Better by Design

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Chances are, you have just finished or are finishing up filing your taxes for 2017.

Whew! It’s over!

Until next year!!

This time of year is stressful:                                                                                                                                          

Waiting on your W-2s, 1099s, and other documentation that only shows up once a year. Realizing how much of your annual salary that you worked so hard to achieve was paid out in taxes last year. Dreading the amount of paperwork. Looking the whole house over for receipts and statements.  Ensuring every possible deductible business expense and mile driven was recorded. Making last minute contributions, medical appointments, and use of childcare services to avoid missing out on any qualified deductions and credits. Nervously completing forms in hopes that you are doing everything correctly. And then the kicker – am I getting a refund or do I owe Uncle Sam.

And now the rules are changing?!

It all adds up to a feverish frenzy in the months of March and April!!

What if we make a plan now that will avoid some of the stress in 2019, so we will actually get to stop and smell the roses when they begin blooming next spring.

We all know we could be more organized. Let’s start there. For many, the standard deduction will be so high next year that you might not itemize, but keep everything anyway just in case. This will require a system of record-keeping, but a simple set of folders will do. Some common deductions that you may qualify for and therefore should keep records of include:

  • Medical, Dental, Vision Expenses
  • Health Savings Account Contributions
  • Childcare and Dependent Care Expenses
  • Educational Expenses
  • Home Expenses
  • Contributions to Charities
  • Self-Employment Expenses
  • Job-Related Expenses
  • Taxes Paid

Just make a place to categorize them as they occur, store them there, and forget about them. Fifteen minutes of assembling will save hours of searching after the new year.

But let’s dig deeper. Get a real plan together, one that is better by design. Decide now what our goals are for the coming year. After all, do we know what we want to contribute to our HSA next year? What medical costs can we expect? How much would we like to give to church and charities? Would we like to renovate a room in our home? Is this the year to start our own business? What are our options for childcare and support with dependent family members? Which preschool/grade school/college is the best choice for our child?

These are great questions and the answers can inform us as we consider our comprehensive financial picture. We can make filing taxes simpler, but we can do so much more! We can endeavor to make all of our financial decisions less stressful by determining today what our goals are and have a strategy in place to best achieve them. In so doing, we will be more efficient in our tax planning.

As fiduciary financial planners, our job is to examine your finances in an all-encompassing manner so that we help you define your goals, analyze and evaluate your current status, and develop recommendations to help you reach those goals.

If your dream is to pay off your debt and save for a home of your own, the time to start paying it off is today. It takes planning. If your desire is to send your children to college or to retire by a certain age, the time to start saving is today. To determine amounts and timings of contributions and do it tax efficiently takes planning. Did you know that you might be able to make enough charitable contributions to deduct and itemize them by batching your charitable giving? It takes planning. We can accomplish more of our financial goals faster when we keep more of our paycheck and don’t give Uncle Sam a loan. This, too, takes planning. In the end, it is all about making wise choices with what we have been given.

And we have been given much. When I find myself complaining about taxes, I must remember where much of our tax money is spent: education, public assistance, technology, state and national defense, Social Security to include Medicare and Medicaid, unemployment services, and so much more. My life would not be the same if there were no taxes. I would not be able to use some of the transportation that I use. I would not have had the same education I was provided. I would live more fearful for my ongoing safety.

So, I am going to prepare ahead of time so that next year is not as stressful. And I am going to count my blessings.

 

Stay Focused. Stay Calm.

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In times of market volatility.

To Our Clients:

First of all, thank you for the opportunity to be a trusted advisor for your financial planning & investment needs. We take our responsibility very seriously and know it's important to you to be informed about the status of your financial plan and investment accounts.

After several years of very low volatility and new market highs, the last few months have reacquainted us with market volatility. 

It is our goal to have done a good job of assessing your risk tolerance and time horizon to build a portfolio that will meet your long term investment needs. We hope to have achieved this during the conversations we've had at our review meetings about market cycles and the inevitable return of market volatility and potential losses during those cycles.

None of us know what the future will hold, but we do know that the path to long term success in the market is comprised of a few key principles:

  1. Develop a sound strategy, and stick with it unless something significant has fundamentally changed.
  2. Keep fees in check. We use investment options that keep fees much lower than industry average!
  3. Stay consistent. Choosing to 'change horse mid-race' introduces additional risk to the portfolio at exactly the wrong time. 
  4. For those that are still in the accumulation phase, a market downturn represents an opportunity to buy the same assets at a reduced price, as hard as it may be to see it that way at the time.
  5. Stay focused on your long term goals. Stay calm even when it seems tough.

If you do have any questions or concerns, we are available. We want you to feel confident in your financial future!


Thank you,
Bridge Financial Planning

 

Our Client Experience

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Many clients have told us that they’ve wanted help with their financial planning & investing work in the past and have tried only to feel overwhelmed, intimidated, or felt like the process ‘wasn’t for me’.

Bridge Financial Planning was built with these insights in mind. We think financial planning should be empowering and engaging. We know that when there’s a clear direction and less stress involved with financial decisions, you have more time to spend on the things that are most meaningful to you!

We can help you understand the implications of financial decisions and take the guesswork and stress out of managing your finances.  Each aspect of your financial life is only a part of the larger picture. For example, a decision about your child’s education may have a direct effect on how and when you meet your retirement goals. Or an investment decision may have tax consequences that are harmful to your estate plans. Often, monthly spending habits affect your long-term goals. Your financial decisions are interrelated.

If you need help identifying risks and establishing and prioritizing goals or if you are not sure where and how to start, we may be the solution.

What should I expect from a financial planning relationship?

A professional advisor should always place the interest of the client ahead of his or her own – the definition of being a fiduciary. If a planner is a fiduciary, then he or she must understand the client’s goals, needs, and current financial situation; and make recommendations based on the best available options.

That’s why we are proud to be one of only a few firms that voluntarily holds ourselves to the highest standards in the industry by being a member of NAPFA (1 of only 4 in the Chattanooga area). Jennifer Harper has been a CFP® professional since 2006, and Allyson Hauss is a candidate for CFP® certification. We are a fee-only firm. That means we do not accept commissions, referral fees, or kickbacks from anyone. That allows our clients to focus on what’s important to them and know that we’re doing the same. We have signed a fiduciary oath.

Not all advisors are held to this standard. You should ask about it as you interview planners.

 

From the beginning, Bridge Financial Planning, LLC set out to make financial planning more welcoming.

 

What does it look like to become a client?

It all begins with a no-cost, no-obligation Initial Consultation. This meeting can be held in person, or by phone or video conference.

During this meeting, you can ask questions, give us insight about your current situation and share your goals and objectives. With the goal of understanding the scope of your needs, we’ll ask questions, and give information on our background, fees, investment philosophy, and explain the expectations of the client/planner relationship. 

After our meeting, we take a bit of time to develop a proposal that we believe is best suited to you, based on the initial consultation conversation.

Each client and their situation are unique. We offer 3 service options to meet your needs.

1.      Some clients are comfortable receiving their financial plan and implementing the plan on their own. For them, we offer hourly planning on an as needed basis. It can be customized to focus on one, several, or all financial planning topics.

Even ‘do-it-yourselfers’ that have the time and expertise to do their own planning and/or investing have received value from our professional and objective advice.

2.      Others would benefit from more ongoing accountability to be sure they stay focused and on-track. But, they may not have a lot of assets to manage – yet, or may have a lot of investments held in an employer retirement plan. For clients like this, we offer a monthly retainer service model. We work together closely in the early months to be sure everything is moving in the right direction. From there, we can meet as needed and tackle any revisions or updates that are needed along the way to stay on track.

3.      We also offer asset management services. Asset management includes financial planning when assets are greater than $250,000.

After mutually determining the scope of the financial planning engagement, the proposal will clarify the goals discussed and the steps going forward. Client agreements and regulatory compliance documents are shared and completed. Questionnaires will follow to further determine not only your stated needs and goals, but also values, priorities, and risk tolerance.

A secure Client Dashboard is created for each client to log into and add sensitive information as well as link accounts to ensure the most accurate details are used to develop planning and recommendations.

Information we often request include:

·        Tax returns

·        Paystubs

·        Credit card Statements

·        Bank and Investment Account Statements

·        Social Security Documents

·        Company Benefits

·        Retirement Account Statements and Information

·        Insurance policy information (health, property, life, disability, etc.)

·        Education Accounts

Next, a Base Facts Review meeting either in person or by phone/video is scheduled to be sure both client and planner are on the same page and all facts and assumptions are correct. After all, a plan is only as good as the information and assumptions going into the plan!

Then we’ll analyze and evaluate your financial details and develop financial planning recommendations, choices, and alternatives based on your circumstances. This is when we create alternative scenarios that will help answer your questions. Common questions include:

·        Is it possible for me to retire when I plan to?

·        Am I taking enough/too-much risk in my investment portfolio? Am I well diversified?

·        Do I have enough/too-much insurance?

·        Can I afford to fully fund my child(ren’s) education and retirement too?

·        Should I focus on paying down debt or saving more?

·        Which is better for me: renting or buying a home?

·        Should I keep my mortgage or pay it down quickly?

·        What if we moved to another state in retirement?

·        Can I still meet my long-term goals if I took a pay cut for better quality of life?

·        As a business owner, how can I manage the financial interconnection between my business and personal finances?

Once we’ve spent time creating your plan, we schedule a time for the Plan Delivery meeting. This is a time for us to share our observations and advice. It is also a time for educating and understanding the impacts of different scenarios. We’ll cover each of the topics outlined in our client agreement.

When we have an ongoing client relationship, the next step is implementing the plan. We can help implement investment strategies and help you stay on track with other tasks such as debt reduction, employee benefit changes, and provide support and encouragement as you become more financially empowered and your plan is more aligned with your goals.

We can help you avoid financial setbacks, deal with unexpected life events, get out of and/or avoid debt, evaluate education and retirement spending and scenarios, and decide where to put your money to reach your goals.

Have confidence that with clear direction you can make progress toward your financial goals.

Will it take time, determination, and discipline on your part? YES!

Schedule your Initial Consultation HERE.

 

Reflections after 3 years.

Three years ago today I started Bridge Financial Planning. After 15 years in the industry, I knew the ins and outs, and knew a few changes to the traditional model were needed to build what I would want for my family if we were in the client seat.

Clients don’t come in standard packages, so why make service models (and yes, fee models) be one size fits all? Why build a model that's solely based on investments, when financial planning is SO much more? Too often I saw business owners and families that needed professional advice be turned away or poorly served by the standard model.

Eliminating commissions and taking the steps to become a NAPFA fee-only firm is another way we align our services with the needs of our clients. No one should have to concern themselves about that distinction, but until we have professional standards in the industry that unequivocally put the client first, we believe it’s a necessary step to distinguish product sales from professional advice.

We still have a long way to go to reach the goals I’ve set – for our clients and for the business. But after three years, I’m happy to see that our vision has come to life and it's working to help our clients make progress toward their goals.

Seeing our clients make progress will always be our greatest joy. We’ve helped clients become more tax efficient with their investments, address their insurance needs, business planning, and education funding goals. We’ve had the opportunity to work with business owners through the process of discovering their business’ value and exploring the opportunities they have. We've helped our clients have meaningful conversations with their children about their values and dreams for the next generation. We've been inspired by their charitable giving. We've watched families and businesses grow! Many clients have greatly reduced or eliminated debt, created an estate plan, aligned their investment portfolios, and put their long-term goals and dreams in writing. Without that step, too often we can feel that saving and investing is an act of sacrifice instead of an act of progress toward meaningful goals.

We continue to commit to the cornerstones that built our foundation. We know that when our clients are served well, we will do well. We know that transparency is simply a great policy. We know that financial planning and investing can be complex, but it doesn’t have to be intimidating or overwhelming. 

We love what we do and hope that it shows through our work.

To our clients – A heartfelt Thank You!

Jennifer B. Harper,  CFP®

 

Important Announcement!

This year, we’re happy to announce that our Associate Advisor, Allyson Hauss, will be accepting new clients. Her specialties are working with professionals in early to mid-career, and with independent women in search of financial serenity. She is a candidate for CFP® certification.

 

A Time of Thanks and a Time of Giving

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by Allyson Hauss

Can you believe it is almost time for the holidays? We will soon be eating turkey and making gift lists for family and friends. And don’t forget decorating and planning parties. I can almost smell gingerbread cookies, a crackling fire, and fresh cut pine trees!

It truly is the most wonderful time of the year – and a great time for giving! Whether we are giving of our time or resources, the holidays bring out the giver in all of us as we look for ways to help our neighbor or be a blessing to those in need.

The most rewarding benefit of charitable giving, of course, is the joy of contributing to a good cause, a strong belief, or a great need. But there is an extra bonus in charitable giving when that gift can also reduce your federal and state income tax, reduce your estate tax, and/or possibly reduce or eliminate capital gains tax.

For purposes of charitable giving, charities are classified as public or private, and there are deduction limits determined by the type of charity and the type of property. Keep in mind, however, that you must itemize to deduct a charitable gift, and only contributions made to qualified charitable organizations qualify for an income tax deduction. In addition, the gift must be made prior to the close of the taxable year for the gift to be deductible in that year.

If a charitable gift is made in cash, the amount of cash given is the deductible amount of the gift, up to 50% of the donor's adjusted gross income (AGI). The rules for gifts of other kinds of assets can become a little more complex. One of the more common options includes gifting appreciated stock. The charity receives the full market value of the gift, the donor receives a charitable deduction - and avoids long term capital gains!

When a gift of tangible personal property or real estate is made to a charitable organization that will use that property in their charitable function, the deduction for income tax purposes is generally the fair market value of the property on the date of the gift. If the property is subject to depreciation recapture, the fair market value is reduced by the potential depreciation recapture on the asset. The IRS has many rules covering income tax deductions for charitable contributions by individuals, which is why it is important to be knowledgeable as you choose where and how to give. IRS Publication 561 Determining the Value of Donated Property and IRS Publication 526 Charitable Contributions are great resources and a good place to start.

Concerning gifts to family and friends, every person may gift transfer-tax-free per donee up to the annual exclusion for the year, which for 2017 is $14,000. This means you can give up to $14,000 to as many related or unrelated people as you would like each year. So, if you have 2 children and 5 grandchildren, you can gift $98,000 in tax free-gifts this year. As a married couple, you can double that amount to $196,000 with each spouse giving half!

You can also make a tax-free gift by making a payment for qualified medical expenses or tuition for someone else. You must pay the qualifying medical care provider or educational organization directly to qualify for the exclusion, but what a great way to give a much-needed gift this season. Contributing to a 529 education savings plan is another great way to give the gift of education! 

Giving and gifting – so many choices! What a wonderful time to celebrate in a purposeful way as the leaves change and the cold weather moves in!

Remember that however you decide to give or gift as we quickly approach the holidays, it is best to have a plan. Each person is unique, and your financial plan should be driven by your values and what is meaningful to you and your loved ones. Your tax advisor and financial planner can help assist and guide you to determine the wisest way to achieve your giving goals that will bring joy to you and your family, bring hope to those around you, and be an integral part of your overall financial plan.

 

This article is for information purposes only and does not constitute a recommendation.

 

Choosing Peace over Profit can be Expensive

 Ripple Effect

Ripple Effect

At some point, I realized that there is no such thing as “normal”. Working with families means understanding that what’s perfectly reasonable and an inherent ‘fact’ in one family, may be unreasonable in another. 

Despite all our financial differences, there’s a theme that is common in many conversations. It was recently explained in a perfect way by a client. They said, “My spouse and I have chosen ‘Peace over Profit’.

What they were describing was that they had both known for a while that despite good income and a wealth of assets, they were on an unsustainable financial trajectory. They also knew that if they discussed it or asked each other (or their children) to change their financial habits, it would cause turmoil in the family. It was easier to stay with the status quo than it was to make changes to their financial habits that would benefit them in the long run. Well, easier until it wasn’t.

Issues that keep being swept under the rug will eventually need to be addressed. The longer we wait, the harder it will be to have the conversation and the harder it will be to change habits.

It’s nearly impossible to separate money from emotions. We all bring our own history, stories, and biases into the decisions we make. But, when we take the time to have meaningful conversations and develop a plan to address our biggest dreams and worst fears, we gain freedom. We gain the opportunity to have peace AND profit.

This family has already taken some bold steps to get back on track and has included their children in the conversation. I have no doubt this transition will continue to be difficult for a time. I also have no doubt that they’ll never regret their choice to take back control!