As a firm, we believe in the importance of having a comprehensive financial plan. We work with each of our clients to gain a detailed understanding of their family, current financial position, and personal circumstances. From this we develop a comprehensive financial strategy to work toward achieving your unique goals. However, life is not static. A good strategy must also be flexible enough to adapt to changing market conditions or life situations. While we cannot control what we cannot control, Fragasso Financial Advisors is proactive in engaging with our state and national political leaders to help shape the legislative environment.
In October of 2022, I joined fellow members from the Financial Planning Association® (FPA®) for their Annual Advocacy Day in Harrisburg to meet with elected officials from across the state to advocate on behalf of our clients and the financial planning profession. The topics of focus for this year’s trip were financial exploitation, financial literacy, and taxation of financial planning services. In summary, here are the main points of discussion:
Every day there are over 10,000 Americans turning retirement age. While it is good practice to periodically review one’s financial position, a significant event, such as retirement, can often be the impetus for an overdue review. Financial planners help seniors and others by engaging in the process of taking stock of tax, estate, investment, risk, and retirement planning resources utilized to develop a plan and systematically implement the plan in order to work toward their short- and long-term goals.
Unfortunately, financial exploitation often involves a person of trust. Financial planners may be in a position to recognize the signs of financial exploitation. The FPA® advocated for a change in the language of existing North American Securities Administrators Association (NASAA) legislation to more stringent verbiage requiring advisors to report suspected incidents of exploitation to the appropriate agency. Particularly, changing the term “may report” to “shall report”. Advisors are encouraged more than ever to protect our clients by reporting instances of even suspected financial exploitation.
Thanks to the power of compounding, along with the benefit of hindsight, many among us would probably say we wished we had started saving sooner. Fragasso Financial Advisors and the FPA® recognize that financial literacy is a vital component of helping Americans live healthy financial lives, and that the need for increased financial literacy education in the United States is a particularly important goal. Even the fundamental elements of personal financial management help with vital life choices, such as understanding credit, savings, lending, home and rent responsibilities, and how to manage debt responsibly. Introducing these concepts to students at an earlier stage will help with the overall goal of preparing students for independence and financial wellness.
There are three particular bills currently in consideration in the Pennsylvania legislature that focus on adding personal finance to the state’s curriculum and making such courses a requirement for graduation. Fragasso and the FPA® advocated for the approval of these bipartisan bills. Financial literacy can be the first step to breaking a cycle of poverty, establishing a solid financial foundation going forward, or even being a good steward of inherited assets.
Fragasso Financial Advisors and the FPA® encouraged our legislatures to consider that financial planning fees should once again be deductible at both the state and federal level. Prior to 2018 individuals could deduct financial advisor fees as a miscellaneous investment related expense, provided the fees exceeded 2% of their adjusted gross income (AGI). This was a significant benefit for retirees or individuals otherwise on a fixed income. The Tax Cuts and Jobs Act, however, eliminated those deductions. Contributions of course remain deductible, so be sure to consult your financial advisor for an appropriate tax-efficient savings strategy.
Fragasso and the FPA® joined several other financial service organizations in requesting that state legislatures and Congress restore and expand the pre-2017 tax deduction for investment advisory fees and financial planner fees. We feel that Congress should restore and expand the deduction without the 2% AGI threshold.
At Fragasso, we consider ourselves more than financial advisors. We are financial advocates working alongside others in the same capacity for what is best for our clients and for future investors, and this is one example of that.