At Breakwater Capital Group, we specialize in comprehensive financial planning for individuals and families, including tailored tax strategies . Given Colorado’s unique tax landscape, tax planning is critical. Let’s examine key strategies to help you reduce your tax in Colorado. Our purpose is to educate Colorado residents to make knowledgeable decisions that merge tax efficiency with long-term wealth management.

Aside from some House seats still needing to be determined, the 2024 election cycle is now behind us. I’ll acknowledge for many, myself included, it may have not been the desired outcome. We are used to having to fight and claw for what’s ours and rather than dwell on it, I am inclined to embrace the unknown and forge ahead. It is now more important than ever to move forward together, collectively pushing for fairer footing and celebrating our many successes.  While it may have been special to witness our first female commander-in-chief, 49% of women now consider themselves the Chief Financial Officer of their household and are responsible for 70-80% of consumer purchasing decisions . In an economy that runs on consumer spending, do not underestimate the power there. SOPHIA’s main objective is to celebrate the brilliant, highly motivated women who make this country so great. I look to partner with them on their journey through the occasional setbacks and remarkable achievements, providing the tools and resources every woman needs to take control of their financial future and create greater financial agency. Rather than be dejected, I am energized by what is to come. There is a lot of work to do; the future is counting on us. With love and admiration for all the incredible women out there, SOPHIA

Where do I start? There is an abundance of personal finance advice out there, easily accessible, with a quick Google search. As the chief (fill in the blank) officer of many things in our household, I’ve learned to automate as much as possible to avoid the perpetual ‘to-do’ list. I understand the feeling of being overwhelmed when it comes to managing your money. But remember, taking control of your finances can be empowering. Many of the clients I partner with have already achieved real wealth, so we are navigating their unique complexities. I also spend a great deal of time making real connections with their partner, their children, or really anyone they think would benefit from our experience and knowledge. As a result, I am able to work with younger clientele, often in the beginning or mid stages of their careers, thus making a really big impact. Not a year goes by without having some version of the “what do I need to be doing right now to be financially sucessful” conversation. As Warren Buffet says, “No one wants to get rich slowly.” He and I may differ on our choices of lunch, no Big Mac for me. However, we surely see eye to eye when it comes to the merits of having a healthy serving of patience with a side of humility. It’s that long-term thinking and that steady approach to building wealth with consistency and discipline that makes you truly wealthy. After all, he has accumulated 99% of his present wealth after the age of 50, but that was achieved by starting a lot earlier and incorporating really good habits. Having worked with hundreds of clients over the course of my career, I can confidently say that anyone who does the following on a regular and purposeful basis is destined for success. Plan, plan, plan. Did I mention I like to plan? I like to plan about planning. I am the person in your life who plans a year in advance down to the minute. It gives me comfort, and after having my son, that has ratcheted up even more. My best friend and I just had a “let me get the calendar out” to plan a Saturday night girl’s date conversation . I understand that doesn’t work for everyone, and thinking about life in more than 5-minute increments can be challenging. How many of us roll our eyes when we are stuck behind the guy at Starbucks who doesn’t know his order yet… Yikes, and those are small stakes. I can tell you with certainty what I’m doing tomorrow, quite precisely a week from now, and even one year is pretty clear. But zoom out, and it gets a little less clear, and anything beyond a couple of years is ambiguous at best. While I do not know at precisely what age I will retire or exactly how much money I will need when I do, I do know that I have never had a client tell me, “I wish I saved less for retirement.” Savings early and often is the key to a successful retirement. It’s never too early to start, and the sooner you begin, the more you’ll have when you need it. Ideally, you save at least 15% of your income towards some type of retirement plan, whether a company-sponsored retirement plan (401k, 403b, 457b), SEP IRA (for my self-employed bosses), SIMPLE IRA, or solo 401k. That 15% contribution includes your company match if applicable, but if you are someone who thrives on pushing yourself, cover the 15% yourself. At the very least, make sure you are contributing enough to get the match. Never, ever, ever walk away from free money. Pay attention to your vesting schedule as well, which is something I recently touched on in a benefits-focused webinar. Too much job hopping can seriously impair your savings. Sure, 15% sounds like a lot, but if you can work towards increasing your contributions automatically, even by 1% each year, you can get to critical mass faster than you think. Building good habits now goes a long way, put some of your current cash flow aside now for “future you” (even if you don’t know what that future will look like quite yet). You are rewarding yourself, and you will appreciate it more than you may realize in the present. Once your retirement savings are taken care of, the script gets flipped a bit. Rather than focus solely on the long term, we need to button up the new expenses, the known and unknown. For that, it is imperative to accumulate a 3–6-month emergency fund. 3-6 months’ worth of savings is a bit subjective, but from my vantage point, you should look at it in one of two ways: 3-6 months of expenditures, or if you do not have the best grasp on your spending, save 3-6 months worth of your after-tax income. So, you still live at home with your folks? Three months may suffice. Or you may be the type of person who sleeps better at night with a higher balance in your savings account helping you navigate life’s uncertainties; here, six months may be for you. This is a number that is best taken for a pulse check once a year with your advisor. I caution women, especially, from letting these savings get too high. A study from Fidelity showed women are more likely to hold onto cash compared to men, citing a lack of confidence in investing as a reason for this preference. Do not let that be you. Setting aside 5% of your take-home will get you to that 3-6 months range in no time and without a big lifestyle shift. What’s also nice about this is once you have accomplished this objective, you get to cross it off the list which feels really good. Hybrids… No, I am not here to recommend your next car purchase, but you could probably do worse for your budget and the environment. What I am talking about here is using tools that can be used in multiple ways, like a Swiss Army Knife or some other household hack. I realize my audience may not love the retirement conversation resurfacing here. With the workplace retirement plan in motion and the emergency fund with a checkmark next to it, contributing to a Roth IRA should be next on your list. The Roth IRA is a powerful tool; first and foremost, it is a tax-free growth vehicle. Accounts like these are rare, and if you want to truly level the playing surface with the IRS after years of them taking their piece, they won’t be in your pocket when it comes time to withdraw, as these funds are all for you. Just a reminder, from 2013 to 2023, the S&P 500 has gone up 9-12% annually on average (depending on the specific time frame) with a total return of 250-300%. When you invest over time, the combination of market growth and dividend reinvestment can lead to increased gains, all of which are tax-free so long as you keep the funds in a Roth IRA until you’re 59 and ½ and the funds have been in the account for five years (hello Roth conversions, more on that in a future post). Along with the tax-free growth, there is an “out clause,” so if you need access to the money before you turn 59.5, you can withdraw your basis (what you put into the account) at any time, penalty-free. Go ahead and leave the earnings behind to still keep growing for you. It’s like a secondary emergency fund. There are annual contribution limits to these accounts that go up every year with inflation. For 2024, the limit is $7,000. You should also be aware of the income limits to be able to contribute directly to these types of accounts. The income phaseout limit begins at $146,000 for a single filer and $230,000 for joint filers. If you are above these income limits, let’s chat . You can make “back door” Roth IRA contributions, but those need more delicate planning as the IRS has a lot of “if that, then this rules,” and it gets confusing quickly. If there is still more room in the budget and you want to keep it that way…skip having children. Kidding aside, just like I like to think of life in 5-year increments, I also like to think of my money in buckets. Compartmentalizing my capital makes it easier to track my progress. Not only are there “retirement” and “non-retirement” buckets, but there are also “taxable, tax-deferred, and tax-free buckets.” Ideally, we have money in all of these buckets, helping us save, invest, and spend in the most tax-efficient way. Investing in a regular brokerage account is filling up the “taxable” bucket. That means if you invest $10 from your paycheck and the underlying investment grows to $20, the $10 of growth will be taxed when you sell that investment. If you sell it in less than a year (short-term capital gains) and realize the gain, you will pay regular income tax. If you sell it at least a year after owning it (long-term capital gains), you will pay a more appealing (lower) rate of either 0%, 15%, or 20%, depending on your income. Having this type of account is nice because it is not tied down to any retirement restrictions or penalties. You have access to the funds whenever you need them. If you do not plan on doing anything with the money for five years or more, you should invest it more aggressively; if you plan on using it before then, invest it more conservatively. Find an asset allocation (your mix between stocks, bonds, and cash) that is appropriate for your unique situation. Back to the idea of having kids: They are a wonderful investment, and you may want to pair them with a 529 account. Obviously, there are many competing forces at work, especially in the department of family finances. We all know childcare is expensive, and there are so many ways parents are trying to make it work. The average cost of childcare in the US is anywhere from $10k-40k per year . Even the low end may equal the household car payments, the vacation budget, or a significant portion of your rent/mortgage payments. I bring that up because 18 years will go by quickly if you haven’t already been told that by everyone at this point, and the cost of college isn’t cheap and steadily rising. Just like saving for retirement, I approach saving for college in the same way, “save early and often.” 529 plans are state-specific but portable, meaning your child does not have to go to college in CO just because you have a CO 529 plan. The reason you would contribute to your state-specific plan is because certain states give you tax breaks for doing so. The tax savings are usually modest, but after all, you are given money for something you plan to do anyway. Every penny counts, so make sure you choose the plan that is most appropriate for you. Each 529 plan should have different investment offerings. I typically recommend one that is low cost and more aggressive when your child is younger and gets more conservative as they approach 18. If you can put $5,000 dollars every year into a 529 plan for your child and it grows by 7% on average, you should have $170,333 dollars to fund those goals. If the grandparents or other family members set up an account for your child, just be cognizant of how much everyone is contributing. Should you be in the lucky position of possibly “overcontributing,” just remember that you can only use these accounts for tuition, room and board, and books. Recent legislation addresses small leftover balances, but don’t go overboard here unless you can afford to start saving for your eventual grandchildren. Let’s just get through the next 25 years before we start thinking about that. There are penalties for distributions that are not used for those purposes. Of course, everyone’s situation varies, and if all your kids are going to Stanford, that is a different conversation, but there are other savings vehicles you may want to consider once you hit a certain dollar amount in a 529 plan. Now if there is any money left over, have some fun, it’s not all about the future, sometimes it’s important to stop and smell the roses. By acknowledging that life can get demanding and expensive best to start saving yesterday. The early years make a huge difference and can mean taking your foot off the accelerator in those later years by planning and executing now. If you feel overwhelmed, that is okay. Ask for help from a professional who understands you and your goals, then create the path of least resistance in getting there. Above all else, just get started; you will always be glad you did. The views expressed represent the opinions of Breakwater Capital Group as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov . Past performance is not a guarantee of future results.

Your financial journey has three phases: the accumulation phase, the preservation phase, and the distribution phase, which this blog will discuss in more detail.  Regardless of your stage in life, having a retirement plan is critical to your financial well-being, especially if you plan to retire for 30 years or longer. Think of it this way: having a retirement plan is like having a well-prepared travel itinerary for an extended trip to a new destination. Just like an itinerary helps ensure you make the most of your time, avoid unnecessary detours, and stay on budget while traveling, a retirement plan provides structure, helps avoid financial pitfalls, and ensures your resources last throughout your retirement years (for both spouses, if applicable). Both a retirement plan and an itinerary require careful planning and flexibility to adjust to the unexpected on an as-needed basis. They also help you reach your desired destination with confidence and on time. At Breakwater Capital Group, we specialize in providing retirement planning in Denver and throughout the US to successful individuals with $500K or more of investable assets. Whether you’re still accumulating wealth or nearing the retirement finish line, understanding the three phases of retirement planning—accumulation, preservation, and distribution—is crucial.

The Woman Behind SOPHIA  As a financial advisor, I spend 75% of my time maintaining and building new relationships. I think about many of those daily interactions where my questions and conversations with clients are so personal. I’m constantly digging for the “who, what, when, where, why, and how” as the topics I discuss with them need to feel relevant and authentic to what is most important to them. Customer satisfaction surveys from J.D. Power, EY Global Wealth, Schwab, and Fidelity tell us that while most clients are satisfied with their advisor, only 40%-50% feel truly understood by their advisor. I found that startling but not shocking as I think about a client recently telling me, “It’s been seven months since your son was born, and I don’t know his name.” That one stung a bit as I think of myself as an open book, although when it comes to work, I pour myself into my clients; I forget how much better a conversation feels when it is less of an interview and more of a dialogue. Today, I am hoping to flip that script as I feel our followers/readers deserve to know who is on the other side. I was raised about 40 miles outside the city of Chicago in the Northwest suburbs. The first eight years of my life were spent being raised by a single mother. Make no mistake, it does truly take a village, and my happiest memories are the afternoons spent at my grandparents’ house while my mom was working. Sometimes, I accompanied my grandparents to their “Maddie’s Hallmark” store, hounding customers to buy more of “my” beanie babies. My grandfather truly made me feel like I could do whatever I wanted, and after watching my mother earn her associate’s, work multiple jobs at once, and rise through corporate ranks, I wanted the same, if not better, for myself. I was the first female in my family to graduate from college. I chose to attend the University of Denver, as 300 days of sun and the allure of the Rocky Mountains seemed like the perfect place for me. Coming to Denver with no family or friends to speak of, I was determined to write my story the way I wanted. I graduated with a degree in political science and international studies. I also graduated with $140,000 (or $167,313 today adjusted for inflation) in student loan debt, which, now that I think about it, is more than I spent on my down payment… All I can do at this point is laugh it off. There was no real financial education in high school, and given the young age my mother had me, I don’t think she even knew what a 529 was, nor would I expect her to. Raising kids isn’t cheap, and there was not much wiggle room in the budget. I thought I would pay off the loans by joining the Air Force after spending three years in the ROTC program, but I decided that was not for me. I also spent all of college as a waitress and finding ways to live that stretched the dollar as far as it would go. I was never afraid to get creative and make sure I could put myself in a position where this debt would not consume or define me. After interning with Senator Bennet’s office and almost packing up my bags to head to DC, I realized entry-level jobs on the hill were paying $25,000 – $30,000 if you were lucky. Knowing I had a $600+ monthly student loan bill at a minimum to pay off, all the girl math in the world would not be able to make that one work. My girlfriend at the time had already secured a job working at Fidelity, one of the largest 401k providers in the US. She nudged me to apply as their starting salaries were in the $50,000 range, and apparently, they had “great benefits,” although I would not really know the value of that until later. I started at Fidelity in October 2015, and after passing all my licensing, I started working with their high-net-worth clientele through many different roles. Fidelity paid TRIPLE overtime for working holidays, and you know, I picked up every holiday I could to pay off my debt, which also helped jumpstart my career there. I also started dating my now husband that same year. After working my way up to the junior advisor role and moving from Denver to Paramus, NJ (my husband is from NJ, and you know relationships are all about compromise), I met my now business partner, Jeff, who is the CEO of our boutique financial planning firm. As his junior advisor, I learned what building and maintaining a 20-year+ relationship with clients looked like. It also made me appreciate the value of an advisor that calls you back when they say they will. The depth and breadth of topics he covered with them were impressive, to say the least. After three years of working in that capacity, I was promoted to Financial Consultant, where I handled my own book of business, working with clients to grow and maintain their assets as they moved through different phases of their lives. I was one of the youngest Financial Consultant trainees, which I attribute to working my behind off and being in the right place at the right time. I think the harder you work, the luckier you get. I raised my hand as much as I could, and I asked for feedback constantly. “Be curious longer” was and still is my mantra. My husband and I got engaged in 2018 on Diamond Mountain in Harriman State Park, which was one of our favorite hiking spots when we were there. I knew I wanted to get married in Colorado because as much time as I had spent growing up in Illinois, my most transformative years were spent in Colorado. We planned our wedding two years later because we needed time to save up, and after calculating how much we were going to spend and how much we could afford to set aside from our pay every month, 2020 seemed reasonable. Well, the universe had other plans, to say the least. We got married in his parent’s backyard and got to celebrate with the rest of our friends and family in Breckenridge in 2022. During those four years, COVID-19 made Derek and I miss our life in Colorado. After our lease in Ridgewood, NJ, ended in June of 2020, we moved in with his parents to save up for a down payment on a house. Between living with your in-laws and not being able to leave the house, we bought our first home in November 2020. The housing market at that time was “weird,” to say the least. We kept getting outbid by cash so many times that, at one point, we offered to buy $1,000 worth of stained glass pieces from the seller’s business. Fast forward to 2024, I now realize this might be my forever home as we locked in a rate that we might not see again after the fastest rate hike cycle in modern history. After moving back to Colorado in 2020, I started to think about my career. I was serving 400+ households, and Fidelity was moving to a “one size fits all model,” which did not intrigue me. I wanted a more personalized offering and one that was not based on the products I sold. I left in 2022, joining a smaller firm in Boulder, Colorado, that specialized in alternative investments. That was not an area I had a lot of exposure to, so I was incredibly grateful to learn more about how those investments fit in with a client’s portfolio. Not too long after I had joined the Boulder firm, my old colleague and mentor, Jeff, reached out and told me about Breakwater Capital Group. I knew immediately he was someone I could never learn enough from. I think our firm’s name tells you exactly how we treat our clients. “Breakwater” generally refers to a structure designed to protect a coast or harbor from the force of waves and minimize erosion or damage to the shoreline. We aim to be that Breakwater for our clients as they go through life’s uncertainties. After my son ended up with two brain surgeries, boy, do I know a little something about that. My son was born on 12/28/23. I thought I was slick in getting him out in the same year we had maxed out our deductible. The universe had different plans yet again. From the ambulance ride from where I gave birth to the Children’s hospital, I think we hit our deductible for 2024 within minutes of the new year. That part was not in the “what to expect when you’re expecting.” Candidly, I never read that book to begin with, so I don’t really know. Although the idea of SOPHIA was put together one year before I had my son, she unfortunately got pushed to the side until now. I wanted to make sure I could give her the attention she deserved. As I felt content with my son’s health and was returning to work, I was excited to get her out in front of people. I have always been an advocate for women and financial empowerment. While it’s true that “money does not buy you happiness,” I have found it does give you access to make choices from a position of power rather than one of weakness for yourself and the ones you love. I will approach SOPHIA with as much care and genuineness as my client relationships. As one of my idols, Sallie Krawcheck, always says, “Nothing bad happens when women have more money,” so let’s get to work. P.S. I promise never to talk about myself that much again.

Open enrollment is traditionally seen as the time to reassess your health insurance options, but with the employment landscape becoming more competitive, many companies are expanding their benefits packages. Employers are now offering perks such as legal assistance and gym reimbursements, among other appealing options, that employees should carefully consider. It’s also a key opportunity to review your financial benefits, as employers might provide additional life or disability insurance at a much lower cost than you’d find on your own, often with the option to keep coverage if you ever leave the company. Here’s what you should keep an eye on from a financial standpoint: Health Insurance Costs: Health insurance remains the most recognized aspect of open enrollment and one of the most crucial. Compare various plans by looking at monthly premiums, deductibles, maximum out-of-pocket limits, and coinsurance. Your goal should be to choose a plan that balances your medical needs with your budget. Tax-Advantaged Accounts: Health Savings Accounts (HSAs) are linked with high-deductible health plans (HDHPs) but are worth considering due to their unique tax benefits. For 2024, HSA contribution limits have increased to $4,150 for individuals and $8,300 for families, up 7% from last year. Unlike the “use it or lose it” nature of Flexible Spending Accounts (FSAs), HSA funds can roll over year after year, grow tax-free, and withdrawals for qualified medical expenses are tax-exempt. This triple tax advantage makes HSAs a powerful tool for managing healthcare costs and even long-term savings. The trade-off is the higher deductible and out-of-pocket expenses typical of HDHPs, which can be around $3,000 and up to $6,000-$8,000, respectively. Understanding these differences is essential for making the right choice. Retirement Contributions: Open enrollment is an ideal time to review your retirement contributions. For 2024, the contribution limit for employee contributions to 401(k) plans is $23,000, with an additional $7,500 catch-up contribution for those 50 and older. Increasing your contributions, if possible, can help secure your financial future. Employers may also permit “after-tax contributions,” which can be converted to a Roth IRA, enabling tax-free withdrawals later under specific conditions. Many employers default employees into target-date funds, but these may not suit your personal risk tolerance or financial goals. We often adjust our clients’ retirement portfolios to better align with their individual circumstances. Be sure to take full advantage of any employer match and ensure your investment strategy is consistent with your long-term objectives. Life and Disability Insurance: Most employers provide basic life insurance coverage equal to 1-2 times your salary. Depending on your family’s needs and financial obligations, you may want to purchase additional coverage. Employer-provided term life insurance is often cheaper than what you’d find on the open market and can sometimes be continued if you leave your job, though the cost might increase. Consider your financial obligations, such as income replacement, childcare, and funeral costs, when determining your needs. Similarly, evaluate your disability insurance coverage to make sure it’s adequate and explore supplemental coverage if necessary. Dependent Care Expenses: Many companies offer Dependent Care FSAs, which allow you to set aside pre-tax dollars for child or elder care expenses. However, keep in mind that you cannot use the same expenses for both the Dependent Care FSA and the Child and Dependent Care Tax Credit. Choose the option that provides the greater tax benefit based on your situation. Overall Financial Impact: It’s important to consider how each benefit impacts your overall financial picture and aligns with your budget. Benefits can quickly add up in cost, so ensure you have a sufficient emergency fund—ideally 3-6 months of expenses—held in a high-yield savings account or money market fund. Simultaneously, plan for long-term financial goals, such as retirement, home buying, education funding, and other significant life events. Balancing these priorities can be challenging, but it’s necessary to build a solid financial foundation. Open enrollment is a valuable time to fine-tune your benefits package, helping you work toward your financial goals and safeguard your family’s future. Carefully evaluate all the options available and consider seeking advice from a financial professional. Our clients face unique and complex financial situations, and we assist them in navigating these challenges by providing clear goals and actionable steps. Partner with an advisor who helps you feel confident in your financial planning and work towards your personal vision of financial freedom.  Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Adviser Public Disclosure website, https://adviserinfo.sec.gov/firm/summary/321097 . Past performance is not a guarantee of future results.

For the last couple of years we have been cultivating this persona, “SOPHIA”, we could not think of a better time to bring “her” to life as we gear up to watch the women of Team USA dominate in Paris. We are bearing witness to something special. Caitlin Clark and her massive shoe contract with Nike is packing the houses at WNBA games, the Nebraska’s volleyball team set a world record for attendance at women’s sporting event with 92,000 people on hand and the NIL has shifted power to the athletes who “own” their brand. Our time has come… More eyeballs, more sponsorships and a real seat at the table, finally. I get goose bumps as I listen to Allyson Felix discuss her running success and proudly watch her hold up that bronze medal in the 4X400 meter with her daughter Camryn. The athletic feat itself is impressive, but to hear her talk about the challenges she faced with finding childcare and how motherhood has affected her journey, leaves me feeling emboldened, excited and above anything else, motivated to get SOPHIA out.  Even though everyday may feel like a marathon, just not Olympic ones, I am proud to wear a different uniform to work every day as a financial advisor. I’ve worked hard to get here and bring my best every day. My clients are for the most part high net worth individuals who are extremely successful. They have hired me because they value my expertise, my experience and dedication. We are always looking to get better and make our clients more successful in whatever it is they are looking to achieve. Much of this is about trust and a really good relationship is based on open lines of communication. After talking to my female clients specifically about their backgrounds and stories, what I hear most often is something that sounds like “I wish I had started saving or investing sooner and I should have done X or Y”. What they are really saying is “I wish financial literacy was as important to teach as algebra”. I hear you, and I could not agree more. A personal lack of financial knowledge costs American’s $1,819 annually. Grab a calculator, see what that adds up to over the course of your lifetime. Unfortunately for women, they are often even more disadvantaged as they earn just 82 cents on the dollar versus their male counterparts performing the same job. But that’s just the average. You could be the highest paid WNBA player, Jackie Young, who makes $252K a year. Steph Curry of the Golden State Warriors makes $51.9 million. That’s 252X more, wow… Women making less than men for the same job described as the compensation sacrifice. There are also personal tradeoffs like motherhood, where they often leave the workforce in their early or peak earnings years, and then again later in life when aging parents or other family members need care. Losing the time or the money can wreak havoc on your financial plans. This can be disheartening, but there are things we can do now and in the future to blunt their impact and make sure we close the gaps from the hand we are dealt as women. Personal finance, building wealth, managing debt and savings may not be the most inviting topics. When you Google them, you’ll see these cold images of charts and spread sheets, men in suits, piggy banks or money bags. It’s often said that “success is the combination of hard work and luck intersecting.” I admit those two forces collided for me with really positive outcomes both personally and professionally. A career in the world of finance allowed me the opportunity to serve others while exposing me to some really critical concepts early on. When I graduated college, I couldn’t rub two nickels together after paying for rent and my $600 monthly student loan payment. Many a month went by when I would just pray that I wouldn’t max out my credit card before the end of the month. Slowly but surely, I earned the gift of financial freedom and the sense of empowerment that came with using my money to do the things that brought me the most joy. No more worrying about getting everyone Christmas gifts in December, being able to say yes to the girl’s trip to SF, and best of all, moving those Zillow “dreams” into the “I might actually be able to afford this in my favorite city” reality. But what should we call these often younger, intelligent, motivated people… the establishment opted for HENRY… High Earner Not Rich Yet You can appreciate my disappointment when now the marketing is HENRY this, or HENRY that. No disrespect to the actual HENRYs (or Henrys) out there…. But the fact that the financial services marketing industry opted for a male persona was a missed opportunity. We know men aren’t the only high income earners so why neglect half of the population, especially those on the rise? I’m not sure and, honestly, I don’t care…. After working with super successful, highly intelligent and wealthy clients for the many years, my partners and I sat down to reflect on what makes us unique, what we bring to the table and who it is we serve with a real sense of purpose. The takeaway: Our clients are actually pretty boss, many of whom are women. There are too many to name, or whose identity we would respectfully like to keep confidential, so instead meet SOPHIA , who embodies their excellence and perseverance. These successful individuals share three common themes: Save – Often Plan – Holistically Invest – Aggressively & Always (and not like crypto or zero-day options “aggressive”, more like I want my money to work as hard as I do type “aggressive”). Follow us to learn more about how all those SOPHIAs out there can live their best lives. Just because you are a high earner doesn’t tell me anything, it’s what you do with that potential. Can’t wait to see those athletes on the podium who turned potential into greatness. P.S. HENRY don’t be embarrassed when SOPHIA picks up the tab…

The death of famed psychologist Danny Kahneman earlier this year meant countless tributes for a true intellectual giant. His work on prospect theory earned him the Noble Prize in Economic Sciences in 2002. The Princeton professor whose exacting attention to detail was borderline pathological, along with his lifelong academic partner Amos Tversky, Richard Thaler and Cass Sunstein made countless (enormous) contributions to the field of behavioral science for the last 60+ years. Their work has helped millions of individuals, organizations, and policymakers alike, many unwittingly, make better decisions when it comes to economic matters and their financial affairs. What is behavioral finance or behavioral economics as it is often referred to? It is a discipline that combines elements of psychology and economics and looks at how the two interplay and impact real world decision making. Going back to the days when man stopped dragging his knuckles when he walked, it was assumed that he acted rationally, especially when it came to important decisions, but time and again it was clear that people’s biases, referred to as heretics, are capable of influencing their choices resulting in suboptimal outcomes more often than we’d like to admit.  While there are many of these biases, in this piece we will stick to a handful so as to get a better sense of what may be getting in the way of you acting more like Mr. Spock, the Vulcan whose calm demeanor saved the Star Trek crew from peril time and again. As we have watched Nvidia’s ascent, which at times is both breathtaking and terrifying, there may be no better story that exemplifies some of these facts today. Don’t let the fear of missing out or FOMO cloud your judgment. Let’s dive in. Endowment Effect: We are all guilty of thinking something that we own is more valuable than the actual markets price, whether it’s a used car or those shares of IBM that have been accumulating dust in your portfolio for the last 20 years while the rest of the tech sector has gone up 3-4X in that time. Bottom line, don’t fall in love with your stocks, save that devotion for your spouse or hobbies. Sunk cost: Similar to the endowment effect resulting in holding on to less than stellar investments, and worse, adding to them on the basis of the fact you have already committed some capital and walking away now would mean locking in those losses. Good investors/traders cut their losses and move on when it is clear that they have made a mistake. That’s okay, it’s a learning experience, no one bats 1.000 in the world of investing. Risk Aversion: We feel pain twice as much as we enjoy our success, this natural wiring may be good for our survival instincts but wreaks havoc on our investing. The result may be in the form of significant opportunity costs or ill-timed decisions in the throes of market volatility. If you find yourself getting nauseous when markets get jumpy, do yourself a favor and skip logging on to look at your balances for a bit. Recency Bias and the Gambler’s fallacy: Perhaps one of the reasons that markets in China have not experienced the same long-term success that we have witnessed in the US despite a truly remarkable economic advance, investors look at the markets much like a casino versus a source of wealth creation. With this heuristic, the notion that a recent random event is likely to impact the future is foolish, the odds of a coin landing on heads or tails are 50% even if the last five flips have all landed on heads. What happened yesterday generally has little bearing on what will happen today and that’s okay. Availability: One of the reasons we have gotten ourselves into this political quagmire, rather than do the work and the research involved to mine the data, here people’s laziness is about simply recalling recent information not necessarily the facts. Interestingly enough, bad information sticks out, even if it is a rare occurrence and clouds our judgment. Stick to the facts, take your to unearth the truth. Cognitive Dissonance: While availability is perhaps a bit more benign, the bias here gets us into the same trouble. Conflicting data or beliefs may make us uncomfortable, let’s listen to this analyst talk up one of our holdings, while I’ll change the channel when another analyst makes the bear case against my position. Often associated with confirmation bias, they have similarities and differences with cognitive dissonance being more of a conscious decision whereas confirmation bias tends to be more reflexive or automatic. Bounded Rationality/Dunning Kruger Effect: Going with our gut or overestimating our ability may mean suboptimal decisions or worse, abject failure. In a world that encourages the Do It Yourself “DIY” mentality, we are constrained by time, information, and cognitive ability yet that doesn’t stop us. We assume we have the ability to be a quick study and effective in our execution when in fact our shortcomings may be harmful. Herding: The recent meme stock revival brought back memories of how a group of Redditers toppled some “brilliant” hedge fund managers, true there is often wisdom in crowds, but not always. This bias always makes me think of Kindelberger’s famous quote… “There is nothing so disturbing to one’s well-being and judgment as to see a friend get rich.” Whether crypto or the rise of social media influencers, just because others are doing it doesn’t mean it’s wise or going to end well. Follow mom’s advice here. This is a good list though there are other “traps” that prevent us from being the next Peter Lynch, our awareness of these biases however may make us think twice, question assumptions, do more research, and avoid triggers so that we put ourselves in the best position to be successful. If in your experience it has been difficult to avoid falling victim to your biases, if you work at it, you can train yourself to avoid the pitfalls and sometimes simply acknowledging your limitations means outsourcing the decision making to your advisor(s) is the smartest move.v