Senate Democrats’ $3.5 Trillion Budget Proposal
President Biden and the Democrats have agreed on a $3.5 trillion budget proposal. This spending proposal on key Biden initiatives over the next decade is in addition to the $600 billion infrastructure spending that has already been proposed. Outline of the budget proposal Michael James, Wedbush Managing Director in Los Angeles says, “This is a massive expenditure proposal, and any companies in the Infrastructure supply chain will be beneficiaries (think Steel, Cement, Pipes and Tubing).” The budget focuses on infrastructure, improving access to healthcare, adding jobs and other priorities that the Biden administration supported through his 2020 campaign and into his first months as president. Since the proposal prohibits additional taxes on individuals, farmers and small businesses earning under $400,000, this indicates that the Democrats will look towards raising taxes on corporations and the wealthy to fund the programs in this plan. This could lead wealthy individuals to take measures to mitigate the tax hit to their situations where available. It could also lead corporations to make structural changes, but the Democrats have indicated that they will seek to limit the ability of companies to lighten their tax load by moving operations offshore. Major areas of spending The budget proposal includes several major areas of spending, including: Extending the temporary tax credits in the COVID relief plan signed by the president in March. This includes the Child Tax Credit, the earned income tax credit and the child and dependent care tax credit. Funding for a wide range of climate change programs and initiatives with stated goals of achieving 80% clean energy and a 50% reduction in carbon emissions by 2030. Funding for various childcare and family related programs. Among these are universal Pre-K funding, funding for extended family and medical leave, nutrition programs and affordable housing initiatives. A variety of workforce and business investments aimed at small businesses. Additional third measure The additional third measure of the budget proposal is the president’s infrastructure program. Infrastructure is broadly defined to include expanded broadband access in addition to the more traditional improvements for roads and bridges around the country. This work includes upgrading ports and airports around the country, delivering clean drinking water to as many Americans as possible and building an upgraded electric power grid. This portion of the spending proposal is even more widespread and includes upgrades to schools, childcare facilities, veteran’s hospitals and various federal buildings. The plan also includes solidifying the infrastructure of our care system including creating new jobs and improving wages and benefits for essential home care workers. All of this is part of the president’s American Jobs Plan and is a priority for the White House. Potential impact of the budget James says, “You would have to think there will be significant borrowing needed to finance all of this, and that supply (along with the likely upward inflationary pressures) should lead to further higher rates and a benefit to the Financials.” This budget proposal has components that will benefit a number of industries and companies in those industries. Certainly, those in traditional infrastructure areas such as construction could benefit. Those in the digital infrastructure space stand to benefit as well. Companies in a leadership position in the digital arena could profit handsomely from this part of the package. Companies with a leadership role in the child and dependent care space could benefit from the added spending there. In evaluating companies that will benefit from this package if fully passed, it’s important to look at various industries that could benefit as well as specific companies in those industries. Not every firm in a related area will benefit, some may miss out on benefiting from the added spending. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
Measuring the Benefits of a Financial Advisor
For most clients, the value of their relationship with their financial advisor is crucial to their financial success. Some of this can be quantified, other benefits cannot. Benefits of a portfolio tailored to a client’s situation Regarding the benefits of a portfolio tailored to the needs of clients, Daniel Stieff, Financial Advisor with Pacific Financial West in Westlake Village, California says, “My clients are busy with their own lives and rely on me to look after their portfolios for them. I regularly communicate ideas and opportunities with my clients that match their goals and objectives. Oftentimes, this includes making recommendations of individual stocks that Wedbush’s Research department favors. Including individual equities can enhance returns above portfolios that are overly diversified with only mutual funds and ETFs.” A portfolio tailored to the specific needs of a client based on their situation can help them manage downside risk, while offering the potential returns they need to achieve their financial goals. Types of services clients can expect when working with an advisor When working with the right financial advisor, clients get the benefit of working with someone who immerses themselves in not only investments, but all aspects of financial planning. A good advisor uses investments as a tool to help their clients achieve their financial goals. Moreover, they take the time to understand their client’s goals, their values and their risk tolerance in formulating the right investment strategy for them. Scott Smallman, Wedbush Managing Director, Investments in Seattle, Washington says, “The biggest value we can provide to clients is aiding in their understanding of their financial situation and how their investments can aid them in meeting their goals. Frequent communication is a key element of making this happen. We need to make sure that we remember that while we live finance every day, that our clients don’t and giving them reminders of what is happening in their portfolios can help them become better investors and better clients for us.” Measuring the benefits of working with a financial advisor Often the benefits of working with a financial advisor are not just based on numbers. According to Meaghan McKenzie, Wedbush Managing Director, Investments in Seattle, Washington, “This is how my clients measure the benefits we provide: Reaching out and contacting clients proactively, not the client calling, leaving a voicemail and waiting for the advisor to return at a later date. We take the time to learn what is most important to the client about their family, not just their investments/account. It’s like the old saying “People don’t care how much you know until they know how much you care.” Several studies have attempted to quantify the value added by using a financial advisor. A study by Russell Investments put that value at 5.2% or more annually. A study by Vanguard Investments put the value added at about 3%. The Russell study incorporated several factors into their calculation including the asset allocation and tax advice provided by advisors. They help investors overcome tendencies towards behavior that can lead to poor investment and financial decisions. Their overall expertise helps clients mesh investing with their overall financial situation. Types of services financial advisors provide Financial advisors generally provide services over and above just investment management. Advisors generally provide services that can include: Overall financial planning Retirement planning Tax planning Estate planning Moreover, many financial advisors focus on providing advice to certain types of clients. These niches might include groups such as those 50 and over in or nearing retirement, doctors and medical professionals, employees of a large company in their area, women who are divorced or widowed and many other niches. When looking for a financial advisor be sure that they have experience working with clients with your particular needs and in situations similar to yours. How do advisors enhance client returns? Advisors can enhance client returns in a number of ways. This can include investment selection as well as an asset allocation strategy that includes a regular rebalancing regimen. Moreover, advisors can enhance client returns by helping clients take the emotional component out of investing. Advisors have the expertise and experience to help their clients look past the moment and stay invested over time in a fashion that will help them reach their financial goals. When evaluating a financial advisor, be sure to ask a lot of questions. Understand their investing approach. Do they offer a full array of planning services or just investment management? How are they compensated? How can they best help you? Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
Increase in Life Insurance Purchases during the Pandemic
While we read about increases in purchases of toilet paper and hand sanitizer during the pandemic, another growth area we’ve seen is the sale of new life insurance policies. According to insurance industry researcher Limra, sales of life insurance policies were up about 11% in the first quarter of 2021 compared with the same period in 2020. Much of this has been attributed to the number of deaths we’ve seen from COVID. Data from various sources indicate that only 50-55% of Americans have a life insurance policy in force on themselves currently. This leaves a lot of upside, and the pandemic clearly ignited an interest in a number of Americans who were either uninsured or underinsured. Millennials purchasing life insurance One trend that has emerged is the uptick in millennials purchasing life insurance. According to MIB Group’s Life Index, applications for new life insurance policies increased 8% year-over-year in 2020 among those under age 44. According to Limra, 45% of millennials have indicated that they are more likely to purchase life insurance due to COVID. The growth of the millennial segment has contributed to the growth of digitization of the life insurance application process among many large insurers and has sparked a growth in online life insurers as well. Millennials are used to doing business this way and this will likely be the wave of the future in the life insurance business. Post-pandemic impact While the current trend in life insurance may be an outgrowth of the pandemic, many experts see the trend towards increasing interest in life insurance continuing after the impact of COVID has faded. This is especially true among younger buyers. The advent of improved technology will aid this process. For example, with new technology the days of having a medical examiner come to your home or office to do an in person medical exam can be eliminated with the new technology available to companies. Insurance and annuity options via Wedbush Wedbush Securities provides the individual investor a wide array of services and investment vehicles to deal with today’s complex financial environment. From the parent planning for education expenses to the mature investor living on a fixed income, our clients receive the individualized attention of experienced investment executives. Our Financial Advisors are dedicated to providing quality advice by evaluating a range of investment products which are best suited to your individual needs. We offer the following types of insurance and annuity options: Term Life Insurance Term life insurance provides death protection for a stated period or term. Variable Universal Variable universal life insurance can build cash value more than the death benefit. Whole Life Insurance Whole life insurance offers level premiums and an accumulation of cash value. Long-Term Care Insurance Long-term care insurance covers care typically not covered by health insurance, Medicare or Medicaid. Universal Life Insurance Universal life insurance combines the low-cost protection of term with a cash value element like whole life. Disability Income Insurance Disability income insurance ensures the beneficiary’s earned income against the risk that disability will make working (and therefore earning) impossible. Annuity Plans Variable Annuities A variable annuity offers clients a wide range of investment options. Modern variable annuity products provide the opportunity to protect a future income stream while providing a specific death benefit. Fixed Annuities A fixed annuity is designed to pay a set interest rate. Once annuitized, clients receive fixed payments for the term of the contract. Index Annuities An index annuity earns interest or provides benefits that are linked to an external equity index such as the S&P 500, Dow Jones Industrial Average or NASDAQ. Immediate Annuities An immediate annuity is designed to pay owners a determined amount of money on a monthly, quarterly, semi-annual or annual basis. The payout for an immediate annuity can be fixed or variable. These and other options in the life, disability and long-term care arena can offer significant planning options at all ages. Annuities can provide a solid option for retirement income. Contact your Wedbush Securities advisor for more information on our insurance products and how insurance planning fits into your overall financial planning efforts. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.