Letter to Stakeholders, February 2025

Wednesday, February 5, 7:45 am EST. We are in the midst of a news deluge as we work to keep up with our new POTUS, his administration and his “special government employee.” Our firm is based at the nexus of the federal government community. By default, and by intention, we have family, friends, clients (and even prospective clients) whose livelihoods are personally affected by so-called “efficiency.” Federal government waste has been a topic for decades (even longer), but one man’s “waste” is another man’s job, someone’s business or an entire community’s aid. We know how some of you have been affected by the first weeks of this new administration but we realize there are many of your friends and family we do not know about. Under that realization, please note that we are thinking about your concerns for them, your shared anxiety for them and your just wanting for them to be OK.

The Bureau of Fiscal Services

The Bureau of Fiscal Services (BFS) is part of the U.S. Department of the Treasury. It handles more than $3.5 trillion of government payments annually and a daily cash flow of more than $110 billion (according to their website). Treasury Secretary Scott Bessent has assured lawmakers that his agency maintains control over this payment system and not the administration’s “special government employee.” If the United States Congress writes a law to authorize payments, and they are not paid, we may run into questions similar to those we had about the debt ceiling; namely, “Can the United States be trusted to pay its bills?” That’s the kind of question I hope we can avoid. For now, our economy is strong. The numbers that point to US manufacturing are good and job availability is high.  In addition, corporate earnings reports about the recent past and likely future have been strong. I don’t like hearing about the BFS for the first time when it’s because an unelected “special government employee” has taken over and inspired a lawsuit. Every one of us receives payments from that system (federal agency paychecks, tax refunds, social security checks, veterans’ benefits, etc.). How it is managed is a serious matter. But regarding how we allocate your portfolio, nothing has yet changed.

Tariffs

What would more likely affect your portfolio in the short term are tariffs. We can think of tariffs as a tax or a surcharge the importer pays to sell foreign items. At least initially. But if a US importer can’t afford to “eat the cost” or negotiate a lower price to make up for the tariff, then that “tax” will likely be passed onto the consumer.  

Over the past few days we’ve heard a lot about tariffs, particularly on Canadian, Mexican and Chinese goods. The current tariff on Chinese-imported goods remains at 10% but the 25% on Canadian and Mexican goods has been delayed. Everything from cars, car parts, avocados, beer (Mexico), oil, lumber, minerals (Canada) could face increase pricing if these tariffs were to go into effect. Those “taxes” would either be a cost to the US importer (lower profits) or the consumer (price inflation).  Either lower corporate earnings or consumer sentiment could lower stock prices, affecting your portfolio in the short-term. But as you already know from the news, politics and policy today is fluid. We may or may not experience any long-term effect of tariffs. It’s a part-time job just to keep up with changing policy. But doing that is part of our full-time job. At your service.

Onward

During times of change the choices become clear: take timely, appropriate action or just keep whistling past the graveyard. We can’t pretend to know the outcomes of the seismic change that’s coming in particular, to our Washington, DC area community (far less the United States and the world writ large). But we can recommit to doing our best work on behalf of your family. Later this month you will receive an invitation to the new technology we’ve been talking about (we’re leaving “beta”). It will (eventually) help you to compartmentalize communication with all of your advisors, strengthen financial security and make it easier to find important financial documents. Speaking of technology, Doug and I have been discussing how artificial intelligence (AI) could be leveraged to deliver more value to you and yours. More to come on that front.

If you are feeling anxious, for yourself or someone you care about, we want to hear from you. To those of you whose work is related to the federal government, we will be reaching out directly. But don’t wait.

“For faster service,” send an email: Jason@JasonHowell.com

Jason J. Howell, CFP®, CPWA®, CSRIC® 

President

Jason Howell Company is a family wealth management firm that strengthens the finances of families making the transition from first generation success to family wealth. We envision a world where wealthy families give, grow and govern themselves in ways that enrich their local communities. We do this by reducing the fear, isolation and guilt associated with financial success.

Jason J. Howell, CFP®, CPWA®, CSRIC® and Douglas W. Tees, MBA, CFP® CAP®, CBDA  have spent a lot of time in the Washington, DC area, and are aware that many people who are first generation wealth suffer from a kind of "financial imposter syndrome."  Successful entrepreneurs and family businesses are always looking over their shoulder; government contractors worry about the next contract; former Capitol Hill staffers privately wonder if they should "feel bad" for the money they now make. Imposter syndrome is common among people who work for the many corporate headquarters based in this area as well. These feelings get in the way of properly managing family wealth. We empower them to get organized, build a team of advisors and make decisions.

Our typical "first generation wealth" families include dual income parents who work, save and have just the right amount of fun. For long-time, family owned businesses we focus on much family preservation as we do wealth preservation. 

First generation wealth success stories and family business owners realize that they:

• Need to “do something” with the cash in their checking/savings
• Need to eventually diversify their portfolio away from the family business
• Need an investment strategy for “up” and “down” markets
• Need a plan to mitigate market, credit, inflation, and political risks
• Need to start tax planning instead of just tax paying
• Need to be sure they are choosing the right work benefits
• Need to reduce financial miscommunications between family members
• Need to separate business finances from personal finances
• Need to separate family wealth from individual wealth
• Need a plan to provide space for both family and individual philanthropy 
• Need to plan for money while alive and for what happens after death