” Kopras says. “There is no rank with him. We are all equal. You can tell he doesn’t see himself better than anyone else. […] If we could mold him and create others like him, the world would be an incredible place.” Gilbert says he is especially proud that, under his leadership, Apex has increased its efforts to include and celebrate

INSPIRED TO SERVE Not everyone is going to run for public office. But if you are inspired by Jacques Gilbert’s story to think more about how you could serve your community, he has a few ideas for you: its Black communities. “We’re formally celebrating Juneteenth now,” he says. “And that was never the deal before. A walk for Martin Luther King Jr. Day? We never had that.” With Gilbert’s influence, the entire town calendar has become more diverse. Apex now officially celebrates Pride Month, Hispanic Heritage Month, Hanukkah, and more. While Gilbert speaks out on issues from traffic to housing to policing, his main job, as always, is showing up. Whether it’s a ribbon-cutting event, a town festival, or a football game between two rival high schools, he’s almost certainly going to be there. And every Friday, he shows up somewhere in the town to knock on doors and ask people what they need from their local government. He includes town employees in these rounds. “People get so laser-focused on what’s happening on Pennsylvania Avenue,” Gilbert says. “But when we ask them what we can improve on Salem Street [Apex’s main street], they know what we need. A pothole that needs fixing has no political affiliation.” During his police force career, Gilbert says, he was often called to help people on their worst days. As mayor, he gets to be there for some of the golden moments too.

Vote. “A lot of people don’t put an emphasis on local elections,” Gilbert says. But, he says, you can make a big, long-term impact by helping choose your local officials. Volunteer. Wherever you live, there are groups at work to make that place better. In Apex, for example, there are citizen committees that work on zoning, environmental issues, parks, public art, transportation, housing, and tree management. Show up. Never been to a meeting of your city or town council? Drop in and see what they’re up to. You may find easy ways to get involved. Speak up. Identify a local issue that matters to you, show up at your council meeting, and speak to your officials about it. If you really want to see action, Gilbert says, show up and speak up as part of a group. “If we don't hear from people, we sometimes don’t know what needs to be fixed. When people call me, I always encourage them to show up and speak for three minutes at a public forum. I guarantee you, you are going to be heard.”

PASSION PURSUITS

YOU SHOULD BE

Dancing by Kim Painter

In 2018, when she walked into the new ballroom dance studio in her Richmond, Virginia, neighborhood, Connie Maier had no idea what to expect. More than five years later, she says she’s gained a few things, including a stronger body, a brighter mood, new friends, and a lot of fun memories. Maier, now 66, entered her first ballroom dance competition just months after she started taking lessons. She says an added bonus of this new passion has been having a way to channel her considerable competitive drive.

Passion Pursuits | Winter 2024

But, Maier says, one of the best things about dance is the way it challenges her brain. “There’s always more to learn,” she says. “There’s always room to grow.” Maier’s experience aligns with what researchers have learned about dance over the past few decades. It’s more than just a pastime or another form of exercise. From waltzes and tangos to hip-hop and country line dancing, dance has superpowers. In short, the Bee Gees were probably right: “You should be dancing.”

Why Dance? “The secret sauce about dance is that it’s a complex activity,” says Joseph Verghese, a professor of neurology and medicine at the Albert Einstein College of Medicine in New York. “The three main ingredients are that it has a mental component, it has a physical component, and it has a social component,” he says. Each of these, individually, has been shown to have profound effects on cognition.” Additionally, research suggests the combination of these ingredients may be greater than the sum of its parts.

Body Benefits

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The secret sauce about dance is that it’s a complex activity. Joseph Verghese

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Like other forms of physical activity, dance builds muscle and bone, slows aging, enhances heart health, lowers blood pressure, and nudges cholesterol numbers in the right direction, according to the Harvard School of Public Health.

easier than other exercise methods to consistently show up for. “Finding something enjoyable is key,” says David Marquez, a professor of kinesiology at the University of Illinois at Chicago. And the best exercise is one you will keep doing.

It also provides additional physical benefits that other forms of exercise can’t. For example, Verghese’s research shows that dance has a positive impact on stability in older adults. Other researchers have found that tango lessons specifically improve gait and balance in people with Parkinson’s disease—so much so that many people with the condition now make it a core part of their therapy.

Emotional Rewards

By improving gait, stability, and balance, dance may also reduce the risk of falling. Falls are the number one cause of injury for adults 65 and older, and statistics from the Centers for Disease Control and Prevention (CDC) say that falling accounts for roughly half of all accidental deaths in this age group.

Social Connections Dance can strengthen a person’s sense of social connection, which can lower the risk of heart disease, stroke, dementia, and depression, according to the CDC. “You generally don’t dance alone,” says Verghese. And dancing with other people adds something special. When you move in rhythm with others, you form an “active and dynamic bond,” he says. Having the chance to connect with others is one of the reasons why dance is so fun. It also provides accountability—making dance

Need a mood booster? Start dancing. In some studies, dance has generated good feelings more effectively and consistently than either yoga or team sports. It has also been shown to boost energy and confidence. When we dance, our brains get dosed with endorphins—the so-called happy chemicals that reduce anxiety, depression, and pain. Science also confirms something Maier has observed. When she’s dancing, other cares slip away. “I don’t have time to think about problems at work or anything at all,” says Maier, who runs a fireplace business with her husband. “It takes all my mental and physical attention.” When she’s dancing, Maier can be present in the moment.

An Anti-Aging Superpower If dancing was only good for your heart, muscles, mood, and social life, it would still be a very healthy activity. But dance may also offer something more: a way to fight age-related cognitive decline. One of the first studies to prove this connection came from Verghese and his colleagues in the 1990s. It showed that people over age 75 who engaged in certain leisure activities were less likely than their peers to develop dementia. On the list were reading, playing

READY TO HIT THE FLOOR?

board games, playing musical instruments—and dancing. In fact, dancing was the only physical activity associated with a lower overall risk of dementia. (It should be noted that some other studies show brain benefits from all forms of exercise, but findings remain mixed.) In the two decades since this study, researchers have worked to confirm the special power of dance and have found promising results. For example, Marquez investigated brain health in middle-aged and older Latinos who take Latin dance classes, learning salsa, merengue, and other steps. “The most frequent benefits we see are for memory,” he says. Marquez and Verghese also found that dancing seems to improve executive functioning, or the skills people need to plan and meet goals. In addition, in one recent pilot study of 16 people with early signs of memory loss, Verghese found less shrinkage in one key memory-related brain area in those who had been dancing for six months compared with those assigned to treadmill walking. What these studies don’t show is why dancing has these possible brain effects. That the movement also involved music may be a contributing factor, but Verghese points out that his treadmill walkers listened to music too.

If you want to brush up on old moves or learn a new style, you’ve got plenty of options, but remember to check with your doctor before trying any new physical activity. •

Investigate classes at your local community college, fitness club, community center, or dance studio. Some community classes may be free or low cost, and many dance studios offer free trial lessons.

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Gather a few friends to organize a private class and hire a teacher. If you have access to an appropriate space, like a clubhouse or place of worship, ask about its rental process.

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Look for something with a bit of challenge but not too much. If you are a beginner, dance with other beginners. If you’ve got a few moves, find a class that will bring you to the next level.

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Invite a friend or family member to join you! Having an accountability partner can help you keep going.

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Try an online lesson. YouTube has videos that can teach everything from salsa to folk dance. If you feel shy or have trouble getting to classes, this can be a great way to start.

It does seem that “dancing requires more cognitive work” than other physical activities, Marquez says. “You have to move your body to the music and remember which steps come next. And when you’re dancing with a partner, you have to be aware and reacting and keep moving with your partner.” People who take formal dance classes also keep learning new and more difficult steps and routines. “The brain is constantly challenged by change,” Verghese says. Maier agrees. She’s advanced through several levels of competitive dancing and intends to keep aiming higher. She’s inspired, she says, by fellow dancers in their 70s, 80s, and 90s. For her, she says, dancing “is a journey that is going to last forever because you can just keep learning.”

Passion Pursuits | Winter 2024

PLANNING FEATURE

TA X - S M A RT RETIREMENT by Neil Downing

For many people, creating a financially secure retirement means years of disciplined saving and meticulous financial planning. Amid visions of leisurely days and newfound freedom, however, it’s easy to underestimate the looming reality of taxes in retirement. To make the most of your accumulated wealth, tax planning should continue long after you stop working.

“The tax implications that accompany retirement decisions can significantly impact a person’s overall financial landscape,” says Jennifer Wertheim, director of tax planning at CAPTRUST. “That’s why tax planning is such an important part of financial planning overall. It’s a way to safeguard your hard-earned assets and stretch your savings.” “Retirement tax planning relies on four pillars,” says Elisabeth Jacobson, a CAPTRUST financial advisor in Lone Tree, Colorado. “Know how your assets will be taxed. Develop a strategy for how you’ll withdraw money. Avoid things that are going to put you in a higher tax bracket. And review your tax situation whenever life changes.” Jacobson says she has seen many cases where new clients could have benefited from earlier planning for retirement taxes. “There are so many people who are good at saving and investing but aren’t aware of how their accumulated assets will be taxed when they are sold or withdrawn,” she says.

For instance, Jacobson says she once met with a couple who had already started taking required minimum distributions (RMDs) from their retirement accounts. RMDs are minimum amounts that must be withdrawn annually from individual retirement accounts (IRAs) and qualified retirement plans, like 401(k) or 403(b) accounts. Your birth year determines when you must start taking RMDs. Generally, they are required once you reach your early 70s. “These clients had done a great job saving money, but they’d put all their savings into a taxable IRA,” says Jacobson. “That meant every single dollar they had was going to be taxed. And their RMDs were huge, so every time they withdrew money, they were raising their marginal tax bracket—and their tax bill—even further.” Incorporating projected taxes into your financial plan can help avoid mistakes like this. “It’s impossible to predict what tax rates will be in a decade or more,” says Philip D’Unger, a manager on CAPTRUST’s wealth 21

planning team. “And regardless, these rates are likely to change throughout your retirement years, which may be a long time considering life expectancy today.” According to the MIT AgeLab, the average American can expect to live roughly 8,000 days—more than 20 years—in retirement, assuming they retire at age 65. “The goal is to be financially resilient, whether you live to 75 or 105,” says D’Unger.

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It’s impossible to predict what tax rates will be in a decade or more. And regardless, these rates are likely to change throughout your retirement years, which may be a long time considering life expectancy today. Philip D’Unger

”

Balance What Is Taxable “It’s important to know all your possible sources of retirement income and how each one will be taxed,” says Jacobson. To start, make a list of your assets. Label which ones are taxable and which ones aren’t. If you aren’t sure about a particular asset, talk to your financial advisor. “Then, you can develop a thoughtful strategy to make sure you have the funds you need while also minimizing tax consequences.” Some assets, such as Roth accounts, will be tax-free. Others, like pensions, will be fully taxable. You may see a third set of assets labeled as tax-deferred. This includes traditional IRAs and 401(k) plans. You don’t pay taxes on dollars in these accounts until you withdraw them. 22

Winter | 2023 Planning Feature | Winter 2024

“Ideally, you will have some balance of taxable and nontaxable assets from which to draw your retirement income,” says D’Unger. If your assets are out of balance, or you aren’t sure, talk to your financial advisor about rebalancing. “As financial advisors, we talk a lot about diversification of assets, but having diverse accounts is also important,” says Jacobson. “With a balance of taxable and nontaxable assets, you give yourself more options, more flexibility. Once we see the full picture of where a person’s assets are being held, we can make sure they have a portfolio that will help them cover their expenses while managing tax implications.” “For instance, you may have built up substantial amounts of money in the taxable and tax-deferred buckets, but not enough in the tax-free bucket,” says D’Unger. “Rebalancing can help you minimize and prepare for future tax consequences. And it can help you spread your tax consequences across multiple years so that your tax bill is more predictable.”

“

Make a Withdrawal Plan “Having a financial plan that includes estimated taxes in retirement can help you avoid unwanted surprises,” says D’Unger. It can also help estimate what your spending may look like as you age.

You don’t need to have everything figured out before you retire. But it’s a good idea to sit down in those first few years and figure out the big pieces of your new financial plan.

”

Elisabeth Jacobson

Jacobson says people tend to spend more money in the first few years of retirement than they spend later. “Those early years can be a sweet spot for tax planning,” she says. “You don’t need to have everything figured out before you retire. But it’s a good idea to sit down in those first few years and figure out the big pieces of your new financial plan.” For instance, Jacobson says she helps clients understand when to start taking Social Security benefits, when to sign up for Medicare, and when they’ll be required to take RMDs. “RMDs are a big piece we manage around,” she says. “Up to 85 percent of Social Security benefits may be taxed, and RMDs are taxed at the ordinary income tax rates,” says Wertheim. “Deferring your distributions as long as you can makes sense from a tax perspective, but how long you can defer will depend on your retirement income needs.” Capital gains are another factor to consider. If you sell a capital asset, you’ll need to pay capital gains taxes on the profits. Capital assets include stocks, bonds, real estate, coin collections, jewelry, and digital assets like cryptocurrencies. Long-term capital gains tax rates are set at 0, 15, or 20 percent and apply to any investment owned for more than one year. Short-term rates are determined by a taxpayer’s ordinary income tax bracket and apply to assets owned for less than a year. This means long-term rates will be lower than short-term ones. 23

CHANGES IN WITHHOLDING

In retirement, tax withholding may not happen automatically. After decades of regular paychecks with taxes withheld, this can be a surprising change. Your financial advisor can help you decide the best plan for how to pay your taxes. Some options include the following: •

Make quarterly estimated payments directly to the Internal Revenue Service.

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Elect federal income tax withholding from your Social Security benefits.

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Request that federal income tax be withheld from your pension or annuity payments.

Note that federal income tax is automatically withheld from distributions from traditional IRAs unless you opt out. Also, if you have a side job in retirement, such as consulting or irregular gig work, you may be required to make separate quarterly estimated tax payments if your other sources of withholding aren’t accounting for these income streams.

“There are multiple tax strategies that can help you take advantage of lower capital gains tax rates,” says Wertheim. “But mostly, you want to make sure you are being strategic about when you sell your capital assets so that your profits from the sale don’t unintentionally bump you into a higher tax bracket for the year.” Capital gains can also increase Medicare premiums. “If you have a higher income year—for instance, because you’re selling real estate or some other large asset—pay attention to your Medicare premiums,” she says. “The Medicare system may automatically assume this new, higher number is now your regular yearly income.” Wertheim recommends people pay attention to state tax rules as well. “There may be nuances at the state level that also allow for specific tax planning,” she says. “In particular, it’s important to understand how retirement income is taxed in your state before finalizing your financial plan.” For example, Jacobson says, “Retirees can deduct between $20,000 and $24,000 in retirement income from state taxes in Colorado, depending on their age.” This means income from Social Security and pension plans may be mostly or entirely state-tax-free for many Colorado residents.

Give Strategically Once you start taking RMDs, you may find yourself in a higher tax bracket. One way to minimize the tax consequences of a higher income is through a qualified charitable distribution (QCD). A QCD is a tax-free donation directly from your IRA to a qualified charity. Although there’s no tax deduction for these donations, making a QCD can reduce your RMD in a given year without boosting your overall income.

Planning Feature | Winter 2024

TAXABLE VS. NONTAXABLE INCOME

As you make your financial plan for retirement, it helps to keep in mind which sources of income are taxable and which aren’t. Note that these lists are not comprehensive, and state laws will vary. Talk to your financial advisor before making any financial decision that may affect your tax situation. Income sources that are or may be subject to federal income tax include: •

Retirement savings accounts, such as traditional IRAs and 401(k) or 403(b) accounts

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Nonqualified deferred compensation plans

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Pensions and annuities

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Dividends and interest

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Capital gains and capital gains distributions

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Up to 85 percent of Social Security benefits

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Rental property income

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Royalties

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Certain business income, including income reported to you on Schedule K-1s by partnerships or S corporations

Income sources that are generally not subject to federal income tax: •

Roth IRAs

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Roth 401(k) and Roth 403(b) plans

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Interest from municipal bonds

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Gains of $500,000 or less from the sale of a principal residence for married couples filing jointly

“In 2024, anyone over 70 1/2 can contribute up to $105,000 directly from their IRA to a qualified charity,” says Jacobson. “This can help you meet your charitable goals and simultaneously meet your annual RMD. Plus, you don’t get taxed on it! It’s a triple win.” “Giving to a 529 education fund is another way to satisfy a gifting goal, and you’ll typically get a state tax deduction,” says Jacobson. “We used to advise against this strategy because it sometimes affected financial aid eligibility for the recipient, but the rules have recently changed. Now, it makes more sense for more people.” Another option to mitigate your tax bill is to use a donoradvised fund (DAF). This is a charitable investment account that lets you donate cash, securities, or other assets to qualified public charities. “If you contribute to a donor-advised fund at about the time you retire, you can claim a federal income tax deduction for the year in which you make the donation,” says D’Unger. “Later in retirement, if you sell a capital asset, a DAF can also help you avoid the capital gains tax that would be due on the sale.” “Taxes are inevitable,” says Jacobson. “But they can be managed. Having a retirement income plan that accounts for taxes can make your tax bill more predictable. It can give you confidence to spend what you’ve worked so hard to save.”

EXPERT ANGLE

by Nanci Hellmich

Some people can remember a wide range of fascinating facts. They know the name of the only bird that can fly backward and upside down (the hummingbird), how many bits there are in a kilobyte (8,192), and the name of the Broadway musical hit that may have helped keep a Founding Father’s image on the $10 bill (Hamilton). Trivia pro and quizmaster Paul Paquet, author of The Brain Boosting Trivia Book for Adults, is one of those people. “I’ve always had an absolute love of learning,” says Paquet, 58, of Ottawa, Ontario. Over the past 25 years, Paquet has written more than 135,000 trivia questions across a variety of media: TV shows, books, apps, the board game Trivial Pursuit, and his website, triviahalloffame.com. He also qualified to appear on Jeopardy! “I find it interesting to sit down and memorize things like the Chinese dynasties,” says Paquet. “Some people have different memory skills. My brain is wired to memorize facts.” He’s quick to add that he’s not good at everything. “I’m terrible at fixing things around the house,” he says. “I often joke that if the apocalypse comes, I know who is going to be needed to rebuild society and who is going to be zombie food. I am going to be zombie food.” Still, there are advantages to knowing a lot of trivia. It’s a conversation starter, stimulates your mind, and provides hours of free entertainment at social events, parties, and family gatherings. Paquet says his wealth of knowledge comes in handy. Once, when entering the U.S., he told the customs agent he was going to attend a trivia event, and the officer quickly asked, “What are the four state capital cities named after U.S. presidents?” 26

Expert Angle | Winter 2024

At first, Paquet thought the agent doubted the purpose of his trip, so he quickly rattled off: Jackson, Mississippi; Lincoln, Nebraska; Jefferson City, Missouri; Madison, Wisconsin. “I realized after I got the four of them correct that he didn’t care. He was just making conversation.”

Developing an Enquiring Mind Paquet began sharpening his trivia skills at a young age. “I was the weird kid who would read the World Book Encyclopedia,” he says. In grade school, he would sometimes hang out with the recess monitors. “I would quiz them on what I had read,” he says. “At first, they thought I was just a curious kid. Then they realized I was quizzing them on the encyclopedia.” In 1982, he appeared with his high school team on Reach for the Top, a Canadian quiz program. His team won twice. When he was in his 30s, he started taking the qualifying test for Jeopardy! “I did well enough to make the live auditions three or four times, but I wasn’t ever picked,” he says. “My wife, Laura, who also loves trivia, was on the show in 2004.”

Creating the Best Questions Over time, Paquet turned his interest into a career. In 1998, he started the Ottawa Trivia League, running events at local pubs. Bars pay him to write questions and provide hosts for trivia nights around the city. One heartwarming outcome of his work: Several couples have met at his trivia events and fallen in love. “It’s a real rush to know there are human beings who wouldn’t be here if their parents hadn’t met answering questions about Taylor Swift.” He launched his website in 1998. People can order questions in bulk for apps or pub trivia leagues. The pub nights and website “both took off and grew in their own directions,” he says. “It became a full-time job and still is.” Paquet, who writes about 15 questions a day, is always searching for new material. “I wander around Wikipedia and read The Economist a lot,” he says. Writing good questions is important to his business. “The content of the question is also the marketing of the business,” he says. “If people show up for trivia night and feel dumb and left out, that’s my failure.” “My goal is for the questions to be entertaining,” says Paquet. “I throw clues in so that people can figure out what the answers are.” He wants to bring out the best in his audience so that participants will say to themselves, Oh, I had that board game when I was six, or I loved that song when I was 20. Many of the people who attend Paquet’s trivia events are 20 to 30 years younger than he is. “It would be easy for me to ask questions about Talking Heads or All in the Family, but now I get to learn about Doja Cat and all the new video games out there,” he says. “People respond to that well.” Players tend to be best at trivia when answering questions about subjects they care about. “Sports trivia people are the very best because they have so much fun with it,” says Paquet. 27

He advises trivia players not to take each question so seriously. “When you make a mistake, forget about it and move on,” he says. “It doesn’t matter how good you are. There are times when something you know well hides in your brain and will not come out,” Paquet says. “You could stump Ken Jennings [the host of Jeopardy! and the highest-earning American game show contestant ever] if you ask him the right question.”

Continuing to Learn Paquet still works to get better at remembering facts, and he says others can do the same. The secret to his success is based on concepts from the Ebbinghaus forgetting curve, named after German psychologist Hermann Ebbinghaus. The curve is a graphic representation of the forgetting process, illustrating how information is lost over time when there is no attempt to retain it. “The idea is, the more often you see a fact over time, the longer you’ll remember it,” says Paquet. “If you see a fact once, you may remember it for a short time. If you see it again, you will remember it longer. If you see it again, you will remember it for even longer still.” Some studies suggest a person needs to revisit the same fact at least seven times before it becomes permanent. To put this into practice, Paquet uses the Leitner system. That is, he studies facts on flashcards kept in an elongated box, similar to a recipe box. He moves the flashcards to different compartments of the box after he reviews them. “I’m writing cards every day,” he says. “It’s the reason I’ve gotten better in the areas where I was weak, like the Bible,

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The idea is, the more often you see a fact over time, the longer you'll remember it. Paul Paquet

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classical music, and Broadway musicals. It has made a huge difference.” Paquet also tried the AnkiApp, a cross-platform mobile and desktop flashcard app designed to help with learning. He says the app works well for lots of people, but he prefers the Leitner box. “I’ve been able to absorb much more than I would otherwise,” he says. “I train, in a sense, and I have fun doing it.” When he’s training, Paquet says, “I can practically feel the synapses in my brain lighting up and making connections. I can’t say if I’m staving off dementia, but I do feel sharper now than I did 25 years ago.” Research from the National Institute on Aging says Paquet could be onto something. There is evidence suggesting cognitive training might help delay or slow age-related cognitive decline. Cognitive training involves structured activities designed to enhance memory, reasoning, and speed of processing. “If the 58-year-old me and 26-year-old me were doing a head-to-head contest, I’m pretty sure the 58-year-old would win,” he says. “I might not be as fast at remembering facts, but I do feel like I know more than I did.”

RESOURCES

Want to test—or expand—your own trivia knowledge? Here are a few places to start. •

Sporcle.com. This website boasts “the world’s largest quiz community.” Play a quiz, create your own, or join a live, virtual event to compete against other players across the globe.

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Ultimate Trivia: Volume 1 by Donna Hoke. Hoke provides more than 800 questions and answers on a wide range of topics, from history and literature to food and nature.

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Boardlandia.com. Depending on your interests, you can find trivia card games that focus on almost any topic, including U.S. national parks, cats, dogs, Egyptology, world history, movie facts, and vintage brand logos.

Expert Angle | Winter 2024

TRIVIA GLEANINGS While making our Winter 2024 issue, we came across some interesting factoids too good not to share. Inspired by trivia master Paul Paquet, star of the Expert Angle article on page 26, we’ve organized some of these facts into a short quiz.

In 2023, for the fifth year in a row, this oceanside city was number one in the country for buying a vacation home. More than 81 percent of all mortgages approved here are for secondary residences. Hint: Although the Southeast dominates the top 10 list, this number one winner is in the Northeast.

This sultry and rhythmic dance style, often associated with a famous Argentine city, shares its name with the city itself.

Among land mammals, which slow-moving animal also has one of the lowest resting heart rates, often as low as 3 to 4 beats per minute?

At what age can individuals typically start withdrawing funds from their retirement accounts, such as a 401(k) or IRA, without facing early withdrawal penalties?

Mayor Stubbs was one of a kind when elected as the honorary mayor of Talkeetna, Alaska, in 1997. What set him apart from traditional elected officials?

Whose portrait graces the front of the $2 bill, even though he was the third president of the United States?

Scan the QR code with your mobile device camera to check your answers.

STAGNATION LIKELY SCENARIO NUMBER ONE

SOFT LANDING

INVESTMENT FEATURE

BlOCKBuSteR OR BUST

by Justin Pawl, CFA, CAIA, CFP® and Sam Kirby, CFA

With movie theaters finally returning to normal after the pandemic, two blockbuster films were released in 2023. One was the concluding chapter of an epic $2 billion film franchise: Indiana Jones and the Dial of Destiny, which cost nearly $300 million to make. The other was a cinematic tribute to a beloved child’s toy, Barbie, which had a budget of $150 million. Numbers like these are common in the film industry, with project investments often surpassing hundreds of millions of dollars. Predicting box office success is, therefore, a high-stakes game. Losses can be devastating. Between these two releases, which one stood the best chance of winning with its audience?

Investment Feature | Winter 2024

LIKELY SCENARIO NUMBER TWO

It is better to be approximately right than precisely wrong. Box office receipts presented an unexpected outcome. Despite its relatively modest budget, the Barbie movie generated $1.4 billion in worldwide box office receipts, while the final Indiana Jones installment generated a disappointing $400 million. The disparity illustrates how difficult it is to predict the future, even for knowledgeable specialists with advanced tools. Like box-office prognosticators, economists, analysts, and financial market pundits apply a dizzying array of data, science, expertise, and gut feel to their annual market predictions. Yet it is exceptionally rare for any one forecaster to get everything right. This unpredictability reflects the complex nature of global economics and financial market dynamics, where success often hinges on factors beyond the numbers and consensus expectations.

A Spectrum of Possibiities CAPTRUST’s Investment Group approaches annual predictions differently from most forecasters. Rather than focusing on one specific result, we prefer to prepare for a range of potential outcomes. Our objective, always, is to make prudent investment decisions that are resilient in the face of many different scenarios. We seek to minimize the potential for catastrophic losses and maximize the probability of success for clients. While we regularly adapt our expectations based upon changing market conditions, at the beginning of each year, we share our thoughts on what could lie ahead. We do this recognizing that the future is unpredictable. Yet this exercise is important to prepare for a range of potential outcomes. After all, it is better to be approximately right than precisely wrong. This year, we expect two scenarios to have the highest likelihood of playing out: stagnation or an economic soft landing. However, it is important to reiterate that the range of potential outcomes for 2024 is exceptionally wide—as it was in 2023. It has only been three years since the COVID-19 pandemic sent shockwaves through the global economy. Central bank policy responses continue to reverberate throughout the global financial system. Many other scenarios are also possible. At opposite ends of the spectrum of possibilities are stagflation and productivity-fueled growth. Stagflation, our economic worst-case scenario, would mean persistently high inflation, high unemployment, and stagnant consumer demand. On the other hand, productivity-fueled growth would mean technology-driven productivity gains that translate into strong corporate earnings and consumer spending. While each of these scenarios is possible, we believe stagnation or a soft landing to be the more likely outcomes.

Source: CAPTRUST Research

Likely Scenario Number One: Stagnation In this scenario, the robust annual gross domestic product (GDP) growth of 5.2 percent witnessed in the third quarter of 2023 becomes the high-water mark of the current economic cycle. The pace of economic expansion decelerates significantly to an average of approximately 1 percent in 2024. The exhaustion of excess household savings accumulated in the time of pandemic-related fiscal stimulus, coupled with decelerating wage growth, leads to a stark slowdown in consumer spending. Even as the economy loses momentum, inflationary pressures persist, compelling the Federal Reserve to maintain its higher-for-longer monetary policy stance. The labor market, which previously saw record job openings, begins to cool, leading to a rise in the unemployment rate. Corporations face a tough economic climate marked by slowed consumer spending and the need to make difficult decisions, including potential workforce reductions, to navigate ongoing economic headwinds. This scenario paints a picture of an economy in a state of sluggish growth, with continued inflation concerns and a labor market beginning to recalibrate to a challenging environment. Investment Implications: Faced with rapidly declining economic growth, equity analysts begin reducing overly optimistic estimates for corporate earnings in 2024 and 2025. Given persistently high interest rates, the net present value of future earnings declines, causing equity valuations to fall. The S&P 500 Index falls by at least 10 percent at some point during the year. Traditional fixed income investments experience positive returns, driven by high beginning yields and a falling interest rate environment, as the Fed begins to reduce interest rates to address a weakening labor market. In this environment, some diversifying and alternative investments— such as hedge fund strategies and private credit—may outperform the S&P 500.

Likely Scenario Number Two: Soft Landing In this scenario, against historical odds, those predicting the Goldilocks outcome of an economic soft landing are correct. Although the transitory thesis regarding temporary inflation drivers was abandoned in 2022, it turns out that the supply chain disruptions and excess fiscal stimulus related to the COVID-19 pandemic had longer-term impacts than anticipated. By 2024, these impacts begin to wane and, combined with the cumulative effects of monetary policy, drive inflation steadily toward the 2 percent target. The Fed, acknowledging a moderating pace of inflation due to its successful policies, begins to ease interest rates by the end of the first quarter. This shows its confidence that inflation will approach the target by year-end. As growth tempers and inflation falls in line with its goal, the Fed initiates a series of interest rate cuts, aimed at maintaining employment levels. Lower interest rates alleviate some of the burden on corporate, government, and household debt refinancing. But they also exert pressure on the housing market as lower mortgage rates liberate homeowners who feel locked in by their current mortgages, leading to an increase in available inventory. This surge in available properties places downward pressure on housing prices in certain markets, exerting a negative wealth effect on consumer spending activity. Economic output shows modest expansion. While growth remains below the long-term trend, it signals a stable trajectory away from recessionary pressures. Consumer spending, which serves as a bellwether for economic confidence, stabilizes. Business investment shows signs of 32

Investment Feature | Winter 2024

Consensus expectations carry correction risks. As the softlanding scenario has become the principal expectation for 2024, investor optimism has reacted positively across both equity and fixed income markets. This creates a risk of disappointment if the expected conditions fail to materialize.

cautious optimism, with aggressive investments in automation and technology that set the stage for future productivity gains. These indicators suggest a growing sentiment that the economy is poised for a period of steady—if unspectacular—growth. Inflation, while easing, persists above the target threshold in select regions of the globe, a reminder of the uneven nature of economic recovery. The lingering inflationary pressures in these areas may reflect localized issues such as supply chain constraints or regional policy responses. This scenario paints a picture of an economy that is slowly but surely finding balance. Fed interest rate reductions serve as a testament to progress toward inflation control and provide a supportive backdrop for continued economic stability and growth. Here, it is important to remember that consensus expectations carry correction risks. As the soft-landing scenario has become the principal expectation for 2024, investor optimism has reacted positively across both equity and fixed income markets. This creates a risk of disappointment if the expected conditions fail to materialize. Investment Implications: Like a rising tide, the Goldilocks outcome raises all investment boats. Recessionary fears are laid to rest, and high inflation is defeated. In this optimistic scenario, wages continue to expand in excess of the inflation rate, and labor market strength bolsters consumers’ ability to continue spending at a high rate on goods and experiences. Corporate earnings growth benefits from consumer strength, plus modestly lower interest rate expenses that begin to alleviate bottom-line pressures. Mid-double-digit equity returns could be expected in this environment, with some industries generating performance of more than 20 percent. With rates beginning to fall early in the year, fixed income investments fully rebound from their 2022 drawdown, and equity-oriented alternative investments outperform.

Powerful Undercurrents Regardless of how the economic script unfolds in 2024, there are powerful undercurrents likely to influence outcomes across each of these scenarios. These undercurrents will play a significant role in shaping economic conditions, as well as the extent to which market behavior diverges from the economy. U.S. Elections: 2024 is a presidential election year. Whether the plot unfolds with an incumbent victory or a new administration, the successful candidate’s impact on the economy and markets is generally not experienced until a year or more after they’ve taken office. It takes time for campaign agendas to flow into new laws or regulations. Nevertheless, in an endless news cycle, media attention on the candidates and their platforms is likely to introduce short-term financial market volatility. Historically, presidential election 33

Productivity gains have the potential to reshape industries, redefine work, and create new value streams. years have shown positive results for the S&P 500 Index approximately 80 percent of the time, regardless of which party succeeds. From an investment perspective, it’s better to vote with your ballot than your portfolio. Geopolitical Tensions: With significant military action across both Eastern Europe and the Middle East, geopolitical tensions remain a constant and influential undercurrent, capable of disrupting even the most wellcharted economic scenario. In addition to direct military conflicts, tensions can manifest in various forms, including trade disputes, global supply chain disruptions, and commodity price impacts. These tensions can introduce significant economic uncertainty that affects the global climate via shifts in currencies, inflation, energy prices, and cross-border investment flows. In any scenario, the resolution or escalation of these tensions will significantly influence the global economy in 2024. Productivity Advancements: Another important undercurrent is the potential for rapid advancements in productivity. These advancements are driven by technological innovation, process improvements, and, in particular, the growing excitement around artificial intelligence (AI). Productivity gains have a direct impact on economic output. They influence labor market dynamics and corporate profitability.

Productivity gains also have the potential to reshape industries, redefine work, and create new value streams, thereby playing an important role in determining the pace and nature of economic recovery and growth.

Plan for Plot Twists It is possible 2024 will deliver the same blockbuster success as the Barbie movie did. But it is also possible 2024 could be a flop on the scale of the strange, 2023 horror interpretation of Winnie the Pooh. Just as moviegoing audiences can be unpredictably fickle, often defying box office forecasts, so too can the financial markets demonstrate unexpected volatility in their response to global events and policy shifts. As we begin 2024, inflation is still well above the Fed’s target. The costs of borrowing for households, corporations, and the government are higher than they’ve been in more than a decade. And the world is full of geopolitical strife. In this environment, it is imperative for investors to remain agile, informed, and proactive. Rather than attempting to predict the unpredictable, focus on understanding the economic drivers and undercurrents and how they might interact with these identified scenarios. This understanding allows for a more nuanced approach to investment, one that not only considers the potential for gains but also stays resilient in the face of uncertainty. Instead of expending energy worrying about the market narrative of the moment, investors should focus on their financial plans and work with their advisors to control the variables that are controllable. With the confidence gained through sound planning, investors can enjoy their popcorn, if not the show, regardless of how the 2024 screenplay unfolds.

MARKET REWIND | RESETTING EXPECTATIONS The higher-for-longer interest rate message reiterated by the Federal Reserve through the first three quarters of 2023 was essentially dismissed by investors late last year as inflation data showed continued easing. Expectations for future interest rates changes were reset significantly lower, and nearly all asset classes soared. To learn more, scan this QR code with your mobile device camera.

Market Rewind Investment Feature | Winter | Winter 20232024

MONEY MINDSET

THE VALUES OF

A DOLLAR

by Jim Underwood

We all know people who have made less-than-rational investment decisions, like pulling out of the stock market during a downturn or continuing to fund expensive repairs for a battered but beloved car. No matter how sophisticated their investment knowledge, investors of all kinds are prone to make suboptimal choices, second-guess long-term decisions based on short-term occurrences, and lose sleep over investment portfolios. These are natural and understandable behaviors, but they’re rooted in a faulty assumption: that all dollars have equal value.

What is the actual value of a dollar? The obvious answer is 100 cents. However, this purely financial assessment fails to account for emotional attachment. There are, essentially, four different types of dollars investors encounter, and each has a different emotional value. Failing to understand the differences among the four has disrupted many well-designed investment plans.

Theoretical Dollars The first type of dollar is one that investors often meet at the beginning of their investment journeys. These are purely theoretical dollars. They exist only in statistical models. Still, they’re important because they help establish expectations for long-term returns and short-term setbacks that could happen along the way. Theoretical dollars are the foundation of all strong investment programs and financial plans. Using complex modeling tools and customized investor data, advisors can demonstrate a range of future outcomes that shift, depending on interim inputs. The future net worth they estimate, minus your net worth today, is composed entirely of theoretical dollars. At best, these dollars have no emotional value. At worst, they can be misleading—especially if we let ourselves get emotionally attached. It’s difficult for the human brain to forecast feelings of loss. Visualizing joy is much easier. That’s why, although we often underestimate how we will feel after a surprise market dip, we can easily slip into daydreams about spending our theoretical dollars at age 70, when we’re on a beach somewhere with our loved ones. Theoretical dollars are important, but keep in mind, they are not real.

Statement Dollars As investors successfully navigate their journeys, theoretical dollars gradually become statement dollars. These are real dollars, built by discipline, sacrifices, and time. But they are invested, illiquid, and hopefully, growing. The effort required to accumulate these dollars creates a connection that gives them emotional value. Statement dollars are like a scoreboard—one that can be checked every day. Their emotional characteristics are driven largely by two conflicting definitions of success: absolute success and relative success. Absolute success means setting a clear, immovable objective like a specific dollar amount or percentage growth. If portfolio returns exceed this objective, the investor can declare victory. Relative success means evaluating portfolio performance compared to a similar portfolio or benchmark. For instance, many investment portfolios aim to outperform the S&P 500 Index. If the S&P 500 falls 2 percent, but the investor’s portfolio falls only 1 percent, this is considered a relative success. Because relative success has no absolute requirements, it can be measured in both up markets and down markets. However, it is important to remember the old Wall Street proverb that “you can’t eat relative performance.” Both measures of success carry emotional risk because it’s human nature to want to outperform. A truly emotion-free portfolio—one that delivers absolute success in down markets and relative success in up markets—exists only in theory. It doesn’t matter how much statistical modeling we do. Nothing can replicate, and no one can avoid, the emotional value of statement dollars. But each investor’s time horizon often determines how much emotional value they have. Thus, one piece of a financial advisor’s job is to keep investors focused on the long term. Like a fisherman pitching and rolling in a boat, watching the horizon can stabilize perspective.

Money Mindset | Winter 2024

The Spendable Dollar Once a statement dollar is deemed spendable, its emotional value climbs dramatically. Statement dollars can rise and fall, but the spendable dollar (also known as cash) is king. People feel real emotional pain when separated from their spendable dollars. That’s why the government withholds taxes before paychecks can be cashed. It’s why casinos use chips instead of real money. And it’s why companies encourage saving via payroll deductions. Once we feel a sense of permanent ownership over our spendable dollars, they’re much harder to let go of. From an investment perspective, the emotional impact of a spendable dollar is often seen when an investment distributes income. Income is the least tax-efficient way to grow wealth, and taxable investors should nearly always choose unrealized gains instead. Most investors view unrealized gains as statement dollars until they are sold or withdrawn. Then, they become spendable dollars and may feel more permanent. While income-producing strategies can be an important part of a well-diversified portfolio, overexposure or a premature conversion of statement dollars into spendable dollars (like selling stocks) can significantly reduce the portfolio’s long-term value. Yet, the comfort of watching a spendable balance grow can tempt even the savviest investors.

The Spent Dollar Generally, there is only one definition of a spent dollar. It is a spendable dollar we used to own, and now we don’t. This can be highly emotional. When dealing with spent dollars, investors often lose rational perspective. Of course, not all spent dollars have the same value. We enjoy spending when it is voluntary and rewarding but usually not when we are forced to spend money on taxes, speeding tickets, or insurance premiums. These dollars often carry a sense of loss, and we commonly resist spending any dollar that has been hard-earned, diligently saved, or long-awaited. This resistance can lead investors to make imprudent investment decisions, but it typically makes an even bigger impact on planning. Even if a strong foundation was established via theoretical dollars, the emotional roller coaster of statement dollars was successfully navigated, and the conversion to spendable dollars was perfectly planned, there is always a heightened sense of doubt when turning a spendable dollar into a spent dollar. Why? Throughout the other three phases, time generally rewards you, healing wounds, providing flexibility, increasing options, and maximizing the power of compounding. But a

spent dollar reverses the clock, turning time into an adversary by reducing future options. Nothing feels more limiting than a permanent decision, and spent dollars are spent, forever.

Navigating Emotional Values Investing is emotional because saved money and long-invested assets often require sacrifice, patience, and persistence. These emotions can be clearly defined, and even predicted, but rarely avoided. To push back against the natural cognitive tendencies that lead to emotional decision-making, consider these four suggestions. 1.

Be wary of using theoretical dollars to define risk tolerance. A risk profile that feels right with theoretical dollars will inevitably feel wrong when hard-earned statement dollars decline in value.

Attempt to prioritize which definition of success is most important to you, then manage statement dollars accordingly.

Try to resist the allure of spendable dollars from cash distributions. Even if they are reinvested into statement dollars, some portion will be spent on taxes. If they aren’t reinvested, you could miss out on future gains and still have to pay taxes.

Finally, when it is time to spend, spend. Enjoy the rewards of a successful investment journey.

The fear of running out of money is real and powerful. Consequently, many retirees fail to fully capture the value of their prudent historical decisions. A financial plan is a critical piece of the investment journey not only because it helps build wealth, but also because it can give you permission to enjoy what you’ve constructed. Remembering the differences among these four types of dollars can also be helpful, especially if it helps us mitigate our natural emotional connections. 37

LASTING LEGACY

SECOND HOME

Succession by Nanci Hellmich

Lasting Legacy | Winter 2024

Mitzi and Steve Deal of Charlotte, North Carolina, like to think of their mountain house as a gift to their family—one that will keep giving for generations. The Deals enjoy their 3,500-square-foot vacation home, which sits on 119 acres near Sylva, North Carolina, for weekend getaways and as a place where their family can gather for holidays and vacations. “The property is gorgeous, and the views are spectacular,” says Steve, 63, a gastroenterologist. “We’ve got trails to hike, and the cute little mountain town of Sylva is only about 10 minutes away.” The Deals have three adult children and, so far, four grandchildren, all under three years old. “One day, we plan to host Grandpa and Grammee Camp for the kids,” says Mitzi, also 63, a retired schoolteacher. “My goal is that my grandchildren will grow up playing together at the house, creating ties that bring them back,” says Steve. “I want them to have great memories growing up with their cousins.” The property’s location works well for most of their family. The Deals can drive to Sylva in less than three hours. Their two daughters’ families live just a little farther away. And their son and his wife, who live in Miami, drop in as often as they can. While drafting their estate plan, the Deals discussed several ideas for handing down the house, then decided to let their kids take part in the conversation. “We talked to our children and asked if the mountain house was something they wanted to keep when we are gone or if they wanted us to get rid of it,” says Steve. “The consensus was they wanted us to keep it.” Like the Deals, many people hope their vacation properties will become a part of their legacy: a place to enjoy with family and friends now and somewhere their children and grandchildren can find comfort in the future.

Assessing Your Estate Plan People are often deeply passionate about their second homes, whether that home is a cottage on the beach, a lodge in the mountains, a farm in the country, or a cabin on a lake. That passion can sometimes cloud their decisions about how to include the property in an estate plan, says William Blair, a CAPTRUST financial advisor in Charlotte, North Carolina. William helps his clients navigate these and other estate planning decisions. “My goal is not to influence how clients structure their estate plans but, rather, to help them understand some of the unforeseen consequences that can arise from certain strategies,” he says. “A great estate plan considers the needs and circumstances of the beneficiaries and the nature and complexity of the assets.” Mike Blair, another CAPTRUST financial advisor and William’s father, agrees. 39

“

My goal is that my grandchildren will grow up playing together at the house, creating ties that bring them back. Steve Deal

”

Mike says more than half of his clients own second homes, and a few have two or three vacation properties. “Everybody wants their grandchildren to grow up together so that first cousins and second cousins have shared family memories,” he says. “It was easier in the past when people lived closer together, but now they often come together only for vacations.”

Keeping the Peace When deciding what to do with a second home, Mike says parents should ask themselves if leaving the property to their children will mostly improve or complicate their children’s lives. Do the kids want this home, or would they prefer to have the proceeds from its sale? Passing down a vacation property can give your family roots, he says. “But the risk is that it can also create family drama. If you think that could happen, you may need to sell. It’s not worth fraying relationships.” Most of the time, Mike says, things go smoothly, and parents typically have good intuition about how their second homes will impact family dynamics. “I’ve been doing this for 35 years, and there have been very few situations where it has gotten bad,” he says. “We try to deal with things before anyone can get terribly upset.”

There’s also time required for upkeep. “For many second homeowners, the time spent maintaining their home is a labor of love rather than a chore,” William says. “Their children may not fully understand the significant time required to maintain it. Additionally, when property ownership is shared among several people, the division of these chores and the burden of the maintenance costs can create rifts.” Some heirs don’t think they’ll use the residence often. For instance, an adult child living in California might not want to spend their vacation time going to a beach house all the way in Georgia. But their siblings who live closer might use it more frequently. “It can cause friction if one of the adult children barely gets to use the house but is still asked to cover an equal share of the expenses,” William says. In other cases, heirs might not be able to afford to contribute. “We have one client who has a beach house where they spend a lot of time with their family,” William says. “Their adult children love the house, but they have very different financial situations and incomes right now.” The parents are concerned that if they leave the house to all three children, the kids may not be able to contribute equally.

What Heirs Can Expect

“We also see significant conflict among adult children when they disagree about who can use the house when, who should pay for which expenses, and whether the house should be used for different activities, like parties or rentals,” William says. For instance, should the house be available for public rental when it’s not in use by family members? Should friends be invited? And if so, can they bring pets?

To reduce conflict and make sure heirs are aware of what ownership entails, William suggests clients talk with their family about what’s required to maintain the property. “Most of the second homes our clients own are not revenue producing. There are property taxes, insurance, and maintenance expenses, and those can be high.”

Honest conversation and group planning can help avoid these problems. “I had a client with a mountain home that had a spectacular view,” Mike says. “Only one adult child could afford to maintain it, so the family agreed that she would inherit the vacation house, and her two sisters would inherit the parents’ primary residence.”

Both Mike and William frequently talk to clients about ways to pass down their second homes. “Family is important to people,” William says. “The last thing they want to do is create conflict with the people they love because of their estate plan.”

Lasting Legacy | Winter 2024

The father asked his daughter who received the mountain house to give her sisters at least one week there each year. “It wasn’t a requirement,” Mike says. “It was a request.”

home to pass to the beneficiaries for less than its full economic value, Stewart says. Another option is to put the property into a limited liability company (LLC). “The two main reasons we use LLCs for homeownership are liability protection and convenience in gifting,” Stewart says.

Paying It Forward Some clients also choose to set aside money in their estates to pay for second home maintenance, says attorney Todd Stewart, managing partner at Stewart Law P.A., also in Charlotte. “Almost all of the time, when people want to keep the home long term for their family, we talk about some sort of endowment to cover the necessary expenses, including tax bills, insurance, and maintenance,” he says.

Liability protection is important if the home is going to be used for third-party rentals and there is a risk of lawsuits due to fire, theft, or injury.

Stewart works with one client who has two vacation properties—one at the beach and another in the mountains. This client plans to create a foundation that will turn his mountain property into a camp for kids. The beach house will be left to his children, with funds allocated for taxes and maintenance. Stewart says most of his clients put their vacation homes into revocable living trusts. The trust holds ownership for the beneficiaries, usually the family. The clients have control over the property during their lifetimes, and the beneficiaries inherit the home when the client passes away. The advantage of using a revocable living trust, instead of a will, is that the trust removes the home from court supervision and its associated costs and delays, Stewart says.

“

For many second homeowners, the time spent maintaining their home is a labor of love, rather than a chore. William Blair

”

“An irrevocable living trust is another option and comes into play when we think the estate is large enough to be subjected to estate taxes,” Stewart says. In this case, the property’s value is based on the time when it is transferred into the trust, instead of years later when it may be worth more. “It takes the property out of the taxable estate,” he says. Some people choose to place their second homes in a qualified personal residence trust. This tax-advantaged strategy allows the

“Sometimes, clients use an LLC to transfer ownership of the property to their heirs over time,” Stewart says. “Every year, the owner can transfer shares of the residence to their beneficiaries while still maintaining control.”

Planning for Different Options The Deals have tried to plan for a variety of scenarios for their mountain residence. The home is now in an LLC, and at their deaths, it will roll into a revocable living trust. “We are leaving money in the trust to help care for the property, so the upkeep won’t be a burden for our children,” Steve says. “We made it so that, if they decide to sell it, they can, because we don’t know what’s going to happen in the future or where they are going to be.” The Deals recently renovated the house, hiring an architect to create a more open floor plan so the family could be together in one room. They also added lots of windows to frame their wide mountain views. The house has a yard, a fire pit, a terrace for grilling, and a huge picnic table that seats their entire family of 12. “Our intention is that it’s comfortable,” Mitzi says. “We have the world’s biggest sofa in the family room. Three people could sleep on it.” “Having the whole family together is magical,” Mitzi says. “It’s a dream come true.” Since their family may continue to grow, the Deals considered building a bunk house out back, but their children said they’d rather have an addition to the existing home, Steve says. “They told us, ‘We don’t want to be in separate houses. We want to be all together.’” Steve and Mitzi were pleased to hear that. “It means they treasure the time together as a family as much as we do,” Steve says.

CLIENT CONVERSATIONS

READER Q & A In this edition of Client Conversations, CAPTRUST explains the

potential benefits of asset consolidation and family office services and explores a few steps to take before investing in artificial intelligence– related stocks.

My retirement savings and investments are spread between multiple financial institutions. Should I combine them, or are there benefits to keeping things separate?

Generally, it’s better to consolidate investments into fewer accounts and, ideally, with one advisor or investment manager. There is a common misconception in financial management that diversification means having several investment accounts at different institutions or with multiple financial advisors. In truth, diversification refers to the variety of investments in your portfolio, not where you hold them. For instance, maintaining multiple 401(k)s with different providers is not diversification, but balancing the quantity of stocks and bonds within your 401(k) is. Asset consolidation has four main benefits:

•

Optimized planning. With investments in one place, it’s easier to see your full financial picture. This helps you make better financial planning decisions.

•

User-friendly implementation. Consolidation also makes it easier to implement portfolio changes like buying and selling investments. It can also reduce account administration fees.

•

Simplified recordkeeping. Working with fewer institutions means fewer monthly statements and tax documents.

Reader Q&A | Winter 2024

•

Reduced fees. Generally, the more assets you hold with one provider, the more opportunities you may have for reducing or eliminating account fees, transaction costs, and other expenses.

For cash accounts, different rules apply, and it can sometimes be a good idea to spread deposits across multiple banks to keep each account balance below $250,000. This is the maximum amount insured by the Federal Deposit Insurance Corporation (FDIC). Before you make any moves, talk to a financial professional to discuss the best strategy. Asset consolidation will look different for each investor.

I run a family business that my children will inherit. How can I make sure they are financially prepared for this transition?

Succession planning is an important part of running any business, especially a family enterprise. Less than one-third of family businesses survive into a second generation, and only about one in 10 continue through a third generation. Success often depends on how well the business and family have prepared. As part of the succession planning process, you may want to consider centralizing your finances so your family can access all your financial information in one place. One way to do this is to establish a family office, which is a formal business entity created to manage your family’s wealth. Another, more informal, approach is to work with a team of advisors who provide family office services. Typically, this team is led by a financial advisor and includes tax professionals, estate planning attorneys, banking professionals, and others.

Family office services can include multigenerational wealth and estate planning, coordinated tax planning and compliance, insurance and investment advisory, family governance, consolidated reporting, bill-paying solutions, and more. Depending on your needs and goals, your team will provide a unique mix of these services that adjusts as your family and business evolve. Regardless of which approach you choose, look for a firm with specialized expertise. A successful leadership transition will require careful planning, reliable governance, next-generation leadership education, and effective operational structures. With those pieces in place, your family can feel confident and prepared to continue your legacy.

I’m interested in investing in artificial intelligence (AI) stocks. What do I need to know to get started?

AI stocks are garnering a lot of attention lately, and for good reason. In late 2022, the technology sector saw a breakthrough in large language models, allowing AI to learn and respond in conversational language. And last summer, when Nvidia, which makes processors that power AI technology, delivered second-quarter sales drastically higher than expected, it unleashed a fervor of excitement. In the days after, mega-cap technology stocks rose sharply, pulling the entire S&P 500 Index upward. Although mass adoption is distant, AI has the potential to unlock productivity in a host of different industries, and companies across sectors are now investing heavily in related infrastructure. This means AI also has huge potential to generate wealth. Despite this potential, it is important to remember that AI is still nascent technology, and investing will be risky. AI stocks are

likely to be volatile, it will be difficult to predict winners and losers, and investors could lose everything. That’s why it’s critical to do your due diligence. Make sure you or someone with AI-specific knowledge is vetting the opportunity set on your behalf, and never invest more than you can afford to lose. If you do decide to invest in AI, consider a diversified approach, either a portfolio of AI stocks, a mutual fund, or an exchange-traded fund (ETF). These can offer better diversification than individual stocks alone. As with any investment, risks abound, and AI strategies will not be right for everyone. A financial advisor can help you understand how AI investments may fit into the larger context of your investment portfolio and how much risk might be appropriate.

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.

GIVING BACK For 2023, the CAPTRUST Community Foundation (CCF) announced total contributions of more than $1 million, including a $100,000 donation to its Charity of Choice. Each organization supported by the CCF aligns with the foundation’s mission to benefit the lives of children. Last year, the CCF awarded 159 grants to nonprofits nominated by CAPTRUST employees, totaling $317,000.

VOLUNTEER CHAIR Rhonda Downum Manager II | Wealth Client Services

CO-PRESIDENT Veronica Karas Principal | Financial Advisor

EVENTS CHAIR Mackenzie Ball Senior Associate | Wealth Client Services

CO-PRESIDENT Bryan Lewis Manager | Advice & Wellness

REGIONAL CHAIR Ashley May Director | Performance Reporting

TREASURER AND FINANCE CHAIR Greg Delage Director | Advice & Wellness

SECRETARY Megan Loftin Senior Manager | Wealth Client Services

GRANTS CHAIR Heather Shanahan Senior Director | Endowments & Foundations

MARKETING CHAIR Catherine Currin Specialist | Communications

FUNDRAISING CHAIR Jacquelyn Guthrie Manager | Integrations

FINANCIAL LITERACY CHAIR Molly Brown Manager | Advisor Group

CAPTRUST Happenings | Winter 2024

YEAR IN REVIEW 3.9.2023 | MONROE VOS JOINS New office in Houston, Texas 4.24.2023 | QA WEALTH JOINS New office in Minnetonka, Minnesota 5.11.2023 | AEVITAS WEALTH JOINS New office in Wellesley, Massachusetts 6.1.2023 | OMEGA WEALTH PARTNERS JOINS New office in Fort Worth, Texas 6.15.2023 | 2023 CHARITY OF CHOICE The CCF donates $100,000 to Mothers and Their Children (MATCH) 7.12.2023 | SOUTHERN WEALTH MANAGEMENT JOINS New offices in Texas and Louisiana 7.19.2023 | #1 RIA Financial Advisor Magazine names CAPTRUST the top RIA 8.24.2023 | GIVING DAY The CCF delivers grants to 76 nonprofits across the nation 9.18.2023 | BARRON'S TOP 100 RIA LIST CAPTRUST ranks seventh for 2023 9.19.2023 | CARLYLE INVESTS Carlyle joins GTCR as a strategist investor in CAPTRUST 10.30.2023 | COLUMN CAPITAL JOINS New office in Indianapolis, Indiana 11.3.2023 | NORMANN FINANCIAL GROUP JOINS New office in Sanford, North Carolina 11.8.2023 | FAST 50 LIST Triangle Business Journal names CAPTRUST #6 12.8.2023 | TRUTINA FINANCIAL JOINS New office in Bellevue, Washington 12.31.2023 | ENGRAVE WEALTH PARTNERS JOINS New office in Houston, Texas

CAPTRUST Happenings | Winter 2024

CAPTRUST GROWTH Q&A with Gary Dean Managing Principal Gary Dean, formerly of TrustCore Financial Services in Nashville, Tennessee, spoke to VESTED about his firm’s transition to CAPTRUST.

9 new firms across 7 states

Why CAPTRUST?

CAPTRUST is a mission-driven and values-led firm. That mission and those values really resonated with us. We had a great deal of interest from firms seeking to acquire us, but CAPTRUST stood out. We trust the firm’s leadership and the overall consistency of the CAPTRUST team.

11 new office locations

How has joining CAPTRUST enhanced your client experience?

We feel proud that most clients didn’t notice any difference in their service— especially when you consider what was happening behind the scenes. We have continued to layer on the benefits of the CAPTRUST platform, from new financial planning tools and client portals to investment opportunities and thought-provoking content.

$885 billion total client assets under advisement

What are you able to offer clients that you were not able to offer before joining CAPTRUST?

295 new colleagues Data as of 12.31.2023

The biggest improvement to our service offering lies on the institutional side. For our existing endowment, foundation, and retirement plan clients, CAPTRUST’s scale was a game changer. We are now an unquestioned market leader in institutional financial services. CAPTRUST prides itself on its depth, access, and leverage, and our clients are experiencing the impact of those three things in a multitude of ways.

CAPTRUST Names New Chief Compliance Officer Ann Leddy, JD, joined the firm in September. With decades of experience serving as a compliance leader and regulatory counsel for global enterprises across the financial services sector, Leddy brings a wealth of expertise. She is based out of the firm’s New York City office. CAPTRUST’s former Chief Compliance Officer Denise Buchanan remains at the firm as the senior director of compliance.

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

Our nationwide team of more than 500 financial advisors offers a wide range of services for a considerable group of clients, from private investors and small business owners to retirement plan sponsors and nonprofit organizations. No matter where you are, you’re never far from expert advice.

Michael Horlick, CFP®, CPA, PFS, CFA Principal, Financial Advisor Dallas, TX Thomas Gile, CIMA® Principal, Financial Advisor Dallas, TX Kelly Pattillo Principal, Financial Advisor Dallas, TX