Good afternoon, everyone, and welcome to our 2025 Annual Outlook webinar. Hope everyone finished last year with a very nice holiday season, and your year is off to a great start. My name is Dana Vosburgh. I'm the Managing Director of Advisory Services here at Manning & Napier. I'm happy to be joined by two great colleagues. First, Chris Petrosino, Managing Director of our Investment Policy Group and a regular panelist for our Outlook webinars. Chris and his team are responsible for setting the firm's overview and our broad macroeconomic outlook, as well as on financial markets, both equities and fixed income, home and abroad, and on asset allocation decision-making. I'm also joined again by Susan Pilon, Senior Financial Consultant in our Wealth Management Group. She's covering the Tampa, St. Petersburg, Florida area for Manning & Napier. Susan works very closely with a broad range of clients, both individuals and institutions, to provide planning strategies and investment solutions across a full array of needs. Thank you, Chris and Susan, for taking part in the webinar today. Happy to be here. Yeah. Well, we're going to kick things off. We like to be interactive here. We're going to kick things off with a poll question, and you'll see that coming up on the screen here. It's kind of a way to just get a sense of priorities and goals for the year ahead. And you can see here it says, "What is your top financial goal for the year?" You may, I guess, all of these could be important to you, but we're asking you to pick one. But reviewing and stress testing your financial plan, creating an estate plan, reviewing asset allocation for diversification opportunities, implementing an efficient tax management strategy, and preparing for my upcoming retirement, so say three to five years. So if you could take a minute just to make a selection, we're going to see what the results say, and then we'll move along with the agenda. So, like I said, these are good choices, so you may have a hard time even picking one. But see the results coming up here. Oh, it's nice. So we've got a range. But reviewing and stress testing your financial plan is the winner, is the 28%. But that's good. We've got a little bit of everything here, and that's great because we're going to be touching on a little bit of everything and kind of a nice mix of topics that we'll try to get to, if not in our prepared material. We had a number of questions as well that we'll address. But so, you know, we're going to have a few more polls. As I mentioned, we like to be interactive throughout the webinar that touch on some key topics that we'll be discussing throughout. So we appreciate it if you participate in those, and we encourage you to ask questions along the way as well. If a question does come up or comes to mind for you, please feel free to submit it using the Q&A function that you'll see on the screen. We'll spend time at the end of the webinar answering as many questions as possible. My colleague, Tom Stedman, one of our Wealth Management Consultants here, will be assisting as well, kind of behind the scenes and replying to some of the questions that come up. I'll just note sometimes certain questions can be a challenge to answer on a live webinar, either because it's very specific to someone's individual circumstances and planning situation, or maybe we just would prefer to have a little bit more time to do research before answering. But just know that we or someone on our team will be sure to follow up to answer your question if we don't answer it live here. And thank you to those who did send a question already. Like I mentioned, we had quite a few, and it was nice to see, and again, a broad range of questions hitting on a number of topics. Lastly, you can find additional resources in the chat, including our Outlook print publication touching on some of what we're covering today, and then upcoming events and guides to help you grow, save, and share your wealth. All right. You know, I think starting every year, you know, everybody's familiar with New Year's resolutions, and this is, I guess, a similar theme here, but we're just going to kind of hit on New Year priorities. Good things to kind of keep in mind as you kick off the year. We're already in the middle of the 23rd of January, but time goes by fast. As we think about the year ahead, you know, a couple of important things. Updating passwords. Our lives are more online now than ever, and that extends to our finances and how we handle our finances. You know, I think it's something to really be diligent about in making sure that you have good passwords. You know, first and last name and the number one is probably not a good password. You know, and everybody acknowledges this, but, you know, sometimes we're not always good to make sure we're diligent about it. So that's a good reminder, just something for security purposes. Beneficiary designations. You know, family situations can change, so make sure your beneficiary designations reflect that. Those beneficiary designations on retirement plans and insurance policies are big ones. You know, they supersede your will. So if something happens, you want to make sure your assets are passing on accordingly. If maybe you put a beneficiary designation in place years ago, right, something can change, and you don't want to accidentally disinherit somebody or maybe have somebody included that you don't intend to have included in your assets anymore or receiving your assets anymore. So that's a big one that we always look at every time we do a review with a client. Create or confirm required minimum distributions for the year. You might be starting RMDs for the first time. If you're 73 this year, technically you have until April of next year for your first RMD if you're 73 this year, but just being aware of that. Also, if you've been taking RMDs, they go up a little bit every year, so making sure that you know what that number is and you have a withdrawal strategy and set up properly to meet your specific needs. Getting or at least prepping for the tax season ahead and getting your information together. You don't want to be waiting until the last minute to gather everything together because sometimes you may miss an opportunity for some tax savings if you don't really put some thought into it or get information to your accountant ahead of time. You may miss out. So doing that ahead of time and making sure that things are organized is a good idea here in the first couple of months of the year. And then also, you know, confirming and understanding when would be a good time to have a meeting with your advisors. Depending on when you met last, you know, maybe it was middle of the year and you can target something maybe in the summer again. But we always recommend annual updates, annual reviews is helpful just to make sure things stay on track. And then reviewing your spending. Also, similar to that, while you're doing that, meeting with your advisors, making sure that you're aware of what your spending is, you're aware of your budget, you're reviewing that. And then maybe that creates an opportunity to save more or take advantage of some planning strategies that you wouldn't have been able to, I guess, identify if you didn't take the time to kind of evaluate that. So those are some highlights. Susan, I don't know if there's anything you wanted to add with that list that I just went through. I think it's a great list, Dana, and I would just add that, you know, we live in an ever more online and ever faster world, so taking good care with those passwords, that is a huge one. I love that, and I think, you know, updating those beneficiaries is another just great I wanted to highlight because as things are changing and things are happening quickly, it's just good to make sure that you have all of those things buttoned up, and it's just always good to not, you know, to slow down and take your time in this fast-paced world. Sometimes we're getting text messages, we're getting email confirmations, so before you automatically respond or click on links, think about those things before you do them, and you can always reach out if it's something to do with us. We're not going to text you. So call us and make sure that it's coming from one of us if you're working with us. Great. Yeah. Thanks, Susan. And I think we'll be touching on a number of things today relating to financial planning and the markets and the economy. So a wide range of topics. 2024 ended somewhat choppy in the markets, but overall, you know, we had another really strong year. And we also had an inauguration on Monday with the Trump administration coming into the office. So lots happening. And there's, you know, as usual, I think any year we start, there's a certain amount of uncertainty. But Susan, we'll start with you. What are some important things to highlight as we start the year? Yeah, thanks, Dana. I think the most important thing from a planning consideration is to actually review your financial plan or create one if you have not done that yet. I think there's some barriers to entry if you have not done it yet. Some of that being that a lot of times people think it's going to be a very tedious process. But the reality is we can create a plan in a very short period of time with not a whole lot of data. Oftentimes I find that once clients go through that, they say, "Oh, I really want to put in all my specifics and my data," because they find out how valuable that plan can be. I think the other barrier can be that sometimes clients say, "I'm afraid of what this plan is going to look like." And what I find is that once clients go through the process, either they're very pleasantly surprised. I've had clients get very emotional in the office after they've seen their plan and how well it's actually looking compared to what they thought it might be. And that's a really good feeling for me that I could give them that comfort and that peace of mind. I kind of think of your financial plan as an insurance policy for your peace of mind. But then also the people that have done this on a regular basis, they kind of crave seeing that plan. When the market takes the inevitable downturn or a pause, they want to see, are they still on track for those most important wants, needs, and goals that they have in their plan, so it's just really nice to see that through different markets, through different legislation that happens, we can always adjust the plan too, and I think sometimes when the plan doesn't look exactly how somebody wants it to quite yet, we have the ability to adjust, and when somebody sees how easy those adjustments can be sometimes, that is another way they get peace of mind in their plan, so that would be my number one recommendation. It's a new year. You don't even have to have a resolution like Dana was talking about. Just go ahead and say, "This is something that I am going to put as a priority," and go ahead and put together that financial plan and make sure that you're on track. Great. Yeah, and Chris, thinking about the markets and the economy then, what are some, I guess, big things to highlight here as we start 2025? From a markets perspective, now is a great time to take a look at financial plans like Susan was discussing. We've had back-to-back years, 20-plus% in U.S. stocks in particular. A lot of other markets have done well. We're really at a time when things have gone well for an extended period of time. As we start the year on the economic front, there are, I think, signs we're well along in the cycle, but there's not much from our vantage point that says it needs to end anytime soon. Rather, what's really on our radar screen is where investor sentiment and valuation are in the market, which is to say both are fairly elevated relative to history. That tends to be an environment where if sentiment shifts a little bit, we can get some volatility. And so as we think about the new year, uncertainty, both with new administration here at home, geopolitics globally, and just the natural ebb and flow of economies, it seems very likely that we will at some point have some volatility during the year. Our outlook at this point is that is something that we want to embrace and add to from an opportunistic standpoint. But I think it really does a great time, like I said, to take a look at that financial plan, make sure that as things have unfolded in markets, you're not taking too little risk and certainly not taking too much risk. And that's really the valuable part of these plans. Great. Well, thank you both. That's a good way to start it off here, and we're going to have another poll question, and it's something we've done before. We call it fact or fiction, and this is an area that's constantly under close watch, what the Fed's going to do and what does that mean for markets and the economy, so this is just fact or fiction, true or false. The statement is the Fed cutting rates does not always lower borrowing costs, so you say fact or fiction to that. We'll let you weigh in, and then we'll reveal what we feel is the answer. Okay. Here comes fact, so large majority, about 90%, are saying fact, and that is our answer as well, so fact. Chris, can you please tell us why this is so? No, absolutely. So when we talk about the Fed cutting rates, right, it's a very specific rate that they are cutting or controlling, which is the Fed funds rate, which is effectively the price of overnight money in the economy. But as we go out to further and further maturities, that's really priced based on the bond market and market participants' opinions of not only where is the Fed funds rate going to be this week and next week, but next month and the quarter after that and the year after that. And that's really what influences the yields as we look at these different maturities. And I think to really drive that point home, right, since the start of the current rate cut campaign back in mid-September, Fed funds are down about 1%. The two, the five and the 10-year are actually up over 1%, and the 30-year is somewhere in between. So as we think about the year ahead, a lot of times the focus is on the equity markets, but there's likely going to be volatility on the fixed income side as well, right? Moves of these sizes are quite, well, 1% is fairly mundane for stocks, particularly these days. 1% in a two-year, a five-year, a 10-year, what have you, those are pretty big, those are pretty big moves. So as we think about the year ahead, we're likely to have some opportunities to adjust duration in the portfolio, sell parts of the yield curve, bond maturities that we think are perhaps a bit richly valued and rotate into some of the more attractive ones as we go forward. I think we can go into detail, a little bit more detail in a few areas, both planning concepts and also certain things we're seeing in the markets and the economy that shapes our perspective. One is the fact that President Trump was sworn in office for a second time on Monday. There's always questions about what that means, both for personal finances when it comes to certain legislation, but also the impact on markets, and so we'll ask both of you, I guess, Susan, starting with you, what are some thoughts as far as maybe the potential impact on somebody's financial plan or their finances? Yeah, I think right now the big question on most people's minds are taxes. Taxes are, you know, we're coming up to put in our 2024 taxes as it is. People are starting to work on those. And now as we're thinking ahead to 2025, what's going to happen going forward? Right now, we have reduced tax brackets, higher standard deduction, a higher child tax credit, a higher estate tax exemption. And all of those currently are set to sunset December 31st, 2025. So those things, while we may think, you know, some of that may change and there's a likelihood of that, and we're going to be talking about that in just a bit, those are kind of the things that we have to plan for at the moment. That is where we stand today, and we're going to be watching this very carefully and something that is on everyone's mind. Chris, and for you, as far as from an investment standpoint, the impact of a new administration or some of the things that maybe President Trump had mentioned or campaigned on, what are some thoughts there? Yeah. Actually, I want to hop to the next slide. I think that's probably a good backdrop for this part. And so we think about the policies of the incoming administration. There are certain elements of it that are perceived as being potentially very, very pro-business, whether that is deregulation, efforts to encourage fair trade, better trade terms for our domestic companies, potentially lower taxes in certain cases. And what we've seen post-election has been a tremendous surge in business optimism, particularly for smaller businesses. You think about smaller businesses; these tend to be far more domestically focused. You don't necessarily have all the multi-jurisdictional tax levers that the large companies have. And perhaps more feel the pressure or pain of regulation a bit more than some of the multinationals. But small business sentiment has taken off post-election. And then even CEO confidence, which again, sort of these bigger tend to be more multinational firms, we've seen that tick up noticeably as well. And so lots of optimism, lots of excitement. The question remains, and this is what we'll be looking to see is to what extent do we actually get follow-through on these things, right? To what extent does this optimism lead to companies choosing to expand, companies choosing to hire more individuals, companies realizing better profits, right? And I think that's where the jury's out, right? That's something that could drive extra growth if we get a surge, a broader surge in investment, I mean, business investment, that could be a real positive going forward. I would temper that a little bit, noting that back in 2016, you got a similar pop in sentiment, both against small businesses and arguably the surge on the CEO side was even greater, and it was really a mixed bag in terms of business behavior post-election, so I think particularly at a time where sentiment's high, expectations are there's going to be good, it's also worth thinking about the other side of the coin, which are some of the policies that could potentially be disruptive for the economy. Certainly, the tariffs, I think, get a lot of the attention just given how quickly they can be turned on in certain cases, and certainly, that will have impact on price. The academic answer to is that inflationary is, well, it's a one-time bump, and then that gets settled out. I think the real-life answer is a bit more muddy because it depends on what the knock-on effects are. So it remains to be seen if these are going to be more of a tool to poke and prod at countries to adopt more friendly terms of trade for the U.S., or if we're actually going to see these implemented in wide swaths. The other one, I think from my perspective that also bears watching is some of the immigration stuff. And I think it's important when you touch on topics like that, we're thinking purely from an investment perspective and really divorced from the politics or what's good or what's bad. But we're at a time in the economy where we still have very low unemployment. It's edged up a bit over the year, but still quite low by historical standards. Job market is tight. And to the extent that you are going to be removing workers from particular areas that have even tighter labor market dynamics, that could be some real pressure on price. So that's something that we're keeping an eye on purely from an investment perspective. But like I said, really at this point, it's too early to tell what we're going to get. But again, at a time when the stock market in particular and investor sentiment seems to be putting lots of weight on good outcomes and not so much weight on the bad outcomes, it's worth being a little more sensitive to some of those potential knock-on effects as we go forward into 2025. Great. Yeah. I think there's a natural segue here into our next, what we have on the screen now, and we thought it was a funny way to address this topic and ask the question because it's easy to lose track of things, right? Do I know where my actual asset allocation is? I think we can all relate to maybe losing track of things, and that includes your asset allocation because just as Chris was saying, the market has moved sharply over the last couple of years, and particularly in domestic stocks, and people, without even knowing it, may have a higher allocation to stocks than they realize, right? They have something in their mind about where it is, but without really reviewing it closely, it may be meaningfully different than that. So Susan, maybe touch on this because I know when we talk about planning, and this is a big thing that we always want to review for our clients. So what are you talking about with your clients? Absolutely. You know, if we're managing all of your assets, we've got a good line on this. We know exactly where that asset allocation is for you. But for multiple reasons, if you're not yet working with us, or if you have outside assets and you're working with us, we don't control all of that asset allocation. And so we may not know exactly what that looks like, but with the growth that has happened over the years, you can see that the equity portion of your assets have gone up. And so you may be taking unintentionally more risk than you plan on. If we look at from 2019 through 2025, a typical 60/40 portfolio without rebalancing at all would be up 13% on the equity side or down 13% on the fixed income side if you want to look at it that way. So you may be taking more risk than you are anticipating. And it's just something to watch. That's another plug for making sure you have a financial plan because we're going to look at all your assets and how they're working together. And we're going to see that pretty quickly and clearly if you're out of whack on that asset allocation. And that's where when that downturn may come or the pause or even a change in which asset class is behaving differently. Most of that growth, that 13%, 11% of it went into U.S. large-cap growth. So if growth has outperformed for a long time, so if value took over at some point, you could see that rapidly change. And so it's just something to think about. It's also a good time to look at your cash flow needs, something that I wanted to talk about when we're looking at your plan. So if you have some upcoming cash flow needs, that's another reason to review your plan, but also maybe a time to take down some of that risk. Here's the opportunity. This risk has grown in that asset allocation that you have on the equity side. Maybe you pare that at this time while we have low capital gains rates, but also to get your allocation back in line and take care of some of those upcoming cash flow needs that you have. Yeah. And I think at the beginning in our first poll, we talked stress testing and kind of reviewing things was a top priority. And we're touching on that there. Here on the screen, you can see it's just the importance of that and why we feel it's an integral part of the process, right? We want to make sure we're doing that, giving people context. That's so important. Yeah. That's one of the things that the plan can actually show you is it can show you how much risk you are taking in the portfolio and what it might look like should we have a pause or a downturn, whether that's today or someday, many months or even a year down the road. Yeah. Yeah. So kind of relating to just how things can change, we thought this would be another fun way to, and this is basically a multiple-choice question that you can participate in. But the chart that you see here is relative performance of which market versus the S&P 500, so there's no labels on this graph. You just see a line basically with a trend going up over time. The choices are U.S. large-cap stocks, emerging markets, so it's large-cap stocks from 2018 to 2024, emerging markets from 2003 to 2008, Japan from 1982 to 1988, and then the U.S. tech sector from 2018 to 2024. So this is just how a market did relative to the S&P 500, so this is a line going up, meaning it did well relative to the S&P 500. So we'll see what people vote on. Interesting. Okay. So a little bit over a majority voted for U.S. large-cap stocks we had, and then the U.S. tech sector by far and away the two most. So we'll reveal our answer here. See, Japan, you can see the labels there. So the Nikkei versus the S&P 500 from 1982 to 1988 was a very strong performer. So you may remember that for some people that can remember the history of how things performed in Japan in the 1980s was extremely strong. So Chris, can you give us some perspective on this and why we wanted to show this chart? Yeah. Y'all made my day. I was trying to find one that looked like what we had experienced of late in large-cap tech or large growth. And I guess I found a good one. So really the idea here is just to illustrate the idea that nothing goes on forever, right? This is if you extend that chart of Japan, that relative chart where you went sort of the 1980s were sort of the decade of Japan Inc., the idea of the various stats of real estate in Tokyo being worth global real estate, all those crazy things, Japanese companies taking over markets left and right. And it was that way for a period of time. And then other leadership emerged. Other markets did well. And I think we're in an environment in some ways similar today, not in any way predicting that the relative experience for U.S. large-cap growth or the tech sector is going to look anything like what befell Japan following the late 1980s or a host of problems that they were dealing with for an extended period of time. But just this idea that things don't go on forever. And it's less about making a call when is the top, when is it time to go invest in the next thing, and more really highlighting the benefits of diversification because we don't know when that day is going to come. So yes, over the past 10 or so years, it was great to own the U.S. tech sector or large-cap growth, even the S&P 500, right? And for the majority of our client portfolios, you've had exposure to those areas. Certainly over this time period, that's all that you owned, but again, given the idea that we don't know when the tide will go out on that and something else will come into favor, it's important to have that diversification, and it's just another way to look at this, and very quickly, this is called the quilt or the periodic table, but we're just looking at different public asset classes year by year going back to 2000, and at a glance, just pay attention to how the colors change, right, so emerging markets is gray. It's always gray throughout the chart. U.S. large caps is that sort of phosphorescent green. Again, same color across the chart, and what you see is really no discernible pattern as far as I'm concerned, right? You go through periods 2003 to 2007 where it was the foreign markets by and large that was where you wanted to be. U.S. large caps were sort of middling, and then we've more recently had a window where large caps were by far and away the winners, beating a number of other areas, and so again, this is the benefits of diversification, the idea being if we can find good investments, good companies across these different areas of the markets, and again, this is just public. Certainly, you can go to the private markets. There's opportunities over there that we've touched on in other venues, but I think it's just important to, I think, take these lessons. So after a period where it seems like all you really need to do is own U.S. large-cap stocks, own the NASDAQ, own the tech sector, a little more history looking back over time, I think it shows that you don't want to do that to the exclusion of all other assets. Great. I think we can also touch on taxes. That's something that we mentioned it earlier, but after the market has given us two very strong years in a row, most people have significant unrealized gains in their portfolios. So many people will ask, "Can I do something to avoid paying capital gains tax?" I mean, I guess it doesn't matter in your retirement assets, in your retirement accounts, but for brokerage accounts and any taxable accounts, that may be a question. So I'm sure you've heard that, Susan, as far as, "What can I do about this? I've got a lot of unrealized gains. Now, what do I do? Yeah. Unfortunately, there's only two ways that capital gains taxes can be avoided, and one is death, not an ideal option, where you get that step-up in basis. And the other is if the market takes it away from you. And so certainly, again, not an ideal option. I don't typically have people that get really upset from selling high in the end. And again, just knowing that capital gains rates are lower right now, and there's quite a bit of room in that capital gains budget at the 15% capital gains tax, it's not a bad idea to take some of that profit off the table. We can do some other things too, like tax-loss harvesting and also pairing gains and losses. So there are strategies that we can use to help with the capital gains. One other thing I will say is we have a tax webinar on February 25th, and we're going to talk about those strategies and others. So make sure to tune in for that as you're thinking about your taxes. I'll be on that webinar with my colleague Tom, who's behind the scenes here, as I mentioned. So yeah, we'll cover a lot of good updates and strategies that people can keep in mind. The goal with any tax planning really is the way we like to focus on it is to try to smooth out the tax ride year to year. It's not so much always sort of avoiding it all together or making sure it's the lowest that year. It may be a better strategy to just smooth it out. And also understand that not selling something means from a capital gains standpoint, you may be exposing yourself to more capital risk. It's what we touched on earlier where the equity allocation can actually creep up higher. For an individual stock that can represent a large, maybe grow to represent a large portion of a portfolio, the added risk is even more elevated there where your personal wealth is attached to a very narrow segment or at least maybe even one company. It's important to really understand those trade-offs and I think weigh the risk there to make sure that things aren't getting out of whack. Let's have another poll here related to taxes. It'll be interesting to hear or see what people vote for on this one. We touched on it a little bit earlier. Susan mentioned it, but the Tax Cuts and Jobs Act, which we call TCJA, will, emphasis on will, be extended. We'll see what do people feel about that. How do they feel about the likelihood that all of it or a good portion of it will be extended? Fact or fiction? We'll give it a minute here. Fact. So about almost 70% are saying fact, it will be extended. So about 30%, then, saying fiction. And our answer as far as where we're seeing it is fiction. We're saying fiction. So Susan, tell us why you think this is the case. Yeah. So it's not that we don't think there is some likelihood of things happening, but will it all be automatically extended? No. This has still got to go through Congress, and there's a slim Republican majority. So we still have to pass this. There's a lot of negotiating that goes on and a lot of tools. And you can see this when you're looking at the chart here that where the pre-Tax Cuts and Jobs Act brackets were to where we are today and then what that will go back to. Because right now, until anything happens, it is set to sunset on 12/31/2025. Sometimes this can even go into 2026 as they're negotiating. We've seen retroactive legislation. So the key right now is to be flexible. Some things that we do think have a higher likelihood are those tax brackets staying lower. We do think that's a higher likelihood. The standard deduction staying higher, the estate tax exemption. Those are some of the things that we think will likely be extended or potentially even replaced with something different, but not going all the way back to where they were, but the planning part is the key here because we know what's happening now. We plan for that, and then as soon as we get information, we can plan for what's going to go on going forward. Right. Yeah. And it can take time. And I think I've mentioned it in other events that we've had when we've talked about taxes and the Tax Cuts and Jobs Act. But as far as looking back on the first Trump administration had put the TCJA in place, and it took a good solid year, even with Republican majorities, to put that in place. And it was actually fairly watered down from some original, at least an overview of ideas during his campaign then. So it can take some time, and it can be a real challenge, I think, to just basically move it forward here. So I think my guess is that there will be a number of changes. It may not just be an extension of the TCJA as we know it. And I think it can take some time. Yeah. So, as Susan mentioned, maybe even going into next year, depending on how complex and wide sweeping the tax changes would be, maybe going into next year and then making something retroactive. So yeah, I think the planning is the important part in making sure that we're monitoring that and communicating those changes to our clients. And I think beyond just this, there are other things that are somewhat tax-related, but other strategies to consider. So Susan, can you just talk about some other things that you think from a planning standpoint would be important to keep in mind here this year? Yeah, absolutely. So one thing is having multiple buckets from which to use once you get into retirement. So if you're already in retirement, hopefully you've already planned for that and have some different buckets, such as a taxable bucket. So just that regular brokerage account, a single or joint name account so that you have that after-tax money. And we're looking at capital gains taxes, a tax-deferred bucket, so your 401(k), your IRA, things like that, those retirement accounts. So we can use those as well. Those are going to be taxed at income tax rates. And then having your tax-free. So those Roth dollars, that Roth bucket, or your HSA, the health savings account, those are ones that can grow tax-free and can be very helpful as well. And what I see really successful with clients is sometimes we're able to change which bucket we're pulling from in different years, especially if there's some time between retirement and when they start taking Social Security or things like that. We're able to maximize some of that planning and make sure we're using maybe multiple of those buckets. But that's something we definitely like to look at with clients and help them with their plans. So that Roth conversion is often on people's minds as well. And there are some better times to make a Roth conversion. When the market's down is a great time to consider doing something like that if you still want to plan for that. Between retirement and your Required Minimum Distribution date, that's another great time to plan for that when you may have less income coming in. Hopefully, you've planned a little bit right before retirement, gotten some cash flow set aside, and then you're able to have a lower income year. But sometimes people just in their regular lives have lower income years depending on their business or whatever it is that they do. So that is also another good time to consider doing a Roth conversion. And then it's always a good time when you're looking at planning for your heirs and thinking about if you have a larger estate, and this is something you have a large IRA, and you want to think about what your heirs are going to do. And as you're thinking about planning for them, a Roth conversion is always a good idea to consider. Charitable giving is another one. Using those qualified charitable distributions is a great way to plan or even just giving. It's $19,000 this year that you can give to anyone. So thinking about your giving strategies, if you are doing charitable giving, it might be even planning your giving out. So if you're having a higher income year, maybe it's pre-funding some of that using something like a donor-advised fund or some other strategies like that where you're going to pre-fund your giving and take that bigger deduction. So those are some options as well. Catch-up contributions is one that I'm super excited about. I wish I was a little bit older for the first time this year because in 2025, everyone can put away in their 401(k), 403(b), or 457, $23,500. If you are 50 or above, you can put away an extra $7,500. So for a total of $31,000, that's a nice amount of savings. But new for 2025, alert here, if you are ages 60 to 63, you have a super catch-up. And that's really awesome because not only can you put away that $23,500, you can also put away an extra $11,250 for a total of $34,750. And that's again for the 401(k)s, 457s, 403(b)s, and also SIMPLE plans. So anything that you're doing a salary deferral. So that's a huge option for people and something to definitely make sure you're planning for. And then lastly, we would say an estate plan review, just something that's a good idea to do with all of these changes. I was working with a client the other day who said, "I had my child. I put together an estate plan. I haven't looked at it, and they're going off to college." And a lot has changed in those 18 years. And not everybody's waited that long, but even if it was five years ago, there's language, there's updates that probably need to be made in your estate plan. And it's also a good time to decide, "Do I need to have a trust?" I was working with a client the other day that we went through all of his assets, and he was able to put a beneficiary on everything he did from his IRA to his Transfer on Death on his regular brokerage account to even a Lady Bird Deed on his property here so that could pass with a beneficiary. But that was great. We determined he didn't need a trust, but your needs may have become more complex, and it may be time for you to look at putting a trust into place if you haven't already done that. So again, things that we can help you review and look at. And it's also a great time to make sure that the things that you think your estate plan is saying that it's going to do is what it's actually going to do. We see that all the time is that somebody thinks that they have it all in order, and then they haven't funded their trust, as an example. That seems pretty simple. I've heard people say, though, before, like, "Oh, I have a trust." And then I said, "What's actually in your trust?" And we might find that they don't have anything put into that trust yet. So those are things that you just need to think about, or even here's what I think my trust says, but let's look at that for you and make sure that you have everything in order. Great. Yeah. And Susan, I guess what I'm thinking about here as I'm listening to that and just thinking about some of the other things we covered, I think the value of revisiting and coming back to your overall plan. And we talked about asset allocation and how that can drift. It's not even unintentional, right? Your asset allocation can change. Talking about tax legislation and potential changes there, the things that we have here on the screen, the different potential strategies that may not be relevant or advisable for everybody. It depends on your situation. There may be years where it makes sense and other years where it doesn't, right? Or maybe it was at one point appropriate and it isn't anymore. And that's okay. But that's where going back and having those regular meetings we talked about scheduling meetings and just the value of doing that, because something can sort of be identified as a new strategy that you didn't think was possible before. So I think a lot of good things to think about here as we start the year. It's a great thought, Dana. And I think the other thing is too, we try to plant the seeds on these, but sometimes when they don't relate to you at this moment, you don't think about them. And that's why it's so important to continually plan or at least look at things annually, if not more often. But because those things do change and something that, like Dana just said, didn't apply to you before may suddenly apply. And we want to make sure we catch all of those. Right, and so what to expect from here, I guess, as we sort of conclude some of the remarks that we prepared here, I guess for both of you, but things that you think are important takeaways, I guess, as we start the year, so for Susan, we'll start with you. What are kind of the top things on your mind here? Yeah. I think I sound like a broken record a bit with make sure you check your plan. But there will be a lot of changes this year. And so I think it's more than ever just an important time to make sure, A, you're set up with where you want to be right now, that you know where you want to be right at this moment and where you're trying to go so that if you can articulate that to your financial consultant, we can help make sure you have a strategy to get there. And then we can pivot that strategy along the way as different things come up and we know what the changes may be. But this could be a pivotal year as we see how things unfold. Yeah. For you, Chris, what are some key takeaways? Just to repeat the theme from earlier in the presentation here, just around, again, several years of one asset class, one particular portion of asset class, like large growth stocks domestically, leading for as long as they have. I think it's easy to forget the benefits to a portfolio of diversification, particularly over the past few years where diversification meant not capturing all of what that part of the market did, but over time, again, I think hopefully we've shown this time in previous discussions that there is merit for owning those other areas, and I would just add that our investment teams, as they're going to work looking for opportunities, we are finding more opportunities outside of just that narrow sliver of U.S. large tech and both domestically across different sectors and business types as well as internationally. So I think that's particularly important as we go forward, especially at a time when expectations are really for another year the same from the same leaders, basically sort of wash, rinse, repeat. It's been two years in a row. Folks tend to extrapolate in a straight line and look for that third one. So I think that's just important to, again, value diversification and use that volatility in the markets that we think we're going to get at some point here to add to those ideas. And I think that's really the key, the setup as we look into 2025. Great. Well, that's a great way to end our prepared portion. Susan and Chris, thank you for your insights today. So as we move to open Q&A, we'd like to highlight if you have any questions after the fact as well. So after we're done here, feel free to reach out, speak with your financial consultant. If you currently work with one, if you don't, contact us, and we'll be sure to have someone reach out to you. So let's move into Q&A. We'll be on the lookout for questions that come in. As I touched on earlier, we aim to select questions that apply broadly to the audience. But please submit any and all questions. If your question isn't answered live here, we will have somebody contact you very soon to address it. We did have a number of really good questions that came in ahead of time, pre-submitted, and then some that came in here as we were going through the material. One I think is just good to cover is about government borrowing. So the question is, as the federal government continues to borrow money and shifts to longer duration bonds to finance it, this seems like long-term rates will continue to increase. Will this trend be the dynamic that breaks something and causes a market decline? So Chris, what are your thoughts? Yeah. And go back to the slide that we had with the Q&A or fact or fiction around the implication of Fed policy, right? And it's not lost on us that I think a key driver of some of that widening that we saw in rates and those longer maturities, it was a part of reaction by the bond market to the prospect of further government spending, particularly deficit spending, and the risks that the incoming administration or current administration, if you took all of their policies at face value, certainly would seem to add considerably to that deficit. And as we look over time, just the interest payment on the deficit has steadily increased. And so we think maybe the first place that we start to see this be a constraint on policymaking and economic activity could potentially be in the next downturn. And particularly with the idea that running very large deficits in what has been a growing economy, right, sort of tends to not occur. Generally, you try to run them countercyclically, build deficits when you need to do fiscal stimulus to encourage growth. And then as things recover, rein that back in as we saw late 1990s, early 2000s, whereas this time really we've just continued to build. And so the risk is that you get to a point where you need stimulus, you need larger borrowing to fund that, and the bond market says no, right? And you get further back up in rates at a time you really needed the relief to help encourage growth. So I think that's a risk that's on the horizon. In terms of bond yields being the forcing function on valuations and things like that, that's certainly one of the things on our radar screen as we see bond yields back up. It's a reason really when we look at our portfolios, we're more or less sort of middle of the road in terms of that stock bond mix. And as bond yields move higher, that starts to become a more credible alternative to owning equities, particularly at higher valuations. Unfortunately, there's not a magic number on the 10-year, 30-year, or any maturity where you say if the 10-year gets to five and a half, things break. It's just more of a you start to get into that area where that potential energy, if you will, starts to really start to build up, and then you don't know what the catalyst is. But I think the bonds are more of a threat today. 4.6 was the last time I looked at the 10-year than they were when the 10-year was one. So it's certainly something on our radar screen and something that is influencing our allocation decisions. There's a few questions, I guess, in different ways that we're asking about inflation. And the question was just, will inflation increase dramatically in the next four years? But there were others that were pre-submitted as well that were kind of related to that. But I guess just thoughts on sort of the direction of inflation as we look ahead here in the next couple of years. Yeah. So I think first, it's probably helpful just to back out the administration and policy and focus on some things that I know we've brought up before on this. I hopefully won't dwell on them too long, but just we think structurally and secularly, you're in an environment where you are likely to see inflation drift higher, right? So not a return to the 1970s or even what we experienced in the early 2021, 2022 sort of post-COVID world opens back up stuff, but higher inflation such that we experienced in the 2000s, the 2010s, that's probably behind us, and that's a function of everything from demographics to the fact that we are seeing more perhaps a peak globalization, more desire to, again, that from just-in-time inventory to just-in-case, all these types of things that will structurally increase costs, which is more or less inflationary. So we think you've got that backdrop. And then on top of that, and this is really, I think, that wait-and-see part from where we go with the current administration. I think as we look across what the policy mix is, it's pretty easy to look and identify things that are potentially inflationary. It's a lot harder to look across and see things that you say, "Oh, that's potentially deflationary or disinflationary if it hits." So yeah, I think on balance, that's likely the risk where we're going today. And from a more cyclical perspective, it seems like we're at a point where you still have some relatively sticky inflation. Again, some of those big outliers have come down, but it's hard to say that you're really seeing signs that you're going to get back to 2s or sub-2s on inflation just given where things are today. It doesn't mean that there's not potential outcomes out there. To the extent that there are increased real-world applications for AI that can be disinflationary, that is certainly a potential out there, right? One of the ways that you can have a disinflationary impact on things is to increase productivity, right? Create more output with the same amount of capital and labor. And that's a potential. We think that's probably more of a longer-term story, but don't want to completely rule things out. But yeah, the short answer is we think the bias is probably higher going forward, not lower. Okay. Yeah. There's a good one that I think we get this question quite a bit. But just generally, where should we park cash now that interest rates are lower? So I mean, I think there's a couple of things there, depending on what our interest rates are, but just in general, parking cash. Where do you put cash when you have some maybe in the current environment? So I think maybe Susan, I think maybe you can answer some of that. Yeah, absolutely. I think there's a big fat depends on that, right? So a lot of it is going to depend on how much cash you have sitting aside and how soon you're going to need that cash. But I also would be remiss if I didn't say it's an important time that if you're looking at cash to think about how much cash do you really need? Have you set aside too much cash at this point? Because sometimes we see that people will put aside some cash. Hey, the rates have been really great. I can get a great CD. I can get a nice money market rate. I can see a special online. Sometimes you have to be very wary of those. And I think Chris will maybe join in on some of that as well. But if you look at the peak rates and you look at 12 months later, oftentimes, not in every cycle of the market, but oftentimes you will see that the bond market, the U.S. Ag g, the S&P 500, or even a 60/40 portfolio has beat that handily 12 months later. So it's just something to consider, like making sure you right-size that cash position. Do you have your emergency fund set aside, that three to six months of expenses? Do you have those upcoming cash flow needs set aside? And then let's make a decision based on your specific situation if we need to park some additional cash aside for other things we know, or should we be investing that somewhere? That's great advice. I guess two thoughts. One is for those assets that you identify needing in cash is really matching what they're invested in for when you actually need it, when you need to pull it, right? If you're buying a piece of property, let's say in the next three months, a three-month Treasury bill is just fine, right? You don't necessarily want to go and buy a 10-year Treasury bond because you're exposed to any swing in interest rates, which when you want to look to sell that thing in a few months could be meaningfully lower than where you bought it. That's an extreme example, but it is, I think, important, particularly in an environment where the deposit rates are falling, those money market rates are falling, and there can be a temptation, "Well, what can I do to get a little more yield?" And other than diversification, there is no free lunch in investing, as they say. And so generally what that means, so just understand what it is that you're looking at or reach out to Susan or your financial consultant with questions, "Hey, I'm seeing this enhanced cash ETF. What's actually in it?" And it doesn't mean it's bad. It just means you might be taking on a little different risk than you thought. So if you needed exactly $10,000 cash and it moved against you and you got $9,500, that means you need a little more cash, right? So particularly, like I said, in a time where rates are going down, just keep an eye on that incremental risk you're taking to get whatever incremental yield a savings product might offer. Right. And I'll just mention, I recognize that we're at the top of the hour here. We'll stay on. We want to be respectful of people's time, but we'll stay on a little bit longer here and try to answer a few more questions. But just wanted to acknowledge that if people have to hop off, we understand, but we'll stay on and answer a couple more here. A couple, I guess, that hit on a couple of different things here. One really in the foreign markets. So the foreign markets have been laggards compared to the U.S. Why has that been? And what is the future for these foreign markets? As U.S. investors, there are two things that we pay attention to that drive our perception of how a market did. One is what the underlying performance of those companies is, but then we have to translate that into dollars, right? So, if you pick your, how did the German stock market do? Well, there's the local price, but then we've got to convert it into U.S. dollars since ultimately that's where all of our obligations by and large lie. And what we've seen over particularly the past year and fourth quarter was an exceptionally good example, is the dollar has been very strong, appreciating significantly. So when the value of the dollar increases, right, that effectively comes at the expense of foreign currency. So when you go and you convert some of these foreign investments back to U.S. dollars or into U.S. dollars, that's where we see a good chunk of the weakness. So I think that helps explain some of it that we've seen. And why has the dollar been strong? I mean, you can potentially chalk that up to certainly better growth here in the U.S. over the past couple of years in particular, where it seems like we've come out of the pandemic recession far better than a lot of other countries, including China, which has been struggling and bumping along in the emerging markets. And because of that, more attractive place to invest. And so one of the reasons we've observed a strong dollar, certainly. But as we look going forward, you got a couple of things. One is how does this change? Part of this is the fact that these other markets are in different parts of their economic cycle relative to where we are in the U.S., right? We've been in sort of financial easing rate cut mode since September of last year. Others have been in there considerably further. You have parts of Europe that are arguably in or near recessionary levels of growth. And certainly, while that is painful to go through, that does sort of coil up the spring of that potential economic energy to grow earnings on the other side of it. So we have the potential for those dynamics to change as well going forward. And look, part of this is too just the mix of businesses and what has been doing well. If we think about a lot of the, on a global basis, where are your leading companies connected to the generative AI, the chip making and all of that? There's some international companies, to be sure, that have done quite well because of their connection with it, but a lot of them are just based here in the United States. So that also goes a long way to help explain why the S&P 500 has done so well, particularly relative to some of those other international markets. A couple more here. We talked about the tax legislation, Tax Cuts and Jobs Act. One was somebody asked to address maybe expectations for changes and extensions of the estate tax laws. So something specific, which I don't think we went into a ton of detail there. But Susan, I guess just thinking about that as we look ahead. Yeah. Again, I think we do think there is probably a nice likelihood of that being extended or altered somewhere within that, not reverting all the way back. That being said, for 2025, that estate tax exclusion or exemption is $13,990,000 per person. So just shy of $28 million for a couple. And should it sunset, as it is currently planned to at the moment on 12/31/2025, that will go back to approximately $7 million with some inflation added in there. So $14 million per couple. So that is half. That is a very large dip if that were to happen. So some planning can be done. We really recommend talking to your estate attorneys and making sure that we know what that plan is and talk about some of those strategies and be prepared should that sunset. So one nice thing too in the financial plan that we use, we have a really nice net worth statement. So we can see what your current plans are, what that looks like as we look at the estate plan within that, and see what those numbers look like specifically for you. So I think if you're on the edge or if you're close to that, especially if it were to come back down, it would be really worthwhile to take a look at that and make some plans. Great. Yeah. Very good advice. So last one we'll have here is, and Chris, this is really about, I think, areas of the market. Maybe what are one or two really sectors that we're looking at maybe for potential strong growth here in the next three to five years? Sure. So we'll assume by growth, we mean growth of investment value. And one area that's coming up a bit more on our radar screen of late is healthcare. This is an area where, again, you've had a small handful of companies tied to the GLP-1 weight loss drugs done very well, attracted a lot of capital, but really behind them, a lot of stuff is really just sort of bumped along to the point where we're talking about companies that historically attracted valuations relative to the broader market and even very attractive relative to their own histories. And more important than just looking cheap, because certainly sometimes things are cheap for a very good reason, we think that there's good businesses there. So this is an area that when we look in our multi-asset class portfolios, we're a bit overweight. I know it's an area that we continue to see some strong idea generation in. Then the other theme that we've been bumping into is looking at cyclical industries that are going through cycles that aren't necessarily tied to the broader economy, really have something of their own going on. So that's maybe less of a buy and hold for the next three to five years and more looking at wanting to own them at the point in the cycle when expectations are low and the financial performance of the industry is depressed. Then as conditions improve, that's when you're going to look to exit. Whether that's three years, five years, or two years sort of depends on conditions. One good example there that we have exposure to in a number of portfolios are lithium miners. And this was an area certainly that did not necessarily respond well to the election results, just given some of the, if not anti-EV stance, certainly not the pro-EV stance, electric vehicles that is, of the prior administration. And so concerned that maybe you're taking out some potential subsidies and things like that for electric vehicles and that those companies certainly weaken. So we thought that was a potentially attractive longer-term, not based on, again, any political outlook, but just more the underlying fundamentals of the lithium markets and the idea that one way or another, there is going to be a need for more lithium and batteries as time goes forward. So a couple of examples there. Great. All right. Well, we've come to the end of the time we have for today, and thanks again, Chris and Susan. I want to thank everyone for taking the time out of their day to be here with us. We greatly appreciate it if you could take a few seconds to fill out a survey that we have linked in the chat section so that we can have some feedback on this webinar. We definitely put a lot of thought and time into making sure that we're covering important topics for people that, for all of you that would like to attend these, and so we'd love some feedback. Also, if you're interested in learning more about Manning & Napier, please visit the link that you see on the screen to schedule a call. We're happy to provide a free consultation where you can outline your financial situation and talk about goals and what you have in mind for your finances. And we can prepare a financial plan and a stress test that will serve as a great way to outline next steps for you to ensure that you stay on track. And so please feel free to take advantage of that. So on behalf of my colleagues, Chris and Susan nd Manning & Napier, thank you again and have a great day. Thank you. Bye.