With changing tax laws, a surging, but still scary stock market, nonexistent interest on savings, and general financial upheaval, getting proper financial planning advice may be more important than ever. George Padula has spent more than 15 years as a financial planner, including his current position at Modera Wealth Management in Boston, where he serves as a principal and wealth manager.
Padula, who works with both private clients and nonprofit institutions, said that he came to Modera because he enjoys working with private clients on their comprehensive investment strategies.
“I have a research background, and financial planning is really an extension of that. I help people answer their key questions: When can I retire? How much money will I need to live on? And, will I have enough to meet my goals and do the things I want to do when I want to do them? Those are the issues people care about,” he explained. “I enjoy working with numbers, but, most importantly I enjoy working with people.”
Padula, who has a long history in Boston, holds a master of business administration from Boston College’s Carroll Graduate School of Management and a bachelor of arts degree from Colby College. He is also a graduate of Boston College High School. He recently spoke with Boston.com to offer some financial planning tips.
Boston.com: How did you advise your clients during the fiscal cliff debate?
George Padula: There were a lot of questions from clients. A big question from clients was around charitable gifting. Should I make a big gift this year or wait until next year?
We wanted clients to look at the big picture and not let a short-term issue dictate the long-term financial picture. In other words, don’t let the tax tail wag the dog. We wanted people to look at their strategies as a whole.
Answers on the fiscal cliff did not get finalized until Jan. 2, and some aspects we have seen before, so we knew how to advise our clients. For example, anyone over 70½ can make a charitable gift of up to $100,000 from his or her IRA directly to a charity. This does not get counted as a taxable distribution and it helps the charity at the same time.
Boston.com: Are you seeing changes in your clients’ willingness to make charitable contributions?
Padula: We’re seeing that our clients are also becoming more involved in the charities that they support and thinking about strategic philanthropy. Some clients are focusing their gifting on charities and nonprofits that are smaller and in which a modest gift can have a more meaningful impact. We have also seen clients volunteering their time and expertise in addition to or instead of a monetary contribution.
We explore the benefits of using appreciated securities to make charitable contributions. With a gift of an appreciated stock, you can gift the shares, the charity gets the full value of the gift, the donor gets the full deduction of the shares and avoids capital gains taxes at the same time. It is a win-win all around. You may actually be better off gifting a security than selling it and gifting the cash proceeds because when you make the sale it could increase your income and it could increase your tax bracket. You’re getting a real benefit there.
You have to incorporate a philanthropic strategy with your overall investing strategy. Ultimately, with cutbacks on human services, people overall are stepping up and increasing charitable gifting of both time and funds. It does not need to be a big commitment.
I practice this myself as, in addition to my work here, as a member of the Financial Planning Association of Massachusetts, I volunteer my financial planning services on a pro-bono basis to Dana Farber Cancer Institute as part of a financial coaching program. We assist patients with various financial planning issues. These are patients who cannot afford the services of a financial planner on their own. It is very fulfilling to be able to help in even a small way those who need assistance as they get themselves healed.
Boston.com: Are your clients concerned about existing and potential changes to tax laws?
Padula: Clients are definitely asking questions. There are different scenarios for clients based on their circumstances. For clients still working, they are seeing some of their paycheck go down because of the Social Security and payroll tax increases. Retired clients have different concerns. They are worried about the cost of health care and whether their taxes will increase in 2013 because of higher rates on investment income and capital gains. These may not impact them now, but it will by April 2014 and we are analyzing scenarios for them now. Continued...