Monthly Archives: April 2016

Join Us in Congratulating Alexis Long on Obtaining the CFP Designation

img_7We are honored to announce and congratulate Alexis Long on receiving the CERTIFIED FINANCIAL PLANNER™ designation from the CFP Board of Standards. It is an exciting moment for Alexis to receive the gold standard in the financial planning industry as she approaches her 2-year anniversary with the firm. After obtaining an MBA from the University of Saint Thomas, Alexis began her career in wealth management at another independent firm in Houston. After expanding her knowledge and experience while working in the financial planning industry, Alexis joined our firm in July 2014. She continues to help grow our firm with her proficiency in financial planning and investment management. Alexis makes it a priority to understand clients and build long-term relationships helping them achieve their financial planning needs and goals.

 

In order to obtain a CFP® designation, one must hold a four-year college degree and complete the CFP® educational program, administered by the CFP®Board. In addition to the course study, one must complete a 10-hour certification exam that tests the planner’s knowledge on important financial planning sectors. One must also have three to five years of experience in the financial industry, adhere to the CFP® Code of Ethics, and obtain 30 hours of continuing education every two years concerning wealth management.

 

We are excited for Alexis to begin using her CFP® designation as she continues to tackle clients’ wealth management needs, whether in the field of retirement planning, employee benefits, tax planning, investment planning, or estate planning.

At Willis Johnson & Associates, we take the time to understand you by combining employee benefits expertise and financial planning wisdom with the emotional elements of your life.

Willis Johnson, CFP®

President and CEO

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Financial Fact | Top Marginal Federal Income Tax Rate

Top U.S. Marginal Federal Income Tax Bracket Rate, History vs. Today: How has top marginal tax rate changed over the years?

 

Did you know that the top U.S. marginal federal income tax bracket rate reached its highest point in history when the government raised it to 94% in 1944? At that time, the 94% tax rate applied to any income over $199,999. In today’s dollars, that is equivalent to any income over $2,609,022.

 

 

Today, the top marginal tax rate is 39.6%. This increases to 43.4% when you add in the 3.8% Medicare surcharge tax, and it applies to any income over $464,850 for a married filing jointly couple or $413,200 if you file as a single taxpayer. While the top rate today may seem high to today’s top income earners, it is actually low when you look at the average top marginal rate over time. Since 1913, the average top marginal rate has been 58.1%.

 

 

Financial Fact_1
Source: J Morgan Asset Management Retirement Insights “Guide to Retirement” 2016 Edition & The Tax Foundation, http://taxfoundation.org
 
 
The information provided is not intended to be a substitute for specific individualized tax, legal or estate planning advice. Individual situations will vary. We can assist you in making informed decisions. No single solution meets all investor’s needs. Investing involves risk including the potential loss of principal.
No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Willis Johnson & Associates is a registered investment advisor. Insurance and additional investment advisory services offered through Willis Johnson & Associates, a registered investment advisor.
Willis Johnson & Associates does not offers tax or legal advice.
 

What Nick’s Reading | Setting Realistic Real Return Expectations

Why understanding the real return after taxes, fees, and expenses is an important goal

Having a proper tax plan can make a huge impact on your take home return

 

During the process of cash flow planning with clients, there comes a time when we discuss the expected rate of growth for their investments. Oftentimes, we hear mainstream media quoting that the market’s historical return over the last 30 years is between 10-12%. Many investors hear this and assume that these nominal returns on investments are a reasonable expectation for the future. But in reality, the real real return, is substantially less than that due to taxes, expenses, and inflation. Thornburg Funds wrote a great piece that discusses this topic in greater depth, A Study of Real Real Returns (Also, see their chart below.)

 

Most investors realize that nominal returns include inflation, which must be subtracted in order to get the real return on their investments. The problem is after taking out inflation, many investors assume they get to keep the rest. Some investors do not realize how taxes can be a huge impact on their take home return when there is a lack of tax planning. According to a hypothetical model by Thornburg Funds, taxes reduce returns by 1.58%.

 

As wealth managers, we understand that the real return after taxes, fees, and expenses is always our goal. One of the reasons we focus so much on tax planning around employee benefits and qualified retirement plans (e.g., IRA, 401k, and 403b) is because we know tax mitigation has a huge impact on real returns. Having the precise assets in the correct allocation within the appropriate type of account is important in order to not leave money on the table.

 

Erosion of Total Returns Over 30 Years (in a Taxable Account, as of 12/31/2013)

 

 

What Nick's Reading_2

What Nick's Reading_1

 

Methodology: This chart shows how fees, taxes on dividends and capital gains, and inflation erode real wealth. The amount at the far right shows the nominal return of an investment, while the area in gold reflects the amount eaten away by fees (in our example, fees of 50 basis points (0.50%) were applied to the investment, with the exception of real estate, which includes a one-time 6% commission). The impact of taxes on income from the investment (either dividend or interest income) is represented by the area in teal. Taxes on capital gains provide a further drag on performance and are represented by the area in green, while the silent tax of inflation, in burgundy, can often turn a positive nominal return  into a negative real real return. Source: “The Study of Real Real Returns,”Thornburg Investment Research, 2014.
Past performance does not guarantee future results.
The information provided is not intended to be a substitute for specific individualized tax, legal or estate planning advice. Individual situations will vary. We can assist you in making informed decisions. No single solution meets all investor’s needs. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Willis Johnson & Associates is a registered investment advisor. Insurance and additional investment advisory services offered through Willis Johnson & Associates.

 


nickNick Johnson, CFA®, CFP®

CONNECT WITH ME ON LINKEDIN

 

Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such. 

 

As Vice President and Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management.

 


 

Quarterly Market Review (as of market close March 31, 2016)

The first quarter of 2016 started with a whimper as equities suffered several weeks of losses. However, as March came to a close, several of the indexes listed here recovered enough to finish the quarter in positive territory. The Dow picked up 260 points to close 1.49% ahead of its fourth-quarter closing value. The S&P 500 also finished the first quarter slightly better than it ended the previous quarter. However, the NASDAQ, Russell 2000, and Global Dow each ended the quarter behind their respective December 2015 closing values. March proved to be a good month for equities, as each of the indexes listed here yielded positive returns, led by the Dow and the Russell 2000, each of which gained more than 7.0% over February.

Click for the Full Update

Allow Us to Accompany You on Your Journey