That is the challenge facing Catherine Keating, the CEO of BNY Mellon Wealth Management. Keating which oversees $265 billion in client assets. The firm is a financial powerhouse with a total of $2 trillion AUM, serving 77% of the Fortune 500. Keating has been named to the “Most Powerful Women in Finance” list and one of the “Most Powerful Women in Banking” list by American Banker.
Keating notes investors should consider taking taxable gains now, especially in highly appreciated concentrated positions. If it makes sense for investors and fits with their long-term plans, selling stock in 2020 and rolling the proceeds into a more diversified set of holdings could avoid potentially higher capital gains tax rates in the future. She notes the advantages of carefully selected alternatives in an era of lowered return expectations.
Capturing the illiquidity premium could make up the difference for a longer-term investor.
Keating notes that in today’s ultra low interest environment, philanthropic gifts are “on sale.” The compelling opportunity today is the low rates makes retained interest very advantageous, and once rates rise, the calculus is very different. There are numerous technical estate and tax planning issues today that seem to be somewhat historically unique.
There are also numerous “Tax Alpha” strategies investors should explore. Estate laws that will lower the tax-free amount of estates are scheduled to expire 2025 creating a “donut” investors need to plan around unless the new administration changes the law (which is unlikely).
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business next week with Mike Swell, head of Global Fixed Income at Goldman Sachs Asset Management (GSAM). Swell is responsible for co-leading the global team of portfolio managers that oversee more than $700 billion in multi-sector bond portfolios.