Our country’s economic climate is constantly changing. Some years are relatively stable and financially sound while others are fraught with upheaval and uncertainty. Many people find these fluctuations challenging and stressful when it comes to financial planning. It’s important to keep in mind that help is out there.
Wealth advisors and certified financial planners are professionals who can help make planning for the new year and into the future both seamless and effective by taking into account their clients’ particular lifestyles, ages and goals.
Laura Marie Raulinaitis, CFP®, a certified financial planner who, along with her husband Darius Raulinaitis, CFA, founded The Lake Avenue Group at Morgan Stanley in Westlake Village, are experienced professionals.
“Your financial advisor is here to be your guide when you're nervous or scared,” she says. “You call your financial advisor when you need advice, when you need handholding and when you need guidance—we are akin to financial doctors. We aim to help keep your finances healthy and keep you from making bad decisions. When it comes to making healthy decisions in your portfolio, it's hard to do without an experienced professional.”
Jennifer Strong, CFP® a wealth advisor with Montecito Bank & Trust Advisors in Westlake Village, is another such expert, and she agrees that having a financial partner is a necessity. She explains that when people try to develop financial plans on their own, they may not know what things are critical to take into account. Here are some common items she often sees missed:
1. Failing to consider life insurance or long-term care insurance when a person is young. Premiums are much more affordable the sooner one implements life insurance.
2. Failing to include emergency funds for unexpected expenses.
3. Not factoring in inflation and taxes in making projections for the future.
4. Making unrealistic investment return assumptions.
When Jennifer first meets with a client, she usually begins by simply getting to know them, which is one of her favorite parts of the job.
“I ask them to tell me about their work, family, lifestyle, current financial situation and habits,” she says. “What makes them happy? How do they see themselves in retirement years—traveling, charity, hobbies? Where will they live? I ask how they feel about their current financial situation and how they envision their future. Have they set specific goals?”
Once Jennifer has this information, she can work with clients to establish an appropriate, customized financial plan to target these goals.
“This plan could include long- and short-term investment recommendations, estate-planning recommendations, tax considerations, life insurance, long-term care insurance and education savings strategies,” she says. “For business owners, this could include cash management, retirement plan implementation for employees, business succession planning and key man insurance.”
MB&T Advisors offers complimentary consultations with wealth advisors like Jennifer, mortgage loan officers, commercial loan officers, personal bankers and business bankers.
“I like the phrase ‘Jack of all trades, master of none,’” she says. “I truly value the relationship I have with my CPA, my realtor, my attorney and my hair stylist. Each of those people in my life have many years of experience and knowledge I could not possibly have and still be an expert in my own field, not to mention managing my family and personal life.
“When was the last time you cut your own hair, and how did that turn out? Each of those people are part of my team of trusted advisors and I am happy to compensate them for the value they add to my life, not to mention the time saved and mistakes avoided!”
As financial professionals, she and Laura have some great suggestions for 2024 that will help not only to maintain assets, but to help grow them.
“Every year we should look at our financial plan or financial situation and work to make it stronger,” says Laura. “Take a good hard look at how much things cost today, including gas and groceries,” she says. “Most things are now more expensive than they were before.”
When it comes to groceries, many people, she says, don’t realize that while they may be paying the same price for something in the supermarket, the size of the packaging has become smaller.
“Little things like that really start adding up and I think being aware of that is important.”
Something else that has changed dramatically and will still most likely be true throughout 2024 is the increased interest rate, which means CDs (Certificates of Deposit) and money markets are offering much better returns now than in the recent past.
However, this increase in interest rates can affect other financial aspects in a negative fashion.
“It's tough because the last several years we've had low inflation and very low interest rates and people aren't realizing that now they can’t buy as much with the same amount of money,” she says. “For example, if they thought they could buy a million dollar house in the past, now they are realizing they can only buy an $800,000 house. Because of these higher rates, the cost of that house to the borrower is the same as a million dollar house was when interest rates were lower.”
Adds Laura, “I think 2024 is the year of rebuilding of the economy, so people are pretty legitimately back to being social and traveling. We're seeing experiences as more important to people in society today versus items, so they should expect to plan for their next experience because those are the things that seem to matter more now. When their kids are going off to college, they're going to be visiting them on parents’ weekend. Plus, the average college student is spending more money on experiences too. They're not so worried about their wardrobes and things like that, so it's changing the way that we spend money and the way that we think about material items.”
For those with debt, she encourages them to pay it off as quickly as possible, especially those with adjustable interest rates.
“Pay down those credit cards with the highest interest rates first,” says Laura. “With these rates going up, a lot of people who may have been paying less for that credit card are now paying a lot more and it's costing them a lot more to keep that debt.
“We are at the highest credit card balances of all time. We just rolled a trillion dollars in credit card debt—that's a really big deal.” The ever-increasing cost of health insurance and college costs are also major influences on determining a workable financial plan.
When it comes to savings, she’s worried that younger people are only going to see the fluctuations in the stock market versus that 5% interest rate and have reluctance to enter the stock market, which she’s seen after recessions in the past.
“I would like to encourage all people to think longer term.”
Laura says it’s also necessary to realize that inflation can eat away your ability to pay for your child's college education, to buy a house or car, manage the cost of the goods in your home and purchase other items.
“That means we need to invest in things that can make up an interest rate higher than inflation because inflation is our biggest risk.”
Adds Jennifer, “We experienced some anomalous conditions in 2023 to include high inflation and a fast and steady increase in interest rates. Recession was a looming concern. As a result, borrowing and spending slowed. The silver lining was that U.S. Treasury short-term rates skyrocketed to levels that became very attractive for those with extra cash on hand.
“Having said that, one can see that from year to year financial conditions change which could affect the trajectory of your financial plan. It is helpful to check in with your financial planner/advisor to ensure you are on track.”
In addition, she says, life events such as marriage, babies, divorce, job/employer change, geographic relocation, inheritance, loss of a loved one, sale of a business and other changes may alter your original financial plan.
“For 2024, it would be helpful to be aware of changing interest rates as this may influence a real estate decision, obtaining a loan and effect returns on short-term and long-term treasuries and bonds.”
Another big change is AI, or artificial intelligence, which is also making its way into the financial sector.
“AI is certainly changing the way that we will operate in this world,” says Laura. “It has been said that a robot can do my job by having you fill out a questionnaire and then giving out financial advice. That part may actually be true.
“However, the part that’s not true is that robots can't exercise compassion and try and talk you through that big down day, or week, month or year and keep you invested. They will only talk to you at a logical level. Of course, Morgan Stanley is definitely investing in AI and trying to help stay ahead of the curve in many ways.”
Laura also encourages everyone to be informed on topics and to get news from more than one source and then check those sources. There is a lot of misinformation out there that may lead to making the wrong financial decisions.
There are many brokers and institutions that people can turn to for financial advice, but before choosing someone to handle one’s assets and financial planning, Laura recommends going to BrokerCheck.finra.org/.
“From an investment perspective, it's more important than ever to know who you're working with and to do your homework and then to take a long-term approach.”
Laura and her team also believe in giving back and paying it forward.
“The Lake Avenue team are members of the community and we get involved,” she says. “We think that it's important to do that because we care.” At the end of each year, to plan for the new year, they decide on which causes they wish to support.
“There are a number of nonprofits that we are involved with as a team,” she says. “We decide where we want to show our support, where we want to get involved and where we want to go. We have packed boxes for the local food bank and built houses for Habitat for Humanity. We are very involved in our yacht club and so we're raising money for the Lahaina Yacht Club that burned down during the Lahaina fires in Hawaii.”
MB&T Advisors is also a key financial supporter in the local nonprofit community through generous grants and sponsorships with over $2.3 million donated in 2022.
When it comes to helping others, Laura often thinks of this quote by Ralph Waldo Emerson: “Happiness is a perfume you cannot pour on others without getting a few drops on yourself.”
For more information, and to get expert advice and assistance for your financial health, go to Advior.MorganStanley.com/The-Lake-Avenue-Group and Montecito.Bank/Personal/Advisors.
Laura Raulinaitis is a Financial Advisor with the Wealth Management division of Morgan Stanley in Westlake Village, CA. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC. www.sipc.org. Laura Raulinaitis may only transact business in states where she is registered or excluded or exempted from registration. Transacting business, follow-up and individualized responses involving either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made to persons in states where Laura Raulinaitis is not registered or excluded or exempt from registration. The strategies and/or investments referenced may not be appropriate for all investors.
Morgan Stanley Smith Barney LLC. Member SIPC.
