PIMCO Education

Making the Most of Year-End Planning Conversations

While clients expect investment management advice, they also need help with related areas, such as insurance and tax planning strategies, long-term care, and legacy planning. Here, John Nersesian, Head of Advisor Education, shares specific strategies to enhance planning conversations for more fruitful client engagement.

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Text on screen: PIMCO

FULL PAGE GRAPHIC: PIMCO Education, Making the Most of Year End Planning Conversations with Steven Pogorelec and host John Nersesian (6 minutes)

PIMCO provides services to qualified institutions, financial intermediaries and institutional investors. This is not an offer to any person in any jurisdiction where unlawful or unauthorized. PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns.

Text on screen: John Neresian, Head of Advsior Education

John Nersesian: Hi everybody. I’m John Nersesian, head of advisor education at PIMCO. Welcome to our discussion around year-end planning strategies. I’m so pleased to be joined by my colleague, Steve Pogorelec. Steve is an account manager for PIMCO, covering our key relationships in New York City. Welcome, Steve.

Steven Pogorelec: Thank you, John.

John Nersesian: So, Steve, you have the privilege of engaging with financial advisors on a daily basis, discussing a wide variety of investment and financial planning issues. Tell us a little bit about the conversation that you're having with advisors as we approach the end of the year.

Text on Screen: Steven Pogorelec, Senior Vice President, Account Manager

Steven Pogorelec: Thanks, John. You know, I have found that the very best advisors focus on the controllable aspects of the client experience. Clients expect investment management advice, however we cannot control markets.

Text on Screen: The importance of professional advice

An image of blue boxes showing different aspects of professional advice, including: Real estate advice, investment management, educational financial advice, estate planning advice (after death), wealth transfer advice (while still living), life insurance advice, tax planning advice, long-term care insurance advice, loan and credit management, financial planning, health insurance advice, and trust services.

Clients also require help in other areas, such as insurance and tax strategies, long-term care, as examples. Fortunately, these are areas that advisors can help control. They can help control setting a plan. Discussing these topics at this time via year-end planning meetings allows advisors to demonstrate greater value to clients, and refocus on the controllable. With that in mind: John, you've been an instructor for the better part of your career, conducting professional development programs across the country. Please share some of the specific strategies that you've found have led to more fruitful client engagement.           

John Nersesian: Great point, Steve. We completely agree with this idea that the role of the advisor is evolving. Investors want investment guidance, of course, but they're also looking for more.

Text on screen: Evolving role of a financial professional

Image of male and female figures, “Today, investors seek investment and planning guidance”

Graphics represent the list of financial professional roles: a bar chart for investment portfolios, a home for retirement planning, a government building for income tax planning, and a portfolio for wealth transfer and legacy planning

They're looking for planning guidance that will help them achieve better outcomes. And the end of the year is the perfect opportunity to have those conversations. Let’s focus on a couple of strategies that might make sense as we approach the end of the year.

Text on screen: Strategies to consider at year-end

List of considerations: 1. Capital gains and losses (in bold); 2. Portfolio rebalancing; 3. Annual gifting.

Text on screen: Strategies to consider at year-end; recognize capital gains/losses

A graphic representation of two math equations:

Short-term transactions: Total short-term gains minus total short-term losses equals net short-term position

Long-term transactions: Total long-term gains minus total long-term losses equals net long-term position

Both gains: each taxed at applicable tax rate

Both losses: deduct up to $3,000 currently (short-term first); excess carries forward

One gain/one loss: Combine the two = net ST or LT, CG, or CL; net gain taxed according to applicable rate; net loss deductible up to $3000 currently, excess carried forward indefinitely

Number one: let’s start with capital gains and losses. Our clients probably recognize the idea that they can use losses on a dollar-for-dollar basis against realized gains as a way of offsetting that tax liability. In fact, investors can go above and beyond, using up to 3,000 dollars of realized losses against ordinary income on a calendar year basis.

Text on screen: Strategies to consider at year-end

List of considerations: 1. Capital gains and losses; 2. Portfolio rebalancing (in bold); 3. Annual gifting.

The second strategy that investors may want to contemplate is portfolio rebalancing. Now, while rebalancing doesn't need to be performed necessarily at the end of that year, the end of the year is a perfect opportunity to revisit portfolio structures and allocations to determine whether or not rebalancing would provide benefit.

Text on screen: Strategies to consider at year-end; rebalance portfolios

Benefits: Addresses unintentional portfolio allocation “drift”; ensures adherence to stated investment policy guidelines; reduces overall portfolio volatility with the potential for higher returns; instills disciplined approach to investment decisions, minimizing behavioral tendencies; requires investor to do what is emotionally uncomfortable, but financially productive: buy low, sell high

We all know that rebalancing helps to lower risk and potentially enhance returns.

But maybe the greatest benefit of rebalancing is the idea that it instills discipline into an investment management program, helping investors deal with the volatility that typically accompanies market exposure. Rebalancing forces the investor to do what may be emotionally uncomfortable but financially productive, and the end of the year is a perfect opportunity to revisit that.

Text on screen: Strategies to consider at year-end

List of considerations: 1. Capital gains and losses; 2. Portfolio rebalancing; 3. Annual gifting (in bold).

Text on screen: Wealth transfer and legacy planning; make annual gifts

Annual gift exclusion now $15,000/donor/year; gift splitting allowed for married couples to increase limit to $30,000/year; reduces value of current taxable estate (federal, state) without impacting unified credit; shifts future appreciation out of estate; basis transfers to recipient (may tax dividends and cap gains at lower rates)

Example: Spouses of 40 years with 3 children, who themselves each have 3 children; allows for annual gifts of $450,000 by utilizing gift splitting

Image of chart of married couple with three married children each with three children.

And then, finally, Steve, I’ll leave you with a third concept: it’s the idea of annual gifting. Now, many of our clients are looking to transfer wealth to that next generation, and to potentially avoid estate taxes or inheritance taxes in the process. The IRS provides us with a 15,000 dollar annual gift exclusion. It’s a use-it-or-lose it proposition. Investors can use this opportunity to transfer wealth to their loved ones, to their beneficiaries, and to other entities: up to 15,000 dollars per donor per year. And while we’re on the concept of gifting, maybe the best way to leverage those gifts is to use those dollars to fund 529 plans.

529 plans provide investors the opportunity to grow capital on a tax-free basis for higher education purposes down the road.

Steven Pogorelec: That’s great, John, thank you. You know, I’d like to dig a bit deeper there, because more recently, we’re seeing an increased awareness in aligning values with investments. Now this may include traditional investing via ESG vehicles, but like you mentioned, it may also include investment in charitable endeavors. I know you've done a lot in this area, so you can provide some insights there.

John Nersesian: Steve,

Text on screen: Wealth transfer and legacy planning; fund charitable giving

Catalysts for increased charitable giving: 2020 total giving: $471.44 billion; charitable gifts still deductible (subject to AGI limit); interest in giving back, creating a legacy

Line chart of charitable giving from 1979 to 2020 in billions of dollars from 0 to 500. Current dollars are shown by a line. The line trend upward with a slight dip after 2009 to $471.44 in 2020.

charitable giving strategies make sense as we approach the end of the year. Charitable giving is still deductible under the current tax code for investors who itemize their deductions. Investors can leverage their charitable gifts by using structured vehicles, like donor-advised funds.

Text on screen: Wealth transfer and legacy planning; fund charitable giving

Donor advised funds: Facilitates bunching of deductions for maximum tax benefit; contributions tax deductible (FMV) in year they are made; avoids capital gains taxes on donated appreciated securities; appreciation within a DAF is not taxable; contribution removed from donors taxable estate


Planning considerations: Subject to AGI limitations; must be completed gift; assets irrevocably removed from donor’s resources; less donor control over assets; may not be suitable for more complex assets; does not provide income stream


Donor-advised funds allow the investor to bunch future deductions into a single calendar year for maximum deductibility. And they also provide the investor to use appreciated property in their giving endeavors, to further lower their taxable events.

Steven Pogorelec: That’s fantastic, John, thank you. You know, to close our session, we’d remind you to focus on the controllable.

Text on screen: Key takeaways

  1. Schedule meetings with clients between now and the end of the year (in blue)
  2. Review appropriate year-end planning strategies with your clients (in green)
  3. Access our year-end planning resources online at pimco.com/advisoreducation (in maroon)

You can do that right now, by scheduling your year-end meetings, perhaps leverage a few of the ideas that you heard today, and take advantage of PIMCO’s planning checklist for your meetings. For these and other resources, please visit our website today. Thank you so much for joining us.

Text on screen: PIMCO 50 1971-2021



Please note that this video contains the opinions of the manager as of the date recorded and may not have been updated to reflect real time market developments Ail opinions are subject to change without notice.

A word about risk: All investments contain risk and may lose value.

The views and strategies described may not be appropriate for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. You should consult your tax or legal advisor regarding such matters. Please contact your account manager for further information.

Information provided is current as of the date specified and is subject to change without notice to you. Amounts, thresholds and ranges are subject to annual IRS inflation adjustments. Data was obtained from sources believed to be reliable but PIMCO does not guarantee the accuracy or completeness of the content provided. PIMCO undertakes no obligation to update the information and disclaims any warranties or fitness for a particular purpose.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.

PIMCO as a general matter provides services to qualified institutions, financial intermediaries and institutional investors. Individual investors should contact their own financial professional to determine the most appropriate investment options for their financial situation. This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. PIMCO is a trademark of Allianz Asset Management of America L.P. in the United States and throughout the world. ©2021, PIMCO

Pacific Investment Management Company LLC, 650 Newport Center Drive, Newport Beach, CA 92660


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