Happy Summer, Clients and Friends:

We hope the warmer weather finds you well and ready to spend some quality time with family and friends in the weeks ahead. Like many people, you may have plans to travel this summer by road or air—or plan to get out on the open water with your boat or jet ski. Whether you’re traveling halfway around the world or staying close to home, it’s impossible not to notice the surging prices at the gas pump and soaring prices for many of the items on your 4th of July or family reunion menu and grocery list.

Investors remain concerned about inflation’s potential impact to the economy, the aggressiveness of the path of upcoming Federal Reserve rate hikes, slowing corporate profit growth, and pockets of still elevated stock valuations. Recently, disappointing earnings reports from several major retailers reaffirmed market participant concerns. We talk about these and other aspects of the markets and economy as we approach the mid-point of the year in our Market & Economic Update – as well as where we expect to see value in the second half of the year. You can also click on the link provided here to access a recording of our first ever Market Noise Live webinar, which took place on June 17^th. PFS wealth advisors share their thoughts on what we believe may be in store for the markets and economy in the weeks and months ahead.

Be sure to browse through all of the links provided below for the latest news and information about your PFS team, upcoming events and tools you can download from our website.

What’s In It for You?

At-a-glance guide to your 2nd Quarter 2022 Frank Talk newsletter:

• News & Events
  • Awards & Recognition
  • New Team Members
  • Upcoming Events
    • 14^th Annual Cleveland Economic Summit
    • 2022 Smart Business Family Business Conference
  • Recent Events
    • Market Noise Live Webinar
    • Smart Business Smart Women Breakfast & Awards
  • 2022 Tax Planning: Checklist and Guide
  • Complimentary Second Opinion Service
  • Visit Our Getting Frank Blog and Join Us on Social Media
• Market & Economic Update

News & Events

Frank Fantozzi Is Recognized as Best-In-State Wealth Advisor for 5^th Consecutive Year

Frank was recently ranked No. 69 in Ohio  in Forbes’ 2022 Best-In-State Wealth Advisors list. This marks the fifth consecutive year that he was named to the list. According to Forbes, the annual ranking spotlights the nation’s top-performing advisors, evaluated based on criteria* that includes industry experience, client retention and assets under management.

The Forbes Best-In-State Wealth Advisor ranking, developed by SHOOK Research, is based on in-person and telephone due diligence meetings and a ranking algorithm that includes: client retention, industry experience, review of compliance records, firm nominations; and quantitative criteria, including: assets under management and revenue generated for their firms. Portfolio performance is not a criterion due to varying client objectives and lack of audited data. Neither Forbes nor SHOOK Research receives a fee in exchange for rankings. View the full list.

Frank Fantozzi Featured in May 2022 Smart Business Magazine 

Frank was featured in the May 2022 issue of Smart Business where he spoke about best practices for business owners seeking to maximize business value in preparation for a sale. Frank holds his Certified Exit Planning Advisor (CEPA) credential from the Exit Planning Institute. The certification enhances a professional advisors’ ability to assist business owners through the process of Exit Planning (the Value Acceleration Methodology), so owners can build more valuable companies, have stronger personal financial plans, and align their personal goals with their financial assets. Click on the link to read the article: Develop a business strategy now to ensure maximum value at sale

PFS Welcomes Four New Team Members 

Planned Financial Services welcomed five new team members this year as we continue to expand and enhance our services offering for the benefit of our growing client base. Join us in welcoming:

• Mike Rinaldi, AIF^®, CEBS, MBA - Retirement Plan Advisor
  Mike joined the Planned Financial Services team in 2022 as a Retirement Plan Advisor for 401(k) Prosperity^®, the firm’s corporate retirement and institutional investment planning division, which focuses on best-in-class retirement plan fiduciary and investment oversight. He brings more than two decades of experience in the retirement planning industry to help ensure that the firm’s business owners, retirement plan sponsors and their plan participants receive the level of actionable and relevant advice, education, communication, and personalized service required to pursue their desired outcomes.

• Chelsea C. Hussey, CLU^®, ChFC^®, CFP^® - Wealth Advisor
  Chelsea brings a broad range of experience to the Planned Financial Services (PFS) team as a Chartered Life Underwriter^®, Chartered Financial Consultant^® and Certified Financial Planner™ professional. She joined PFS as a wealth advisor to help business owners and high net worth families pursue their objectives in areas such as  wealth and retirement income planning, business succession, executive compensation, employee benefits, estate conservation and charitable giving. She works closely with the firm’s multi-disciplined team of wealth advisors and client liaisons to develop customized financial strategies to help clients pursue the Return on Life^® they desire.

• Danielle LeChard - Paraplanner
  Danielle joined Planned Financial Services (PFS) in 2022 as a paraplanner to help simplify the lives of high-net-worth families and business owners. She plays an integral role in supporting the firm’s team of wealth advisors and client liaisons in developing customized financial strategies in areas including retirement, investment, estate, tax, insurance and business exit planning.

• Andrew Hoyt - Client Liaison
  Andrew joined the Planned Financial Services team with a strong background in financial services technology, client relations and business solutions. As a client liaison, Andrew is committed to ensuring a consistently exceptional experience from new client onboarding to ongoing client account servicing and support. He collaborates with the firm’s wealth advisors as part of a team that is focused on exceeding client expectations through the delivery of timely, relevant and proactive services.

• Vicki Giancola - Executive Assistant
  Vicki joined the Planned Financial Services team as an executive assistant. She also assists in maintaining  our customer relationship management system, running reports, conducting research, and implementing social media initiatives and prospect outreach, among other responsibilities.

Upcoming Events

Mark your calendar! Our 14^th Annual Cleveland Economic Summit Will Take Place on Thursday, September 22, 2022

We look forward to welcoming you and your guest to our 14th Annual Cleveland Economic Summit on September 22^nd at the Cleveland Botanical Garden/Woodland Hall from 4:00 – 6:30 pm. Watch for a “Save the Date” email reminder in the coming weeks. 

2022 Smart Business Family Business Conference

For the sixth consecutive year, Planned Financial Services will sponsor the Smart Business Family Business Conference & Family Business Achievement Awards with Frank Fantozzi participating as one of the industry expert panelists providing insight and addressing the challenges of family businesses. The conference will take place on Thursday, September 29^th  from 8:00 a.m. – 10:30 a.m. at Corporate College East.

Recent Events

Market Noise Live: Managing Market Volatility & Uncertainty

Thanks to everyone who joined us for our first Market Noise Live webinar, delivered via Zoom on June 17th. PFS wealth advisors Frank Fantozzi, CPA, MST, PFS, CDFA, AIF^®, CEPA, Amy Valentine, CFP^®, CFA^® and Cynthia Yang, CFA^®, CAIA^®, CIPM shared their insight on the markets and economy, including steps you can take now to help manage risk and identify opportunities.

Watch the recorded webinar

2022 Smart Business Smart Women Breakfast & Awards

For the sixth consecutive year, PFS participated as a sponsor of the Smart Business Smart Women Breakfast & Awards on June 23rd at the Westin Cleveland Downtown. PFS Paraplanner, Danielle LeChard, was an award presenter. The Smart Women Breakfast addresses issues facing women in the workplace. The conference also recognizes the achievements of leading businesswomen, inspiring male advocates, and effective women’s programs through the Smart Women Awards program.

2022 Tax Planning

Get Your 2022 Tax Checklist

In January, we introduced our new 2022 Quick Tax Reference Guide. This handy at-a-glance guide makes it easy to quickly find the information you need from federal income tax brackets and rates to capital gains and qualified dividend rates, contribution limits for retirement plan and health savings account (HSA) contributions, annual gift and estate tax exclusion amounts, limits for charitable deductions, and more. Feel free to download it, print it out or save it to your device to access throughout the year.

2021-2022 Tax Planning Guide

Looking for more comprehensive tax information? The Planned Financial Services 2021 – 2022 Tax Planning Guide provides an overview of key tax provisions and deadlines you need to be aware of to reap the full benefits of collaboration with your qualified tax advisor. Click here to view or download your PFS 2021 - 2022 Tax Planning Guide now.

Complimentary Second Opinion Service: Introduce Your Family, Friends and Business Associates

Our complimentary Second Opinion Service continues to be well-received among the friends, family members and colleagues of our clients and associates. This valuable service provides the people you care about with an opportunity to benefit from the same expertise and guidance that you have come to expect as a valued client of Planned Financial Services.

In many cases, a second opinion will simply provide confirmation, and the confidence that those you care about are on track to fulfill their values and achieve their goals with their current financial provider or strategy. However, if needed, we are happy to suggest ways in which we can help, including recommending another provider if we are not a good fit for their needs. Either way, following a Discovery Meeting and Investment Plan Meeting with our experienced team, they will receive a Total Client Profile and a Personalized Financial Assessment of their current situation.

Click here to learn more about the Planned Financial Services Second Opinion Service, and to download a full description of this service and the benefits it offers to the people you care about most.

Don’t Miss Out on the Topics that Are Important to You: Visit Our Getting Frank Blog

For timely information on the financial planning, business growth and investment topics that are meaningful to you, visit our Getting Frank Blog at PlannedFinancial.com. We post new articles and opinions weekly, so be sure to visit us. You can also read the latest blog articles by connecting with me personally on social media: LinkedIn, Twitter and Facebook.

Market & Economic Update

This year has been rough all-around for the American consumer. Not only are we battling decades-high inflation, but investors’ portfolios are off to one of the worst starts to a year in history as we near the halfway point. Our technical work is first and foremost rooted in trend following, and the trend in both stock and bond prices so far this year have of course been down. However, one trend that has been strongly higher is energy prices. It may be early, but we see some potential signs that energy trends could be changing, which would not only have positive implications for consumers’ wallets, but also potentially investors’ investment portfolios.

Gas prices hit record highs

Let’s start with the single price that matters to consumers most: gas prices. Even if you drive an electric car, it would be hard not to notice the huge increase in gas prices over the past year. The AAA national average price for a gallon of gasoline just hit $5 for the first time ever. For many Americans, the amount of gasoline they need is simply fixed, as they must drive to work, school, etc. So when prices rise, the money has to come from somewhere else, and it should therefore come as no surprise that the consumer discretionary sector is the worst performing S&P 500 Index sector year-to-date with a more than 30% loss.

Don’t forget that what matters to consumers also matters to politicians. President Biden’s approval rating has continued to decline amid higher inflation numbers, with a near perfect inverse correlation to gas prices. That has implications for the midterm elections, where Republicans will look to capitalize on inflation and spin their energy policies as the solution. Currently, betting markets show about 3:1 odds that Republicans will be able to take control of both the House of Representatives and the Senate in November.

Energy policy remains a wild card

To be sure, the Biden administration, while focused squarely on its policy of transitioning the economy towards a non-fossil fuel environment, has been trying to alleviate the burden of rising gasoline and diesel prices by trying to introduce a federal gasoline tax holiday.

The administration wants the federal tax holiday, which would take 18.4 cents off a gallon of gasoline, to be introduced along with a state tax holiday. A tax break from both state and federal governments is expected to give consumers approximately $30 of savings per month for one weekly fill-up. The breakdown in savings comes from the 18.4 cents per gallon for the federal tax and 31 cents per gallon on average from state governments. The tax holiday, which would last for three months, needs congressional approval, and so far, despite intense lobbying efforts, approval doesn’t appear forthcoming.

In addition, the administration has become increasingly vocal in encouraging energy companies to increase drilling, while an upcoming presidential visit to Saudi Arabia is being highlighted as an opportunity to discuss measures to foster peace in the Middle East. Still, given that Saudi Arabia is the de facto leader of OPEC, the goals of the visit undoubtedly include an attempt to return with an agreement for higher oil production levels. OPEC, despite raising production levels in July and August, is seemingly intent on keeping prices high as member countries recover from the drought of demand incurred by the pandemic.

Ironically, although lower gasoline prices could encourage more consumer discretionary spending, it could also lead to more travel by car, exactly the opposite of what’s needed to help bring down inflation. A long-term solution still remains unclear, as the low oil price environment that has reigned over much of the past eight years has consistently punished American oil companies for investment and rewarded more shareholder-friendly policies such as dividends and share buybacks. Still, the all-important U.S. consumer needs a break regardless of how it’s delivered.

Energy prices drive inflation expectations

Nothing we have addressed so far is especially positive, so let’s get to that part. While the gasoline prices are just pennies removed from those all-time highs, gas prices at the pump tend to operate on a lag from real world commodity prices. In the past few weeks, the price of West Texas Intermediate (WTI) crude oil has fallen approximately 15%, losing a technical support level we believed would hold near $115/barrel.

While the trend in most energy/oil prices is still higher from a long-term perspective, numerous other commodities that have experienced strong bullish runs appear to be more clearly breaking down, so the odds of a top in oil prices may be higher than just the chart itself suggests. As global central banks fight inflationary pressures around the globe with rate hikes, the result has been a perception that the economy will not be able to withstand continued tightening of financial conditions and will fall into a marked slowdown, if not an all-out recession. For instance copper, often referred to as Dr. Copper for its ability to forecast economic conditions, just hit its lowest level since February 2021.

That in and of itself isn’t a positive, but market-based inflation expectations are highly correlated with commodities, especially oil, and those also appear to be rolling over recently, with the two-year breakeven implied inflation rate recently hitting its lowest level in four months.

To be clear, we do believe that fundamentals still matter, but it would be naïve to suggest that the Federal Reserve (Fed) and the potential path of its rate hikes have not been the primary focus of short-term market moves this year, and so far, that shows little signs of changing. Any shift towards a more dovish Fed, whether it be from economic weakness or lowered inflation expectations, is almost certain to be a positive for bonds, which have fallen dramatically amid the latest surge in inflation and skyrocketing interest rates, but may also be a positive for equities which seemed potentially already priced for a recession.

Conclusion

So far in 2022, energy investors have been some of the only equity holders rewarded, with the sector up approximately 30% year to date, and the only S&P 500 sector in positive territory. While we remain positive on that sector and do not see a dramatic reversal lower in crude prices, any easing of the constant upward pressure on energy prices like we have seen recently could still allow energy companies to thrive, while providing relief to consumers and the current inflation dynamic. Expectations are just that, expectations, but if the commodity price decline combined with easing supply chain issues can bring inflation lower over the second half of 2022, things may turn around quickly for both stocks and bonds.*

Closing Remarks

As market and economic conditions evolve in the weeks and months ahead, you can rely on your PFS team to continue to monitor and adjust our portfolios and keep you up to date on these and other developments. We also want to remind you that our office is open for clients who would like to meet in person. For those who prefer to meet virtually, we continue to use Zoom for virtual meetings, and are always available via phone. Just let us know how you prefer to meet, and we’ll make it happen!

We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide. If you, or someone you know, has questions or concerns about your personal investment strategy or business finances, please don’t hesitate to share information about our complimentary Second Opinion Service and reach out to your experienced team of wealth advisors at 440.740.0130.

Don’t forget to connect with PFS on Twitter, LinkedIn, Facebook and YouTube.

Click here for a summary of the material changes made to our ADV Part 2A between March 2021 and March 2022.

To review our firm’s privacy policy, full ADV Part 2A Firm Brochure and ADV Part 2B Brochure Supplements, please visit our website at PlannedFinancial.com/contact-us/.

If you’ve invested in cryptocurrency (for example, Bitcoin or Ether), nonfungible tokens (NFTs), or certain other digital assets, it’s important to familiarize yourself with new tax reporting requirements that take effect in 2023. The new rules won’t increase your taxes. Instead, they’re designed to help the IRS identify unreported digital transactions.

No new taxes

As with other capital asset transactions, transactions involving digital assets are already taxable. For example, if you sell cryptocurrency in exchange for traditional currency, you must report capital gains or losses. These might be short- or long-term, depending on how long you’ve held the cryptocurrency. In addition, because the IRS views cryptocurrency as property for tax purposes, using it to purchase or sell goods or services is considered a taxable exchange.

The new reporting rules, which were added by 2021’s Infrastructure Investment and Jobs Act, apply to digital asset transactions occurring on or after January 1, 2023. Under the rules, digital assets will be treated as securities for tax purposes.

Crypto exchanges (essentially, any platform on which investors can buy or sell cryptocurrency or other digital assets) must begin reporting transactions to investors and the IRS in early 2024. They’ll use Form 1099-B, which is currently used by brokers to report details on sales of stock and other securities, including sale proceeds, relevant dates, cost basis, and the character (short- or long-term) of gains and losses.

Bye-bye privacy

The new rules are expected to affect investors in a couple of significant ways. For one thing, the privacy of cryptocurrency transactions — part of their appeal for many current investors — will become a thing of the past. Also, digital assets will be treated as cash for purposes of the anti-money-laundering law that requires businesses to report cash transactions of $10,000 or more to the IRS.

That said, many crypto exchanges lack access to certain information they need to determine an investor’s cost basis. So it’s likely that 1099-Bs provided to you and the IRS will overstate gains or understate losses associated with these transactions. You’ll need to document your digital asset transactions carefully to ensure your gains and losses are reported accurately.

Just the beginning

Keeping accurate records of your transactions will also put you in a good position for future regulatory developments. Currently, cryptocurrency is only lightly regulated. Given how risky these investments can be (including the risk of losing your initial investment), you should expect additional rules and reporting obligations in the future.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

To the surprise of many investors, 2021 was a banner year for the U.S. stock market — the S&P 500 posted a broad-based 26.9% return. But if the financial markets teach one lesson, it’s this: What succeeded last year (or last week) is no guarantee of what will succeed in the future.

This is why experts encourage investors to avoid market timing and commit to maintaining a diversified portfolio. In fact, many of history’s most successful investors — Benjamin Graham, Peter Lynch and Warren Buffet — are well known for staking out a strategy and sticking with it through thick and thin.

Graham’s guiding principle

Economist and investor Benjamin Graham’s guiding principle was known as the “margin of safety.” He favored stocks that traded at prices well below what metrics such as price-to-earnings and price-to-book suggested they were worth — what is now known as “value.” The bigger the gap between the share price and the stock’s “intrinsic” value, the better. That way, if market conditions went against a stock, its value might still have room to increase (or decrease less).

Graham held that the margin of safety allows investors to be wrong about a stock and yet potentially still make money. This isn’t to say that cheap stocks can’t get cheaper — it’s always possible to lose money in the stock market. But expensive stocks have much bigger downsides because their price generally reflects high investor expectations. Stocks with a large margin of safety won’t necessarily have favorable expectations priced in and therefore may be more resilient to negative surprises.

Simple stocks for Lynch
Celebrated money manager (notably of Fidelity’s Magellan Fund) Peter Lynch has focused on investments he understands. Lynch once put it this way, “If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand.”

Consider the market bubble of the late 1990s and early 2000s. The impulse to capture huge gains in new technology stocks led countless investors to brush aside the fact that they really didn’t know what some companies did or how their business models worked. Things didn’t end well for many when the market crashed in the early 2000s.

Buffet favors fundamentals

Billionaire investor Warren Buffett also famously avoids companies with esoteric business models. His unwavering focus on buying businesses whose fundamentals he thoroughly understands has resulted in undeniable success, even though his investments can lag aggressive portfolios in go-go markets.

Of course, complicated businesses can be great investments if you have specialized expertise. For example, if you’re a professional chemist, you may be better positioned than the average investor to understand the merits of a new pharmaceutical stock. However, you probably don’t want to invest only in one market niche. Your financial advisor can help broaden your knowledge base and assemble a diversified portfolio of investments that make sense for you.

Great from the not so great

Buffett’s a well-known proponent of another piece of classic investment wisdom: Find great companies and hold them. Of course, the trick is to be able to distinguish the great companies from the not so great.

Try to tune out the daily noise in the markets and instead look for companies with strong competitive positions and sustainable business plans. Generally, you want to hold these stocks, reinvesting any dividends and letting compounded growth work for you. That said, there are valid reasons for selling securities. Changing economic and market conditions, and factors such as a company’s management, product lineup or competitive profile, may all be good excuses to sell.

Don’t be intimidated

If you’re intimidated by investing, it’s good to know that some of the best investment strategies are actually pretty simple. But even experienced stock-pickers can benefit from professional advice. So talk to a financial expert about your goals and develop a diverse portfolio that can better withstand market ups and downs.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Does your employer offer employees a Health Savings Account (HSA)? If so (and if you don’t already take advantage of it), you should take a second look. HSAs often are referred to as “medical IRAs” because they enable participants to save money while deferring — and, when paying for eligible expenses, eliminating — taxes. With health care costs high and rising, you can’t afford to overlook this opportunity.

How to participate

Some employers with high-deductible health plans (HDHPs) offer HSAs. You may also set up an HSA on your own through a bank or insurance company that offers them. To participate, you must be enrolled in an HDHP, have no other insurance and not yet be enrolled in Medicare. Contributions may be made to an HSA by you, your employer or both. Family members and others also may contribute.

Employers generally can contribute as much as they want to your HSA, but there’s a limit to the annual amount you can contribute. For 2022, it’s $3,650 for you or $7,300 for family coverage. If you’re age 55 or older, you can make additional catch-up contributions of $1,000. You can contribute to your HSA until the federal tax return deadline (for example, April 18, 2022), even if the contribution is for the prior year.  

HSA participants may withdraw amounts for qualified out-of-pocket medical expenses, such as physician and dentist visits, without tax consequences. You may also use your balance to cover co-pays and deductibles. However, HSAs generally can’t be used to pay health insurance premiums. 

Tax advantages and more

As mentioned, contributions to an HSA are tax-deductible. You can make contributing easy by enrolling in an automatic payroll deduction program that withdraws pretax funds from your paychecks. Also, any earnings within your HSA account are tax-free. HSA funds may be invested in a range of securities, including mutual funds, stocks and bonds, depending on your employer’s plan.

What’s more, withdrawals used to cover qualified medical expenses aren’t subject to tax. The list of qualified expenses is extensive and ranges from eyeglasses to root canals to fertility treatment drugs. For a detailed list, review IRS Publication 502.

If you have money left over in your HSA at the end of the year, it remains for the following year. This feature provides a distinct advantage to HSAs over flexible spending accounts (FSAs). Any unused balance in an FSA at year’s end usually is subject to a limited carryover. And in most cases, FSA balances are forfeited.

You can use your HSA to pay for expenses even after you’ve retired. There’s no time limit for withdrawals. Also, HSAs are portable, so you can continue to use your HSA if you change jobs or insurance carriers.

Be aware of drawbacks

HSAs also have some drawbacks. For example:

• You can use HSA funds only for health care expenses. If funds are used for nonqualified expenses, the account withdrawal will be subject to tax. What’s more, the IRS will tack on a 20% penalty if you’re younger than age 65. (Compare this with a 10% tax penalty for early withdrawals from traditional IRAs before age 59½.)
• In some cases, HSA providers charge monthly account fees or transaction fees. Also, you could be subject to extra charges for account overdrafts or deposits that don’t clear your bank.
• If you die and leave your HSA to beneficiaries, the account funds may not enjoy the same tax benefits. In general, a spouse beneficiary who assumes an HSA as his or her own can make tax-free withdrawals for qualified expenses. But for other beneficiaries, the account will no longer be treated as an HSA and is subject to tax.

And, of course, HSAs are only available to employees enrolled in HDHPs.

Health cost burden

As health insurance costs rise, many employers expect their employees to shoulder more of the burden. If you have an HDHP, an HSA can help you reduce that burden.

Investment advice offered through Planned Financial Services, a Registered Investment Advisor.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.