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At Watermark Wealth Strategies, we believe in listening to our clients and providing tailored financial advice.
THE SMART CHOICE: Watermark Wealth Strategies
Legacy of trust, honesty and success
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he business and personal financial landscape across our country can change dramatically day to day, which makes it difficult to know where to turn and who to trust to help navigate your future. Adding to that uncertainty is an unprecedented amount of indifference, poor customer service and even misinformation in today’s volatile investment market. The wealth management experts at Watermark Wealth Strategies understand this better than most, and they want to help, tapping into more than 200 years of combined experience in estate and retirement matters.
History of success
Watermark Wealth was established in 2009, by Carmen G. Cercone, certified estate planner, and the founding partner
and firm principal. He is joined by Kyle Richardson, certified financial planner and co-principal; Thomas Lungaard, accredited investment fiduciary; Tyler Brilinski, certified financial planner; and James Bruce, certified estate planner. While the firm was established 11 years ago, the founding members have been together since 1999. The team at Watermark Wealth knows that investing can be scary for most people, and they take the time to demystify it. “ We’ll sit down with you and assess your risk tolerance, goals, and financial constraints before recommending a course of action,” said Cercone. “More importantly, we make sure you understand the principles of investing. You can be sure you’ll not only receive the best advice for your situation, but also that you’ll comprehend the reasoning behind our advice.” Watermark Wealth Strategies offers investment advice as part of our wealth management services by Smart Choice, continued on page 2 attacking every aspect of wealth management equally.
“We want you to enjoy the fruits of your labor in retirement.” —Carmen G. Cercone, Founding Partner and Certified Estate Planner, Watermark Wealth Strategies
Be proactive and involved with your financial planning during uncertain times By Brian Sodoma, for Watermark Wealth Strategies s the nation marches towards a heated election with pandemic uncertainties still looming, retirees and those planning their retirement have many concerns. One of the primary questions wealth managers hear today is: Are my investments safe, and should we being making any changes? “I think the biggest concern is ‘how do portfolios function and provide returns during the pandemic with no real end in sight?’” said Aaron Gordon, investment advisor, and partner at Watermark Wealth Strategies. Aaron says avoiding the subject isn’t a sound move either, and many may be surprised to learn that there
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are opportunities to help them survive and even thrive amidst the uncertainty.
Make the call to your advisor
The first step to finding out if you have a sound strategy in place during unprecedented times is to call your advisor. Don’t assume changes will be made or ignore potential problems you may sense are coming. Discuss your fears and ask about strategies that could directly address the specific concerns you have. “ There are a lot of areas you can adjust in a portfolio during uncertain times, and a good planner will talk about what you should watch for and be aware of,” Aaron added.
Learn to be nimble
The set-it-and-forget-it days for a stock market portfolio may be over, at least in the short term, the advisor also noted. That has also opened the door for some short-term opportunities of late. His team was able to be nimble and help many clients enjoy stock gains during the June run-up. There is still an opportunity to look for returns in this marketplace while still being a conservative investor. Talking to clients about calculated risk while purchasing reliable US-based companies should be considered within anyone’s portfolio.
Proactive, continued on page 3
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Meet the Watermark Wealth Strategies team:
In their own words Carmen G. Cercone, CEP “I’m a big proponent of not putting the cart before the horse and my belief that having your financial house in order starts with a comprehensive estate plan, ensuring your beneficiary designations are current. Having an up-todate Health Care Power of Attorney, Living Will, as well as Durable Financial Power of Attorney. These vital documents can be found in a proper Estate Plan, including a Living Trust or executed individually. Arizona offers a Beneficiary Deed for our homes, which passes our property to named beneficiaries at death, completely avoiding probate for as little as $30 and the same deed for our automobiles, which has no cost. A comprehensive trust can transition an entire estate to heirs without probate, ensuring a seamless transfer to beneficiaries protecting them from divorce, litigation, creditor and future estate tax. Most clients have concerns about passing large sums to their heirs, who will handle their financial affairs if they are not able, and most importantly protecting the money they worked hard for when it transfers to their heirs. Our goal every day is to alleviate a concern or fear our clients have so they leave our office with peace of mind and can travel more, spend more time with children and grandchildren, volunteering or whatever activity gives them a higher quality of retirement.”
Carmen G. Cercone (left) and Jake Cercone (right).
Jake Cercone, AAMS Jake Cercone entered the business nine years ago and provides trust and retirement advice to more than 150 clients, as well dealing with the children and grandchildren of Watermark’s present clients. Most importantly, he provides a legacy link to take care of and steward the financial and estate plans for generations. “Once these vital estate steps are completed, clients can look forward to developing comprehensive investment and retirement planning without the concerns of how and when the assets pass to their heirs.. Keeping Estate Plans current is as important as establishing them, we provide over 120 complimentary updates to trusts annually. This feature has played a key role in the fact that we don’t ask our clients for referrals but receive them over 30 times a year. Our staff is dedicated to personal interaction with our clients, no 1-800 #’s, automated phone system, or robotic planning or service. We field on average 25 personal phone calls per day and as many e-mails; no one should ever have to wait or not have access to their advisors and staff on a daily basis.”
Sara Gordon (left) and Aaron Gordon (right).
Sara Gordon, Practice Manager Aaron Gordon, Partner, MCEP, CFP Aaron Gordon joined Watermark in 2012 and has 22 years of experience in the industry. Aaron and Sara believe that treating clients like members of their family is the key ingredient in their financial success. Aaron is a strong believer in establishing and facilitating estate planning before entering into a financialplanning role. “Most of my clients have expressed concern over the COVID-19 pandemic and November’s election. Establishing and managing a well deployed, well thought out, diverse financial plan inherently takes into consideration the bumps in the road as well as
unexpected hurdles that in many instances cannot be forecasted. The one-size-fits-all is not part of any well thought out planning, just as small, medium and large don’t properly encompass the diverse range of individual clients concerns or objectives. COVID-19 brought record volatility and concern to the market and client portfolios, but a properly diversified portfolio based on the individual risk tolerance aptitude of each client’s personal objective was the best course of action. We have made adjustments and course corrections along the way but have found an open dialogue sometimes daily was a relief to our clients. I found that much
like the 2008 financial meltdown, being available at any time was the key to alleviating my client’s fears. We have also taken on clients from other firms who could not reach or talk with the investment counselors or talked to different representatives without a cohesive plan or continuity that became the major point of discontent. Top-down planning, third-party money managers and portfolio algorithms will never instill more confidence than the ability of a personal financial advisor, who knows the client relationship firsthand and can make necessary adjustments immediately.” While the ease of using these methods for advisors is less labor intensive, taking responsibility for the success or the sometimes the failure of performance should be the personal responsibility of the advisor you sit with vs. a third-party removed. I believe this is true of the November election, which is on every client’s mind and is at the top of their concerns. While trying to predict market trends and performance is always difficult, trying to find consensus on this point in 2020 is almost impossible. We have found that whatever our clients’ fear or concern, whether unprecedented or not, is the top priority. If they’re concerned, we address that concern and lower their risk or redeploy their assets to make them feel more comfortable. I am a proponent of planning for my clients’ needs for more income in the GO-GO years, adjusting for less income in the SLO-GO years, and further adjustments for the NO-GO years. Having the proper amount of income when you need it is the most essential aspect to retirement planning.”
Experts at Watermark demystify the investment process Smart Choice / continued from cover
By the numbers
Watermark Wealth Strategies provides financial advice for more than 3,500 Arizonans, and trust services for more than 2,500 Arizonans. The firm manages more than $1.1 billion in assets and has five certified financial planners, and three certified estate planners on staff, with offices located in Scottsdale, Chandler, Payson and Minnesota. Cercone’s financial experience dates back to 1979. He attributes the firm’s success to treating every individual’s needs and objectives as their own, and not painting everyone with the same brush.
Customizing to your needs
Every family and individual has a unique set of circumstances and concerns, and each set of circumstances is treated independently and customized for these needs. As Watermark Wealth Strategies is independently owned, it serves its clients’ interests only.
Managing clients’ needs is Watermark’s No. 1 priority. They do not have cookie-cutter, off-the-shelf portfolios with top-down planning from Boston, New York, Chicago or Los Angeles. Their planning strategies are developed individually for every client, considering the individual client’s needs, goals and specific concerns. “ Watermark Wealth’s portfolio solutions are geared towards tax efficiency, risk tolerance and input from our clients,” Cercone said. “ We talk with our clients in an open dialogue vs. talking at our clients.”
Trust planning
The company’s trust planning is structured to deal with real-life concerns and fears, and a sound alternative to trust mills who use this critical process as nothing more than a way to sell indexed annuities or long-term care insurance. Watermark Wealth is also an economical alternative to the high-cost trust plans abundant in the state. “Ninety percent of our clients are post- or preretired; our firm’s focus is directed at investments,
planning and instruments dealing with these issues.” Cercone said.
Client interaction
“It is Watermark Wealth’s philosophy to be in constant interaction with our clients,” Cercone said. “In the pre-COVID days, we typically had seven client education and themed social functions per year, including gourmet chocolate and wine tasting, Monte Carlo Night, Halftime Report, and an annual Holiday Party. Our office was designed to host events for 200-plus attendees.” The realities for today’s investor are much different than years ago. A married couple retiring in 2020 can expect a joint life expectancy of almost 30 years! “ This involves planning for the three retirement phases encompassing the GO-GO, SLOW-GO, and NO-GO years. It is possibly the most overlooked yet crucial planning experience,” Cercone said. “ We want you to enjoy the fruits of your hard work in retirement.”
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tips for vetting a wealth planner By Brian Sodoma, for Watermark Wealth Strategies
Choosing a wealth planner is one of the most important decisions any individual makes, but finding the right one can be challenging. Here are several important attributes and red flags to look for. They reveal a lot about how a wealth planner operates, and can help someone eyeing retirement choose with confidence.
Kevin W. Hostert (left) and Rich Liberante (right).
Kevin W. Hostert, CFP Rich Liberante, Partner, CPA, MPA, CFP Rich Liberante joined Watermark in 2013 and has a background in tax planning as well as financial planning. Rich is a strong advocate of minimizing unnecessary tax and building portfolios with a high degree of tax efficiency. 2020 brought in the SECURE Act and for the most part Americans were unaware that RMD on IRA’s had been changed to age 72 from 70-½ and that the STRETCH IRA, which previously allowed our heirs to create and have an IRA that could provide them a lifetime of income, now has to be distributed in full within 10 years.
We’ve advised our trust clients that more care will be needed and thought put into how and when to distribute IRA, Roth, and non-IRA investments to the next generation to achieve the most advantageous tax result. Additional consideration needs to be made when determining which accounts house which assets. Individual investments, whether stocks, mutual funds, ETFs, annuities, etc. have their own unique tax implications. However, account registration types, such a Roth IRA, Traditional IRA, Individual, or Trust accounts have their own unique
Effective financial planning is all about relationships. To add a bit more confusion, the government ushered in the CARES Act that allowed for the suspension of RMDs all together including inherited IRAs for 2020. With the major change in the SECURE Act affecting IRAs, it also impacts Roth IRAs, which also have to be distributed in full within 10 years. While this will not impact taxes, it will create a tax dilemma after the distribution, as heirs will have to be cognizant of re-investing assets tax efficiently. Integrating the changes to IRAs to your estate planning is more important than ever, as heirs are now forced to take all distributions from IRA and Roth within ten years. This change could impact the tax rate for your beneficiaries.
tax rules. It’s important to marry up the proper investment with the right account type to achieve the best tax result. It’s amazing how the small change of holding an investment in one account type versus another can improve a person’s tax situation and their overall bottom line income. You can read further on these topics and more in Rich’s new book. “Climbing Your Way to Wealth” available at Amazon. Kevin Hostert is Rich’s partner and joined the practice in 2014 and is key in portfolio development and tax efficiency. He states that the process of selecting the right tax efficient allocation is more time consuming, but the tax reward has been well worth it for Watermark’s clients in the pursuit of paying less tax and growing their portfolios.
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It starts with the phone
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Consult FINRA
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A planner speaks with you, not at you
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Don’t be fooled by “Index” talk
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Minimums are a red flag
Your first contact with a wealth planner will likely be through a website inquiry or a phone call. Pay attention to how quickly (or slowly) he or she responds to your requests, particularly by phone. Ask yourself these questions: • Can I get the manager on the phone quickly? Or are there frequent delays and assistants handling my needs, instead? • Does the manager keep suggesting I “do it online?” • Do I have to go through a complex phone system to reach my manager? These are all red flags that indicate your experience will be far from personalized, says Carmen Cercone, principal and founding partner of Watermark Wealth Strategies. “ You need individualized attention and 1-800 numbers and automated systems can’t give you that,” he said. “ We field personal phone calls from our clients every day.”
The Financial Industry Regulatory Authority (FINRA) is a regulatory body for financial advisors. For peace of mind, prior to hiring a wealth planner, visit the finra.org website and type the person’s name into the “BrokerCheck” tool. The search will show how long the wealth manager has been in the field, the institutions he or she has worked for, and credentials held. More importantly, there’s also a “Disclosures” section that alerts you to any past disciplinary actions against them.
Even in a world full of online and technology efficiency, visit a wealth planner in person before signing up. Your conversation should bring peace of mind and a deeper understanding of the options available to you – and above all, you should feel heard. A sound wealth planner spends time explaining opportunities and the risks associated with them, embraces open dialogue, listens closely, and encourages input from the client. Some wealth planners do too much directing and telling at times when they should be listening, Cercone adds. “It’s not about us. It’s about you. In our work, we learn about family dynamics, we talk about mortality and a lot of very personal information is shared,” he added. “ That’s an important part of what we do and a planner should not take that lightly.
It’s a common question in financial planning circles: How did your portfolio perform against the Index? Some planners will even tout their results in advertising or in conversations. Anyone can talk up gains in a bull market run, but real planners also speak frankly about bear market realities, Cercone warns. “ Think about it. If you ask me that question, why would I show you a client’s portfolio who didn’t beat the Index?” he said. “I tell clients, ‘you’re not the index. Each of you are individuals and your needs must be addressed individually.’ ”
Cercone also bristles when he hears wealth planners talk about minimum dollar amount requirements for prospective clients. “I think it’s wrong to say ‘if you don’t have a certain amount of money I won’t deal with you.’ ... The other day I saw a 9.8 million-dollar client and 42 thousanddollar client. I spent almost the same amount of time with both of them,” he added. Watermark Wealth Strategies helps thousands of Arizonans with their wealth, estate and tax planning needs. Visit watermarkwealth.com or call (480) 442-3989.
You need a good planner in these uncertain times Proactive / continued from cover A nimble portfolio strategy requires more consistent contact with your financial advisor. For decades, touching base with your financial advisor once or twice a year was the norm. Aaron emphasizes meeting three or more times a year, especially during significant market changes.
Making life adjustments, not one answer for everyone
Whether beginning a career, starting a new family, or nearing retirement, Watermark Wealth Strategies financial planning experts devise a detailed plan that works for you.
Today, a married retired couple can expect a joint-life expectancy of about 25–30 years. Naturally, the earlier years of retirement are more active. Bucket list adventures are being fulfilled, and couples tend to travel more, too. Due to the pandemic, some have needed to put those plans on hold, and that may affect how they want to invest today. For others, in
later retirement phases, preservation strategies that may be less affected by market and political uncertainties may require less of a hands-on approach, too. Regardless, it’s an excellent time to re-evaluate your life goals and plans for the coming years with the current uncertainties. There is no single approach to serve everyone but pinning down your short-term goals and desires could help anchor a sound short-term strategy. “ There’s really no one-size-fits-all, but you certainly do have options,” Aaron added. “For us, we try to help everyone understand the backdrop of this environment and how it may affect the phase of retirement they’re in and, more importantly, the life they’re trying to lead.” Watermark Wealth Strategies helps thousands of Arizonans with their wealth, estate, and tax planning needs. Visit watermarkwealth.com.
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Tax efficient strategy must be a part of wealth and estate planning By Brian Sodoma, for Watermark Wealth Strategies ood financial planners know the pulse of the market and can pivot quickly for their clients. Experienced estate planners help families navigate the transition of assets through generations. But both of these skilled players also need one more piece to build a sound wealth management strategy for clients: a tax planner. Unfortunately, with most wealth management firms, taxes are an afterthought, as the emphasis is primarily on achieving gains the client desires. “A financial plan is only good if there’s an understanding of the tax ramifications. At the end of the day, you live on what you’re able to keep, not what you make,” said Rich Liberante, a CPA, CFP, and partner with Watermark Wealth Strategies who recently wrote the book “Climbing Your Way to Wealth.”
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Separating tax preparation from tax planning
When most us think of taxes, we think of filing a return. A tax preparer focuses on those returns, but a planner puts a lot of time and energy into making sure, ahead of time, the numbers in the return are the most advantageous for the client. To make that happen for retirees and those planning to retire, financial, estate and tax planners must all be on the same page, Liberante emphasized. “It’s really a coordination between all of us. When you look at taxes, investment strategies and estate planning holistically, you will get the best results,” he added. “A lot of people are surprised by what we can do to save them money from a tax standpoint.” If you don’t plan well, the extra money you pay in taxes is actually lost twice: first, the money paid is gone, but in addition, you also lose the potential gain on the money you could have kept and invested. One common mistake Liberante sees with new clients is allocating certain investments to the wrong account types. From a tax standpoint, some assets are better suited to be held in IRA’s while other investments may get better tax treatment when held in non-IRA accounts. Getting this wrong can cause a person to pay significantly more in tax than necessary.
IRA changes
With the 2019 SECURE Act, many IRA rules are changing this year. The required minimum distribution age was increased from 70 ½ to 72 and age limits for contributions will be removed. But the law affects those who inherited IRAs the most. Before, they could stretch distributions out over their lifetime, if desired, but now the funds will need to be distributed in full within 10 years. Depending on their income level, heirs could be subject to higher tax rates as a result of this change. With these changes in effect, wealth and estate planners with a tax planner on board can best advise clients. “ This is a case where most people don’t know much about these tax details, so they don’t really know what to ask,” Liberante added. “ That’s why it’s important for us to have these pieces all in-house, under one roof. We know what to ask to help you make the right decisions.” Watermark Wealth Strategies helps thousands of Arizonans with their wealth, estate and tax planning needs. Visit watermarkwealth.com or call (480) 442-3989.
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essential planning items you should do…NOW!
You know the old saying: “ There’s no time like the present.” This most certainly applies to planning for your retirement. Here are some important tips to get you started:
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Review beneficiary designations (401k , IRA, Roth IRA, life insurance, annuities) if you have an individual brokerage account, add a TOD (Transfer on Death) or a bank account POD (Payable on Death). Update Financial Powers of Attorney, Health Care Powers of Attorney and Living Will.
If you do not have a Living Trust; execute a Beneficiary Deed for your home or any real property in Arizona.
Execute an Automobile Beneficiary Deed for all registered vehicles, trailers, ATVs and 8-wheelers.
Revisit all investment accounts to make sure the allocation meets your current risk tolerance.
Review trust successor trustees and trust distribution to heirs.
Take advantage of the $300 charitable deduction for 2020.
Low-cost, free resources and other need-to-knows for trust and estate planning By Brian Sodoma, for Watermark Wealth Strategies rusts are a valuable tool in many estate plans that allow families to avoid probate and assure assets quickly and efficiently transfer to loved ones after a person passes away. Some people, however, neglect certain housekeeping duties with their trusts while others may spend hundreds or thousands of dollars to set one up unnecessarily, says Carmen Cercone, principal and founding partner of Watermark Wealth Strategies. Here, he sheds light on some common missteps in trust and estate planning.
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The beneficiary deed
Many people often hear they “need” a trust, but that may not always be the case. If you have a simple estate that includes a home and a few bank and retirement accounts, paying several hundred or thousands of dollars to create a trust is likely not needed, Cercone explains. In Arizona, a homeowner who wants to make sure their home is passed along to a specific loved one can file a beneficiary deed with the county recorder. A one-time $30 recording fee is all it costs
and the short document can be filed by the actual homeowner. Some wealth planning offices charge up to $300 for this service, which isn’t very time consuming. “A lot of people in Arizona don’t know about the beneficiary deed. If you just want to make sure the right person gets the home, this is an easy way to do it,” Cercone noted. “I help people file these for free all the time because it’s just the right thing to do.”
Auto deeds, bank accounts
If you have automobiles and want to assure their title transfers to a specific party after you pass away, an Arizona auto deed can be filed with the Arizona Department of Transportation (ADOT) for free. For bank accounts, a document referred to as a POD (Payable On Death) can be filled out to assure all funds in your accounts go to a specific party. It, too, is a zero-cost form anyone can request from their local bank. “Only about 15% of bank accounts have a POD. The reason? People just don’t talk about it,” Cercone added.
Crossing I’s, dotting T’s on trusts That’s not to say a trust is never required. Trusts are a comprehensive package that includes healthcare and financial
powers of attorney, a living will and assignment of personal property documents. All assets are retitled to the trust to avoid probate, and it is a very reliable conduit to disperse assets to designated beneficiaries. One of the greatest mistakes people make, however, is to not update their trust as they accumulate assets. Then, if they pass away unexpectedly, the assets inside the trust are settled quickly, but those outside of it go through probate and can take years to claim and loved ones may incur heavy legal costs along the way. If you buy a second home, a boat, a timeshare, or another asset, remember to call your wealth planner to add it to the trust, Cercone emphasized. “ When someone dies, those left behind are in a very difficult mental state,” he said, “but if all the documents are taken care of, at a time when people are most vulnerable no one can take advantage of them. Don’t leave behind any loose ends.” Watermark Wealth Strategies helps thousands of Arizonans with their wealth, estate and tax planning needs. Visit watermarkwealth.com or call (480) 442-3989.
If you would like to take advantage of Watermark Wealth Strategies 60-day complimentary services listed below: • Updated Financial Power of Attorney • Updated Health care Power of Attorney • Updated Living Will • Complimentary Beneficiary Deed ($30 Maricopa County Recorders Fee NOT included) • Complimentary Automobile Deed
You can reach them at: Watermarkwealth.com reception@watermarkwealth.com WATERMARK WEALTH STRATEGIES LLC 11333 N. Scottsdale Road, Suite 295 Scottsdale, AZ 85254
480-442-3989
Join Watermark allison@watermarkwealth.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Watermark Wealth Strategies, LLC is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Kestra Investment Services, LLC (Kestra IS) https://bit.ly/KF-Disclosures.
