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Frank Talk - 4th Quarter Newsletter (2019)

Published: 11/22/2019

Table of Contents


Written by: Frank Fantozzi

Happy Fall, Clients and Friends!

I hope this finds you and your family well and busy preparing for the upcoming holiday season. Before you know it, we’ll once again find ourselves at year end. That makes now an important time for wrapping up any year-end tax planning goals and getting a jump on your 2020 planning.

Tax_Guide_ImageTo help you prepare, we sent an email to each of you in September with a link to your Planned Financial Services 2019 – 2020 Tax Planning Guide. The guide provides information on a variety of strategies and year-end deadlines to help educate you on the current landscape so that your collaboration with your qualified tax advisor is more beneficial. If you missed our email containing the link, we’ve provided it below for your convenience.

View or download your PFS 2019 - 2020 Tax Planning Guide now 

A highlight of this fall season for your team at Planned Financial Services was the opportunity to celebrate our 25th Anniversary as a firm with so many of you on Thursday, October 24, 2019, at Sapphire Creek Winery & Gardens. Details about the event are included below, under News & Events. Again, I want to reiterate our gratitude to all of our clients and friends for believing in us—especially in those early years—and trusting us to guide you in making informed and confident decisions. We look forward to helping you and your family work toward enjoying life on your terms for the next 25 years!  

Among the news we’re excited to share with you in this edition of Frank Talk, is the addition of Joe Rogers, Finance and Operations Director to our growing team. You can learn more about Joe below, or by visiting

What’s in It for You?

At-a-glance guide to your 4th Quarter 2019 Frank Talk newsletter:

  • News & Events
    • Welcome Joe Rogers, Finance and Operations Director
    • Cynthia Yang named Forbes “Top Next Generation Wealth Advisor”
    • Dan Goldfarb Recognized as a 2019 “Bright Star” by NOACC
    • PFS named “Weatherhead 100 Upstart” for 8th time
    • PFS 25th anniversary event
    • Smart Business Family Business & Business Longevity Conference
  • Market & Economic Update

News & Events

PFS Welcomes Joseph M. Rogers, II, Finance and Operations Director

Join us in welcoming Joseph (Joe) M. Rogers, II to the Planned Financial Services team. As Finance and Operations Director, Joe will support and work collaboratively with the firm’s team of experienced wealth advisors and financial services professionals to ensure alignment between the firm’s operational and strategic initiatives across business functions, including client services, human resources, finance, marketing and sales, and information technology.

Joe brings the unique mix of business management and operations expertise we’re looking for as we expand our footprint to serve a growing number of family and business clients, and deliver on your needs for timely, relevant, and actionable advice. Much of Joe’s attention will be focused on the development and implementation of the strategic initiatives that will continue to advance our firm’s business goals and build on our accomplishments over the past 25 years, with an emphasis on strategic wealth and investment planning, corporate retirement plan services, and Complete Family Office (CFO)SM services. Joe brings a deep understanding of sales and marketing theories and practices, and advanced skills in operations management, strategic planning, contract negotiations and customer acquisition and retention. Visit to learn more about Joe.

Cynthia Yang Named a Forbes Top Next Generation Advisor

We’re proud to announce that Wealth Advisor, Cynthia Yang, CFA®, CIPM, CAIA®, was recognized for a second time by Forbes magazine as a “Top Next Generation Wealth Advisor.” According to Forbes, advisors were selected for the Top Next Generation Wealth Advisors list based on insights from SHOOK Research™, which compiles quantitative and qualitative data. Advisors were evaluated using a variety of criteria and must have been born after 1980 to qualify for the award. Cynthia was first recognized for the award in 2017.

Cynthia is a Chartered Financial Analyst (CFA®), Chartered Alternative Investment Analyst (CAIA®) and Certified in Investment Performance Management (CIPM). As a Wealth Advisor, she brings deep knowledge, insight, and expertise in equity valuation, independent investment research, risk management, and portfolio performance attribution analysis to you and your Planned Financial Services team.

Advisors were required to have a minimum of four years relevant experience and acceptable compliance records. Overall ratings were based on, but not limited to: client service models, investing process, business types, revenue produced, and assets under management.

Dan Goldfarb Recognized as a 2019 “Bright Star” by Northern Ohio Area Chambers of Commerce

Wealth Advisor, Daniel (Dan) Goldfarb, CFP®, ChFC®, CRPC®, was recognized as the Solon Chamber of Commerce’s “Bright Star” for 2019. The Bright Star program, which is administered by the Northern Ohio Area Chambers of Commerce (NOACC), includes 38 chambers of commerce across Northern Ohio. Each year, individual chambers recognize a member as their Bright Star, who has “made a significant impact on the chamber through membership, retention, sponsorship, economic development, operations and/or education.” Each Bright Star honoree must be an active chamber member for at least two years and “is likely to be an unsung hero or a dedicated behind-the-scenes volunteer.” We congratulate Dan on this well-deserved and prestigious honor.

Dan is a CERTIFIED FINANCIAL PLANNER™ Practitioner, Chartered Financial Consultant® and Chartered Retirement Planning CounselorSM with more than ten years of experience helping clients align their values and goals with their financial assets through insightful financial and investment planning. He brings extensive experience working with business owners, executives, professionals, individuals and families to help clients pursue their objectives in the most tax-efficient and cost-efficient manner in the key areas of wealth accumulation (including investment allocation), business succession, executive compensation, estate conservation, charitable giving strategies and employee benefits.

PFS Named a Weatherhead 100 Upstart Award Recipient for the 8th Time

In October 2019, we were pleased to learn that Planned Financial Services was named a Weatherhead 100 Upstart company for the eighth time by the Weatherhead School of Management, Case Western Reserve University. Established in 1988, The Weatherhead 100 awards are the premier celebration of Northeast Ohio’s spirit of entrepreneurship and the companies leading the way in Northeast Ohio. Each year, the organization recognizes an elite group of companies who are the best example of leadership, growth and success in our region. Companies that make the list are recognized for their percentage of revenue growth over the past five years. PFS will be honored among its peers at a special black-tie event at the 32nd Annual Weatherhead 100 Awards Ceremony on December 12th at the Hilton Cleveland Downtown.

The Weatherhead 100, awarded to PFS in 2007, 2008, 2009, 2011, 2016, 2017, 2018 and 2019, is based on sales growth, employment of 15 or fewer employees, and/or companies with less than $1 million in net sales. In 2019, 200 applicants applied for the award in three award categories: Weatherhead 100 Upstart, Weatherhead 100 and Weatherhead 100 Centurion, with 29 awards granted in the Weatherhead 100 Upstart category. For more information, visit

PFS Participates in 2019 Smart Business Family Business & Business Longevity Conference

Family Business ConferencePFS was proud to participate as a program sponsor for the Smart Business: Family Business Conference and Family Business & Business Longevity Conference, on Thursday, September 19, 2019, from 7:30 a.m. – 10:30 a.m., at the Westin Cleveland Downtown. Presented by Cuyahoga Community College, the program featured a dynamic line-up of keynote speakers and panelists, including Frank Fantozzi.

PFS has actively supported the Family Business Conference & Family Business Achievement Awards in various capacities since its introduction in 2012, including as repeat program sponsors, panelists, and attendees. At this year’s conference, attendees heard from a dynamic line up of panelists as they shared real life examples of what separates success stories from failures. The networking breakfast and interactive workshop offered perspectives from both industry experts and business owners, addressing issues facing both family-owned and non-family businesses.

One of the topics discussed at this year’s conference was the benefits of establishing an advisory board for your privately-owned businesses. If this topic interests you, download our step-by-step guide to establishing an advisory board.

Download Getting On Board: How to Establish an Advisory Board for Your Growing Business

PFS 25th Anniversary Celebration

We had the honor to host more than 100 clients, family and friends who joined us to mark our firm’s 25th anniversary on Thursday, October 24, 2019, at Sapphire CreekPFS 25th Logo Final-01 Winery & Gardens in Chagrin Falls, Ohio. The early evening event featured Napa Valley appellate wines, made especially for Sapphire Creek by a private vintner as well as other beverages, a broad selection of passed and plated hors d’oeuvres, and a full dessert bar. Guests enjoyed live music and strolling magic by Dustin Kaiser, personal photo opportunities provided by Michael Wypasek Photography, as well as access to the winery’s natural gardens, nestled among ten acres of secluded woods and streams.

Market & Economic Update

“Be fearful when others are greedy, and greedy when others are fearful.” – Warren Buffett

*The S&P 500 Index has trended higher in an unusually persistent fashion recently. The benchmark has notched 10 record-high closes over the past four weeks, including four straight closes through November 18th.

It’s human nature to get nervous when market conditions are too calm, especially with an uncertain outlook and an aging bull market. However, we urge investors not to lose sight of their goals.

Since 1950, the S&P 500 has consistently powered past record highs. Stocks rarely move higher in a straight line, though. Since 1950, the S&P 500 has declined an average of 2% in the month after a record-high close. In 2018, the S&P 500 notched a record high September 20th, only to fall nearly 20% by December 24th. Volatility can be uncomfortable, and it can be difficult to stay focused on long-term prospects when prices are falling.

Luckily, history shows that even the swiftest selloffs don’t last forever. After the S&P 500’s nearly 20% slide in late 2018, it recouped all of its losses in the next four months. In 2011, the index dropped 19% from April to October before reaching new highs again in March 2012. The S&P 500 even found its way back to record highs after the 2008–09 financial crisis, nearly 5.5 years after its 2007 October peak.

Even though the path can be rocky, stocks have historically offered long-term opportunity for investors. It’s important to stick to your investing plan in times of volatility and calm. We still view volatility as an opportunity for suitable long-term investors consider rebalancing portfolios or add to positions.

Closing Remarks

If you, or someone you know, has questions or concerns about your personal investment strategy, or personal or business finances, please don’t hesitate to reach out to your experienced team of wealth advisors at 440.740.0130. We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide.

As we prepare to wind down another year, we hope you will find time at year-end to spend time with family and friends, sharing the many joys of the season. Happy Holidays to you and your family!

Real People. Real Answers

Health, Happiness, and Good Fortune,

Frank Signature

Frank Fantozzi
President & Founder




The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.

All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

*Research sources provided by LPL Research, November 2019.

Planned Financial Services, Smart Business and Forbes magazines, SHOOK Research, the Weatherhead School of Management, Case Western Reserve University, and Cuyahoga Community College, and LPL Research are all separate, unaffiliated entities.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor. 

Active vs. Passive Investing: How the Strategies Actually Differ

Written by: Cynthia Yang

For years, financial experts have debated the relative merits of active and passive investing. Neither approach is inherently better than the other, and either strategy can outperform depending on market conditions, asset class and other factors.

What’s the difference?

Passive (also referred to as “index”) funds generally strive to track the performance of a particular market index, such as the S&P 500. Typically, they buy and hold all, or a representative sampling, of the index’s securities. Because trading is kept to a minimum, these funds tend to be tax efficient. And their costs are low because they rely on a formula or algorithm rather than labor-intensive analysis of individual companies.

Active funds, in contrast, rely on rigorous analysis to evaluate individual securities and create a portfolio that attempts to beat a market index or achieve other goals. Because these funds often try to maximize profits by selling when investment objectives dictate, they can be less tax efficient. Their need for expert analysts to select securities means that costs generally are higher.

Is the choice really that clear?

It’s important to understand that purely passive investing doesn’t really exist. Short of buying every security in the world, all investment portfolio choices are “active” to some extent. For example, if you choose the “passive” strategy of investing in an S&P 500 index fund, you’ve made an active decision to limit your investment to U.S. large-cap stocks, a small fraction of the securities available in the United States and across the world.

Passive investing supporters point to studies showing that the majority of actively managed large-cap equity funds underperform their index over the long term. (In part, this is because these funds charge higher expenses.) However, many actively managed funds in other categories, such as bonds and small-cap equities, do beat their indexes. Plus, there’s evidence that actively managed funds perform better in certain market conditions.

Who are you?

The right investment strategy depends on who you are — your situation, goals, time horizon and risk tolerance. If you’re risk averse and satisfied with matching an index’s performance, passive investing may be appropriate. But if you’re willing to chance higher volatility because you hope to beat the index, you may be suited for active investing. In many cases, a well-balanced and diversified portfolio will include a combination of passive and active vehicles. Just remember that, with all investment strategies, there’s a risk of losing money.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

Capital Gains Planning: When Timing is Everything

Written by: Dan Goldfarb

The timing of capital gains and losses can have a significant impact on your tax bill. So it pays to consider the tax implications before you sell investments — particularly as the end of the year approaches.

Long and short of it

Generally, the longer you hold an appreciated investment, the better. It allows you to defer taxes, which maximizes growth and may reduce the tax if you’re in a lower tax bracket when you sell. Plus, holding an investment for more than a year allows you to take advantage of lower long-term capital gains tax rates. But if you need to sell shares you purchased at different times for different prices, minimize taxes by choosing the shares that will produce the smallest tax or largest loss.

Short-term gains — on assets held for one year or less — are taxed at ordinary-income rates as high as 37%. But if you hold an asset for more than a year, you’ll qualify for a favorable long-term capital gains rate. Depending on your income level, this could be 15% or 20% (plus a 3.8% net investment income tax, if applicable). So, whenever possible, it pays to put off selling an investment until it qualifies for the long-term rate.

When sooner is better

If you plan to sell an investment at a loss, it may be advantageous to do so before you reach the one-year mark. That’s because, to determine your net capital gain or loss in a given year, you begin by offsetting gains and losses of the same type.

Say, for example, that you’ve already recognized $10,000 in short-term capital gain and $10,000 in long-term capital gain this year. You also own a stock, purchased just over 11 months ago, that’s declined in value by $10,000. If you sell the stock now you’ll have a $10,000 short-term loss that offsets your $10,000 short-term gain. This leaves you with a $10,000 long-term gain taxed at a favorable rate. But if you wait a month until you’ve held the stock for more than a year, the long-term loss must be used to offset the long-term gain, leaving you with a $10,000 short-term gain taxed at the higher ordinary rate.

Strategic gains and losses

You need to think strategically when taking capital gains and losses. If you plan to sell investments that will generate both capital gains and losses, doing so in the same year allows you to offset losses against gains and reduce your tax bill. In some cases, however, it may make sense to postpone gain until the following year.

Taxpayers are permitted to deduct up to $3,000 in capital loss from their salary or other ordinary income. Suppose you have a $3,000 net capital loss in 2019. You also own a stock whose sale would yield a $3,000 long-term capital gain. If you wait until 2020 to sell it, the gain will be taxed at favorable long-term rates and you’ll be able to deduct this year’s $3,000 loss from your ordinary income. But if you sell the stock this year, the gain will offset the capital loss and you won’t be able to use it to offset ordinary income.

Are you planning to recognize a large capital gain this year and have a large unrecognized capital loss? Consider selling the loss asset this year to offset the gain. If you wait until next year to sell the asset, you’ll lose your chance to offset this year’s gain. That’s because unused losses may be carried forward to future years, but generally can’t be carried back.

Taxes aren’t everything

Keep in mind that tax considerations alone shouldn’t control your investment decisions. However, understanding the tax consequences of various investment strategies can help boost your portfolio’s returns.


Sidebar: There’s still time to reduce your 2019 tax bill

But you need to act by December 31! Depending on your situation, including whether you itemize deductions, the following actions could reduce your income tax liability:

  • Incur deductible medical expenses (assuming these expenses will exceed 10% of adjusted gross income).
  • Donate to your favorite charities.
  • Ask your employer if any bonus can be paid out in January instead of December.
  • Pay tuition for academic periods that will begin in 2020’s first quarter.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Should You Retire Your Mortgage Before You Retire?

Written by: Amy Valentine

For most people with a mortgage, paying it off — ideally before retirement — is a major financial goal. But the percentage of Americans still making monthly mortgage payments when they receive that last paycheck is rising. According to the Federal Reserve’s Survey of Consumer Finances, 35% of households headed by people ages 65 to 74 still have a mortgage — about 15% more than in 1998. Not surprisingly, the amount of debt they carry has also climbed.

Many personal finance experts recommend retiring your mortgage before you retire. But there are also strong arguments in favor of prioritizing other financial goals.

Eliminating your largest bill

With your mortgage gone, you probably can reduce the amount you may need to pull from your retirement accounts each month to cover living expenses. That’s a benefit when financial markets decline, because you won’t need to sell as many investments that have dropped in value. In addition, there’s the psychological benefit of knowing you’re free of this expense. If you’re like many people, your mortgage is your largest monthly bill.

One of the reasons often given for hanging onto a mortgage is the ability to deduct interest payments from your taxable income. But the 2017 Tax Cuts and Jobs Act curtailed or eliminated some deductions while it nearly doubled the standard deduction. In 2019, the standard deduction is $12,200 for single filers, $24,400 for joint filers and even higher for those who have reached age 65 (an additional $1,650 for single filers and $1,300 each for married filers). Even with a mortgage, you may not have enough total deductions to make itemizing worthwhile.

Some argue you can use the money you would put toward your mortgage to make other investments that could possibly earn a higher return. However, because almost all investments fluctuate in value, paying off your mortgage is likely to offer a more risk-free return.

Putting other priorities first

Although entering retirement mortgage-free can be a sensible move for many people, it’s not right or possible for everyone. If you have credit card or other debt that carries a higher interest rate, you’ll want to whittle down those balances first. And if you haven’t adequately funded your retirement accounts, you should do everything you can to boost those savings. Also, liquidating a large portion of your investments to pay off your mortgage might leave you “house poor” — with much of your wealth tied to your home and not easily accessible in an emergency.

Finally, before paying off your mortgage, check to ensure there’s no prepayment penalty. The Dodd-Frank Act of 2010 limited lenders’ ability to impose penalties on many mortgages, but it still makes sense to confirm this.

Factor in everything

The decision to pay or not to pay off your mortgage should be made after reflecting on all of your personal circumstances — including your retirement plans, tax concerns and total wealth. Discuss these factors with a financial professional who can help you come up with a holistic plan. © 2019

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Reversing Direction: The Benefits of "Upstream" Estate Planning

Written by: Frank Fantozzi

Traditional estate-planning techniques often focus on transferring wealth to the next generation — your children — in a tax-efficient manner. But if your parents are alive, shifting wealth to the older generation (commonly described as “upstream” planning) can also be an effective strategy.

Give appreciated assets

Transferring appreciated, income-producing assets to your parents (with the expectation that you will eventually inherit them) may offer significant benefits for both you and them. This strategy is particularly advantageous if your estate and your parents’ aren’t large enough to trigger gift or estate taxes (exemption amount of $11.4 million in 2019).

Here’s an example: Megan owns 10,000 shares of stock worth $500,000 ($50 per share), which pays qualified dividends of $2.50 per share ($25,000) each year. Her basis in the stock is $100,000. She’s in the highest tax bracket, so she’s taxed at a long-term capital gains rate of 20% on her qualified dividend income (20% of $25,000, or $5,000). And if she were to sell the stock, she’d be liable for $80,000 in capital gains taxes (20% of $400,000). Megan gives the stock to her father, Tom, who is retired, providing him with additional income of $25,000 per year. For purposes of this example, assume that gift and estate taxes aren’t an issue for either Megan or her father.

Tom is in the 12% tax bracket, so he qualifies for a 0% federal tax rate on the dividend income. Ten years later, Tom dies, leaving the stock to Megan. In the intervening years it has grown in value to $900,000, but Megan enjoys a stepped-up basis in the stock and can sell it tax-free. Had she held the stock for 10 years rather than giving it to her father, she would have owed $160,000 in capital gains taxes [20% × ($900,000 - $100,000)].

When you transfer an asset upstream, there’s a risk of loss in that your parents might sell the asset, give it away, leave it to someone else in their wills or lose it to a creditor. One way to mitigate this risk is to transfer the asset to a trust that provides your parents with income for life and then transfers the asset back to you with a stepped-up basis. For this to happen, the trust must be designed very carefully to ensure that the asset is included in your parents’ estate.

Convert to a Roth IRA

If one or both of your parents have sizable savings in a traditional IRA, talk to them about the possibility of converting their IRAs into Roth IRAs. If your parents are in a lower tax bracket, this strategy can produce significant tax savings — and you can give them the money they need to pay taxes on the converted amounts.

To take another example, Emily, age 68 and single, has $300,000 in a traditional IRA. She plans to leave it to her son, Tyler, who’s in the highest tax bracket. Emily is retired and living off her other retirement savings, with no income other than Social Security. So she’s in the 12% tax bracket. When Tyler inherits the IRA, he’ll have to begin taking required minimum distributions (RMDs) from the account, which will be subject to tax at his 37% marginal rate.

Suppose, instead, that Emily converts the traditional IRA into a Roth IRA. Although the conversion is taxable, she does it gradually over several years to ensure that she isn’t pushed into a higher tax bracket. Tyler gives Emily the money she needs to pay the tax on the converted amounts.

This Roth IRA conversion provides several significant tax benefits:

  1. It relieves Emily of the need to take RMDs when she reaches age 70½. (A Roth IRA’s original owner isn’t required to take them.)
  2. It ensures that the IRA balance is taxed at Emily’s lower tax rate rather than at Tyler’s higher one.
  3. When Tyler inherits the Roth IRA, he’ll be able to withdraw the funds tax-free.

Tyler will have to take RMDs, but he can allow the remaining Roth IRA balance to continue growing tax-free indefinitely.

Against the current

It’s natural to look downstream, toward your children and grandchildren, when planning your estate. But don’t overlook the potential benefits of upstream planning. In some cases, transferring wealth to your parents can benefit the entire family. Talk to your estate planning advisor about your options.

Sidebar: Should you buy your parents’ home?

Suppose your parents own their home outright or have a substantial amount of equity in it. They’d like to continue living there, but they could really use their home equity for other things.

Home equity loans or reverse mortgages are possible solutions. But for many families, a better option is to buy your parents’ home. This arrangement allows your parents to live in the home while tapping their equity. And instead of paying interest to a lender, they pay rent to you.  While reporting the rental income, you enjoy tax deductions for mortgage interest, property taxes, depreciation, maintenance and other expenses.

To avoid tax complications, pay fair market value for the home and charge your parents fair market rent. Keep in mind that appreciation in the home’s value may trigger capital gains taxes (subject to an IRS exclusion) for your parents or you now or down the road. © 2019

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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