Financial markets have become increasingly complex, making it difficult for individual investors to navigate successfully on their own. Investors often face the question of whether hiring a financial advisor truly provides enough value to justify the fees.

Recent comprehensive research by Vanguard, DALBAR, and other industry experts provides compelling evidence that professional financial advice offers significant value beyond basic investment selection. 

A case for having a pro on your side

Skepticism toward the financial advice industry is understandable—bad experiences, opaque fee structures, or conflicts of interest have burned many investors. Stories of sales-driven advice and misaligned incentives have cast a long shadow. This article is not a defense of every advisor, but rather a case for how true fiduciary advice—delivered transparently and with accountability, can provide measurable value in an increasingly emotional and volatile investing environment.

This emotional volatility is not hypothetical. We live in an era of heightened uncertainty, with rapid market shifts and global instability testing investor patience. As Fisher (2025) highlights in The Psychology of Market Patience, staying invested through turbulence demands far more than logic—it requires resilience. In these moments, the steady presence of a fiduciary advisor can serve as both guide and guardrail, helping investors remain committed to their long-term goals.

Professional advisors serve not only as planners and portfolio managers but also as behavioral coaches and accountability partners. This role is becoming even more essential as emotional decision-making erodes individual investor returns. The following sections explore how advisors can help improve portfolio outcomes, increase the likelihood of meeting financial goals, and reduce the emotional cost of investing.

They help enhance your portfolio performance

One of the most critical aspects of working with a financial advisor is the potential for improved portfolio performance. Contrary to the popular belief that advisors primarily add value by outperforming the market, research indicates that the most meaningful advisor contributions come from disciplined investment strategies. Advisors employ practices such as improved diversification, regular portfolio rebalancing, and tax-efficient investing, each enhancing long-term returns (Pagliaro & Utkus, 2019).

Vanguard’s research quantifies this benefit, estimating that financial advisors may add about 3% per year in net returns compared to a typical self-directed investor (Kinniry et al., 2022). This incremental gain, compounded over years, translates into significantly greater wealth accumulation.  

They can walk with you through turbulent times

According to DALBAR’s 2024 Quantitative Analysis of Investor Behavior (QAIB) report, the average equity investor significantly underperformed the market. In 2023 alone, the typical equity investor earned 5.5% less than the S&P 500, marking the third-largest performance gap in the past decade (DALBAR, 2024). This underperformance primarily results from emotionally driven investment decisions, such as selling assets during downturns and missing subsequent rebounds.

DALBAR’s findings further illustrate this emotional cost during turbulent periods. For example, the average equity investor saw returns of -21.17% in 2022, compared to the S&P 500’s -18.11%. Even in the strong market rebound of 2023, investors again lagged the market substantially, achieving only 20.79% returns versus the S&P 500’s 26.29% (DALBAR, 2024). Such significant performance gaps highlight the crucial role of advisors in mitigating harmful investor behaviors.

they can lead you to your goals with precision

Beyond portfolio management, financial advisors significantly enhance investors' ability to achieve long-term financial goals such as retirement security. Vanguard’s study on Personal Advisor Services (PAS) reveals that advised investors have an 80% or higher chance of successfully meeting their retirement goals compared to investors without professional guidance (Pagliaro & Utkus, 2019).

The role of fiduciary advisors—professionals legally obligated to act in the best interests of their clients—is particularly critical. According to Sheldon Geller, fiduciary advisors are required to disclose and mitigate conflicts of interest, ensuring investment decisions prioritize client goals over personal or company gain. This fiduciary responsibility provides investors with assurance and confidence, contributing to better financial outcomes (Geller, 2017).

They provide emotional stability

One of the most valuable yet often overlooked benefits of financial advice is the emotional stability it provides. Behavioral finance studies show that individual investors frequently succumb to emotional biases such as overconfidence, excessive trading, and holding onto losing investments too long.

Maymin and Fisher (2011) emphasize the value financial advisors add through behavioral coaching, helping clients avoid impulsive decisions during market downturns. Vanguard's research quantifies this emotional benefit, attributing between 0 and 2% in additional annual returns to behavioral coaching alone (Kinniry et al., 2022). Trust and personal connection further account for nearly half of the perceived value in advisor-client relationships, empowering clients to stay committed to their investment strategies during volatile periods (Pagliaro & Utkus, 2019). 

They will help you stick to a long-term strategy

Investor discipline, encouraged by advisors, remains critical for achieving optimal returns. DALBAR’s findings underscore how investor behavior significantly impacts returns. The report indicates that investors who maintain long-term strategies, supported by professional guidance, substantially outperform those who make emotional decisions (DALBAR, 2024).

The historical evidence from DALBAR’s extensive research over the past 30 years consistently shows that emotional investment decisions are detrimental. Advisors counteract this by instilling discipline, maintaining structured investment strategies, and reinforcing long-term thinking, resulting in better investment outcomes.

find an advisor who helps you go further than you could alone

Despite substantial evidence supporting the value of financial advice, some investors remain skeptical, often due to isolated cases of underperformance by certain advisors. However, focusing solely on short-term investment returns can be misleading. The primary value of financial advice lies in comprehensive financial planning, disciplined behavioral coaching, and fiduciary oversight.

Investors should critically evaluate advisors based on their holistic service offerings, transparency, and fiduciary commitment rather than just short-term market performance. Effective advisors deliver measurable benefits through strategic planning, emotional guidance, and long-term investment discipline.  

being a FIDUCIARY matters

Understanding the differences among fiduciary, quasi-fiduciary, and non-fiduciary advice is essential. According to Fisher (2025), only about 4.92% of financial professionals in the U.S. operate as fee-only fiduciaries, legally obligated to place their clients' best interests above their own and disclose any potential conflicts of interest. Quasi-fiduciary advisors might follow fiduciary standards selectively or in certain situations but may still receive commissions or have other conflicts of interest. Non-fiduciary advisors, such as brokers, typically operate under suitability standards rather than fiduciary obligations, often leading to decisions that may not align with optimal client outcomes (Fisher, 2025).

The distinction between these advisory models is critical for investors. True fiduciary advisors provide greater transparency, reduce conflicts of interest, and often result in higher client satisfaction and better long-term financial outcomes. 

Invest wisely with professional guidance

Navigating today's financial landscape alone poses substantial risks, primarily due to emotional biases and complex market dynamics. Research from Vanguard, DALBAR, and leading financial experts clearly demonstrates the profound impact professional financial advisors have on investor outcomes. Advisors not only enhance portfolio returns but also significantly increase the likelihood of achieving critical financial goals and provide invaluable emotional reassurance.

Ultimately, investors who recognize and leverage the full spectrum of benefits offered by professional financial advice position themselves to achieve greater financial security, resilience, and long-term success.

References:

DALBAR. (2024). Quantitative Analysis of Investor Behavior (QAIB) Report. DALBAR, Inc. Retrieved from www.qaib.com

Fisher, P. (2025, April 6). The psychology of market patience. Human Investing. Human Investing. https://www.humaninvesting.com/450-journal/psychology-of-market-patience

Fisher, P. (2025, February 14). An analysis of investment advisor representatives and bureau of labor statistics data: Determining the percentage of financial advisors acting as true fiduciaries. https://www.humaninvesting.com/450-journal/only-5-percent-of-advisors-are-true-fiduciaries. Human Investing.

Geller, S. M. (2017). Retaining a fiduciary investment advisor. The CPA Journal, 72-73.

Kinniry, F. M. Jr., Jaconetti, C. M., DiJoseph, M. A., Walker, D. J., & Quinn, M. C. (2022). Putting a value on your value: Quantifying Vanguard Advisor’s Alpha. Vanguard Research.

Maymin, P. Z., & Fisher, G. S. (2011). Preventing emotional investing: An added value of an investment advisor. The Journal of Wealth Management, 13(4), 34-43. https://doi.org/10.3905/jwm.2011.13.4.034

Pagliaro, C. A., & Utkus, S. P. (2019).Assessing the value of advice. Vanguard Research.

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A BOOK FOR THE SAVER IN ALL OF US

Becoming a 401(k) Millionaire isn’t your typical retirement guide. With 30 years in finance, Dr. Peter Fisher shares personal insights and real stories to help you plan with confidence.

Learn more

Disclosure: Human Investing is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. This article is provided for informational and educational purposes only and should not be construed as personalized investment advice. The information contained herein is believed to be accurate as of the publication date but is subject to change without notice. Past performance is not indicative of future results. Index performance is shown for illustrative purposes only and does not represent the performance of any specific investment. Investors cannot invest directly in an index, and index returns do not reflect fees, expenses, or taxes. The estimated value added by advisors is based on research and modeling assumptions that may not reflect actual investor experiences. Actual results will vary based on individual circumstances, market conditions, and advisor practices. Investing involves risk, including the potential loss of principal. Readers should consult with a qualified financial advisor to assess their individual circumstances before making any financial decisions.

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As a leader at your company, you are provided a comprehensive range of benefits that help achieve your financial and retirement goals. However, things can go awry at tax time. The newer Metro and Multnomah County taxes, in addition to regular Federal and Oregon taxes, are becoming an increasing burden for executives to navigate. 

By implementing a proactive forward-looking tax strategy and payment plan, company leaders have a significant opportunity to improve their financial situation, relieve stress related to taxes, and reduce unwanted April surprises!

In this article, we’ll examine a few of the biggest reasons you could get hit with an unexpected tax bill and ways to navigate it differently.

Tax hit #1: Limiting your withholdings on supplemental pay

Many sources of compensation beyond salary (such as PSP, LTIP/PSU vests, RSU vests, and stock option exercises) are taxed as “supplemental pay.” This comes with a fixed tax withholding percentage, regardless of your tax bracket or withholding elections on your base salary. For example, the fixed withholding rates set by the government on supplemental pay is 22% Federal and 8% Oregon. The reality is most executives are in a much higher income tax bracket, sometimes as much as 17% higher than the amount withheld. This discrepancy leaves a significant gap in the amount of taxes that should have been withheld versus the actual amount that was withheld.

As an example, Charlotte an executive has $50K of RSUs that vested on September 1st. With all her income sources (salary, PSP, LTIP/PSU, RSUs) her total taxable income is $400K. The taxes automatically withheld on the $50K vested RSUs would be about $15K (22% Federal + 8% Oregon). However, her total income puts her in the 35% Federal tax bracket + roughly 10% Oregon bracket. This makes the withholding on her RSUs about $7,500 short ($50K x 15% short).

To get this paid in, she could use Quarterly Estimated Tax vouchers to submit the underpaid tax to the IRS and Oregon. Or, depending on her overall tax situation, she may be able to wait and pay the balance due with her tax return in April without incurring underpayment penalties and interest – although this determination may require a tax professional to run a detailed tax projection. For many people, being hit with a large bill all at once in April may not feel great and they may opt for Quarterly Estimated Payments instead.

If Charlotte doesn’t realize that her withholding was short until she files her tax return next April, she could face yet another surprise – 7 months of underpayment interest and penalties. Depending on her overall tax picture, the IRS and Oregon may have been accruing this since September. Yet another unwanted surprise for Charlotte.

Tax hit #2: Not withholding enough (or at all) for Multnomah County’s “Preschool for All” tax

The Preschool for All tax is 1.5% on taxable income over $125,000 for individuals or $200,000 for joint filers, with an additional 1.5% on taxable income over $250,000 for individuals or $400,000 for joint filers. The rate is currently scheduled to increase by 0.8% in future years. If you live or work in Multnomah County, you are likely subject to the “Preschool for All” tax that started in 2021.

Unfortunately, your company might not use payroll withholding to cover this tax, in which case you would be responsible to fully submit this tax on your own. Multnomah County expects these payments to be received quarterly to avoid interest and penalties. This can be submitted using vouchers or paying online.

We often see the most challenges for residents of Multnomah County who travel outside the county boundaries to work for an employer that does not currently have Preschool tax withholding options. Determining how much to pay and navigating this alone can be stressful. And for any late or underpaid tax, the county is quick to send notices in the mail. To reduce this headache, we recommend finding trusted advisors or tax professionals to serve as a guide to help you navigate complexities throughout the year.

Tax hit #3: A lack of coordination on how much to withhold for the Metro tax if you and your spouse both work

The Metro Supportive Housing Services tax (a.k.a. the Homeless tax) also began in 2021. It is a 1% tax on applicable income over $125,000 for single filers or $200,000 for joint filers.  If you don’t know whether your residence or your workplace is located within the Metro, you can look up the address here: Metro Link.

The challenges described above for the Preschool tax are similar for the Metro tax. Additional issues arise for families when each spouse works at a different company, and we see this frequently because the Metro area is larger. The income threshold for this tax is based on total household income. Since the spouses’ two different employers likely do not communicate with each other, there can be significant over or under withholding of these local taxes.

For example, Nike is located within the Metro boundary. If a Nike executive has income of $400K, Nike will start to withhold Metro tax once the executive’s income for the year is over $200K. Let’s say their spouse earns $90K by working for a different company, ABC Co., located across town but still within the Metro. Since this $90K alone is under the threshold, ABC Co. does not automatically withhold Metro tax. However, we know the total household income of $490K is over the threshold, which means all of the ABC Co. income is subject to Metro tax too. You see how this can create an issue? Unless the spouse realizes this and works with ABC Co.’s HR department to turn on withholding or diligently submits quarterly payments to the Metro on their own, the family may discover a balance of tax, penalties, and interest to pay in March/April right around a spring break vacation with their kids. Not fun!

In short, if you live or work in the Metro boundaries, it is important to be aware of the withholding options that your employer provides, and to be certain you are opted in or out accordingly.

Tax hit #4: Incorrectly reporting stock transactions and the complexity that comes with it

Up to this point, we’ve discussed withholdings on your salary and benefits. What about company stock that you own and decide to sell – what can go wrong there?      

When you sell company stock (whether you’re still at the company or have moved on), it is reported to you and to the IRS by the custodian (i.e. Fidelity, Schwab, Computershare) on a Form 1099. On this form, the custodian clearly reports the sale date, quantity, sales price, and name of the company’s stock that was sold. What is not so clear is the basis – the portion of sales proceeds that is not taxable because it has already been taxed on your W-2.

If the stock was acquired as part of your employee benefits package, this information is often buried within dozens of pages in the Form 1099. And these pages can be detailed, complex and confusing to read - especially as each custodian has a different template and the layout can change from year to year. We recommend seeking the help of a professional if you are unsure about your basis or how to report it. An experienced tax preparer sees MANY of these forms each season. They know where to look to find the basis of the company stock you sell, and how to translate that information accurately onto your tax return.

Without reporting the basis, or reporting it incorrectly, your taxable income could potentially be overstated significantly and you may accidentally pay more money to the IRS than is actually due. Fixing this after your tax return has been filed can require a time consuming process of preparing an amended return and waiting for the government to return your money. If you suspect you overpaid your taxes, you can always reach out to a tax professional to review your tax return. CPAs within our firm often provide this review to clients throughout the year as part of our financial planning services. 

While tax is a complex subject, it is only a piece of your unique financial picture. Planning appropriately for taxes should be done cooperatively with other parts of your financial plan, such as cash flow, retirement and estate planning. Done right, they’ll fit together like a perfect puzzle.  

Want to minimize the tax headache? A few Actions you can take now

Action #1:  Bring in experienced tax professionals.

Tax professionals can work with you to run “tax projections” to track how much you need to pay and monitor your April balance. These tax projections can be done any time throughout the year and can be refined near year-end to give you peace of mind and limit unwanted surprises.

If you’re looking for tax savings now or in retirement, we highly recommend proactive tax planning. A professional who is well-versed in your company’s benefits can use your tax projection to provide customized strategies to minimize your tax liabilities.

Action #2:  Talk with your financial planner.

We know that for many company executives, setting aside additional tax payments from your monthly household cash flow can become stressful, especially since the amounts can be so inconsistent. If you’re feeling that stress, tell your financial planner – they’ll want to know so they can help you navigate it well and feel more confident going forward. 

One strategy we may suggest is the “Pay as You Receive” method, which calculates an estimated amount of taxes due from each type of supplemental income when it hits your bank account. Making tax payments at the time you receive the income- while you have the funds to do it- will leave your monthly cash flow separate and unaffected.

These estimated tax payments, when combined with your payroll withholding, should be equal to your anticipated tax bracket for the calendar year. This approach helps ensure that your total payment to the IRS, Oregon, Multnomah County, and Metro aligns with your overall tax obligations.

Action #3:  Find a team that has BOTH!

It is important to note that any tax payment and mitigation strategies should be part of a comprehensive financial plan that is tailored to your specific financial situation. If you’re considering a firm that can look at your full financial picture, we’d love to help. At our Lake Oswego office, our team has licensed CERTIFIED FINANCIAL PLANNER® professionals and Certified Public Accountants, and we constantly share knowledge with one another.

We’re here to talk you through local, state, and federal complexities and we want to help you get things right the first time. Our mission is to serve you faithfully and be there to guide you through your benefits packages as you advance in your career or make a move.

If you have questions about how to set up a proactive forward-looking tax strategy, please contact our team to learn more.

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Disclosures: The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

This material is not intended to provide, and should not be relied upon for, tax advice. Please consult your tax advisor regarding your specific situation.

Scenarios discussed are hypothetical and for illustrative purposes only. They do not represent actual clients or outcomes and should not be interpreted as guarantees of future results.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Commission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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A financial plan is a structured approach to managing one’s financial life. It is not merely a spreadsheet or a collection of investment products—it is a comprehensive framework that organizes income, expenses, savings, risk management, taxes, and long-term goals into a cohesive, actionable strategy. When constructed properly, a financial plan enhances decision-making, reduces uncertainty, and improves financial outcomes (Nissenbaum, Raasch, & Ratner, 2004).

Yet if financial planning is so powerful, why do so few follow through?

The answer often lies not in math, but in mindset. Research shows that even financially literate individuals struggle to plan for the future when they lack self-control, future orientation, or supportive social norms (Tomar, Baker, Kumar, & Hoffmann, 2021). A well-designed plan must account not just for assets and liabilities—but for human behavior. That’s why the best financial plans are often paired with an accredited fiduciary advisor, who offers a simple, visual, and tailored approach to help you make decisions.

At its core, a financial plan helps individuals clarify what matters most and align their resources accordingly. Whether navigating early adulthood, managing a growing family, or preparing for retirement, individuals benefit from a written plan that reflects financial priorities and personal values. In my work as a financial advisor and educator, I have seen that the most significant breakthroughs often come not from more money, but from more clarity.

the purpose of a financial plan

The purpose of a financial plan is twofold: to organize current financial resources and to make informed decisions about the future. This may sound straightforward, but the complexity of modern financial life often makes it difficult for individuals to answer even basic questions such as, "Can I afford this?" or "Am I on track?" A financial plan provides a framework to answer these questions thoughtfully and methodically.

More than a static document, a financial plan is a living tool. It should evolve alongside an individual's life stages, economic conditions, and shifting priorities. According to Nissenbaum, Raasch, and Ratner (2004), regularly reviewed and updated plans yield significantly better financial outcomes over time.

It starts with defining your goals

Goal-setting is the anchor of any financial plan. Without clear goals, even the most sophisticated strategies can lose direction. Goals give context to numbers and bring meaning to saving and investing. They can be short-term (saving for a vacation), mid-term (purchasing a home), or long-term (funding retirement or creating a legacy).

One of the most effective frameworks for goal setting is the SMART method—specific, Measurable, Achievable, Relevant, and Time-bound. Goals should inspire and direct behavior. In my experience, clients who articulate their goals clearly are far more likely to follow through on their plans.

components of a comprehensive plan

A thorough financial plan includes several interdependent elements, each of which contributes to the individual's or household's overall financial health. According to Ernst & Young’s Personal Financial Planning Guide (Nissenbaum et al., 2004), the five essential components are:

1. Cash Flow and Budgeting
   Understanding income and expenses is the foundation of any financial plan. A clear cash flow picture allows individuals to make informed decisions about saving, spending, and giving. Budgeting is not about restriction; it is about intentionality. When individuals budget effectively, they begin to control their money rather than letting money control them.

2. Risk Management and Insurance
   Life is unpredictable. A good financial plan includes appropriate insurance coverage to protect against major disruptions—including illness, disability, death, or property loss. While not exciting, insurance serves as a financial firewall. Emergency savings also fall into this category, with most professionals recommending a reserve of 3 to 6 months of essential expenses.

3. Tax Planning
   Tax efficiency is a core pillar of financial planning. Smart planning reduces unnecessary tax burdens and aligns financial decisions with long-term goals. This includes strategic use of tax-advantaged accounts, such as IRAs and 401(k)s, as well as decisions around capital gains, charitable giving, and income timing.

4. Investment Planning
   Investments must serve the plan—not the other way around. A financial plan defines the purpose, time horizon, and risk tolerance for each investment goal. This helps investors avoid emotional decisions and focus on long-term strategies. Diversification, asset allocation, and periodic rebalancing are all part of this disciplined approach.

5. Retirement and Estate Planning
   A financial plan must consider the future. This includes projecting future income needs, optimizing Social Security benefits, managing required minimum distributions (RMDs), and crafting an estate plan that reflects one’s legacy goals. Planning ahead ensures that wealth is transferred intentionally and tax-efficiently.

Building a financial plan: a step-by-step process

While the components of a financial plan are well-established, the process of creating one can be deeply personal. Below is a common approach used by both individuals and professionals:

1. Establish Goals and Priorities
   Start by asking what matters most. What do you want your money to do for you? What are your non-negotiables? Apply the SMART method in making them more attainable. Writing these goals down is a powerful first step.

2. Gather Data
   Collect all relevant financial information, including income, expenses, debts, assets, insurance policies, and legal documents. The accuracy of your plan depends on the quality of your data.

3. Analyze and Diagnose
   Identify gaps, inefficiencies, or risks. This includes assessing debt levels, reviewing savings rates, stress-testing for emergencies, and evaluating investment alignment.

4. Develop Strategies
   Design strategies that address the specific needs uncovered in your analysis. This might include refinancing high-interest debt, increasing retirement contributions, or adjusting your investment allocation.

5. Implement the Plan
   Execution is where many plans fall apart. Automate good behavior when possible—automated savings, investment contributions, and bill payments reduce reliance on willpower.

6. Monitor and Review
   Plans should be reviewed at least annually, and anytime there is a significant life event (e.g., marriage, new job, birth of a child). Adjustments should be proactive, not reactive.

Behavioral considerations in financial planning

Financial planning is as much about psychology as it is about math. Behavioral finance has shown that individuals often act irrationally with money due to cognitive biases, emotional reactions, and social pressures. A written financial plan serves as a behavioral anchor—a tool that reduces the likelihood of impulsive decisions.

Recent research reinforces the role of psychology in retirement financial planning. Tomar, Baker, Kumar, and Hoffmann (2021) identify several psychological determinants that significantly impact whether individuals engage in effective planning. These include future time perspective (the ability to think long-term), self-control, planning attitudes, and financial knowledge. In other words, it is not enough to know what to do; one must also be inclined to do it. Social norms and perceived behavioral control also play an influential role, suggesting that a supportive environment enhances financial planning behavior.

Research has shown that investors with written plans are more likely to stay invested during market volatility, rebalance their portfolios regularly, and avoid the pitfalls of market timing. A plan brings structure, and structure supports discipline.

common mistakes and how to avoid them

Even well-intentioned individuals fall prey to common planning mistakes. These include:

• Neglecting emergency savings

• Underestimating expenses in retirement

• Taking on too much investment risk

• Failing to review insurance coverage

• Overlooking tax implications of financial decisions

• Not discussing financial goals with a spouse or partner

Avoiding these mistakes begins with awareness and regularly revisiting the plan. A good advisor doesn’t just build a plan—they help you adapt it.

the value of working with an advisor

While many individuals can build a basic plan on their own, the guidance of a fiduciary financial advisor can add significant value. Advisors provide objectivity, technical expertise, and behavioral coaching. At Human Investing, we believe our highest calling is to serve as guides—helping clients navigate complexity with wisdom and clarity.

Importantly, not all financial advisors are held to the same standard. A fiduciary advisor is legally obligated to act in your best interest. Yet even among those who use the fiduciary label, fewer than five percent operate without receiving any form of commission (Fisher, 2025). That’s why the true fiduciary standard—free from all commissions—should be the baseline, not the exception.

turn intention into action

A financial plan is not just a document—it’s a decision. It reflects your willingness to take control of your future instead of drifting into it. The most successful outcomes aren’t reserved for the wealthiest or the most analytical—they’re earned by those who start, stay consistent, and make adjustments along the way.

If you’ve made it this far, you already care about your financial future. The next step is simple, but powerful: act. Whether it’s writing down your goals, scheduling time to review your budget, or meeting with a fiduciary advisor, do one thing today that your future self will thank you for.

Your money needs a plan. And now, you have the framework to build one that works.

References
Fisher, P. (2025, February 14). Only 4.92% of advisors are true fiduciaries. Is yours? Human Investing. https://www.humaninvesting.com/450-journal/only-5-percent-of-advisors-are-true-fiduciaries

Nissenbaum, M., Raasch, B. J., & Ratner, C. L. (2004). Ernst & Young's personal financial planning guide. John Wiley & Sons.

Tomar, S., Baker, H. K., Kumar, S., & Hoffmann, A. O. (2021). Psychological determinants of retirement financial planning behavior. Journal of Business Research, 133, 432–449.

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Disclosures: Human Investing is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. This article is provided for informational and educational purposes only and should not be construed as personalized investment advice. The information contained herein is believed to be accurate as of the publication date but is subject to change without notice. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Readers should consult with a qualified financial advisor to assess their individual circumstances before making any financial decisions.

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Rokas - stock.adobe.com

Given the recent stock market volatility, it is important to re-evaluate your plan for your Stock Benefits (RSUs, ESPP, Stock Options) to take advantage of opportunities that may arise in this environment. 

A well-crafted strategy for your stock benefits should focus on:

1. Personal needs and situation

2. Maximizing the benefit

3. Minimizing taxes

4. Diversifying strategically

5. Incorporating the investing principle of “Buy Low + Sell High” (when available)

The Investing Principle of Buy Low + Sell High

A fundamental investing strategy is to buy stocks when they are undervalued and sell them once they’ve appreciated, allowing you to benefit from the price increase. While timing restrictions from stock benefits may limit this approach, it’s important to integrate it whenever possible.

Strategies for your stock benefits based on your timelines

How do you incorporate your personal situation and needs with an effective strategy during the current market volatility? We will dive into several strategies that address the needs for different time periods, since timelines are an even more important factor during volatile markets.

For short-term needs (2 years or less)

Stock compensation can provide funds for expenses beyond salary and bonus, such as tuition, home repairs, vacations, or tax bills.

1. First, consider selling recently purchased ESPP shares. Since you're buying these shares at a discount while the stock price is low, selling them for a gain doesn’t violate the “buy low, sell high” principle.

2. Next, consider selling recently granted and vested RSUs. Like the ESPP strategy, these RSUs can help meet short-term cash needs. The main difference is that RSUs are often granted at a higher price—before a market downturn—so their current value may be lower than when they were granted. However, if the RSUs were granted recently, the price difference might be minimal, making them a more attractive option to sell.

For intermediate term needs (3-7 years) 

The intermediate term timeframe can be more challenging, since the answer isn’t clear and should depend on your risk tolerance.

• The more conservative approach: Sell existing RSU grants that will vest in the next 12 months. This strategy reduces your exposure to stock volatility but doesn’t fully align with the “buy low, sell high” principle, since RSUs may be worth less than their original grant price. However, future annual grants—typically part of your compensation—can help offset this by being issued at lower prices during a market downturn.

• A higher-risk approach: Hold all existing RSUs until the funds are needed, with the hope that the stock price recovers before then. This could allow you to better capitalize on the “buy low, sell high” strategy. The risk, however, is that the stock may not recover in time—or at all—leaving you potentially forced to sell at a loss when cash is needed.

• The balanced approach: To hedge your bets, consider combining both strategies: sell some RSUs now while holding others for potential future gains. This hybrid approach can offer peace of mind, helping you avoid second-guessing your decision if the market doesn’t move in your favor.

For long-term needs (8+ years)

Planning for long-term goals like retirement tends to be more straightforward.

• For vested RSUs and ESPP: Consider a strategy called Tax Loss Diversification, a variation of traditional tax loss harvesting. Tax loss harvesting involves strategically selling investments in non-retirement accounts to realize a loss, which can reduce your tax bill. You then reinvest that money into similar investments to stay in the market and benefit from potential recovery. With Tax Loss Diversification, the added benefit is that you're also shifting from concentrated stock (like your company shares) into a more diversified investment—such as an index fund with exposure to hundreds or thousands of companies. When the market is rising, diversifying can be painful due to the capital gains taxes involved, so it's wise to take advantage of a downturn as a window of opportunity.

• Stock Options, RSUs, and ESPP: Stock Options offer the greatest potential upside but also carry the highest risk, especially when they’re “underwater” (i.e., the stock price is below the option’s strike price, making them currently worthless). In these cases, the best move is often to wait and give the stock time to recover, maximizing the chance to capture that upside. For RSUs and ESPP shares that you intend to hold for long-term growth, the best approach is often patience—holding through downturns and waiting for both the stock price and the broader market to recover.

The Exception: Expiring Stock Options

Expiring stock options require timely decision-making due to looming deadlines. Your strategy should reflect your risk tolerance, the number of options involved, and how critical they are to your overall financial goals.

• Conservative approach: Sell all options now to avoid the risk of further price declines. This minimizes downside but also limits any potential future upside.

• Moderate approach: Sell portions of your options at predetermined dates over time, balancing risk reduction with the opportunity for gains.

• Moderately aggressive approach: Sell portions based on specific price targets. If those targets aren’t reached, you may need to sell the remaining options closer to expiration to avoid losing them entirely.

• Aggressive approach: Hold all options until close to expiration in hopes of a stock price rebound or significant upswing. This offers the most potential upside, but also the highest risk of loss if the stock doesn’t recover in time.

Market volatility may feel uncertain and carry risks, but it also creates rare opportunities to make the most of your stock benefits. If you haven’t revisited your strategy recently, now is a great time to reassess and align your plan with the current market landscape.

Remember, there’s no one-size-fits-all approach. The right strategy depends on your company’s stock performance, your personal financial goals, risk tolerance, and overall circumstances. Use this moment to take control, make informed decisions, and turn today’s challenges into tomorrow’s opportunities.

For questions or more information about managing stock benefits during current conditions, please call (503) 905-3100 or contact us.

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Disclosures: The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

This material is not intended to provide, and should not be relied upon for, tax advice. Please consult your tax advisor regarding your specific situation.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Commission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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Don’t let time run out on these end-of-year tax plays. Not having a tax projection done can be a costly mistake. Besides giving you peace of mind in April, in order for you to pay the lowest percentage of taxes over your lifetime, you have to plan and utilize every opportunity. Sometimes this means paying more dollars in tax in the current year to seize and maximize that lower rate.

For Lower Income Tax Brackets

 While your income is low, it may make sense for you to realize more income now and better utilize your low tax rates. 

1. Roth 401K and Roth IRA contributions: Contributing to a Roth 401k or Roth IRA may cost you more in taxes today, but it allows those dollars to grow tax-free. If you can do this early in your career and give your retirement dollars a long time to grow, the tax savings will be enormous.

2. 0% federal tax on capital gains: Many people are unaware that the IRS actually allows for a 0% tax on capital gains (Example: Gain from sale of stock). If your taxable income is below $48,350 Single $96,700 Married-Filed-Jointly in 2025, you may want to realize additional gains this year by selling stock to take advantage of these low rates. Keep in mind you may still need to pay state & local taxes on these sales but selling at the 0% federal tax bracket is an opportunity you can’t afford to pass up.

3. Lower your tax bracket when your income is low in retirement: Sometimes this situation occurs not when you are starting your career but when you are ending it. In the years between retirement and age 73, when Required Minimum Distributions start, there are opportunities to take advantage of these low tax brackets as well.

4. Lower your tax withholdings in January: If you are getting a large refund, adjust your withholdings on your paycheck for the next year. Adjusting early in the year keeps more money in your pocket each month. Do not give the IRS an interest-free loan.

For Middle Income Tax Brackets

As you start making more money and entering higher tax brackets, this is the time to start looking for deductions. 

1. Maximize your employee benefits: Have you maximized your employee benefits such as retirement contributions (including catch-up for those age 50+, and an extra catch-up for those age 60-63), H.S.A. contributions (including catch-up for those age 55+), and other benefits? When you are a W-2 employee, the best place to look for deductions is at work. Many companies will also offer some sort of match on retirement contributions. By not putting enough or anything into your workplace retirement plan, you may be leaving money on the table.

2. Tax loss harvesting: One place you might go looking for additional deductions is your brokerage account. While no one likes to lose money on their investments, Capital losses can offset up to $3,000 of ordinary income each year. If your income is high you may want to harvest losses for two reasons:

   1. Taking losses now allows you to put off paying tax in favor of paying down the road when it might be cheaper, potentially 0% or 15% federally.

   2. To stay out of the 20% highest capital gains bracket $533,400 Single, $600,050 Married-Filed-Jointly for 2025).

3. Non-Deductible IRA contribution: If you are already doing the items above and want to put more away for retirement, you might consider funding a non-deductible IRA. You (and your spouse) can put up to $7,000 (for 2025) into an IRA each year. This puts after-tax dollars into an IRA which could later be converted to a Roth IRA, which can grow tax-free. Keep in mind that the IRS views all of your IRAs as one IRA. Any distribution or conversion must be done proportionally to your taxable and non-taxable balances. If you have taxable amounts in your IRA, you may owe tax on any conversions.

4. Raise your tax withholdings in January: If you owed a lot in April last year, it may be an indicator that you need to adjust your withholdings for the coming year or make estimated payments. The IRS requires you to pay the tax due at least quarterly. January is a good time to adjust your withholdings because you have the entire year for the changes to take effect. This means you can make the smallest change to your net pay and still yield the desired effect at year-end.

For Higher Income Tax Brackets

When you find yourself with a surplus of money, living generously may yield additional tax savings.

1. Charitable contributions using stocks: While contributing to charity generally does not save you more than you spend on your taxes, if you have the heart to give there are efficient tax strategies that can allow your donation to go further. As changes to itemized deductions have vastly limited the amount of benefit many people can get from making charitable contributions, with careful planning, there are ways you may still save big.

   1. Contributing long-term appreciated stock may allow you to gain a charitable contribution for the fair market value of the stock and never pay the capital tax from the sale.

   2. Utilizing a donor-advised fund may allow you to bunch several years of donations into a single year. This could allow you to take larger deductions over several years.

   3. If you are over age 70.5 and not itemizing your deductions it may make sense for you to donate straight out of your IRA with a Qualified Charitable Distribution. These donations get paid straight from your IRA and are not taxed.

2. $19,000 gifts to your children: If you are planning to transfer a large estate to your children upon your death it may make sense for you to utilize the annual gift limits and give each year to potentially lower taxes on your estate. These gift limits are annual and adjust with inflation. Current limits are $19,000 per year per individual. This means a husband and wife could give $19,000 each to a child for a total of $38,000. If that child is married, they could also give their child’s spouse the same amount without filing a tax return.

   To be clear, you can give all the way up to your lifetime limit in a given year without paying taxes, but giving more than $19,000 requires you to file a gift tax return and reduce your lifetime estate.

When it comes to taxes, Benjamin Franklin said it best when he said “failing to plan is planning to fail”. If you have not done so already, get your tax plan going before the end of the year. 

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Disclosures: Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Commission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

This material is not intended to provide, and should not be relied upon for, tax advice. Please consult your tax advisor regarding your specific situation.

The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results.

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This article explores how financial headlines influence investor behavior, often exacerbating emotional decision-making and undermining long-term investment outcomes. Drawing from behavioral finance research and investor psychology, the article argues that investors should adhere to a written investment plan rather than respond impulsively in the face of uncertainty and sensational news. Selected headlines from Bloomberg and CNBC illustrate the impact of the modern media environment on perception and behavior. The insights of Peter Lynch, Jack Bogle, and Warren Buffett are used to contextualize the long-standing wisdom of patience and discipline in investing.

The rise of financial anxiety

Today’s investors are inundated with a 24/7 news cycle that thrives on urgency. While access to information has never been easier, clarity has never been harder to maintain. Financial headlines are designed to capture attention, often through alarming or emotionally charged language. This reality presents a challenge for investors: distinguishing between signal and noise and avoiding making decisions rooted in emotion rather than logic or planning.

The emotional power of headlines

A review of today’s (4/24/25) major financial media illustrates the challenge. From CNBC, headlines such as:

Bridgewater hedge fund warns Trump policies could induce a recession
The S&P 500 formed an ominous ‘death cross.’ What history says happens next

frame the economic outlook in dramatic, even catastrophic terms. Similarly, Bloomberg ran with:

Odd Lots: Why the Real Tariff Pain Hasn’t Even Begun
One of Wall Street’s Biggest Bulls Slashes View as Tariffs Bite

Despite these headlines, the S&P 500 rose nearly 2% today, and tech stocks surged on strong earnings reports. This disconnect between the emotional tone of news coverage and actual market behavior is a classic example of availability bias—a cognitive distortion where individuals give undue weight to recent, vivid, or emotionally charged information (Tversky & Kahneman, 1973).

This behavioral response, driven by the availability of alarming headlines, often leads investors to abandon sound strategies in favor of reactive decisions. Yet history and experience warn us against this trap. As the following insights from some of the most respected minds in investing make clear, enduring success comes not from responding to noise but from adhering to a disciplined, long-term approach.

Wisdom from the investment greats

The dangers of reactionary investing are not new. Legendary investor Peter Lynch warned:

“Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.”

Jack Bogle, the founder of Vanguard, put it more bluntly:

“The idea that a bell rings to signal when to get into or out of the stock market is simply not credible.”

And Warren Buffett offered perhaps the most elegant summation:

“The stock market is a device to transfer money from the impatient to the patient.”

These insights underscore the importance of focusing not on media narratives but on long-term goals and rational portfolio construction.

Recognizing the wisdom of these investment luminaries is a critical first step—but applying it consistently requires more than agreement; it requires structure. Investors need more than memorable quotes to overcome the behavioral impulses triggered by market volatility.

They need a written financial plan that serves as a behavioral compass, grounding decisions in clearly defined goals, timelines, and risk tolerance. Translating timeless investment principles into practical, repeatable actions makes the financial plan a vital tool for staying the course when emotions run high.

The role of a written financial plan

The antidote to reactionary behavior is a well-crafted financial plan that clearly articulates an investor’s purpose, time horizon, risk tolerance, and rebalancing strategy. Far from being a static worksheet, the plan functions as a behavioral anchor, offering clarity during periods of uncertainty and helping investors resist the temptation to respond emotionally to sensational headlines.

A thoughtfully structured financial plan does more than outline investment choices and target allocations. It proactively defines how to respond to market volatility, eliminating guesswork when clarity is most needed. Doing so transforms abstract wisdom into actionable discipline—bridging the gap between intention and execution.

Planning over panic

In a media landscape dominated by noise, fear, and speculation, the most effective investor response is not reaction—but preparation. Rather than chase headlines, successful investors rely on a carefully constructed financial plan and the discipline to follow it. Behavioral economics and decades of market data affirm that patience, consistency, and structure drive long-term success.

So, when the next wave of headlines warns of crisis or collapse, the wise investor doesn’t panic. They return to the plan—and stay the course.

For more information about our financial planning services, please call (503) 905-3100 or contact us.

References:

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131.

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A BOOK FOR THE SAVER IN ALL OF US

Becoming a 401(k) Millionaire isn’t your typical retirement guide. With 30 years in finance, Dr. Peter Fisher shares personal insights and real stories to help you plan with confidence.

Learn more

Disclosures: These market returns are based on past performance of an index for illustrative purposes only. Past performance does not guarantee future results. All investing involves risk, including the loss of principal.  Index performance is provided for illustrative purposes only and does not reflect the performance of an actual investment. Investors cannot invest directly in an index.

The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Comission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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Markets have been moving fast lately — in both directions

Down 10% in two days. Up almost the same the next. Three trading days: A full year’s worth of returns gone, and then mostly back again. 

Looking at the S&P 500 last week feels disorienting. And in a way, that’s the point.

View fullsize

This kind of movement makes people wonder if the system is broken. But this is exactly how markets work. They are brutally efficient at processing new information, whether it’s political, economic, or emotional.

Markets don’t wait for clarity. They move quickly on possibility, repricing risk in real time, regardless of how ready you feel. And when things are uncertain—when leadership seems unpredictable, policy is in flux, or the narrative changes overnight—the swings can be dramatic.

Fast drops, slow climbs — that’s the deal

Volatility is the price of admission for long-term growth. There’s a reason people say, “Markets take the stairs up and the elevator down.” Even looking at the last few years, gains usually build gradually, while losses often arrive quickly and unexpectedly.

Yet, over the decades, the odds have been in your favor. On average, the S&P 500 has risen in 52% of trading days, 73% of calendar years, and 94% of decades. (Source: Capital Group)

Three days of outliers over the last 25 years

New York Times

The sharp losses of April 3rd and 4th, followed by the rebound on April 9th, are outliers in magnitude but not in pattern. The biggest gains and losses tend to cluster together, and they often show up when they’re least expected. Selling after a big drop means missing the potential surge that follows. Buying after a big rally means forgetting what preceded it.

This isn’t a timing game. It’s a discipline game

Discipline doesn’t mean knowing what happens next. It means staying in the game when it feels like the rules are changing. It means resisting the urge to flinch when the noise gets loud.

The headlines will keep coming, and volatility will return. But the most reliable part of markets is that they change. The market may take the stairs up and the elevator down — but over time, it remains one of the most reliable places to grow long-term wealth.

Hold fast to your financial plan. Stay invested.

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Disclosures: These market returns are based on past performance of an index for illustrative purposes only. Past performance does not guarantee future results. All investing involves risk, including the loss of principal.  Index performance is provided for illustrative purposes only and does not reflect the performance of an actual investment. Investors cannot invest directly in an index.

The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Comission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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We live in a world of complex economic forces, but at the heart of many of today’s big-picture challenges lies a simple truth: a country cannot indefinitely consume more than it produces. That is precisely what the United States has been doing for decades through the persistent and growing trade deficit.

This article is meant to educate, not alarm. To help all investors, professionals, and citizens better understand what is happening behind the scenes, why it matters to our long-term prosperity, and how thoughtful policy tools, including modernized tariffs, might help correct course.

Let us start with the core issue.

What is a trade deficit? 

A trade deficit occurs when a country imports more goods and services than it exports. Imagine your household spending more every month than it earns—you would need to make up the difference by drawing down savings or selling off parts of your home. That is essentially what the U.S. does year after year. We purchase foreign goods (such as cars, electronics, and clothing) in excess of what we sell abroad and must finance this gap by issuing debt or selling U.S. assets.

These assets include U.S. Treasury bonds, commercial real estate, stocks in American companies, and ownership stakes in U.S. businesses. That means other countries, such as China, Japan, Germany, and many others, are gradually gaining greater ownership of our economy.

 “Our net worth is being transferred abroad”

Legendary investor Warren Buffett put it bluntly over 20 years ago:

“Our country’s ‘net worth,’ so to speak, is now being transferred abroad at an alarming rate” (Fortune, 2003).

This quote deserves close attention.

Buffett does not talk about some abstract notion of wealth. He is referring to the tangible ownership of American assets—the land, companies, infrastructure, and financial instruments that make up our nation’s economic engine. When we finance our trade deficits, we are often doing so by selling these assets to foreigners or issuing IOUs (bonds) that must be repaid with interest over time.

Imagine a wealthy family that owns a large estate. Every year, to fund vacations and a high standard of living, they sell a few acres of land or take out a bigger mortgage. At first, it seems manageable. But over time, they no longer own the home outright. Their income now goes to paying interest, rent, or dividends to outsiders who bought what used to belong to them.

That is the picture Buffett (and others) paint of America’s trade behavior.

In real terms, this means future generations of Americans will be working to sustain themselves and sending investment returns overseas—to countries that now hold claims on our assets. As foreign ownership increases, so does the investment income flowing out of the U.S., thereby reducing our ability to reinvest in our own future.

The role of tariffs in correcting imbalances

This is where tariffs, when carefully designed and wisely implemented, can play a role—not as a weapon or political cudgel, but as a tool of balance.

Buffett originally proposed a market-based mechanism called Import Certificates, but the underlying principle is simple: If you want to buy more than you sell, you have to fund it—and at some point, that model breaks. A modest, broad-based tariff system could help bring trade into equilibrium, nudging us back toward producing more of what we consume and consuming more of what we produce.

This is not about isolating ourselves from the world. It is about aligning our consumption with our production, and ensuring that we do not gradually erode our national wealth through unchecked deficits.

Yes, tariffs raise prices—especially on imported goods. That is a cost worth recognizing. However, Buffett warns us not to be short-sighted:

“The pain of higher prices on goods imported today dims beside the pain we will eventually suffer if we drift along and trade away ever larger portions of our country’s net worth” (Fortune, 2003).

In other words, the bill comes due. The longer we delay, the more painful it will be to unwind the imbalance.

What does the modern data say?

Recent academic research offers critical insights into how tariffs function in today’s economy.

One study by Furceri, Hannan, Ostry, and Rose (2019) reminds us that, although economists overwhelmingly oppose protectionism, the public is less convinced, possibly because much research on tariffs is outdated or overly theoretical.

Their research examines the macroeconomic effects of tariffs using data from 151 countries over a 50-year period and finds that tariff increases reduce output, productivity, and consumption while increasing unemployment and inequality. These adverse effects are worse in advanced economies and during economic booms.

Tariffs have a limited impact on improving trade balances and can even lead to an appreciation of the exchange rate, offsetting their intended benefits. Overall, tariffs appear to be detrimental to economic welfare.

In another research article by Amiti, Redding, and Weinstein (2019), the authors conclude that in 2018, U.S. tariffs were almost entirely borne by American consumers and importers, rather than foreign exporters. Prices rose for many U.S.-made goods tied to these tariffs, and supply chains were disrupted. Consumers faced fewer product choices, and the overall economic cost was substantial, amounting to approximately $8.2 billion in lost efficiency and an additional $14 billion in costs passed on to consumers. These impacts aligned with basic supply and demand predictions.

The researchers believe their estimates are conservative, as they did not include other significant costs, such as lost product variety, companies reorganizing their supply chains, or the uncertainty caused by changing trade policies. Surprisingly, foreign exporters did not lower their prices to stay competitive, meaning Americans bore nearly all the costs of these tariffs. Why this happened remains a puzzle for future research.

So what do we make of this? Tariffs are not magic bullets. They are levers. Furthermore, like all levers, they require precise calibration. Used strategically and modestly—within a broader framework of trade policy—they may help correct imbalances, such as the persistent U.S. trade deficit. Used carelessly or punitively, they may do more harm than good.

Conclusion: Looking ahead

Warren Buffett’s warning in 2003 was not about politics—it was about sustainability. He argued that a nation cannot afford to consume more than it produces forever without losing control of its financial destiny. His solution was not isolationist, but strategic: to implement mechanisms, such as import certificates or well-designed tariffs, that could restore balance without undermining prosperity.

Today, academic research provides a clearer understanding of the costs and consequences of acting on that vision. Furceri et al. (2019) provide comprehensive macroeconomic evidence: tariffs tend to lower GDP, harm productivity, increase unemployment and inequality, and have little impact on improving trade balances. Amiti et al. (2019) demonstrate, in the U.S. context, that tariffs in 2018 were almost entirely borne by domestic consumers and importers, resulting in billions of dollars in lost efficiency and rising prices. Their conclusion? Tariffs reshaped supply chains and reduced product variety, ultimately burdening American consumers.

Together, these insights remind us that tariffs are not moral judgments—they are instruments. When used bluntly or reactively, they carry real costs. But used surgically, as part of a broader policy framework, they can still serve a purpose.

As we confront record trade deficits and rising foreign ownership of American assets, we are left with essential questions:

• Are we prepared to prioritize long-term national resilience over short-term consumer convenience?

• Can we modernize trade policy without repeating past mistakes?

• If not tariffs, what levers are we willing to pull to protect our economic independence?

Buffett’s voice echoes still: action is required. But today, that action must be informed by data, guided by principle, and measured by impact, not ideology.

References:

Amiti, M., Redding, S. J., & Weinstein, D. E. (2019). The impact of the 2018 tariffs on prices and welfare. Journal of Economic Perspectives, 33(4), 187–210.

Buffett, W. E. (2003, November 10). America's growing trade deficit is selling the nation out from under us. Fortune.

Furceri, D., Hannan, S. A., Ostry, J. D., & Rose, A. K. (2018). Macroeconomic consequences of tariffs (No. w25402). National Bureau of Economic Research.

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A BOOK FOR THE SAVER IN ALL OF US

Becoming a 401(k) Millionaire isn’t your typical retirement guide. With 30 years in finance, Dr. Peter Fisher shares personal insights and real stories to help you plan with confidence.

Learn more

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Volatile markets test more than portfolios—they test patience. It’s easy to feel unsettled when headlines scream, and market volatility ensues. But the most important thing you can do as an investor is also the simplest: don’t let emotions get the best of you. 

In my nearly 30 years of advising clients, I’ve seen over and over again: the clients who succeed are the ones who manage their emotions, not just their money. The smartest thing you can do right now is stay calm and stay the course. The plan is working—even when it doesn’t feel like it. My experience has been that history has a way of rewarding those who stay calm, stay invested, and stay focused on their well-crafted financial plan.

At Human Investing, we believe that behavior, not timing or speculation, is what separates long-term success from short-term regret. For clients who have been with us for over 20 years, you’ve seen firsthand how a steady, disciplined approach can weather storms and grow wealth through them. For those new to our firm, please know that trust is the foundation of everything we do. We don’t just manage portfolios, we help guide people through uncertainty with clarity, care, and confidence.

To better understand the importance of maintaining a disciplined investment approach, it is helpful to examine five common psychological biases that often lead investors to deviate from sound decision-making. Drawing on both empirical research and professional experience, this section explores how emotional responses can override strategic thinking—particularly during periods of heightened uncertainty and market volatility—and outlines methods used to help clients remain focused on long-term objectives.

1. Loss aversion: When pain is louder than logic 

Researchers Kahneman, Knetsch, and Thaler (1991) discuss the psychological factors that drive loss aversion. Loss aversion is not just an investing concept; it’s a fundamental part of human psychology. Research shows that losses are felt about twice as painful as equivalent gains are perceived as pleasurable. In the brain, a $100 loss doesn’t just “sting”—it screams. And when markets drop, that emotional volume can drown out logic, strategy, and even years of sound advice.

This isn’t just a theory. I've seen it firsthand for a few decades—watching clients grapple with fear during the dotcom bust, the 2008 financial crisis, the 2020 COVID crash, and more recent volatility. In each case, the market eventually recovered. But those who let fear dictate their choices often miss the recovery, lock in their losses, and derail their long-term plans.

Here’s what makes loss aversion so dangerous: it feels rational. When the market drops 20%, the brain doesn’t think, “This is temporary.” It thinks, “Get out before it gets worse.” That impulse can feel like wisdom. But in reality, it's a trap.

The dislocation occurs when investors stop viewing a dip as part of the journey and begin to see it as the destination. Their long-term goals fade from view. The carefully designed plan becomes irrelevant. All that matters is stopping the pain.

But that short-term relief often comes at a prohibitive cost. Investors who sell at the bottom lock in their losses and are frequently too emotionally exhausted—or too afraid—to re-enter the market in time for the rebound. And rebound it almost always does. History shows that the market has consistently rewarded those who stay invested through downturns, not those who try to time their exits and re-entries.

2. Herding: When “everyone’s doing it” feels safer than thinking 

There’s a reason why stampedes are dangerous—not everyone in the crowd is running toward opportunity. Some are running from fear. 

In investing, we refer to this behavior as herding—the instinct to follow the crowd, particularly during times of uncertainty. Scharfstein and Stein (1990) were among the earliest to formally investigate and publish on the concept of herd mentality. We are indeed social creatures, hardwired to look to others for cues when we’re unsure. But in the markets, that instinct can be costly.

When prices drop and headlines grow loud, it’s natural to wonder: “What does everyone else know that I don’t?” You see friends moving to cash, analysts shouting about doom, and articles predicting disaster. The pull to join the herd becomes magnetic. But the crowd is often most unified at the wrong time, buying high out of excitement or selling low out of fear.

Here’s the cognitive dislocation: when fear spreads, we confuse consensus with correctness. If enough people are panicking, their emotion starts to feel like evidence. But markets are not democratic. The loudest voices are not always the wisest, and just because many are moving in the same direction doesn’t mean it’s the right one.

3. Recency bias: When yesterday becomes forever 

Tversky and Kahneman (1974) laid the foundational research on recency bias. They determine that “…the impact of seeing a house burning on the subjective probability of such accidents is probably greater than reading about a fire in the local paper. Furthermore, recent occurrences are likely to be relatively more available than earlier occurrences (p. 1127).” 

Put differently, individuals often extrapolate recent market movements into the future, believing that a market decline will persist or that a rally will continue indefinitely. This cognitive distortion, known as recency bias, reflects the tendency to overweight recent experiences when forming expectations about future outcomes.

It’s a mental shortcut that makes sense on the surface. After all, if it’s been raining for three days, we naturally reach for an umbrella on day four. But in the markets, this shortcut becomes a trap.

The dislocation happens when investors confuse a recent event with a long-term trend. They think: “The market’s been down the last two months—maybe this time is different. Maybe it won’t recover.” Or: “Tech has been hot all year—maybe it always will be.” This kind of thinking leads to chasing what has already happened or fleeing from what is already priced in.

Here’s the problem: the market doesn’t move in straight lines. It zigs, zags, and surprises. The best days often follow the worst. Yet, when recency bias takes hold, investors tend to anchor on the latest data point and overlook the broader context.

I’ve witnessed this bias unfold in every major market event since 1996. This ‘cognitive dislocation’ was particularly acute during the downturn from 2000 to 2002, when markets declined by 10%, 10%, and then 20%. But those who were paralyzed by recency bias—those who assumed the storm would never end—missed the sunshine that followed.

4. Sentiment: When moods masquerade as markets

The market is often described as a voting machine in the short term and a weighing machine in the long term (Graham, 2006). That’s another way of saying: in the short term, emotion can drive price more than value. And that emotion, called market sentiment, can be just as contagious and unpredictable as the weather.

Sentiment isn’t about fundamentals. It’s about how investors feel about the future. When people feel optimistic, they see opportunity in every dip. When they feel anxious, even the strongest companies look shaky. This is where the dislocation happens: investors begin to substitute their mood for actual analysis.

In times of high sentiment, people often buy more than they should, take on more risk than they realize, or ignore warning signs. During low sentiment, they often underinvest, sell too soon, or abandon long-term strategies altogether—not because the plan changed, but because their feelings did.

I’ve witnessed this in action many times since 1996, particularly in 2008, when panic dominated sentiment, and many investors fled the market near the bottom. The truth is, markets don’t care how we feel. But our feelings often shape how we interpret the market. That’s why at Human Investing, we spend as much time helping clients manage their emotions as we do managing their investments. We help you separate how you feel from what’s actually happening.

Your plan is designed to withstand emotional swings. It assumes there will be times when the market is overconfident, and times when it’s too afraid. That’s why we don’t react to moods. We respond to goals. Because when you confuse sentiment for truth, your portfolio becomes a mirror of your emotions. But when you trust your plan, your portfolio becomes a reflection of your purpose.

5. Emotional echo chambers: When biases team up to derail you

If loss aversion, herding, recency bias, and sentiment were minor on their own, we might be able to brush them off. But they don’t stay in their lanes. These biases often compound, amplifying each other until an investor is no longer thinking clearly. That’s what we call an emotional echo chamber—a space where your own fears are repeated and reinforced until they sound like facts.

Here’s how it plays out:

• The market dips, triggering loss aversion—“I can’t afford to lose more.”

• You see others selling, which activates herding—“Everyone’s getting out. Maybe I should, too.”

• You assume the recent downturn is the new normal—recency bias—“It’s just going to get worse.”

• Your confidence drops, and negative sentiment clouds your judgment—“I don’t feel safe, so maybe I’m not.” 

Suddenly, your investment decisions are no longer tied to your long-term goals—a chorus of emotional responses drives them, each one echoing the others. This is the moment investors often make their biggest mistakes: abandoning well-designed plans, selling at market lows, or shifting strategies midstream out of fear.

I’ve seen this cycle emerge during every major downturn. What I’ve learned is this: when fear gets loud, clarity gets quiet. Investors don’t just lose money in these moments—they lose confidence, perspective, and peace of mind.

At Human Investing, our job is to help you break out of that echo chamber. We’re here to re-center you when everything feels off-balance, to remind you of the purpose of your financial plan, and to bring you back to your long-term vision when the short-term noise becomes deafening.

We believe that staying invested is not just a financial decision, it’s an emotional discipline. That’s why we design portfolios that align with your comfort zone and why we lead with planning. Because a sound financial plan doesn’t just grow your wealth, it protects your thinking.

When emotional noise is high, we help you find quiet confidence. When biases clash in your head, we help you hear your goals again. And most importantly, when you start to feel like you’re the only one holding steady, we’re here to remind you—you’re not.

Empirical evidence

If the five behavioral prompts are not enough to encourage you to focus on your plan, a 40-year perspective on market ups and downs can provide an essential viewpoint. 

Please see Figure 1 at the end of this document. In it, you’ll see the average intra-year drop for the S&P 500 is approximately 14%, based on historical data going back several decades.

This means that in a typical year, the market will experience a peak-to-trough decline of around 14%—even in years that end up positive overall.

Here’s a quick breakdown:

From 1980 through 2023, the S&P 500 had: 

• Positive returns in about 75% of those years

• But it still experienced an average intra-year decline of ~14%

Why it matters:

Many investors panic during temporary drops, thinking something abnormal is happening. In reality, a 10–15% drop in a given year is a feature, not a flaw, of long-term investing. It’s part of the process, not a sign to change course.

References:

Graham, B. (2006). The intelligent investor: The definitive book on value investing (Rev. ed., J. Zweig, Commentary). Harper-Business. (Original work published 1949)

Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1991). Anomalies: The endowment effect, loss aversion, and status quo bias. Journal of Economic perspectives, 5(1), 193-206.

Scharfstein, D. S., & Stein, J. C. (1990). Herd behavior and investment. The American economic review, 465-479.

Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases: Biases in judgments reveal some heuristics of thinking under uncertainty. science, 185(4157), 1124-1131.

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Disclosures: These market returns are based on past performance of an index for illustrative purposes only. Past performance does not guarantee future results. All investing involves risk, including the loss of principal.  Index performance is provided for illustrative purposes only and does not reflect the performance of an actual investment. Investors cannot invest directly in an index.

The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Comission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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A BOOK FOR THE SAVER IN ALL OF US

Becoming a 401(k) Millionaire isn’t your typical retirement guide. With 30 years in finance, Dr. Peter Fisher shares personal insights and real stories to help you plan with confidence.

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Most investors, at some point, experience moments when it feels like the world is shifting beneath them. This week is one of those times. 

On March 4th, the president implemented new tariffs: 

• 25% on imports from Mexico and Canada (except Canadian energy, which faces a 10% tariff). 

• An additional 10% tariff on imports from China.  

Markets reacted predictably: the stock market dropped, volatility spiked, and headlines shouted.
 
And even as I write this, the situation continues to evolve. Markets are adjusting, policymakers are responding, and uncertainty remains. But while the news cycle moves quickly, the principles of sound investing remain the same. 

Why do tariffs make investors nervous?

At their core, tariffs increase costs for businesses, which can squeeze profit margins. And if there’s one thing markets care about, it’s profits. 

We read many perspectives on the global economy, and Dr. David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, has been a consistent voice of reason for over a decade. Known for his practical insights, Dr. Kelly asserts that tariffs result in "higher prices, slower economic growth, reduced profits, increased unemployment, greater inequality, lower productivity, and heightened global tensions." 
 
Investors aren’t just reacting to tariffs. They’re reacting to the unknown: 

• How long will these tariffs remain in place?

• Are they just a negotiation tactic? 

• Is this a temporary period of volatility, or the beginning of a longer cycle? 

Markets don’t panic about what they know—they panic about what they don’t.

Investing is messy. It always has been. 

Market downturns often feel like a unique crisis. But history tells a different story. 
 
Recessions, inflation spikes, political uncertainty, trade wars, interest rate hikes—these challenges are not new. The market has faced them all before. And yet, over time, it has moved higher. 
 
As noted by author Seth Godin, “The future is messy, and the past is neat. It's always like that.” 

The importance of perspective

Market downturns feel different when you’re living through them. The news feels bigger. The risks seem higher. The headlines are scarier.  
 
This feeling is amplified after strong market years, when investors feel they have more to lose—at least on paper. In 2023 and 2024, the S&P 500 delivered a total return of nearly 58%, propelling more investors into the ranks of "401(k) millionaires," according to Fidelity. 

It’s natural to feel anxious about market fluctuations, but fear is never a sound investment strategy.  

A strong financial plan is built specifically for you — your goals, your risk tolerance, and your timeline. More importantly, it’s designed with the understanding that markets are unpredictable and often messy. By accounting for uncertainty upfront, your plan provides a steady framework, allowing you to stay the course during volatility instead of reacting to short-term fluctuations. 
  
As John Bogle, the founder of Vanguard, wisely put it, “The stock market is a giant distraction from the business of investing.” 
  
Bad news drives headlines, but bad news should not drive investment decisions. Market downturns are inevitable, but they are also temporary. 

Reasons to sell? There will always be more.

There has never been a time in history when you couldn’t find a reason to sell. 
 
Recessions. Political chaos. Interest rate hikes. Pandemics. Trade wars. Every one of these events made investors think, “Maybe this time is different.” 
 
And yet, over time, the market has rewarded patience, discipline, and long-term thinking. 

View fullsize

Morgan Housel, author of The Psychology of Money, puts it best: "Your success as an investor will be determined by how you respond to punctuated moments of terror, not the years spent on cruise control. A good definition of an investing genius is the man or woman who can do the average thing when all those around them are going crazy." 

What can you control?

While headlines will continue to change, wise investors focus on what they can control: 

1. Maintain an emergency fund. The best way to endure volatility is to have enough cash to cover the unexpected. 

2. Manage your news consumption. Headlines are designed to capture attention, not provide perspective. 

3. Hold enough short-term bonds and cash so that you’re never forced to sell long-term investments during even the longest downturn. 

4. Maintain a diversified approach to your portfolio. Lately, the market has been driven by just a handful of the biggest companies. However, as of March 4th, a globally diversified portfolio has outperformed the S&P 500 year to date. 

5. Stay focused on the long game. Your success as an investor won’t be determined by what happens in the next week or month. It will be determined by how you navigate market noise over decades.

What should you do now?

If you have a financial plan, now is a great time to revisit it. These moments of uncertainty are exactly what your plan was built for. 

If you don’t have a plan, this is a reminder of why you need one. A well-structured investment strategy helps you stay focused when markets get messy. 

At Human Investing, we help investors build financial plans that are designed for the long term; plans that account for uncertainty, so you don’t have to react to every headline. 

If you’re feeling unsure about the road ahead, let’s talk. The best investors aren’t the ones who predict the future—they’re the ones who are prepared for it.

References:

Kelly, D. (2025, March 3). The trouble with tariffs. J.P. Morgan Asset Management. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/notes-on-the-week-ahead/the-trouble-with-tariffs/   

Housel, M. (2020). The psychology of money: Timeless lessons on wealth, greed, and happiness. Harriman House. 

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Disclosures:

These market returns are based on past performance of an index for illustrative purposes only. Past performance does not guarantee future results. All investing involves risk, including the loss of principal. Index performance is provided for illustrative purposes only and does not reflect the performance of an actual investment. Investors cannot invest directly in an index.

The information provided in this communication is for informational and educational purposes only and should not be construed as investment advice, a recommendation, or an offer to buy or sell any securities. Market conditions can change at any time, and there is no assurance that any investment strategy will be successful.

Diversification does not guarantee a profit or protect against a loss in declining markets. Asset allocation and portfolio strategies do not ensure a profit or guarantee against loss.

The opinions expressed in this communication reflect our best judgment at the time of publication and are subject to change without notice. Any references to specific securities, asset classes, or financial strategies are for illustrative purposes only and should not be considered individualized recommendations.

The opinions expressed by third-party individuals, including Dr. David Kelly, Seth Godin, Morgan Housel, and John Bogle, are their own and do not necessarily reflect the views of Human Investing or its affiliates. Their inclusion is for illustrative and educational purposes only.

Human Investing is a SEC Registered Investment Adviser. Registration as an investment adviser does not imply any level of skill or training and does not constitute an endorsement by the Commission. Please consult with your financial advisor to determine the appropriateness of any investment strategy based on your individual circumstances.

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An Analysis of Investment Advisor Representatives and Bureau of Labor Statistics Data: Determining the Percentage of Financial Advisors Acting as “True Fiduciaries”

In the financial services industry, the concept of acting as a fiduciary—putting the client’s best interests ahead of all else—has become a litmus test for ethical practice. However, determining how many financial professionals truly operate under a fee-only fiduciary model reveals a significant gap between perception and reality.

Industry Snapshot: Financial Professionals in the U.S.

According to the Bureau of Labor Statistics (2023), the financial services landscape in the United States includes:

• 513,000 financial services sales agents, encompassing roles such as stockbrokers and commodities traders.

• 321,000 personal financial advisors, offering financial planning and investment guidance to individuals.

Together, these figures total 834,000 professionals engaged in roles that directly or indirectly affect individuals' financial outcomes.

Investment Advisor Representatives: A Subset

Among these professionals, 77,468 individuals are registered as Investment Advisor Representatives (IARs), according to the Financial Industry Regulatory Authority (FINRA, 2022). IARs are often seen as closer to the fiduciary standard due to their regulatory obligations. However, even within this group, a significant portion still earns commissions.

• A recent analysis by Welsh (2024) indicates that 47% of IARs receive commissions, leaving only 53% as truly fee-only fiduciaries.

• Applying this percentage, the total number of fee-only IARs is approximately 41,958 individuals.

The True Percentage of Fee-Only Fiduciaries

To contextualize this figure, let’s consider the broader pool of financial professionals (advisors and brokers). Dividing the number of fee-only IARs (41,958) by the total number of financial professionals (834,800) yields a striking conclusion:

Only 4.92% of financial professionals operate as fee-only fiduciaries.

This percentage has seen growth from an estimated 2% in 2018 (Mantell, 2018), reflecting progress but also underscoring the rarity of this practice in an industry dominated by commission-based models.

References:

Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Securities, Commodities, and Financial Services Sales Agents.

Bureau of Labor Statistics. (2023). Occupational Outlook Handbook. U.S. Department of Labor: Personal Financial Advisors.

Financial Industry Regulatory Authority. (2022). 2022 FINRA industry snapshot. Financial Industry Regulatory Authority.

Mantell, R. (2018, March 19). Is it time to adopt a uniform fee-only standard for financial advice? The Wall Street Journal.

Welsh, J. (2024, October 31). What role do commissions now play for advisors? Investment News.

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Understanding the Rules, Risks and Special Tax Incentives

As a Nike employee, it is common to have a desire to participate in the success of the company.  For many, this opportunity exists within the Nike 401(k) by investing retirement funds in Nike stock.  Even though it is available, is it a good idea and if so, how much is appropriate?  We will explore the rules, risks, and special tax incentives that exist within the plan.

The Nike Plan Rules and Limitations

1. Future Investments in the Nike Stock Fund are limited to a maximum of 10%, which includes Employee Contributions, Nike Matching, and Rollovers.

2. Existing Investments in the Nike Stock Fund:

   1. You can fully diversify out of Nike stock at any time by moving the dollars to a different available investment fund(s).

   2. If you want to increase your amount in the Nike Stock Fund from other existing investment funds, Nike will only allow it if the Nike Stock will be 20% or less of your overall account balance.

   3. Even though Nike places the 20% limit on transfers, there is no limit on the total amount of stock you can accumulate in the Nike Stock Fund. If you accumulate more than 20%, you can still contribute up to 10% to the Stock Fund.

Why the limitations on Nike Stock Fund within the RSP 401(k)?

You can see by the rules and limitations that Nike wants to encourage participation in the stock but in a responsible manner. It allows you to regularly contribute small amounts over time but with a cap of 10% at that time. It wants to discourage employees from making quick short-term decisions to move a large portion of their retirement savings into the Stock Fund by limiting that to 20%. To balance all of this out, it leaves an unlimited upside for the stock to grow in the 401(k) by having no overall limit in the value. Nike created guardrails to limit the risk and make sure that investment in Nike Stock is a long-term decision.

Understanding the Risks

Risk #1: Concentrated Stock Risk

Any stock or portfolio of stocks is subject to one type of risk known as Market Risk, which affects the entire stock market. Examples of factors that can create Market Risk are changes in interest rates, government regulations, taxes, and wars.

There is an additional risk that can affect you when you hold a large amount in a single stock. This risk is known as Company Risk, and it is related to the financial viability of that specific company. The emergence of new trends, technology, or even a scandal can decimate or take down an entire company. Examples of companies that have experienced this type of risk are Enron, Sears, Blockbuster, and AOL. This type of risk can be mitigated by diversifying and owning multiple stocks or investing in a diversified stock mutual fund or exchange-traded fund (ETF).

Risk #2: Employment Risk

If a company ever begins to struggle financially, the ramifications can likely be seen in the elimination of jobs and lower bonus’ for employees since they are tied to company performance. At the same time, the stock price of the company will typically drop, impacting the personal savings of anyone owning that stock. The effect of a stock price drop in your personal savings can become magnified if it happens simultaneously with losing your job or the elimination of your bonus.

How much Nike stock is too much?

The first step is to assess your overall exposure to Nike stock. Depending on the level at Nike, employees have access to different forms of Nike stock as part of the benefits package. It is common for Nike employees to accumulate a significant amount of Nike stock through benefits in the form of ESPP, Stock Options or Restricted Stock Units (RSUs). If you incorporate any Nike stock owned in your 401(k) and compare that to any other investments (retirement accounts, cash, real estate), what percentage of your assets are in Nike stock? So once you know the percentage, what is the right percentage for you?

Diversification and the “Rule of Thumb”

In the financial services industry, there is a rule of thumb that states that you should not own more than 5% or 10% of your overall investment portfolio in one single stock since it can create a significant amount of risk related to that Company Risk described earlier in this article. There definitely is prudence to this rule of thumb, but it can be challenging for employees to follow this “rule of thumb” strictly because of the stock benefits provided by Nike.

When It Can Make Sense to Exceed the Rule of Thumb

Part of maximizing your time at Nike is to take advantage of the benefits that are provided. Nike stock benefits all include a special incentive when compared to normal Nike stock. Whenever you consider risk, it should be evaluated in relation to the potential reward, so the higher the risk, the higher the reward should be for it to be a worthwhile investment. These incentives from the Nike benefits increase the reward so it can justify taking the additional risk of owning a concentrated amount of one stock.

The GAME-CHANGING Incentive for Owning Nike Stock in Your 401(K)

Net Unrealized Appreciation (NUA)

There is a unique tax strategy that exists within the Nike 401(k) that can make owning Nike stock more advantageous. The strategy is known as “Net Unrealized Appreciation” or “NUA” and applies to qualified retirement plans where you own company stock within the plan.

Net Unrealized Appreciation is the difference between what you have contributed (average cost basis) to the Nike Stock Fund and what it is worth today. Essentially, it is the growth above your contributions to the Nike Stock Fund.

The IRS has a provision that allows you to potentially receive a preferential tax rate on the NUA amount when you distribute Nike Stock from your 401(k) if you follow very specific rules. This preferential tax rate can save you between 13-37% in income taxes on the NUA amount depending on your specific situation.

When you make pre-tax contributions to your 401(k), future distributions will be taxed as Income when you take withdrawals from that account. If you follow the NUA Strategy steps, you would distribute all or part of the Stock Nike Fund as Nike Stock, pay taxes as Income on the contribution (Average Cost Basis) portion only. All growth of the Nike Stock (NUA) would be subject to a lower preferential tax rate of Capital Gains, which you can delay until you want to sell the Nike stock.

How to take advantage of the NUA strategy:

1. Nike stock must be transferred out of the 401(k) in-kind and cannot be sold before transfer.

2. The entire Nike 401(k) balance must be distributed in a single tax year. This could mean that the Non-Nike stock portion could be rolled into an IRA.

3. The distribution of the entire account can only be made after a “triggering event,” which are Death, Disability, Separation from Service, or Reaching age 59 ½.

As a future tax planning strategy, you could wait to sell the NUA Nike stock until you were in a low enough tax bracket and potentially have No Federal Capital Gains tax on the NUA amount.  The most common timeframe for this opportunity is after retirement and before age 73, when Social Security income and required minimum distributions from your IRAs can force you into a higher tax bracket.

The final and most important consideration is how your Nike stock exposure fits into your overall financial plan.  If you have a financial plan to show you how dependent your financial future is on Nike stock, this can help you make the most well-informed decision on your overall Nike stock exposure.

If you want to know more about incorporating Nike stock within your 401(k), please get in touch.

You can schedule time with me on Calendly, e-mail me at marc@humanvesting.com, or call or text me at (503) 608-2968.

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