Country Indices Flash Report – September 2023
Oil prices surged to $95 per barrel due to ongoing supply cuts from OPEC+, dwindling strategic reserves, and surprising Chinese demand.
Bailard Named to Barron's Top 100 RIA Firms
San Francisco — September 21, 2023 — Bailard, a values-driven firm, is proud to announce that it has been named to Barron’s list of the Top 100 RIA Firms for 2023. This prestigious recognition showcases independent RIA firms nationally and underscores Bailard’s commitment to its clients through comprehensive financial and wealth planning, investing, and family office services, all delivered with compassion.
Barron’s, a respected financial news and investment publication, conducts an annual assessment of Registered Investment Advisor (RIA) firms across the United States. The rankings are based on a broad evaluation of criteria, including assets under management, client retention, growth, technology infrastructure, and the firms’ compliance record.
“It is an honor to be recognized by Barron’s as one of the Top 100 RIA Firms in the nation, and this achievement is only possible with the remarkable dedication of our wealth management team,” said Michael Faust, CFA, President of Wealth Management at Bailard. “We are particularly focused on simplifying the complexities of our clients’ financial landscapes. Our team strives to be the trusted ‘one call’ our clients make to get things done.”
Bailard has a long-standing history of excellence in the financial services industry, with a focus on delivering comprehensive and customized financial planning and investment strategies = to high-net-worth individuals, families, and institutions. The firm’s commitment to its core values of accountability, compassion, courage, excellence, fairness, and independence has made Bailard a trusted partner in helping clients achieve long-term success and stability.
For more information about Bailard and its comprehensive wealth management services, please visit https://bailard.com/wealth-management/.
About Bailard, Inc.
Founded in 1969, Bailard is an independent wealth and asset management firm serving individuals, families, and institutions alike. Bailard has built a long‐term asset management track record across domestic and international equities, fixed income, and private real estate, as well as robust, in-house sustainable, responsible and impact investing expertise. Through it all, Bailard works with clients to align their financial goals with their values. With $5.5 billion in assets under management as of 6/30/2023, Bailard is a majority employee-owned and women-led firm, and a Principles of Responsible Investing (PRI) signatory. A values-driven firm based in the San Francisco Bay Area, Bailard is deeply committed to its core values of accountability, compassion, courage, excellence, fairness, and independence.
About Barron’s Top 100 RIA Firms methodology:
The 2023 Top 100 RIA Firms was released by Barron’s in September 2023. This 8th annual ranking of independent advisory companies is based on assets managed by the firms, technology spending, staff diversity, succession planning and other metrics. Advisors who wish to be ranked fill out a 102-question survey; Barron’s then verifies that data and applies its rankings formula to generate a ranking. The formula features three major categories of calculations—Assets, Revenue, Quality of practice—with multiple sub-calculations in each. Bailard ranked 99 out of 100 on the 2023 list. This award does not evaluate the quality of services provided to clients and is not indicative of the practice’s future performance. There was no fee to enter.
529 Plan Rollovers to Roth IRA Begin in 2024: What You Should Know and Consider
By Alex Aceves Madriz and Lena McQuillen, CFP®
How the SECURE Act 2.0 Impacts 529 Plans
529 plans are tax-advantaged accounts used to pay for qualified education costs. Because funding typically occurs well in advance of the beneficiary utilizing the plan, historically, there has been a fear of overfunding. This fear leads some people to avoid funding 529 plans altogether.
However, with the passage of SECURE Act 2.0, there is now an opportunity for penalty- and tax-free rollovers to Roth IRA accounts beginning in 2024. Here are the important and strict guidelines that must be adhered to:
- The Roth IRA must be in the name of the 529 beneficiary – not the 529 owner (if different);
- The 529 plan must have been open for more than 15 years;
- Rollover amounts cannot include any 529 contributions (or earnings on those contributions) made in the preceding five-year period;
- The lifetime maximum amount that can be rolled from a 529 account into a Roth IRA is $35,000. There is currently no indexing of this number for inflation. This limit appears to be per beneficiary, meaning a parent with multiple children could potentially roll over $35,000 per child;
- Rollovers are still subject to the annual Roth IRA contribution limit ($6,500 in 2023). The total allowable rollover each year would be reduced by any contributions made by the beneficiary into their Roth or Traditional IRA; and
- The 529 beneficiary must also have earned income at least equal to the amount being rolled over in the year of the rollover.
What is the Downside to a 529-to-Roth Conversion?
Given the annual Roth IRA contribution limit, it will take several years to take advantage of the full $35,000 529-to-Roth IRA rollover.
It is also unclear if a new 15-year waiting period is required when changing a 529 beneficiary. Further clarification from Congress or the IRS is necessary to determine if the original inception date an account was opened can be carried over to a new 529 beneficiary.
What is the Upside to a 529-to-Roth Conversion?
This opportunity is unique in that Roth IRA income phase-out rules do not apply. Although the 529 beneficiary could have income that exceeds the annual Roth IRA contribution limit, they will still qualify for the 529-to-Roth IRA rollover. This could be considered a “backdoor” Roth IRA opportunity for high-income earners. Additionally, there is also no time limit or deadline to complete the 529-to-Roth IRA rollover.
Questions & Next Steps
For clients, please contact your Investment Counselor. For those interested in learning more about Bailard, please contact Louise Model, Vice President, at (650) 571-5800 or lmodel@bailard.com.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. This publication has been distributed for informational purposes only and is not a recommendation of, or an offer to sell or solicitation of an offer to buy any particular security, strategy, or investment product. Neither Bailard nor any employee of Bailard can give tax or legal advice. The contents of this piece should not be construed as, and should not be relied upon for, tax or legal advice.
Bailard's Tess Gruenstein Honored with Prestigious Industry Award
San Francisco — September 14, 2023 —Bailard, a values-driven asset and wealth management firm, is delighted to announce that Tess Gruenstein (Senior Vice President, Acquisitions & Portfolio Management, Real Estate) has been honored as one of Pensions & Investments’ Influential Women in Institutional Investing.
The inaugural 2023 class of P&I’s Influential Women in Institutional Investing recognized 65 industry leaders. P&I assembled an advisory board of leading investors and key industry executives to determine focus areas—including leadership and contributions to the advancement of women—and evaluate candidates on their ability to demonstrate measurable effects and results within one’s own workplace and within the industry.
Having joined Bailard in 2015, Tess is a highly skilled and effective leader who has made significant contributions to the success of Bailard’s real estate efforts, and the company at large. As a testament to Tess’s exceptional achievements, Preston Sargent, Executive Vice President of Bailard Real Estate noted, “Tess has a very special blend of skills and qualities that make her an extraordinary leader, manager, partner, co-worker, and friend. She has an unyielding commitment to fairness, quality, and doing the right thing.”
With her early experiences and support from professionals in the institutional real estate industry, Tess has dedicated herself to providing similar opportunities for others. As a woman in commercial real estate, Tess works to serve as a spokesperson, role model, and advocate, consistently promoting her team’s work. Tess seeks to drive positive change and create a more equitable and inclusive workplace culture for women in real estate.
“It is a mixture of very good luck, great colleagues and mentors, and hard work that gave me the kind of exposure and career growth to get here,” said Gruenstein. “The recognition that diversity of perspective, gender, and economic and educational backgrounds leads to more dynamic, forward-thinking workplaces is still new and so essential. I benefited from this perspective at multiple points in my career, and I cannot stress enough how it made all the difference for me. I will proudly pay this forward as we support the next wave of women in the business.”
Bailard extends its heartfelt congratulations to Tess Gruenstein for this well-deserved recognition. Her contributions have driven much success, and we look forward to her continued leadership.
About Bailard, Inc.
Founded in 1969, Bailard is an independent asset and wealth management firm serving individuals, families, and institutions alike. Bailard has built a long‐term asset management track record across domestic and international equities, fixed income, and private real estate, as well as robust, in-house sustainable, responsible and impact investing expertise. Through it all, Bailard works with clients to align their financial goals with their values. With $5.5 billion in assets under management as of 6/30/2023, Bailard is a majority employee-owned and women-led firm, and a Principles of Responsible Investing (PRI) signatory. A values-driven firm based in the San Francisco Bay Area, Bailard is deeply committed to its core values of accountability, compassion, courage, excellence, fairness, and independence.
About P&I’s Influential Women in Institutional Investing
Pensions & Investments, owned by Crain Communications Inc., is the 50-year-old global news source of money management. It released this inaugural list of Influential Women in Institutional Investing in September 2023, with 65 honorees. To be eligible, women must be currently employed in institutional investing, have a minimum of 7 years of experience in the industry and demonstrate a measurable effect and results within one’s own workplace and within the industry. Women across the institutional investment industry are eligible (allocators, asset managers, consultants, service providers, etc.) and should ideally demonstrate a commitment to attract, retain, support and promote women into the industry. This award does not evaluate the quality of services provided to clients and is not indicative of Bailard’s future performance. There was no cost for Bailard to enter.
Maximizing Philanthropy and Income: Charitable Gift Annuities in a High Interest Rate Environment
By Sam Crawford and Dave Jones, JD, LLM, CFP®
With rising interest rates, Charitable Gift Annuities are emerging as a beneficial option for charitable planning. One can think of a Charitable Gift Annuity (CGA) as a loan between a donor and a non-profit organization. In this arrangement, the donor provides the principal (their gift), and in return the non-profit offers interest payments to the donor for life. However, the unique twist is that the non-profit gets to retain the principal upon the donor’s passing. In the current higher interest rate environment, CGAs present a distinct opportunity to donate to a non-profit while still maintaining income.
The role of interest rates in shaping the attractiveness of Charitable Gift Annuities is twofold: they impact both the annuity’s payout rate and the deduction a donor can claim. First, the payout rate is largely based on the American Council on Gift Annuities (ACGA) suggested maximum rates. While there are a variety of factors that influence the rates, the current federal funds rate is an important input in determining the suggested maximum rate. Other factors that influence the payout rate include the donor’s age and whether a donor wants to defer their first income payment. ACGA rates are designed to assume 50% of the grantee’s donation transfers to the charity upon the donor’s passing. Second, donors receive a one-time tax deduction based on the present value of the annuity or the present value of the money the IRS deems will be given to the charity. While the specifics of the deduction are intricate, one thing is clear: the deduction is highly sensitive to interest rates. A donor will find their deduction significantly diminished in a low interest rate environment compared to the deduction they would receive at a high rate.
Another attractive feature of CGAs is that donors receive a portion of the annual income payment tax-free. Though we recommend individuals work with their tax advisors when considering a CGA, many non-profit organization’s websites feature calculators which can be used to estimate the tax-free component of their CGA. As an example, let’s suppose a 75-year-old individual, in a high-tax bracket, is looking to donate $500,000 cash via a CGA to Harvard Medical School in August 2023. Using Harvard’s CGA calculator, the donor will receive a deduction of approximately $216,500. Additionally, they will receive $33,500 in annual income of which approximately $22,850 will be tax-free annually for their lifetime.
As if rising interest rates were not incentive enough, the SECURE Act 2.0, signed by President Biden in 2022, allows a one-time transfer of $50,000 of a Qualified Charitable Distribution to what the IRS defines as a new split interest entity. As background, a Qualified Charitable Distribution is a tool that individuals aged 70 ½ or older can use to give up to $100,000 annually directly to charity from their IRA. The individual does not pay income tax on the distribution, but also cannot take a charitable deduction for the gift. Split interest entities are structures that benefit both the donor and the non-profit. In this application, the vehicles that make the most sense to consider pairing with a Qualified Charitable Distribution are either a Charitable Remainder Trust or a CGA. Because CGAs do not require legal counsel to draft a trust document or ongoing accounting like Charitable Remainder Trusts, CGAs are the simper choice.
One clear risk of a CGA is the reliance on the non-profit to maintain payments for the rest of the donor(s) life. Although non-profits may allocate a portion of the donated funds for immediate use, they are required to maintain adequate reserves, as dictated by state laws, to meet the obligations of the gift annuities and comply with the diverse regulatory requirements in each state where they offer CGAs. Additionally, some states, including California, have investment restrictions that aim to protect the corpus of a non-profit’s CGA pool from suffering catastrophic market losses. In today’s landscape of rising interest rates, Charitable Gift Annuities (CGAs) are emerging as an increasingly attractive option for individuals seeking to combine charitable giving with financial security. By viewing CGAs as a unique partnership between donors and non-profit organizations, we can appreciate their potential to provide income for life while leaving a lasting philanthropic legacy.
Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. This publication has been distributed for informational purposes only and is not a recommendation of, or an offer to sell or solicitation of an offer to buy any particular security, strategy, or investment product. Neither Bailard nor any employee of Bailard can give tax or legal advice. The contents of this piece should not be construed as, and should not be relied upon for, tax or legal advice.