Letter to Stakeholders, January 2025

Thursday, January 09, 4:45 pm EST. On this “National Day of Mourning” we are reminded of the short history of the United States with the funeral of America’s 39^th President Jimmy Carter. We are a country, just under 250 years old, continuing to grapple with the experiment of our democratic republic.  

I don’t take for granted the freedoms, the weaknesses, the challenges or the opportunities of our United States of America. President Carter’s initially controversial “Malaise speech” referenced a “Crisis of Confidence” that was later transformed to inspiration in the 2004 movie version of the 1980 Miracle On Ice. As your advisers, we choose to be inspired by opportunity and to be prepared for the economic and market challenges that may lie ahead with new leadership. Around the world, in previously dependable democracies like Canada, South Korea and even Romania (since 1991) democracy is being challenged as it was last year in the United Kingdom, France and Germany. These events may lead to macroeconomic gyrations that affect both the stock and bond markets in 2025. How? That is yet to be seen but we will be watching on your behalf and taking preliminary actions in preparation. 

Preliminary Actions

Last month’s letter referenced the diversification in your portfolios meant to serve as a “buffer” to those previously mentioned “market gyrations.” Good portfolio maintenance is another tool we use. Doug and I will evaluate all of the funds you are invested in as of today to ensure they are not only the right investments but also allocated at the right percentages to achieve your goals (regardless of market volatility). We are also working on new reporting to make it easier for you to translate performance of each investment. We welcome your questions and feedback. Portfolio maintenance, investment rebalancing (to the right percentages) and transparent reporting are all part of the “preliminary actions” we are taking to better serve you.

Artificial Intelligence   

It would be inappropriate for us to write about the future without mentioning the two words that are becoming ubiquitous: “artificial intelligence (AI).” AI is as important for national security – as depicted by this dedicated US State Department page – as it is for consumers (re: Panasonic Go’s recent announcement). In 2023 and 2024 the stock market benefited from the “AI frenzy” as did your portfolios. Is there more to come? 

In all likelihood AI will produce productivity gains and additional stock market gains for many companies big and small. But what about your daily lives? How will AI affect the way you live, work and play? MIT’s Technology Review has some predictions (and translations) for the future of AI in 2025. Key among them are the rise of “agents” formerly referred to as “chatbots.” Different than so-called “Large Language Models (LLMs),” that feel like advanced search engines, agents are designed to do work for you. Much like ChatGPT or Perplexity or Gemini, you will query a “chat” space but the agents are designed to perform actions (like communicating with another agent to order movie tickets or restock the fridge). Fully programmable AI agent avatars are available already and will only get harder to distinguish from real human beings later this year. Whether we give Doug the AI avatar treatment in future months/years is an (important) open question. How AI affects our world – including the investing world – even in the short and long-term, is something we are following closely.

The Future of Our Client Community

There are still some of you I haven’t met in person! The pandemic years gave rise to the technology that makes our business meetings efficient – no parking, no water glass condensation on paper reports – but it is still a goal of mine to meet at least once per year with you in person. Yes you. Doug and I will continue evaluating opportunities to serve you better in the coming year. We are currently in “all staff retreat” mode discussing the future of our client community including how many more clients we would like to serve and in what capacity. This year we will fully launch new software investments for your use and aim to reduce the friction between you and your strategic partners. And if you have ideas of how you would like to interact and be more involved together as a client community, please share them.

Later this year we celebrate our 10^th anniversary as a firm. It’s probably a good reason to get together to celebrate. Don’t you agree? 

More to come!

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