Letter to Stakeholders, August 2023

Tuesday, August 8th, 9:33 am EST.  How connected do you feel to the global economy? That’s a question I ask each of you during our family governance process. The most common response is that you feel somewhat insulated from shocks to the financial system. That is mostly true. You have positioned yourself to survive an economic downturn, U.S. debt downgrades and even a custodial transition (TD to Schwab). We have been and still are here to help.

Custodial Transition

Charles Schwab has likely sent you a letter for each of your accounts with us that are currently “custodied’ with TD Ameritrade Institutional. Since you are likely someone with more than one account, seeing all that mail can be intimidating. All they are asking you to do at this point is create a login: http://SchwabAlliance.com. This will combine all of your accounts with us under one login. All of your investments will transfer to the Schwab platform as they are; as will your automatic transfers (in and out).  Questions? Call me: 571-595-3988. If I can’t answer immediately, I’ll call you back.  

U.S. Debt Downgrade

After careful thought, Fitch Ratings downgraded United States Treasury debt from AAA to AA+. It’s our country’s second downgrade in its 247 year history. Unfortunately, this is an outcome I campaigned against in 2012. I worried about the United States getting “bad credit” and I still do. Because we raised the debt ceiling, bankers like JP Morgan's CEO Jamie Dimon and U.S. Treasury Secretary Janet Yellen are characterizing this downgrade as “arbitrary” and “ridiculous.” Dimon even goes as far to say  that “it does not matter,” because we are “the most prosperous nation on the planet.” But it does matter. This is not the catastrophe of failing to raise the debt ceiling I wrote about in May of this year and October of 2021. But it is the path. The conversation about this topic went from our U.S. debt having never been downgraded (2010 and prior) to only once (2011) to being downgraded now twice (2023). What can you do? Let your friends, neighbors and members of your family know that politicians playing with the debt ceiling limits is not “just politics as usual.” It is making history. You and me and your neighbors have the power to help write that history.

Economic Downturn: Home or Away?

Much was ballyhooed of what 2023 would look like financially in this country. But none other than Bank of America researchers have finally capitulated to the strength of well, America. Rather than recession, our economy continues to grow with low unemployment and dwindling inflation. Some of this can (and will) change over time but it’s been the year of resilience for the U.S. economy; especially compared to China.

CNN’s Fareed Zakaria’s latest Washington Post column goes into some detail about how challenged the economic recovery has been in China (“chronic slowdown”). Most Americans don’t feel like the US economy is doing well but the Pew Research Center shows that negative sentiment is common in most developed countries. The non-partisan Center for Budget and Policy Priorities outlines just how much deeper but how much shorter the pandemic recession was compared to the Great Recession of 2008. The U.S. Department of the Treasury has outlined how well we are faring compared to other advanced economies (like the UK, Germany, France and Canada). So are we experiencing an economic downturn here at home or are we merely a part of the global economy (away)? Regardless, you were right: [your plan] is somewhat insulated.

Jason Mraz

Since the CDC is no longer tracking COVID-19 data, I can only share anecdotal evidence of a resurgence: Doug’s dear wife (and co-workers) testing positive after a work trip. I sheepishly benefited from their suffering with receipt of their Jason Mraz tickets for last Sunday’s Wolf Trap show. Mraz’s music is sentimental, romantic and fun. His “I Won’t Give Up” was there for me and my dad after my sister died. His “I’m Yours” walked my wife down the isle on our wedding day. “Lucky” was our first dance. Doug and Deb have songs of his as ringtones for each other. We are all big fans (including one of our newest clients who I bumped into at the show). These are good times for Jason Mraz.

And his masterful performance made me want to be that good at what we do for you!

Jason J. Howell, CFP®, CPWA®, CSRIC®

President

Jason Howell Company is an independent, family wealth management firm that offers accredited investors the confidence to overcome financial imposter syndrome.

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 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 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. They trend a little older - Baby Boomers (born 1946 - 1964) and Gen-Xers (born 1965 - 1980) - but we're starting to see more Millennials (born 1981 to 1996) who don't want to wait until it's too late. They earn impressive incomes and have accumulated a good bit of savings. As bona fide experts themselves, they expect fiduciary expertise from people they hire. They are just not sure about the "big box" brokerage firms that advertise one thing and seem to do another. 

First generation wealth accumulators realize that they:

• Need to “do something” with the cash in their checking/savings
• 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 partners
• Need to separate business finances from personal finances
• Need to plan for money while alive and for what happens after death