The year 2021 was filled with upheaval in many ways—the evolving global pandemic at the top of the list. There have been significant economic shifts as well, including potential changes to the U.S. tax law and the all-time highs of the U.S. equity markets. Undertake your year-end financial review, and give yourself time to connect with advisors, make thoughtful decisions, and act.
To assist in this planning endeavor, J.P. Morgan Private Bank offers key tips to make your year-end financial check-up as efficient and effective as possible. Here, Grafton Ifill, Executive Director at J.P. Morgan Private Bank in Dallas, provides the information you need to get started.
“December is typically a time when we come together with our clients to assess their broader financial picture and goals. It’s also a time when we consider any actions that need to be taken before the end of the year, such as charitable donations or tax-loss harvesting,” Ifill says. “This year, we have been encouraging clients to start this review process a little earlier, spend time with their advisors to assess where they are, and take necessary actions, particularly, ahead of potential tax law changes in the ensuing months.”
It’s helpful to use financial technology to put together a comprehensive snapshot of financial holdings. For instance, J.P. Morgan has great aggregation tools that our clients find helpful and can be used as a base in our discussions.
Review your portfolio.
Equities have soared in 2021, and our market outlook remains positive. Even so, you should make sure you understand how you’re currently positioned and ensure that your overall strategy is still aligned with your goals. Pay particular attention to any holdings that have become a “concentrated position.” These positions may have a disproportionately negative impact on your portfolio’s performance if markets were to turn.
Additionally, it is important this year to keep an eye on your cash. U.S. consumers are holding significant amounts of cash that currently earn very little due to interest rates being so low. Make sure the amount you hold is intentional, based on what you need for operating cash flow, near-term, big-ticket purchases, opportunistic dry powder, or a psychological safety net. Consider other cash management strategies for cash holdings without a specific purpose.
Take advantage of low-interest rates.
While the low-interest-rate environment may have challenging implications for your cash, it does create tons of opportunities on the liability side of your balance sheet for activities like loan refinancing or restructuring. Estate planning strategies like intra-family loans and grantor retained annuity trusts also become compelling during a low-interest rate environment.
Consider impactful tax planning moves.
Be sure to reach out to your tax professional. Year-end tax planning moves can include annual gifts, charitable gifts, or strategies like tax-loss harvesting. Also, ask your tax advisor about tax-aware planning and structuring strategies. For example, some of our clients have considered paying for a home in cash, doing a cash-out refinance, and using mortgage proceeds for investments — this allows you to classify interest on a loan as investment interest, and you can deduct it fully against investment income. This strategy can potentially provide a greater benefit than the standard mortgage interest deduction. Tax planning plays an important role in a sound financial plan. Getting expert guidance and having a thoughtful approach can be extremely impactful in achieving your broader financial goals.
Review year-end charitable giving plans.
So many of our clients are charitable, and this is a good time to review year-end giving plans and to re-assess charitable causes you may be interested in. This is also the time to get your family involved and discuss issues or organizations you want to support together.
Gather with family and loved ones to discuss wealth.
For many of our clients, family is what it’s all about in the first place. We encourage them to consider holding holiday family meetings. It’s a great opportunity to share and discuss everyone’s goals, values, and aspirations and explore ways family members can be helpful to each other. It can be an opportunity to review general family finances, and also a great opportunity to educate and expose the next generation.
We also encourage our clients to consider and talk about, as a family, the importance of cyber-safety—remaining vigilant, using best practices broadly, and reminding everyone about the benefits of being educated on this topic. We suggest using a multi-layered approach to prevent cyber-crimes and work with a financial partner who can provide strong fences to protect against potential threats. Even taking small actions within your control, like multi-factor authentication and making sure online privacy settings are strong, can protect the entire family.
Grafton Ifill is an Executive Director and the Market Team Lead for J.P. Morgan Private Bank, serving the Dallas region. Grafton heads a group of bankers to deliver a full range of wealth management, banking, and lending services to affluent families, private clients, and foundations. His team provides holistic and integrated strategies that are customized to the unique needs of each individual and institution.
Connect with J.P. Morgan Private Bank in Dallas
privatebank.jpmorgan.com/dallas | (214) 965-3000
About J.P. Morgan Private Bank
J.P. Morgan Private Bank provides customized financial advice to help wealthy clients and their families achieve their goals through an elevated experience. Clients of the Private Bank work with dedicated teams of specialists that bring their investments and financial assets together into one comprehensive strategy, leveraging the global resources of J.P. Morgan across planning, investing, lending, banking, philanthropy, family office management, fiduciary services, special advisory services and more. The Private Bank oversees more than $1.7 trillion in client assets globally. More information about J.P. Morgan Private Bank is available at www.privatebank.jpmorgan.com/
“J.P. Morgan Private Bank” is a brand name for private banking business conducted by JPMorgan Chase & Co. and its subsidiaries worldwide. JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank-managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. JPMCB and JPMS are affiliated companies under the common control of JPMorgan Chase & Co.