Schwab Wealth Strategists Answer Common Questions

August 14, 2023
Top wealth strategists discuss some of the most pressing concerns they're hearing from clients today.

Schwab wealth strategists across the country help clients with everything from retirement and estate planning to risk management and insurance.1 Here they share their views on four frequently raised topics.

How to allocate a windfall

"We're in the midst of one of the biggest intrafamily wealth transfers in history, and many clients coming into large sums of money ask what they should do first. I always give the same answer: 'Nothing,'" says Scott Hiller, a Certified Wealth Strategist® based in San Antonio. "It makes sense to pause and think things through.

"That means making a plan, ideally with help from a financial professional, because there are many factors to consider. Are you on track with retirement? What are the tax consequences of the windfall? And how might this change your estate plan? Don't do anything until you can answer those questions with confidence.

"That said, I do urge clients to go ahead and splurge a little (but only after considering more important factors such as paying down high-interest debt). The future will be here before you know it, but it's still worth celebrating the present."

How to create a shared mission around family wealth

"As families come together to celebrate the end of summer or the holiday season, many clients with significant assets raise a unique concern: How to create a shared sense of purpose around family wealth. I tell them that it requires work and communication—and then suggest a family wealth mission statement," says Susan Hirshman, a director of wealth management based in Phoenix.

"Schwab has created a process to help families develop such a directive. Much of the benefit comes from the process itself, which helps a family examine its values and beliefs about how wealth can best be preserved and deployed. The goal is to get a constructive conversation going and ensure it doesn't become one-sided. This is about collaboration."

How to reduce capital gains taxes

"Wanting to reduce capital gains taxes is something that comes up in nearly every client discussion I have," says Susan Bober, CPA, JD, a senior wealth strategist based in Indianapolis. "But there are a lot of rules, rates, and tax brackets to wade through, which can be frustrating when what clients really want are simple solutions. For that reason, I try to offer a few quick tips that apply to nearly any situation.

"First, look for opportunities to harvest, or realize, capital losses from securities in your portfolio that have lost value, which you can use to offset any gains in a given year. Second, reduce your taxable income—such as by fully funding your retirement account or through charitable donations, if you itemize—which will reduce what you pay overall and may even allow you to drop down to a lower, long-term capital gains tax bracket."

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How to save for a wedding

"With the worst of the pandemic behind us, weddings had a resurgence this summer," Susan Bober says, "so I've had a lot of questions recently about the best way to save for a child's wedding. My answer might be described as one part mathematical, one part practical.

"The math is pretty straightforward: I ask the client how much they hope to save and how soon they expect to need it. Then I calculate the amount they'll need to put away each month. With any savings goal, the sooner you start, the easier it will be.

"The more practical point I make is that savings goals must be prioritized. I warn against neglecting your retirement to put money toward a wedding. I also point out that a child's college fund is probably more important than a wedding fund, and while there are tax-advantaged savings plans to help with college, there's no such equivalent for weddings."

1Certain services may be provided by affiliated professionals and third-party firms. Schwab Wealth Advisory® does not provide specific individualized legal or tax advice.

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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. 

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk including loss of principal. 

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed  income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Tax-exempt bonds are not necessarily a suitable investment for all persons. Information related to a security's tax-exempt status (federal and in-state) is obtained from third parties, and Schwab does not guarantee its accuracy. Tax-exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.

The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal, or investment planning advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner, or investment manager.

Schwab Wealth Advisory™ ("SWA") is a non-discretionary investment advisory program sponsored by Charles Schwab & Co., Inc. ("Schwab"). Schwab Wealth Advisory, Inc. ("SWAI"), is a Registered Investment Adviser and provides portfolio management for the SWA program. Schwab and SWAI are affiliates and are subsidiaries of The Charles Schwab Corporation.