Summer 2024 Wealth Management Newsletter

Nicole Smith, Wealth Management Administrator, attained a Bachelor of Science in Business Administration & Accounting from Western Governors University.

“Since high school, I have always liked accounting. Through completing my degree, I have gained a deeper understanding of accounting and business administration concepts that I can utilize in my role to equip our team to deliver continuous improvement of internal systems to benefit our clients.”

Paige VanDusseldorp, Associate Wealth Advisor, attained her Master’s in Family & Consumer Sciences with a specialization in Family Financial Planning from Iowa State University.

“This coursework allowed me a deeper understanding of financial planning such as importance, the complexities, and the crucial role we play in our clients’ lives.”

Congratulations to Paige and Nicole!

Inflation & Fixed Income Markets

Article by Brad Dummett, CFA®
VP, Senior Investment Officer

The Federal Reserve continues to stress patience as inflation slowly trends lower. The latest headline and core (excluding food and energy) consumer price inflation (CPI) readings showed an increase of 0.3%, which was broadly in line with expectations. On an annualized basis, headline inflation increased 3.4% and core increased 3.6%. While this is significant progress after the highs of the pandemic, we are still above the 2% target level set by the Federal Reserve. Given the continued inflation pressures, the Federal Reserve once again held policy rates steady at 5.50% at its May meeting. The latest projections from the Federal Reserve are for three interest rate cuts as we progress through 2024, compared to the current two cuts priced by the market. This is significantly lower than the seven cuts originally projected by the market at the start of 2024. These projections, while a good measure of current views of the market, are historically inaccurate as highlighted by the below chart. The dotted lines represent projections of future rate moves, while the solid line represents the actual path of rates.

Fixed income markets have been challenged as the reduction in rate cuts drove interest rates higher. Year to date, the Barclays Aggregate Bond Index is down 1.97% and has returned an unimpressive 0.07% annually for the last five years. On the other hand, equity markets continue to race higher with the S&P 500 up over 10%, setting a new all time high in the process driven by continued earnings strength as the result of a surprisingly resilient consumer.

Although recent returns for fixed income have been challenging, we continue to believe this is an attractive environment for the asset class going forward. With rates elevated, interest payments are well above recent levels and the potential for capital appreciation should drive returns higher as rate cuts unfold over the next 6-12 months. Equities continue to outperform, but may have overrun fair values. While we do not expect a crash, slower growth is anticipated.

Planning for Summer Fun and Expenses

Article by Mike Castle, CFP®
VP, Senior Wealth Advisor

As we get to summer (my favorite season of the year!), our Wealth Advisory team has worked to finish up our winter/ spring cycle of meetings with clients, and we look forward to spending more time outside in the nice weather. Hopefully this will include finding opportunities to meet and socialize with our clients in more informal settings. If you see any of our team out and about this summer, please come up and say hi. We’d love to hear about what you are up to.

Summer also means vacations and traveling. While these are certainly fun activities, expenses can add up quickly if you are not careful. Here are a few easy tips to make sure your summer fun doesn’t get in the way of your financial success:

1. Set Clear Financial Goals: While this may seem easy and obvious, having a basic budget in place for what your family intends to spend on summer activities can help prioritize those things that should be at the top of your “to-do” list.
2. Local Activities: Most communities have a variety of summer activities that are available for free or at a very modest cost. Many people are pleasantly surprised at the things that can be experienced without traveling very far, so get out and explore your local area.
3. Off-Season Destinations: Popular winter destinations can be much more affordable and available when visited in the off season. You might have to pack extra sunscreen, but the good deals and smaller crowds can be worth it.
4. We’d love to hear about your fun summer plans or travel tips! Snap a picture or send a note to us at wealth@myfcb.bank. We know our clients are the most fun and look forward to hearing about all the fun you are having this summer. Don’t forget the sunscreen!

Financial Future of Your Family

Article by Chelsea Frederick, CTFA
AVP, Trust Officer

People worry about protecting those they love. One of the best things we get to do as Trust Officers is help families let go of that worry. By working with them and their trusted advisors, we can put in place a plan we can carry out long after they are gone. While we know not everyone needs a Trust, we know there are more families that would benefit from some type of Trust than those that have one in place. Each need for a Trust is unique. Our team has experience planning, establishing, and administering Trusts of all types.

So, what can a Trust accomplish? Some of the main ways we see Trusts benefiting families include:

• Avoiding probate administration, attorney fees and Court costs.
• Directing wealth distribution to heirs seamlessly.
• Protecting beneficiaries from Creditors.
• Ensuring oversight of transition of wealth to beneficiaries that are not equipped to handle significant wealth without guidance and oversight.
• Providing for needs in case of illness or incapacity without the delay and cost of a Conservatorship or limitations of utilizing a Power of Attorney.
• Reducing potential estate tax liability.
• Transitioning a family business or farmland to the next generation.
• Providing tax-efficient gifts to charity.

When you couple a Trust with a professional Trustee, like FCB, you can let go of the worry you may feel about the financial future of your family. Our team is always available to discuss your estate planning questions.

Form 5498 for IRA

Article by Amanda Berding, ATOP
AVP, Trust Operations Officer

Each May, accountholders with an IRA receive a form 5498. Below is an overview of what a 5498 is and where clients can find a copy of the form.

What does 5498 do?

• Reports prior year IRA contribution amounts. • Provides Fair Market Value (“FMV”) of account prior year end (2023).
• Provides FMV of certain specified assets (when applicable).
• Provides Required Minimum Distribution (“RMD”) date and amount (if box 11 is checked an RMD is due in current year).

What does a client need to do with form(s)?

• Nothing. The 5498 form provided is informational for their records. We submit the information to the IRS on their behalf. Clients should note if an RMD is due in 2024, the information listed will not reflect distributions already taken in 2024. Make sure to discuss with us if you have not scheduled your 2024 RMD.

Where can 5498 Forms be found?

• If you lose the mailed form, don’t hesitate to contact us for a copy.
• If you are signed up for electronic statements, your tax documents can also be found in the Accunet Portal under the files tab (same as statements).

If you have any questions, please do not hesitate to reach out to us. Thank you.