Welcome to our Q3 installment of the Quarterly Download (Q3 officially ended on Friday)! Read on for more about our newest merger, year-end tax planning, and new award recognitions.
Welcome to our Q3 installment of the Quarterly Download (Q3 officially ended on Friday)! Read on for more about our newest merger, year-end tax planning, and new award recognitions.
As you know by now, we recently merged with Karp Capital Management, a $1.2B AUM firm in Sausalito, CA. See below for some quick answers to commonly asked questions:
Who is Karp Capital? Karp Capital was founded in 2004 by Peter Karp as an independent alternative to larger brokerage firms. The firm has 20 employees and is located 30 minutes outside of San Francisco.
Why did Miracle Mile merge with Karp Capital? Our industry is going through several structural changes as administrative costs, value-added services such as advanced planning, and the ability to serve clients on a national scale become more important. Karp Capital was looking to become part of a larger platform with an amazing culture, making Miracle Mile an obvious choice. For Miracle Mile, deepening our bench of high caliber investment professionals, client service staff, and adding an advisory team in Northern California was very attractive.
Does Karp Capital serve any niche areas? Yes, Karp Capital has a specialty in working with auto dealerships and the complexities of their reinsurance accounts. They also have a dedicated retirement team that works with business owners to design, implement, and monitor company-sponsored retirement plans.
What will change at Miracle Mile as a result of this combination? The short answer is not much as it relates to client relationships, but we will substantially enhance our back-office. We will finish integrating our respective companies by the end of the year which will add several more professionals to our Investment Strategy Group, fill out our Advanced Planning Group, and add several additional members to our leadership team. Miracle Mile Advisors will remain the name of the combined firm.
KEY TAKEAWAYS FROM Q3
Reviewing End of Year Tax Planning Opportunities: Given the market volatility this year, we are spending a fair amount of time focusing on end-of-year tax planning for clients to take advantage of asset price movements to save on taxes, optimize charitable giving, and complete wealth transfer plans with more attractive valuations.
Funding year-end charitable gifts to Donor Advised Funds and/or foundations (preferably with appreciated securities) to maximize charitable deductions in 2022.
Making any outstanding individual gifts to family or friends (the 2022 gift exemption is $16,000 per person, meaning that married couples can give up to $32,000 to as many individuals as they want, and they will not trigger a gift tax filing).
Complete any outstanding Roth conversions with stocks at lower prices (which means you pay fewer taxes).
Actively managing tax-loss harvesting opportunities in portfolios by swapping like securities and funds to “harvest” realized losses to offset gains thus decreasing your overall tax bill.
Reviewing each client's holistic financial plan, cash flow needs, and liquidity time horizon to ensure that we are appropriately allocated for additional volatility as the Fed continues to raise interest rates in its fight against inflation.
While we cannot control the short-term direction of the markets, the end of the year is a critically important period to plan for what we can control.
Inflation Reduction Act (IRA): Last month, President Biden signed into law the Inflation Reduction Act, a broad-based bill designed to address rising prices that would affect policies across several areas.
From an investment perspective, the most immediate impact from the bill would be a 15% book minimum tax and 1% excise tax on share repurchases, which would negatively impact the earnings of companies in the S&P 500.
Longer-term, the IRA commits to spend $370B over the next 10 years on energy security and climate change (including a 30% solar tax credit which has now been extended 10 years).
The act also includes provisions to allow Medicare to negotiate for lower prices on 10-20 drugs through 2029 and limit drug price increases.
While the more important development to our portfolios is the speed at which the Fed's monetary tightening can bring inflation down, the IRA could have an impact on future investing, specifically in the tax-advantaged, renewable energy space.
The Rise of Fintech: Fintech, technology that is used by financial institutions to deliver their services directly to customers in a seamless way, is proliferating our lives at a rapid pace and is already ingrained in many of our daily habits.
For investors, the market is at a crossroads between employees and automation, and that problem will only grow during this tight labor market as companies look for ways to reduce costs.
While the Fintech industry has been hit hard with lower valuations as seen across the technology sector, we believe large cap companies that are enhancing their Fintech platform are providing the best opportunities right now, as they can weather a recession and continue to build for the future (i.e. Apple’s buy now, pay later movement).
Overall, we view new fintech companies and fintech ETFs as too unestablished to invest in currently, but will continue to do our diligence to decide if investment options should be added to our platform.
Our Investment Strategy Group is available should you have any questions about fintech or other niche industries.
MIRACLE MILE HIGHLIGHTS
In addition to the Karp Capital team, we also onboarded FOUR new employees this quarter! Welcome Lorena, Marie, Michael, and Alexandra!
FIRM RECOGNITION
Last month, advisor Sara Wendt was the feature individual in the Forbes Top Next-Gen Advisors list! As a result of this coverage, she also had two feature articles from Forbes and RIA Intel. We could not be more proud of Sara and all that she has been able to accomplish!
Disclosures: Miracle Mile Advisors LLC (“MMA”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where MMA and its representatives are properly licensed or exempt from licensure. The information is illustrative, and is provided for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. All investments include a risk of loss that clients should be prepared to bear. The principal risks of MMA's strategies are disclosed in the publicly available Form ADV Part 2A. Past performance shown is not indicative of future results, which could differ substantially. This message is confidential and subject to terms at: https://miraclemileadvisors.com/disclosures/ including on awards/rankings, confidentiality, legal privilege, viruses and monitoring of electronic messages. If you are not the intended recipient, please delete this message and notify the sender immediately. Any unauthorized use is strictly prohibited.
Miracle Mile Advisors, 11300 W. Olympic Blvd., Suite 800, Los Angeles, CA 90064, 310.246.1243
