Our 7 Pillars of Life Planning & Wealth Management
We have cultivated expertise across a spectrum of services which we refer to as the 7 Pillars for Life Planning and Wealth Management. Encompass strongly believes in a holistic approach to client care. To best promote your chances for success, we believe your advisory team needs to do more than the traditional “stockbroker.”
1. Retirement Planning
We’re probably not the first to tell you that retirement can be expensive. Unfortunately, determining the exact amount of money needed is nearly impossible, as no one knows how life circumstances will change and evolve over time. This is where our ongoing Retirement Planning process comes into play.
Encompass will analyze your assets, liabilities, income, and goals to develop a retirement plan that is unique to your financial situation and aspirations. We review all sources of income, including Social Security and your IRA’s required minimum distribution, to develop a strategy that aligns with your cash flow needs.
This planning exercise is not a one-time event. Life is uncertain and things change. Our team will revisit your plan on a regular basis to examine the long term implications of your present day decisions. With eyes on the big picture, Encompass will help you stay on track towards achieving your goals.
2. Estate Planning
If you don’t have an estate plan in place, the State has one for you… and you may not like it.
When someone dies without a will or trust, the government’s intestacy laws determine who manages the estate, how assets are distributed, and who becomes the guardian of minor children. Fortunately, with appropriate planning and a good estate attorney, you can ensure that your wishes are honored.
Titling/Beneficiaries. Some of the most important aspects of estate planning are making sure that your assets are titled appropriately and your beneficiary designations are correct. When the time comes to distribute assets after death, these designations may take priority over anything specified in a will or trust. Titling can also determine which assets are subject to probate, how they are taxed, and how soon your heirs receive them. Reviewing your assets’ ownership and beneficiary designations is an excellent way to help take a measure of control of your estate.
Estate Taxes. If you are fortunate enough to have accumulated substantial assets by the time of your death, your estate may be subject to federal and state estate taxes. Working with your attorney and CPA, our team can guide you through several strategies to potentially minimize this taxation and allow more of your assets to flow through to your heirs. Among the strategies that we often consider are establishing a trust, gifting, and using life insurance.
Probate. The court-supervised process for determining the authenticity of a will, or administering an estate without a will, is known as “probate”. There are many potential disadvantages to going through probate, including cost, time, lack of privacy, and loss of control. This onerous process can be avoided, or at least minimized, by owning assets in a trust and having accurate beneficiary designations on your accounts.
3. Investment Management
Our experienced investment professionals know that every client is different. That’s why every investment strategy we implement is tailor-made to each client’s unique goals and risk capacity. Building your ideal investment portfolio is a work of art, but using the framework below, our team can help develop a strategy that supports your long-term success.
Determining Your Long-Term Risk Tolerance
What’s the point of developing a long-term investment strategy if you can’t stick to it?
Encompass is mindful that investing can be an emotional endeavor. We also are aware that these emotions often lead investors to make poor decisions, such as “buying high and selling low”. This makes it extremely important to find a level of risk that can be tolerated during times of market volatility. To assist our clients in pinpointing their personal risk tolerance, Encompass has invested in some of the industry’s finest financial software. Using the outputs from these programs to help frame the risk conversation, we’ll work with you to find an investment allocation that is appropriate for the long-term.
When constructing portfolios we place an emphasis on diversification, cost-effectiveness, and tax efficiency. Our team utilizes exchange traded funds (ETFs) and mutual funds to diversify our clients’ portfolios across asset classes, geographic regions, market capitalizations, and investment styles. Social responsibility is an increasingly important part of the conversation. Rather than trying to time the market or going “all in” on an individual stock, we believe that taking the disciplined approach of investing in a diversified portfolio is the steadiest way to long-term success.
Ongoing Research and Portfolio Review Process
Once your investments are implemented, our team will provide regular updates on your portfolio. As opposed to “set it and forget it”, we revisit your asset allocation as changes in your life and the markets dictate. Encompass’ Investment Committee is dedicated to analyzing the global economy, especially as it relates to our asset allocation recommendations. Our objective is to provide you confidence that our team is looking out for your hard-earned money.
Debt can be a lever or a crutch. When used prudently, borrowed money can be an excellent financial tool for things like mortgages and cash flow smoothing. However, there is a point where the weight of that debt can be crippling and negatively affect your life and relationships.
Our process starts with a comprehensive analysis of your personal balance sheet, cash flow, and outstanding debt. Once the whole financial picture is clearer, we help outline your opportunities in the following areas:
Cash Flow Smoothing. If you have short-term cash flow needs, there are options available to you. Whether it be using your investment portfolio for a securities-backed loan, utilizing a Home Equity Line of Credit, or borrowing money from another source, our team will work with you to determine which approach makes the most sense for your specific situation.
Refinancing. Constantly changing interest rates may present an opportunity for you to refinance your current debt to more favorable terms, including mortgages, student loans, credit cards, and auto debt. When conditions allow, this can be an excellent way to improve your cash flow or save money on interest payments depending on your particular circumstances.
Debt Reduction vs Investing. You may have heard a version of the old saying, “The return on investment is guaranteed when you pay down debt.” While this is true in theory, it is also important to look at your opportunity cost. We will compare your current interest rates to the potential return on your investment portfolio to illuminate the pros and cons of each decision.
5. Insurance Review
Life can be unpredictable, featuring a variety of risks. With a comprehensive review of your current insurance policies, you’ll be in a better position to make decisions about the insurance options available to you. The end result should be greater peace of mind.
Life Insurance. While no one enjoys contemplating their ultimate demise, it can be comforting to know that your final intentions will be honored with the appropriate insurance. Whether it be insurance to protect against tragedy, to address the burden of estate taxes, or key person insurance for small businesses, we strive to help you feel confident that your coverage matches your objectives.
Annuities. For those who want a guaranteed income stream, purchasing an annuity is an option to consider. This is sometimes referred to as “buying a pension”. These contracts have their fair share of drawbacks (cost, liquidity, etc.), all of which our team can help you understand to make an informed decision.
Health Insurance. Health care may be one of your highest annual costs in retirement, making it extremely important to have a plan in place to cover those expenses. Our team connects you with health insurance professionals to assist in navigating the complexities of pre-Medicare and Medicare insurance policies.
Long-Term Care. These policies help pay for the personal care you may need down the road. While often expensive, LTC policies help address the risk of depleting your hard-earned assets. Although not always appropriate for everyone, we can help evaluate whether this protection makes sense.
6. Saving for Education
With the rising costs of education, families are wise to develop a plan early to manage these expenses. Using 529 College Savings plans and other saving techniques, we help you determine how, and how much, to save in a tax-advantaged manner.
Why use 529 plans to save for education?
- Tax-free growth and withdrawals. No taxes are due on earnings in a 529 plan nor on withdrawals for qualified educational expenses.
- Control. The account owner, not the beneficiary, retains control of the assets and can change the beneficiary when appropriate. Owners can name a Successor owner as well.
- State income tax benefits. Depending on your state of residence, you may be eligible to claim tax benefits for making contributions to the plan.
For parents: You are eager to fund your child’s education, but where do you begin? How much do you need to save? Where do you put those savings? What’s the best way to invest them? We offer a thorough analysis to answer all of these questions as they relate to your unique circumstances (child’s age, school of choice, etc.).
For grandparents: Did you know that helping fund your grandchildren’s educations can be an excellent estate planning tool? Though an account owner controls the 529 plan, the assets are not included in the owner’s estate for tax purposes. Should you ever need to take the money back or if you want to change the beneficiary of the plan, there is a way to do so.
7. Charitable Giving Strategies
To nurture, to support, to promote, to grow, to preserve, to share, to love. There are a variety of reasons why Encompass clients give money away to charities and the religious institutions dear to them. But the question arises: What are the best ways to give that are both tax-smart and make for the biggest impact?
Here a few of the helpful tools that Encompass clients use to satisfy their philanthropic goals:
Donor Advised Fund: Donate securities with large unrealized gains to receive a tax deduction now and distribute funds to 501(c)(3) charities of your choice over time. It’s the convenience of Bill-Pay, but for charity!
Qualified Charitable Distribution from your IRA: Distribute cash gifts directly from your IRA to satisfy your required minimum distribution without adding to your taxable income. This could be especially important if you are no longer itemizing deductions on your tax return.
Gift Highly Appreciated Securities: Do you have stocks you’ve owned forever with big embedded capital gains? Gift the security to charity and they can liquidate with no tax due.
Bunching: With the higher standard deduction, it may make sense to “bunch” your gifts every other year and itemize. Some years you take the standard deduction; in bunching years you itemize.
Visit Fidelity Charitable for more information.