Try This Twist on Home Movies: Capture What Your Family Values Most
THE HOLIDAYS ARE A TIME FOR SHARING—not just gifts, but family lore. How your grandparents met. The summer Dad swam across Lake Winnipesaukee, on a dare, for charity. The app cousin Sarah created while on maternity leave—that’s now a multimillion-dollar business.
“Every family has favorite stories that live on from generation to generation,” says Stacey Allred, head of the Center for Family Wealth, Merrill Lynch Wealth Management. “And most of them contain a moral that reveals a lot about your family’s values and the way you’ve been raised.” A combination of social codes, financial practices and traditions, these values are a key part of your family’s legacy.
In years past, families might have chosen to write down their values in a mission statement of sorts, and some still do. “Nowadays, nearly everyone has a smartphone or digital camera, which makes it so much easier to capture and share important memories and the essence of what your family stands for.” Doing so can provide an invaluable guide to the next generation.
To capture conversations around your family’s values, Allred suggests asking about your parents’ or grandparents’ definition of success. “You’ll find it goes way beyond the financials,” she says. You can also reach out to your Merrill Lynch advisor for “value cards”—bulleted statements and prompts—to help kick-start and steer these conversations. “It’s one thing to say, ‘Our family values generosity’,” says Allred. “It’s quite another to say, ‘Here’s why and how’.”
For more tips on how to capture your family’s favorite memories—and core values—on video this season, check out videographer Steve Pender’s tips, above.
For more insights on talking with your family about values and money across the generations, read “Aging and Your Wealth.”
Steve Pender and Family Legacy Video are not affiliated with Bank of America Corporation.
No Time Like the Present to Teach Your Kids About Giving
BLACK FRIDAY TRADITIONALLY KICKS OFF the holiday shopping season. Americans spent $1 trillion on holiday gifts in 2016—and that amount is expected to increase this year, according to the U.S. Commerce Department. But a cultural backlash against such frenzied seasonal consumerism is building—this year, in fact, some major retailers are closing their doors on Black Friday, giving their employees an extra day to spend with family. And some shoppers are turning to charitable giving in the name of family and friends, instead of buying gifts.
“The holidays provide the perfect opportunity to teach your children the power of giving,” says Stacy Allred, head of the Center for Family Wealth, Merrill Lynch Wealth Management. “In a society that touts consumerism, philanthropy is a great antidote.” So much so, in fact, that six years ago, the United Nations Foundation declared the Tuesday after Thanksgiving “Giving Tuesday.” Last year charitable donations on that day also increased from the previous year, reports the Foundation.
Over the years, many Merrill Lynch clients have asked Allred for tips to help them foster generosity in their children. “Becoming an effective giver is a skill that must be developed, and it’s nice if you can start early,” Allred says. “Think of the toddler who’s very focused on herself—those 'me' years. As you’re giving her a gift, you could ask her to go choose a toy that she no longer needs and give that away.”
Reinforcing the importance of helping others can be as simple as going around the dinner table every night and asking, “What did you do to give back today?” It doesn’t have to be about money, Allred notes. “Did you open a door for someone, give them a smile, ask if you could do something for them?”
In the video above, Allred offers more practical tips for teaching kids of all ages how they can practice generosity and, through little acts of selflessness, make a big difference in the world around them.
Click here for more important money conversations to have with your family as you spend time with them over the holidays.
A New Report Uncovers the Financial Costs of Caregiving
MOST OF US KNOW SOMEONE who is a caregiver. Many of us (40 million, in fact) are caregivers, providing 37 billion hours of support to family members coping with the realities of aging and illness. Twenty million new caregivers joined their ranks last year, so chances are good that you, too, could become a caregiver (if you’re not already one).
Those are just some of the eye-popping stats revealed in a new report, “The Journey of Caregiving,” produced by Merrill Lynch in partnership with Age Wave, a thought leader in the study of aging and its implications for society.
While many previous studies have looked at caregiving’s physical and emotional challenges, very few have explored its financial costs. “Many caregivers find they have to dip into their savings or take on debt to cover expenses,” notes Cynthia Hutchins, director of Financial Gerontology for Bank of America Merrill Lynch.
““We found that 92% of caregivers are financial caregivers, providing help paying the bills, managing investments, handling insurance forms, preparing taxes and monitoring bank accounts,” says Ken Dychtwald, CEO and founder of Age Wave. “When we delved into the many ways that caregiving can upend financial plans, it became evident that financial advice tailored to caregivers’ needs is required—and, in fact 66% of the people we surveyed said they could benefit from such help.”
One other striking statistic: Nearly half of financial caregivers don’t have the legal authorization to manage their loved ones’ finances, according to Gallup Polls and the AARP. “If you’re in the position of helping a family member with their finances, make sure they put a durable power of attorney in place, giving you the authority to do so,” suggests Hutchins. “It could go a long way in preventing family conflict.”
Merrill Lynch also has a Client Contact Authorization Form that can identify you as the person an advisor should contact if any financial problems arise in an aging loved one’s account. “This can be very helpful in the early stages of the caregiving journey, before you’re fully involved in the financial aspects of caregiving,” notes Hutchins.
Despite the many challenges, caregivers find tremendous satisfaction in their role: 91% are grateful to be able to provide care and most would gladly take on the role again, according to the report.
“I think that when I look back—when my parents are gone someday—I'll be glad for the time we had, and the way our relationship changed as they grew older,” said one caregiver who participated in the study.
DOWNLOAD THE STUDY to learn more about the costs of caregiving and how you can prepare—and share this study with someone you know who is a caregiver.
Need Help Deciphering the Markets? This Series Is for You
“YOU’VE PROBABLY HEARD ABOUT ‘EMERGING MARKETS’ over the years —maybe a news story about a debt or currency issue in one country or political unrest in another. But when it comes to investing in them, your first thought might be, ‘Thanks, but I think I’ll wait ’til they’re done emerging.’” With that, Nick Giorgi, an investment strategist in the Chief Investment Office at Bank of America Global Wealth & Investment Management, launches into the first of a new series of videos called Market Decode.
The goal, says Giorgi, “is to demystify investing.” He explains, “It can sometimes seem to the average investor that people in wealth management speak a foreign language: puts, calls, sectors, asset allocation. Our aim with this series is to translate how the markets work into the kinds of conversations you might have with your colleagues at the watercooler. Or over dinner with friends.”
Market Decode will feature Giorgi and other strategists from the Chief Investment Office offering straightforward explanations and sharp insights into timely financial and economic topics. It’s designed to help you make well-informed investing decisions that can help you pursue your goals.
First up, Giorgi “decodes” emerging markets—24 countries around the world that are projected to grow twice as fast as the U.S. this year and next, according to the Chief Investment Office. Along the way, he investigates a phenomenon known as “home country bias,” or the tendency for investors to tilt their portfolios strongly toward domestic assets, which helps explain some people’s reluctance to invest in this sector.
Up next is “Market Decode: Some (Surprising) Ways to Invest in Tech.” “Keep your eye out for it and others in this series,” says Giorgi, “and talk with your advisor about the ideas we’ll be covering.”
For more investing insights from our Chief Investment Office, visit ml.com/insights.
Student Loan Debt: The $1.5 Trillion IOU
TWENTY MILLION COLLEGE STUDENTS started their freshman year this fall—and seven in 10 are likely to leave with debt. They’ll have lots of company: As of June 2017, Americans collectively owe $1.5 trillion in student loan debt, making it the second-largest source of consumer debt after mortgage loans, according to Merrill Lynch’s Chief Investment Office.
How much individual graduates owe is partly dependent upon where they go to school: In Utah, for instance, the average student loan debt for the class of 2016 was only $19,975, while in New Hampshire it was $36,367, reports the Institute for College Access and Success, which surveyed more than 1,000 public and nonprofit four-year colleges in September of this year.
Finding the Right Pay-Back Plan for You
There are a number of repayment options available to graduates with federal student loan debt. They include a 10-year repayment plan, a graduated repayment plan with payments that start low and steadily increase, and various income-based plans. Those who work for the government or in the nonprofit sector may also be eligible for the Public Service Loan Forgiveness Program. If you owe private loans, the issuing bank sets the repayment terms.
“Deciding which repayment plan is right for you requires hard choices and a solid strategy,” says Jean Kim-Wall, director and wealth strategist at the Strategic Wealth Advisory Group at Merrill Lynch. “For instance, having lower monthly payments and more time to pay off your loan may sound tempting, but you’re likely to pay more in interest over the life of the loan.” For that reason, she says, “even if you’re eligible for an income-driven plan with a lower monthly payment, it may not be your best choice. If you can afford to pay more, do.”
Here are three more tips from Kim-Wall.
- ✔ First, "try to pay the interest on your loans while you’re in school to prevent your principal from growing during your college years."
- ✔ Also, “pay back the loan that has the highest interest rate first.”
- ✔ Finally, consistency is key, since “regular payments show future lenders that you have discipline.”
Headed to grad school next? Read “The Basics Q&A: Paying Off Grad School Debt.”
Time to Get Smart About Artificial Intelligence
IT WAS THE “CHECKMATE” HEARD ‘ROUND THE WORLD: Twenty years ago, a computer called Deep Blue outsmarted the reigning world chess champ, and artificial intelligence, or AI, suddenly became more real than a sci-fi movie plot. Today, AI’s potential goes far beyond games, shaking up entire economic sectors—and people’s lives.
AI, defined as “the development of computer systems able to perform tasks normally requiring human intelligence,” already can be seen in the form of digital assistants, unmanned drones and facial recognition systems. And AI-driven products aimed at reducing operating costs, improving decision-making and enhancing consumer services are in the works across a range of industries. (See video below.)
Investors with deep pockets are taking note. Just this past year, AI startups raised a record $5 billion globally—a near-tenfold increase over the 2012 level, according to CB Insights.
What’s speeding up development—and investor interest? Ehiwario Efeyini, senior research analyst, U.S. Trust, Bank of America Private Wealth Management, offers three compelling reasons:
- Intuitive Machine Learning. The traditional approach to programming computers has relied on system engineers writing vast sets of instructions. But that’s changing. New machine learning techniques allow computers to adapt to new situations on their own.
- Unprecedented Quantities of Data. The vast amount of data now available from social media uploads, connected devices, digital transactions, health records and more can be crunched and analyzed as never before to program software that responds more accurately to the world.
- Exponential Increases in Chip Speed. The use of graphical processing units (GPUs)—with their thousands of processing cores—makes it possible to run large numbers of similar operations at the same time. And tech companies are racing to build even faster “quantum computers” with chips that manipulate data using quantum mechanics.
What AI Could Mean for the Average Investor
Many real-world applications are still at the early stages, points out Efeyini. But over the coming years, you can expect AI software and related products to gain more widespread industrial and consumer adoption. “The biggest beneficiaries should be providers of AI-enabling technology and industries that gain the most in product enhancement from improvements in AI performance.”
Learn more about ““The Rise of the Machines” here. To read up on other timely market trends, check out the latest insights from Merrill Lynch’s Chief Investment Office below.
The Best Gift You Can Give Your Family
IN THE CATEGORY OF THINGS NO ONE WANTS TO TALK ABOUT, illness and death rank right up there. But putting steps in place now to spell out your health care and estate planning wishes could be one of the best things you can do for yourself—and your family.
“You take care of your family all your life. Preplanning for the time when you’re no longer here, or able to articulate your wishes, is just an extension of that—and a very caring gift,” says Cynthia Hutchins, director of Financial Gerontology at Bank of America Merrill Lynch. Here’s how to begin.
Start a “Big Picture” Conversation
As early as possible, meet with your loved ones, your financial advisor and estate attorney to begin translating your values into a long-term plan. Do you have a living will, which spells out your wishes to medical providers and your family? Is your estate structured in a way that will minimize the tax hit on your heirs? You might even want to think about planning your own funeral to take the pressure off your loved ones.
Next, “think about what you would want to happen in different scenarios,” says Hutchins. This means naming those who’ll carry out your wishes, including the person you want to make health-care decisions for you if you can no longer do so, as well as an executor, trustee and guardian, if you have minor children. Be sure to check in with them to make sure they’re comfortable with any responsibilities you’ve given them.
Create a “Family Album”
“Your financial advisor can work with you to create a “family album,” a document that contains all the possible things your heirs may need to know about or get their hands on,” Hutchins says. That includes things like the title to your car, deed to your house, account numbers, online passwords, and contact information for everyone from attorneys to accountants.
The following useful resources, including a new and very comprehensive paper on “Aging and Your Wealth,” will help you get started having these important, but difficult conversations. The checklist “Loss, Legacy and Looking Ahead,” can provide your family with useful step-by-step financial direction—from dealing with probate issues to investment decisions. Share them today.
10 Midyear Market Lessons—and What to Make of Them
“WHILE SIX MONTHS HARDLY MAKE A TREND,” the first half of 2017 offers investors some interesting insights into the remainder of the year, says Joseph Quinlan, head of Market & Thematic Strategy in Merrill Lynch's Global Wealth & Investment Management Chief Investment Office (GWIM CIO). He and the GWIM CIO team take the pulse of the markets, tracking 10 developing trends in these recent CIO Weekly Letters, “Lessons at Midyear,” Part I and Part II, and in the CIO July Monthly Letter.
Test your knowledge of the markets by taking our True or False quiz below. Then tune in to our “Midyear Market Check: Are You Ready for the Opportunities Ahead?” webcast for insights and answers from Chris Hyzy, chief investment officer, Global Wealth & Investment Management; Karin Kimbrough, head of Investment Strategy, Merrill Lynch Wealth Management; and Niladri (Neel) Mukherjee, director of Portfolio Strategy, Private Banking & Investment Group and International.
2 Times You Should Never Tap Your Home Equity
IT’S BIG. IT’S EXPENSIVE. And it’s many people’s largest asset. While your home may be the place where you lay your head and dream at night, it can also play a huge financial role in your life.
Making those monthly mortgage payments is a little like “enforced savings,” says David Steckel, head of Mortgage Product Strategy, Global Wealth & Investment Management. Your home’s value shouldn’t be overlooked as you build your financial strategies for the future—and the equity you hold in it is one resource you can draw upon to help you cover certain current expenses.
The simplest way to do so is through a home equity loan or line of credit, says Steckel. Many people turn to one of these to help them pay for major home renovations, for instance. But there are some expenses that you should never use your home equity for. After all, why put at risk that place where you raise your family and dream at night? Here, Steckel, gives his thumbs up—and down—on seven uses you might be considering.
Online College Degrees: Are They Worth the Money?
ONCE CONSIDERED A POOR SUBSTITUTE for the real thing, online higher-ed degrees are moving into the mainstream. These days they’re fully embraced by high-quality public and private not-for-profit institutions, which collectively serve 70% of all online students.1 Even the Ivy League is in on the action. And an increasing number of students are turning to online courses for their undergrad and grad degrees. Online M.B.A., anyone?
While the cost per credit tends to be similar for both online and on-campus students, their other advantages may be hard to ignore. The flexibility of being able to study at night and work by day that online programs offer students, as well as the cost efficiency of learning remotely (no housing or travel expenses to consider) make them a tempting option, says Richard Polimeni, director of Education Savings Programs at Bank of America Merrill Lynch. “Both federal aid and 529 accounts can be used to cover eligible expenses for online students,” he explains.
As for how employers perceive these “virtual” degrees, “there’s a growing awareness that online or on-the-ground doesn’t matter. What matters is the institution,” says Dr. Joshua Kim, director of digital learning at the Dartmouth Center for the Advancement of Learning. If you’re looking to join the ranks of online degree seekers, Kim suggests that you consider the following.
Take a test run. One advantage of online education is that many courses are now offered à la carte. Taking an online course or enrolling in a multicourse certificate program can help you evaluate whether an online degree track is right for you.
Check out the reputation of the program—and opportunities for networking. Make sure the school you’re interested in is accredited by using this search tool from the Department of Education. “Keep in mind that it’s not just the degree that’s valuable—it’s the network,” says Kim. When researching programs, look for notices of group work and opportunities to meet in person. Pursuing an online degree at an in-state institution may also help build your network by making it easier to meet with classmates and professors in person. This might explain why more than half of online students attend programs in their state.2
Do your homework on the instructors. Online degrees may give you access to professors who are professionals working in your field. But a program run entirely by adjuncts should be a red flag, says Kim. “A good professor will be responsive and work hard to create a community among the online students, whether it be through discussions, a blog or group project work,” adds Debra Greenberg, director, Retirement and Personal Wealth Solutions at Bank of America Merrill Lynch, who teaches marketing as an adjunct professor at Rider University.
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