This Year’s Best Financial Advice From the Pros


With 2023 drawing to a close, we have been reviewing our weekly Barron’s Advisor Big Q articles from throughout the year and selecting some of the best pearls of wisdom that financial advisors shared with us. Their tips can come in handy as you prepare your financial resolutions for 2024. Thanks for your readership and Happy New Year!

Judith Leahy, senior wealth advisor, Citi: Having kids of my own, I did both a custodial account and a 529 plan. The custodial account doesn’t give you the tax benefit of a 529, but it does give you a little bit more flexibility. With a 529 plan, you’re boxed into the menu of funds that the plan provides for you. But you can do any kind of investment with a custodial account. You can buy individual stocks if you want and reinvest the dividends, which I have been a fan of. If you wanted to do a zero-coupon bond, and wrap some equities with that, so that you have that bullet maturity for year one, when the child is 18, you can actually do something along those lines.

So you have more creativity in a custodial account. And depending on the child, it can be a great way to teach them about finances and the markets and to get them involved at an early age. I think it’s really a learning opportunity. The drawback is that it’s an irrevocable gift. So at majority age, whatever you deem that to be, whether it’s 18 or 21, or in some cases it could be longer than that, that money becomes their money. So you have to make sure that you want to go down that path with your child.

Andy Wang, advisor, Runnymede Capital Management: I think higher interest rates have changed the risk-reward prospects. Today, investors can earn 5% to 5.5% interest with little risk through a high-yield savings account, certain money-market funds or by buying three- to six- month Treasury bills. That equates to $5,000 to $5,500 in interest annually with little risk, and it’s liquid. So if you have a big nest egg, your excess cash can be working for you while you sleep, and you’ll likely sleep very well.

If there’s a desire for higher potential appreciation, an investor could use a barbell strategy, where capital is invested equally in high-risk and low-risk assets. You could invest half of the $100,000 in a three-month Treasury bill and the other half in stocks.

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Given where interest rates are, I feel pretty good earning 5.5% and waiting to buy stocks when an opportunity arises. Of course, that’s not an easy thing to do. One has to be like a firefighter who’s willing to run into a burning building. But great investors like Warren Buffett have shown that it pays to be fearful when others are greedy and greedy when others are fearful.

Jeremiah Doyle, estate planning strategist, BNY Mellon Wealth Management: One of the things that always amazes me is that even sophisticated people don’t know that you can give appreciated stock, deduct the fair-market value and not have to pay tax on the capital gain. I feel like an apostle of the obvious saying that, but I’ve run into so many people who give cash at the end of the year.

As far as trends, the increased standard deduction has been a headwind to charitable giving, not so much for high-net-worth individuals but for regular people, because it’s so high, at $27,700. In order to get an income-tax benefit, you’ve got to itemize your deductions. And for all intents and purposes you’ve lost your state and local income-tax deduction over 10 grand, and you can’t deduct any miscellaneous itemized deductions until 2026. A lot of people double up their charitable giving one year so that they’re well over the standard deduction. The next year, they take the standard deduction that everybody’s been taking since 2017.

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Crystal Garrett, financial advisor, Tiras Wealth Management: One topic that comes up a lot is when to start taking Social Security. While the traditional advice indicates that it can be better to wait, I often advise clients to think a bit further on the decision. While we almost always suggest waiting if you are still working and earning more than about $20,000 a year between age 62 and your full retirement age, we think others with high retirement income and/or large investment balances should consider starting early. The straight-line break-even period for forgoing each year of payments is about 14 years. However, if the client is retired and certain they won’t return to work, we suggest that they consider starting early because of the risk of changes to the system that might prevent them from getting their full benefits later. 

We know the system has to change at some point in the next 10 years or so, and it is far from clear what changes Congress will make to ensure the long-term health of the system. Many retirees don’t realize that a “means” test was already added in 1993, which is when retirees earning over a threshold started being required to pay income tax on 85% of their benefits. I’m concerned my clients could be impacted by future benefit reductions like this. Additionally, the impact of taking Social Security and allowing other assets to continue to grow can extend the break-even period. While there’s likely no way to know the right answer unless you look back from the future, I think the typical knee-jerk reaction deserves further thought.

Nelrae Pasha Ali, Advisor, Wells Fargo Advisors

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I’ve spoken with aging clients who are happy, and one thing they have in common is the three F’s: faith, family, and finances. It seems like they all believe in something greater than themselves, and they prioritize family. As for finances, that’s obviously about saving properly, and is really about having peace of mind. In that regard, long-term care insurance is definitely something to think about. It’s really meant to give you serenity, to give you peace of mind.

If you have peace of mind, you tend to sleep better. If you sleep better, you tend to be healthier. It’s a chain reaction. We’re all living longer, and particularly if one spouse is gone as we get older, having serious healthcare needs can change your whole financial trajectory.

Write to Amey Stone at amey.stone@barrons.com



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