Matt Chope

Under the Hood: Investment Allocation for 529 Savings Plans

Contributed by: Matthew E. Chope, CFP® Matt Chope

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As many parents and grandparents know, 529 plans can be a wonderful strategy for families to help build college tuition savings for their children.  Not only do the plans benefit students, but they also carry advantages for the account creators or donors. The student can potentially enjoy tax-deferred growth with federally tax-free distributions if used for qualified educational expenses. Advantages to the donor include complete control of the account, high contribution limits, and no age restrictions or income limitations to inhibit investing.  It’s no surprise that 529 savings plans have become popular savings vehicles.

Have you ever wondered how 529 college savings plans are invested to meet time-sensitive tuition expenses? 

Age-based investment funds make this challenge easily manageable.  The graph below shows the glide path of equity allocations for 529 savings plans at various ages of the beneficiary from 2010 to 2013.

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  • Generally, 80% of the portfolio is invested in equities at age 0 and reduces to 10% by the time the beneficiary is enrolled in college.

  • Since 2010, plan investment managers have become more conservative in the beginning (age 0) and end (age 19) stages of plans.

  • Investment managers have become 6-7% more equity aggressive during ages 5-15 to meet tuition goals.

To meet tuition needs within 18 years, the graph reveals that investment managers are becoming more aggressive during the middle of a student’s investment time horizon, but they are also growing more cautious about preserving money closer to the end of the student’s investment time frame.  Interestingly, the graph also reveals that investment managers still rely on bonds as one of the safest places to preserve money (90% of the portfolio by age 19), despite the negative reputation bonds have received in our current rising rate environment. 

The glide path is designed to allow for an outcome with minimal surprises to all investors, no matter the economic environment when it’s time for college.  Some cycles will end on a poor note with markets crashing, while in other times markets will be soaring as students begin to tap the funds.  Ultimately, the guide path is designed to gradually reduce investors’ risk and exposure to market disruptions in the final years of saving, when investors are closest to needing the money they’ve worked so hard to save.  

Investors should carefully consider the investment objectives, risks, charges and expenses associated with 529 plans before investing. This and other information about 529 plans is available in the issuer's official statement and should be read carefully before investing. Investors should consult a tax advisor about any state tax consequences of an investment in a 529 plan.

As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. The tax implications can vary significantly from state to state.

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.


The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and are not necessarily those of Raymond James.

Helping Older Relatives? How to Help Without Jeopardizing Your Own Finances

Contributed by: Matthew E. Chope, CFP® Matt Chope

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Helping elderly family members with financial issues can be tricky.  In many cases, you may feel an obligation to assist, especially if the older adult is on a fixed budget and has limited financial resources. In fact, a recent MetLife study found that 68% of American caregivers have been found to spend their own money to support the needs of their older adult relatives, which drained funds that they had planned to use for their own financial independence. If you sense that an elder you care about is on a trajectory for financial ruin, what can you do to help? 

How do you step in and assist without putting your own financial security in jeopardy? 

The first thing to do is to gather some information to get a better sense of your loved one’s financial picture.  You’ll want to have an understanding of their assets and debts, and their budget:  their sources of income and their expenses. With the understanding of what income and what bills and expenses the older adult is dealing with, you can better connect with resources that may be able to assist them.

A client (let us call him John) told me a story recently about how he helped his older sister in-law (let us call her Bonnie) make some difficult decisions.  Bonnie was not a high-income earner in her working years. Although she was able to purchase her home and pay off her mortgage; she didn’t save much, and she had now depleted her savings.  At age 75, the reverse mortgage that Bonnie had put in place, in addition to her minimal Social Security income were not enough to keep up with her rising costs for health care (Medicare premiums and prescription drug co-pays), property taxes, insurances and utilities.

Here are the actions John took to help Bonnie with her situation:

  1. John discovered that the county would allow her to apply for a reduced or total removal of real estate taxes through the property tax poverty exemption. As a result, Bonnie received a full exemption from her property taxes. Each county has a program for low-income folks - you need to complete an application and appear before a board of review annually. Here is a link with more information: https://www.michigan.gov/documents/treasury/Bulletin7of2010_322157_7.pdf

  2. John contacted low-income home energy assistance (LIHEAP) and received a reduction in electricity and heating costs for Bonnie. https://www.benefits.gov/benefits/benefit-details/1545

  3. John contacted Human ARC Premium Assist about receiving a significant reduction in Medicare Part B premiums; as an added bonus, they also provided assistance with Bonnie’s prescription drug costs. https://screening.humanarc.com/PremiumAssist

  4. While online at the premium assistance site, John found more information about special coverages for things like medical alert, ambulance/transportation assistance, and a 1.25% copay for prescriptions.

  5. John contacted Social Services about food stamps and Bonnie is now receiving about $97 more a month through a program called SNAP. http://www.feedingamerica.org/need-help-find-food/

  6. For Bonnie’s auto insurance, John pays the whole year upfront and Bonnie pays John back monthly so she can take advantage of the discount for paying the premium annually.

  7. John pays Bonnie’s utility bills via automatic payments from his account to avoid late fees, which in the past were a wasteful and unnecessary expense. Bonnie also reimburses John monthly for this.

  8. To save money on her cell phone bill, John added Bonnie’s phone line to his plan as an additional line.

  9. Bonnie was willing to give up cable TV – John found that an inexpensive antenna works fine and they were able to rid Bonnie of her monthly cable bill.

With a little bit of creativity and resourcefulness, John was able to assist Bonnie while also preserving his own financial resources.  If you or someone you know is in the position of assisting an older adult and needs help putting together a strategy, please let us know.  We are here to help!

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.


This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. The case study provided is hypothetical and has been included for illustrative purposes only. Individuals cases will vary. Links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax, legal, or mortgage issues, these matters should be discussed with the appropriate professional. 

Tax Reform Series: Changes to State and Local Income Tax

Contributed by: Matthew E. Chope, CFP® Matt Chope

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The Tax Cuts and Jobs Act (TCJA) is now officially law.

We at The Center have written a series of blogs addressing some of the most notable changes resulting from this new legislation. Our goal is to be a resource to help you understand these changes and interpret how they may affect your own financial and tax planning efforts.

The original proposals for tax reform would have completely eliminated any deductions for taxes paid to a state or local government, including local property taxes.

 “State And Local Tax” (SALT) provision varied, and controversially was projected to have a disproportionate impact on states with big cities with high state and local tax rates (like New York, California, and Maryland have some of the highest state income tax rates, and therefore the higher state income tax deductions).  Many people in these states are considering moving to lower taxed states due to this tax law change.

However, in the final version of the Tax Cuts and Jobs Act of 2017, households will be given the option to deduct their combined state and local property and income taxes, but only up to a cap of $10,000. Notably, it is a $10,000 limit on the combined total of property and income taxes, not $10,000 each! The $10,000 limit applies for both individuals and married couples (which is an indirect marriage penalty for high-income couples), and is reduced to $5,000 for those who are married filing separately.

In addition, to prevent households from attempting to maximize their state and local tax deductions in 2017 before the cap takes effect in 2018, the new rules explicitly stipulate that any 2018 state income taxes paid by the end of 2017 are not deductible in 2017 and instead will be treated as having been paid at the end of 2018. However, this restriction applies only to the prepayment of income taxes (not to property taxes), and applies only to actual 2018 tax liabilities.  

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.


This information has been obtained from sources deemed to be reliable but its accuracy and completeness cannot be guaranteed. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.

Nine Represent Center at Raymond James Conference

The Center proudly led two separate Top Advisor Sessions at the recent Raymond James National Conference.  Matt Chope and Tim Wyman (pictured left) led a discussion about growing your business.  Dan Boyce and Melissa Joy presented "Finding, Developing, & Implementing Junior Partners."  Over 100 peers attended each session.  

With the destination of Orlando, Florida, nine team members flew south to attend the National Conference May 21st through the 25th.  The four-day event welcomed over 3,400 participants from across the nation.  The conference fosters both professional and personal development through a variety of learning sessions which are presented by both peer advisors and specialized industry experts.  

A powerful benefit of attending conferences like this is the opportunity to hear ideas from others.  Center team members get to know people over the years and learn what new ideas and innovations are working for peers.

One area of growth highlighted at this year’s national conference was technology. Raymond James and the Center for Financial Planning are making major investments in cutting edge technology that will work to the advantage of both the advising teams and Center clients.

Members of our Center team in attendance included:  Sandy Adams, Dan Boyce, Matt Chope, Marilyn Gunther, Jen Hackmann, Melissa Joy, Laurie Renchik, Tim Wyman and Troy Wyman.

3 Center Planners Recognized by Hour Detroit Magazine

Center team members Sandra Adams CFP®, Matthew Chope CFP® and Timothy Wyman CFP®, JD received recognition by Five Star Professional in the June 2012 issue of Hour Detroit magazine.  They were named to the 2012 Five Star Wealth Managers list, a select group of wealth managers in the Detroit area.  Congratulations – Sandy, Matt, and Tim.

Matt Chope Glimpses the Future in Texas

Center Planner Matt Chope recently traveled to Texas to attend a Raymond James Regional Conference. Matt returned with a full plate of ideas and information to share with Center team members. According to him, “Attending the conference gave me a chance to sit with industry experts for 3 days and learn about the latest nuances in many areas of financial planning for 2012.”

Key conference highlights included:
  • Listening to some of the best money managers in the business share ideas about where the economy is headed and the state of the investment environment.
  • Social security experts presented ideas on the best strategies to incorporate for clients (hint hint: signing up isn’t as easy as it sounds so talk to a financial planning CFP(r) specialist first).
  • Introduction of new developments in technology that foster effective use of data and help create efficient resources to serve the needs of clients. At The Center, this will mean state-of-the-art changes that will help us better plan for our clients’ futures.

Matt came back energized and excited to share what he learned with his counterparts at The Center. Luckily, he did not come back saying “y’all.” 

Matt Chope and Angela Palacios Sharpening the Saw in Seattle


Matt Chope and  Angela Palacios recently attended a three-day user conference in Seattle for Tamarac, our portfolio rebalancing software provider.  The meetings were held September 14–16. 

They were joined by 220 advisors, thought-leaders, and product experts from around the country.  Together they collaborated on ways to leverage our current software, learned operational best practices, and gained insights into new technology opportunities.   This collaboration is a result of The Center's ongoing commitment to utilize technology to better serve our clients.

Matt commented:  “To remain competitive, the best financial planning firms need to obtain a better return on information.  We are encouraged by our technology partner's work in this area.  They are forging on, working tirelessly toward better integration of information systems.  These systems will allow for smoother functioning of client information, with the goal of enhancing better decision making.  They are also designing a platform to develop better workflows for our staff and provide better service and overall client experience.”

 

Beach Volleyball Wisdom


Commitment to a process, adjusting to new circumstances, and effective communication are all actions that help keep financial plans on track.  Partner Matt Chope transfers the same skills to the volleyball court, for which he was recently honored.  

This winter Matt competed in an international tournament in Puerto Vallarta, Mexico.  The tournament brought together 80+ players and 5 pros from around the world for 6 days of intense competition.  With 11 beach courts used concurrently, the tournament format has each player compete in 30-40 games where teammates and opponents change every game.     

 Matt says, "What makes this an exciting event is not only the physical dexterity and conditioning required to last six days in the hot sand and elements, but also developing friendships with such a diverse group of people with unique strengths and abilities." 

Much to Matt's surprise and honor, he was chosen as one of three male Most Valuable Players by his peer players at the end of the tourney.  Besides performing well on the volleyball court, a positive attitude and good sportsmanship are keys to Matt's tournament success.

These qualities also make Matt a valued Center team member and effective financial planner.Congratulations, Matt!

Matt attends 2010 FPA National Conference in Denver, Colorado.

Matt Chope recently attended the 2010 FPA National Conference in Denver, Colorado. As a Certified Financial Planner (CFP), Matt and Center planners are dedicated to sharing ideas, knowledge and support within our financial planning profession. The Financial Planning Association is one of the largest, most active, and most sophisticated financial advisor groups in the country with over 24,000 members and over 100 active local chapters. Click here to find out more about the Financial Planning Association®

Over the years , Matt has attended dozens of similar conferences and retreats with the intention of cultivating the best practices within our industry. Topics range from technology and practice enhancements to exploring new portfolio building techniques; the common theme being to improve our client's overall financial planning and investment experience.

Matt shares, "In all, it was a great conference and I was able to bring some best practices back to share with our Center team. We are implementing some of those ideas and continue to strive to enhance The Center experience. While we realize we will never be perfect, especially in this profession where so much is uncertain we will continually to work toward one of our firm values which is our passion for excellence."