November, 2016

Changes to Bright Directions 529 College Savings Program

The Illinois Bright Directions College Savings Program has made a number of changes to their age-based portfolios. Since many of our clients utilize Bright Directions, we felt it was important to highlight these changes.

Age-Based Portfolio Names

When selecting an age-based portfolio, investors are able to choose from one of three options. The names of the options were age-based aggressive, age-based growth, and age-based balance. They have now been updated to aggressive age-based, moderate age-based, and conservative age-based. The updated portfolio names will appear on your next statement.

Age Bands

More significantly, Bright Directions has also made a change to the age bands in its age-based portfolios. The number of bands has increased from five age bands to nine age bands. This allows for more subtle adjustments to the investment allocation once the child reaches the various age bands. Effective October 25, the new age bands are 0-2, 3-5, 6-8, 9-10, 11-12, 13-14, 15-16, 17-18, and 19+.

If you have questions about either of these changes, please don’t hesitate to call us at (847) 607-4976.

Real Estate News: 1031 Exchange

Throughout 2016, our firm has seen continued strong demand for 1031 replacement properties. The uptick in demand has grown year over year coming out of the recession, with notably high demand starting in early 2015 that has continued since.

Most investors that engage our firm in a 1031 exchange have sold or are interested in selling a real estate asset that would trigger substantial taxes upon sale unless an exchange is completed, so they work with us in their search for a replacement property. We have worked with investors who sell rental houses, apartment complexes, farmland, and business real estate, to name a few.

The inventory of available replacement property is always changing and we work with individuals to find a solution that meets their needs. Typically, we have replacement property in a variety of types of real estate, including, but not limited to, multi-family, retail, office, medical, and self-storage. Recently, we’ve seen a trend of sponsors bringing more operating-type assets to market, such as multi-family and self-storage. We’ve also noticed an increase in replacement investments with both high and low leverage in order to meet the strong demand for investors hoping to exchange with a large range of leverage on their relinquished property.

Learn more about 1031 exchanges.

Market Updates

The third quarter started with some bumps following the Brexit vote in June, but the markets managed to move forward. This quarter saw the S&P 500 post a gain of 3.31% and Nasdaq was up 9.69%. Employment numbers slowed slightly over the summer, but the unemployment rate remained relatively unchanged, hovering around 4.9% (down from over 10% at the peak).

Throughout the year there has been a focus on what is said to be struggling corporate profits, while profits have generally been down since 2014. There are two major factors at play:

1. The value of dollar has risen, sharply at times. Every time the value of the dollar increases, the profits of business generated overseas in other currencies decreases. With over 40% of S & P 500 company’s revenues generated overseas, this has a significant impact on earnings.
2. Low oil prices have impacted earnings in the energy sector.

So while profits may be down, much of the regression can be accounted for from the value of the dollar and the price of oil.

Most of the asset managers we work with think the chance of a recession in the near term is small; therefore, they remain committed to an equity bias in their portfolios.

While we certainly don’t have a crystal ball, we anticipate the strong possibility of increased market volatility to end the year. With the election and the next Federal Reserve meeting just around the corner, there will certainly be plenty of headline news to move the markets. This is why we always stress the importance of having a financial plan and investments with a risk tolerance suitable to your investment objectives. We believe that having a plan—and sticking to your plan—is the best way to weather a bumpy market.

As always, if you have any questions, please don’t hesitate to call us at (847) 607-4976.

Meetings and Education

Over the last couple of months, Nathan and Matt have attended a number industry meetings and educational events. September was Life Insurance Awareness month, so Matt jetted to Atlantic City in September for a conference focused on advanced life insurance planning strategies. He’s anxious to apply what he learned and help our clients!

Do you want to review your life insurance? Schedule a meeting with us today. Don’t forget to select “Life Insurance Review” when you schedule your appointment.

Nathan took a quick trip to Tulsa, Oklahoma in September to attend a due diligence meeting on one of the oil and gas investment sponsors that we use. While there, Nathan met with the sponsor’s executive and geological teams. There was also abundant information regarding the science and technique that goes into finding and extracting oil and natural gas.

In September, Nathan attended the annual Alternative and Direct Investment Securities Association (ADISA) conference with nearly 1,000 other industry leaders. ADISA is a national trade association that serves advisors, like our firm, who utilize private and public direct investments in their practices. The event, held at The Cosmopolitan in Las Vegas, gives us the opportunity to share ideas with other financial advisors as well as hear from a large number of product sponsors in an efficient manner. There are also break-out sessions that provide us with education and insight on changes and opportunities within the industry. As with every conference and due diligence trip that we attend, our goal is to gather information that allows us to serve you better. This conference mainly focused on alternative investments, particularly 1031 exchange replacement property, REIT investments, private equity, and oil/gas investing.

We’re thrilled to share with you that Keith Lampi, CEO of Inland Private Capital, is this year’s ADISA Distinguished Service Award winner. We’ve worked closely with Keith and his team at Inland for a number of years and many of our clients have met with or talked on the phone with him. Please read the press release to learn more.

And finally, When you’re attending a conference in Las Vegas, it’s pretty much impossible to avoid sneaking away for a little bit of fun. Nathan was fortunate enough to be invited to a sports car racing event hosted by Concorde Investments. Coincidentally, he has some luxury sports car experience; in high school, he—fun fact—worked at a car wash where he was able to wash a few of these cars. Now, years later, he was so excited to have the opportunity to take both an Audi R8 V10 and a Ferrari Italia for a few laps and turn ‘em loose! Want to see? Watch the video (warning: viewer may experience jealousy).

As of 11/1/2016. The opinions expressed are those of the writer and does not necessarily represent the views of the presenting party, nor their affiliates. Past performance and predictions are not a guarantee of future results. The material contained hearin is obtained from sources believed to be reliable, but its authenticity, accuracy or completeness is not guaranteed. Projections are inherently limited and should not be relied upon as an indicator of future results. The S&P 500 Index is a widely recognized capitalization – weigheted index that measures the performance of the large- capitilization sector of the U.S. stock market. Direct investment in an index is not possible.

Securities offered through Concorde Investment Services, LLC (CIS), Member FINRA/SIPC. Advisory services offered through Kuhn Wealth Management, Inc., a state registered investment advisor. Kuhn Wealth Management, Inc. is independent of CIS and Concorde Asset Management, LLC. All of whom are unaffiliated with third party sites, and cannot verify the accuracy of nor assume responsibility for any content of linked third party sites. Information available on third-party sites is for informational purposes only.