Latest news with #FinancialAdvisors
Globe and Mail
5 days ago
- Business
- Globe and Mail
Morgan Stanley Wealth Management Delivers New Tool to Help Clients Tackle Single Stock Risk
Morgan Stanley Wealth Management's Global Investment Office (GIO) has launched the Equity Vulnerability Score, a proprietary tool that can help clients and the Financial Advisors who serve them measure and rank the susceptibility of US stocks to potential future drops in value. As a risk management tool, this can help provide important insights for investors—especially those who hold concentrated equity positions, which Morgan Stanley defines as five or fewer stocks making up more than 30% of the risk in a portfolio. Concentrated equity positions often occur naturally for company founders, those who receive equity compensation, and early investors. As these positions grow over time, they can unwittingly expose the investor to underperformance, higher volatility and material drawdowns—when a stock begins to decline from its peak and can drag the rest of the investor's portfolio down with it. Looking historically, the GIO found that among the individual stocks contained in the Russell 1000 Index, a stock market index that represents the 1000 top companies by market capitalization in the United States: Individual stocks were more than twice as volatile as the index itself (37% v. 15%) since 2014 The average stock's maximum drawdown was twice as large as the index's (approximately 50% vs. 25%) Most individual stocks tend to underperform the index on any forward-looking basis, with the median underperformance clocking in at -2.6% per year Most stocks that outperformed the index over five years went on to then underperform in the following five years 1 The Equity Vulnerability Score can help flag the likelihood that a stock may soon drop in value, and can also be used to complement Morgan Stanley's existing Tactical Equity Framework, which helps identify short-term opportunities to seek overall stronger performance. 'As a leader in both equity compensation and in providing guidance to founders, early-stage investors, and executives of publicly traded companies, we see this is a significant and often overlooked challenge for many of the clients our Advisors serve,' said Steve Edwards, Senior Investment Strategist, Morgan Stanley Wealth Management. 'And while it is natural to have an emotional attachment to a stock that you've watched grow over time, it can also pose an outsized risk. Morgan Stanley Wealth Management has been unwavering in helping to address this issue, and the vulnerability score puts another arrow in our quiver to continue to do just that.' The Equity Vulnerability Score draws from a broad range of indicators proven to have a strong correlation with the negative returns brought on by drawdowns, in three main categories: Financial Stability – Looks at the stability of a company's finances by comparing key metrics such as earnings or revenue, as well as how much those numbers fluctuate over time. Fundamental Momentum – Checks whether a company's important financial numbers are improving or declining, using key gauges of profitability, quality, and value. Volatility and Tail Risk – Measures recent stock price moves, focusing on large drops and trading activity. For more information, please find the following report: Global Investment Committee Special Report: Confronting the Concentrated Equity Challenge and Measuring Drawdown Vulnerability. See also: About Morgan Stanley Wealth Management Morgan Stanley Wealth Management is a leading financial services firm that provides access to a wide range of products and services to individuals, businesses, and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement, and trust services. About Morgan Stanley Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit A decline in the value of the investments held in a concentrated portfolio of a limited number of securities would cause the portfolio's overall value to decline to a greater degree than that of a less concentrated portfolio. Morgan Stanley's Equity Vulnerability Score is a quantitative factor-based ranking of US stocks' relative vulnerability to future drawdowns. To compute the Equity Vulnerability Score, a set of three differentiated factor categories were selected: (1) the Financial Stability category, (2) the Fundamental Momentum category, and (3) the Volatility and Tail Risk category. After combining the scores for the underlying indicators therein to derive the three categories-level scores, the categories' conclusions are then blended into the overall Equity Vulnerability Score. Consistent with Morgan Stanley's Tactical Equity Framework, the Equity Vulnerability Score relied primarily on FactSet's Quant Factor Library (QFL) dataset. © 2025 Morgan Stanley Smith Barney LLC. Member SIPC
National Post
5 days ago
- Business
- National Post
Morgan Stanley Wealth Management Delivers New Tool to Help Clients Tackle Single Stock Risk
Article content NEW YORK — Morgan Stanley Wealth Management's Global Investment Office (GIO) has launched the Equity Vulnerability Score, a proprietary tool that can help clients and the Financial Advisors who serve them measure and rank the susceptibility of US stocks to potential future drops in value. Article content As a risk management tool, this can help provide important insights for investors—especially those who hold concentrated equity positions, which Morgan Stanley defines as five or fewer stocks making up more than 30% of the risk in a portfolio. Concentrated equity positions often occur naturally for company founders, those who receive equity compensation, and early investors. As these positions grow over time, they can unwittingly expose the investor to underperformance, higher volatility and material drawdowns—when a stock begins to decline from its peak and can drag the rest of the investor's portfolio down with it. Article content Article content Looking historically, the GIO found that among the individual stocks contained in the Russell 1000 Index, a stock market index that represents the 1000 top companies by market capitalization in the United States: Article content Individual stocks were more than twice as volatile as the index itself (37% v. 15%) since 2014 The average stock's maximum drawdown was twice as large as the index's (approximately 50% vs. 25%) Most individual stocks tend to underperform the index on any forward-looking basis, with the median underperformance clocking in at -2.6% per year Most stocks that outperformed the index over five years went on to then underperform in the following five years 1 Article content The Equity Vulnerability Score can help flag the likelihood that a stock may soon drop in value, and can also be used to complement Morgan Stanley's existing Tactical Equity Framework, which helps identify short-term opportunities to seek overall stronger performance. Article content 'As a leader in both equity compensation and in providing guidance to founders, early-stage investors, and executives of publicly traded companies, we see this is a significant and often overlooked challenge for many of the clients our Advisors serve,' said Steve Edwards, Senior Investment Strategist, Morgan Stanley Wealth Management. 'And while it is natural to have an emotional attachment to a stock that you've watched grow over time, it can also pose an outsized risk. Morgan Stanley Wealth Management has been unwavering in helping to address this issue, and the vulnerability score puts another arrow in our quiver to continue to do just that.' Article content The Equity Vulnerability Score draws from a broad range of indicators proven to have a strong correlation with the negative returns brought on by drawdowns, in three main categories: Article content Financial Stability – Looks at the stability of a company's finances by comparing key metrics such as earnings or revenue, as well as how much those numbers fluctuate over time. Article content Fundamental Momentum – Checks whether a company's important financial numbers are improving or declining, using key gauges of profitability, quality, and value. Article content Volatility and Tail Risk – Measures recent stock price moves, focusing on large drops and trading activity. Article content For more information, please find the following report: Global Investment Committee Special Report: Confronting the Concentrated Equity Challenge and Measuring Drawdown Vulnerability. Article content See also: About Morgan Stanley Wealth Management Morgan Stanley Wealth Management is a leading financial services firm that provides access to a wide range of products and services to individuals, businesses, and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement, and trust services. Article content About Morgan Stanley Article content Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit Article content A decline in the value of the investments held in a concentrated portfolio of a limited number of securities would cause the portfolio's overall value to decline to a greater degree than that of a less concentrated portfolio. Article content Morgan Stanley's Equity Vulnerability Score is a quantitative factor-based ranking of US stocks' relative vulnerability to future drawdowns. To compute the Equity Vulnerability Score, a set of three differentiated factor categories were selected: (1) the Financial Stability category, (2) the Fundamental Momentum category, and (3) the Volatility and Tail Risk category. After combining the scores for the underlying indicators therein to derive the three categories-level scores, the categories' conclusions are then blended into the overall Equity Vulnerability Score. Consistent with Morgan Stanley's Tactical Equity Framework, the Equity Vulnerability Score relied primarily on FactSet's Quant Factor Library (QFL) dataset. Article content Article content Article content Article content
Yahoo
20-07-2025
- Business
- Yahoo
Top 5 Estate Planning Strategies To Avoid ‘Great Wealth Transfer' Taxes
The United States is about two years into a Great Wealth Transfer that will see an estimated $84.4 trillion in assets pass from older to younger generations by 2045. Generational wealth preservation is a priority for many of these families, and for some, minimizing tax liability is an important way to achieve it. Trending Now: Learn More: Several types of tax can impact wealth transfers. They include estate tax (40% in 2025), as well as capital gains tax on appreciated assets and ordinary income taxes on tax-qualified accounts, according to Matthew Chancey, Certified Financial Planner and author of 'Tax Alpha Solutions: Effective Tax Management Strategies For High-Net-Worth Investors.' In 2025, estate tax only applies to estates that exceed $13.99 million ($27.98 for married couples) in fair market value, per the IRS website. Beginning next year, the exemption increases to $15 million, according to the Tax Foundation. However, Chancey noted even if your estate isn't impacted by estate tax, your heirs could still have capital gains and income tax to deal with. GOBankingRates spoke with Chancey and other financial advisors about the strategies they use to help their clients minimize taxes on transferred wealth. Take Advantage of Step Up in Cost Basis 'One of the best parts of the tax code is called 'stepped up cost basis at death,' which means when our parents pass on and leave assets to us as heirs […] capital gain taxes can be avoided since the assets are now considered to have stepped up their cost basis to current FMV [fair market value], thus eliminating any capital gains,' Chancey said. You can use this strategy for a variety of appreciating assets, including taxable brokerage accounts and real estate. To visualize how this works, say the cost to acquire your home (its cost basis) was $200,000, and its fair market value is $400,000 now. If you gift the home to your child and they later sell it for $500,000, they'll pay capital gains tax on $300,000 ($500,000 less the $200,000 cost basis). If, on the other hand, they inherit the house and sell it for $500,000, they'll only pay capital gains tax on $100,000 — $500,000 less the stepped up basis of $400,000. Consider This: Reconsider Joint Ownership Some families like to jointly title property as a means of estate planning, according to Allison Harrison, founder and principal attorney of ALH Law Group, which specializes in estate planning for the LGBTQ+ community. However, this approach is problematic. 'The property is now subject to all the owner's creditors, and the survivor does not get a step-up in basis for capital gains purposes,' Harrison said. Take Out Permanent Life Insurance 'Life insurance is a great way to provide access to capital today, but grow it in a tax free way for the beneficiaries,' Harrison told GOBankingRates. A properly structured whole life policy, for example, is a permanent life insurance policy that can accrue interest on a tax-deferred basis and earn dividends tax-free, per Guardian. Under most circumstances, your beneficiaries won't have to pay income tax on insurance money that passes to them directly, in one lump sum, according to the IRS. Keep Gifts at $19,000 per Year or Less You pay gift tax of up to 40% if your gifts exceed the lifetime limit of $13.99 million (for 2025). For tax year 2025, gifts of up to $19,000 per year, per recipient, don't count toward the lifetime limit. Nor do they count toward your $13.99 million estate tax exemption, as they do if they exceed $19,000. The rules are the same for the generation-skipping tax on gifts to anyone at least 37.5 years younger than you, per TurboTax. 'Hugely important for people over the $15 million exemption level [for 2026]. That is potentially a double tax without planning,' warned Matthew Wiley of Wiley Law. You can work around the gift limits entirely by paying the recipient's tuition, health insurance or unreimbursed medical bills instead of gifting them cash or other assets. These payments are non-taxable as long as you pay them directly to qualified schools or to insurance companies or healthcare providers, according to Jackson Hewitt. Place Assets in an Irrevocable Trust A trust allows a third party, called a trustee, to hold assets you transfer into the trust for beneficiaries you designate. After you die, the trustee distributes the assets to the beneficiaries, according to Fidelity. An irrevocable trust can't be changed, but it can minimize estate tax and your heirs' income tax liability, while also shielding your estate from creditors and lawsuits. Wiley named the following irrevocable trusts as his favorite strategies for shielding wealth transfers against tax: Spousal lifetime access trust Irrevocable life insurance trust Domestic asset protection trust (available in select states) More From GOBankingRates 7 Luxury SUVs That Will Become Affordable in 2025 This article originally appeared on Top 5 Estate Planning Strategies To Avoid 'Great Wealth Transfer' Taxes Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-07-2025
- Business
- Yahoo
The Next Step: Is this young lawyer on track to retire?
Retirement planning can feel overwhelming, but what if taking just one step could improve your outlook? That's the idea behind The Next Step, Financial Planning's newest series. We're inviting Americans from all walks of life to participate. By sharing basic details about their savings, income and retirement goals, participants provide a snapshot of their current financial situations. We then anonymize this information and present it to professional financial advisors, asking: What single step could make the biggest difference in this person's retirement readiness? Each edition of The Next Step will spotlight an individual's story and feature actionable advice from advisors on how they can take their next step toward a more secure retirement. For the inaugural edition, Financial Planning heard from a 26-year-old lawyer living in New York City. Here's a snapshot of their current finances and how they compare to an average U.S. adult in their same age bracket. The saver makes just under $84,000 annually, roughly 43% more than the median full-time worker in their age range. Currently, 14% of their income goes toward retirement savings. After taxes and withholdings, they receive $4,858 in monthly income, more than enough to cover their average monthly expenses of $2,095. Even after attending law school, the saver has no debt. That puts them well ahead of the median debt figure for someone in their age bracket. Adults less than 35 years old report a median debt figure of just under $43,000. The saver has $5,000 stowed away for retirement, roughly 74% less than the median adult in their age range. About 60% of that is in pretax retirement accounts, while the other 40% is in nonqualified accounts. Based on their current income and contribution rate, they save just under $1,000 every month toward retirement. READ MORE: As Social Security claims surge, young investors brace for its absence The saver said they want to retire at 67, with plans to spend slightly more than they currently do. Based on their desired retirement age, FP projected how much money they can expect to have at 67, given a $5,000 starting base and a monthly contribution of $978. In the calculation, FP assumes an average inflation-adjusted return of 7%. General savings guidelines suggested by Fidelity Investments recommend having savings equaling one year of your annual salary by age 30, with the goal of having 10 times your annual salary saved by age 67. The saver also said they do not have a spouse with whom they share a retirement strategy. Based on the information they shared. Financial Planning asked advisors: "What single step could make the biggest difference in this person's retirement readiness?" Here's what they said: Prime time for Roth contributions Filip Telibasa, founder of Benzina Wealth If I could give just one piece of advice, it would be to start prioritizing Roth contributions now. At 26, their current tax rate is likely the lowest it will ever be, and they have decades ahead for growth. Every dollar contributed to a Roth account buys many years of compounding that will eventually be withdrawn tax-free. Currently, 60% of savings are in pretax accounts and 40% in nonqualified, which means there's most likely no Roth exposure. Shifting contributions to a Roth 401(k) or Roth IRA locks in today's lower tax rate while preserving future flexibility. As income and tax brackets rise over time, they can always pivot back to pretax contributions. The goal is to diversify across all three tax buckets — pretax, after-tax, and nonqualified. This way, they can strategically draw from each in retirement based on their tax situation. READ MORE: For Gen Z, retirement feels out of reach. Can advisors bring it closer? We can't predict future tax policy, but we know their taxes are likely at their lowest today. That makes Roth contributions the smart move while they're young. Heather Hofstetter, client service associate/paraplanner at Angeles Investment Advisors Given the client's age, my first question would be, "What does your emergency savings look like?" My second question is, does the employer match retirement contributions (and if so, how much?). If this client is not already saving enough to receive the full match, my first recommendation would be to increase their savings until they do. If they are already getting the whole match, then I recommend adding savings to a Roth IRA. If they could make the full $7,000 annual contribution, it would go a long way toward providing both income and tax efficiency in retirement, but even a smaller amount done consistently would benefit from the long-term compounding and give them flexibility and options later. (If they were fortunate enough to have a 529 that wasn't exhausted to pay for higher education, the 529 owner might be able to help them seed this account from the excess 529 funds!) Make a roadmap and follow it Judson Meinhart, director of financial planning at Modera Wealth Management If I were going to advise this person to do one thing that can help them, it would be to set a 10-year goal to start working toward. READ MORE: Confronted with college costs, parents reach for their 401(k)s Those early days of saving and investing can be intimidating (investment gains on a $5,000 balance are small, and contributions make up most of the account growth). It might feel like you're not making any progress in those early years, and it can be tempting to give up. Having a roadmap and an achievable 10-year target can help keep things in perspective. The goal doesn't have to be elaborate. A spreadsheet with projected contributions and investment growth can be a simple, yet effective, method to keep you motivated to save. Build a nest egg early Ben Loughery, founder of Lock Wealth Management The only thing I really see is if we could get them to 20% savings … or even meeting in the middle at 17 or 18%, especially before lifestyle creep, possible family with kids in the future, etc. That way, we have time on our side, building the nest egg early. When those bigger expenses do come up around mid-life life, we don't need to worry about playing catch-up as much. Prepare for the unexpected Samuel Molina, founder of The Academy of Financial Education The next step this person can take is to purchase whole life, disability, and long-term insurance to protect their wealth. If they are not insured, a disabling event can become very costly and drain their accounts. READ MORE: How to advise clients on Biden's SAVE plan before it disappears The whole life insurance policy would be to protect against down markets. If the person only has money in investment accounts and we experience a recession, near or during their retirement, they can use the cash value to weather the storm as their investment portfolio rebounds. Take a breath and treat yourself C Garrett Moore, founder of Moore Financial Management My advice for this individual would be: don't forget to enjoy life, too. In short, they're doing great financially. They have an excellent income for their age, they are living well below their means with zero debt, they are saving a fantastic amount, and they are being smart about their tax allocation. So long as they have their investments buttoned up alongside a decent cash cushion, they are in really, really good shape. If they haven't already, they need to take a breath, pat themselves on their back, and treat themselves to something they would like. I always recommend experiences that create memories you'll never forget. Ready to contribute? Financial advisors who are interested in contributing to future editions of The Next Step can submit their names and emails below, and Financial Planning will contact them when there is another opportunity to participate. Fehler beim Abrufen der Daten Melden Sie sich an, um Ihr Portfolio aufzurufen. Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten Fehler beim Abrufen der Daten
CBS News
15-07-2025
- Business
- CBS News
What is the best age to buy an annuity at?
Retirement planning often feels like trying to hit a moving target. Just when you think you've figured out how much you need to save, inflation shifts the goalposts, market volatility throws you off balance and suddenly you're wondering if your Social Security benefits will be enough to cover any of your expenses during retirement. These types of issues are part of why more people are turning to annuities to lock down a reliable retirement income stream, one that guarantees you won't outlive your money. However, the timing of when you buy an annuity can make or break the benefits. While it might seem like waiting until later in life would guarantee the biggest annuity payout, that strategy doesn't always work, and neither does the flip side of that coin. Buying an annuity too early could lock you into lower returns and limit the growth potential, after all, while waiting too long can mean you miss out on years of steady income that could have supplemented Social Security or retirement savings. So, how do you know when to pull the trigger? Let's break down how your age impacts annuity payouts and what factors should guide your decision. Compare your annuity options online and lock in a great rate today. It's important to understand that the "best" age to purchase an annuity varies from one person to the next, as the right timing depends heavily on your financial goals in retirement. In general, though, annuity payouts are higher for older buyers because insurance companies use life expectancy to calculate payments. That means a 75-year-old will likely receive a larger monthly payout than a 65-year-old who invests the same amount, simply because they're expected to draw on the annuity for fewer years. But waiting to purchase an annuity isn't always the ideal approach. Many financial advisors recommend buying an annuity between the ages of 60 and 70. Purchasing during this window can help you avoid market risks while ensuring you still get significant payouts over time. Remember, though, that there are numerous types of annuities, and while it may make sense to purchase a fixed annuity between the ages of 60 and 70, the rules can differ for other annuity options. For example, deferred annuities grow tax-deferred until you start withdrawing funds, and buying this type of annuity earlier — let's say in your 50s — gives your money more time to grow. However, this strategy requires patience and some financial flexibility, as you won't see any immediate income benefits. Or, if you're leaning toward an immediate annuity to supplement your Social Security with guaranteed monthly payments, waiting until you're in your late 60s or early 70s to buy one often provides the highest payout ratio. That said, your health and life expectancy are also critical factors to consider during the process. If you're in excellent health and come from a family with a history of longevity, locking in an annuity earlier could ensure more years of income. Get prepared for retirement by adding an annuity to your portfolio now. If you're trying to time your annuity purchase correctly, it may benefit you to think about how an annuity fits into your overall financial picture rather than focusing on a particular age. Ask yourself: It's also worth considering laddering annuities, which is a strategy where you purchase multiple annuities at different times and rates to help balance payouts and flexibility. This allows you to hedge against locking all your money in at one particular rate. There's no universal answer to the question about the best age to buy an annuity. For many people, purchasing between ages 60 and 70 strikes a good balance between payout size and retirement income needs, but your health, lifestyle and financial situation, as well as the type of annuity you're planning to purchase, will ultimately determine what's right for you. If you're considering an annuity, it may benefit you to work with a financial advisor who understands your goals. They can help you evaluate whether buying now or waiting makes the most sense for your retirement plan. Timing isn't everything, but with annuities, it can make a significant difference in how much income you receive.
