For more information and show notes visit: https://bwmplanning.com/post/94

This week, Justin and Jared are back with another Lightning Pod - here’s what you can expect in this episode:

• Oil Super Majors Performance in 2024: We dive into the lagging share prices of major oil companies and discuss what this means for investors. With ExxonMobil being the only one in the green, we explore the implications of diversification in your investment strategy.
• The Fascinating World of Waymo: I share my recent experience riding in a Waymo self-driving car in San Francisco. We discuss the advancements in autonomous vehicle technology, the safety statistics, and what it means for the future of transportation.
• Bench Accounting and the Risks of VC-Backed Services: We take a closer look at the recent shutdown of Bench Accounting, a company that aimed to revolutionize tax services but ultimately fell short. This discussion highlights the challenges of service-based businesses in the private equity landscape.
• NBA Ratings and Media Access: We wrap up with a conversation about the decline in NBA ratings and the impact of media contracts on viewership. Is it the style of play, or is access to games becoming a bigger issue?

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected]. Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/93

This week, we had the pleasure of welcoming Jeff Krimmel, a mechanical engineering PhD from Caltech and the founder of Krimmel Strategy Group. If you’re looking to deepen your understanding of energy strategy and market dynamics, this episode is a must-listen!

In our conversation, Jeff shares his unique journey from a technical engineering background to becoming a key player in energy strategy consulting. He discusses how his experiences at Baker Hughes and other companies shaped his perspective on the energy sector and led him to launch his own firm.

Here are some highlights from the episode:

• Energy Strategy Insights: Jeff dives into the complexities of energy sources, emphasizing that all energy sources are imperfect. He provides a balanced view of hydrocarbons, renewables, and the evolving energy landscape.
• The Future of Energy: We explore what the optimal energy mix might look like in the near to long-term, considering the unique challenges and opportunities in different regions, including Texas and the Gulf Coast.
• Navigating Career Risks: Jeff shares valuable advice for oil and gas professionals on how to leverage their expertise in a rapidly changing market. He emphasizes the importance of understanding your human capital and the risks associated with concentrated exposure to the energy sector.
• Financial Acumen: We discuss the significance of financial literacy for engineers and technical professionals and how it can empower them to make informed decisions about their careers and investments.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected]. Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/92

Last week, we explored the considerations for inheritors, but this time, we shift our focus to the responsibilities and planning topics that grantors need to keep in mind. Many of our clients find themselves in both roles, so understanding both sides of the equation is crucial for effective financial planning.

In this episode, we discuss:

• The implications of disclaiming an inheritance and how it can affect your family dynamics.
• The importance of proactive versus reactive planning when it comes to passing down assets.
• Key questions grantors should consider, such as when to give assets and what to communicate to heirs.
• The concept of "impact arbitrage" and how timing your gifts can maximize their benefits.
• Strategies for managing different needs among heirs and ensuring they are prepared to handle their future inheritances.

As we approach the holiday season, this episode serves as a timely reminder of the importance of family discussions around wealth and legacy. We hope you find valuable insights that can help you navigate these complex topics.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected]. Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/podcast

The first part of a two-part series where we explore the intricacies of inheritance from two perspectives: the inheritor and the gifter. This week, we focus on the inheritor's point of view, discussing why it’s essential for everyone—especially those in the oil & gas profession—to consider the implications of potential future assets.

Here are some key takeaways from this episode:

• Why Everyone Should Care: Even if you think you won’t inherit anything, the upcoming great wealth transfer will have significant macroeconomic consequences that could affect you.
• Understanding Your Financial Plan: We discuss how to approach the question of whether to include potential inheritances in your financial planning. Should you factor it in, and if so, to what extent?
• The Importance of Asset Types: We break down different types of assets you might inherit, such as brokerage accounts versus IRAs, and how their tax implications can drastically change your financial outlook.
• Liquidity and Control: We highlight the importance of understanding the liquidity of inherited assets, especially when it comes to privately held businesses.
• Real-Life Scenarios: We share examples to illustrate how different situations can impact your financial planning decisions.

Whether you’re expecting an inheritance or just want to be prepared for the future, this episode is packed with valuable insights that can help you navigate the complexities of financial planning.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/90

In latest episode of Financial Planning for Oil and Gas Professionals, Jared & Justin dive deep into the fascinating world of Texas's $200 billion Teacher's Pension Fund.

Did you know that 1 in 20 Texans participates in this pension? That's millions of people relying on smart investment strategies. We break down the allocation and what you can learn from it:

1) The Importance of Diversification: The Texas Teacher's Pension allocates 54% of its assets to global equity, 21% to stable value, and 21% to real return. This diversified approach allows them to manage risk effectively while capitalizing on various market conditions. For individual investors, especially those heavily invested in oil and gas, this serves as a reminder to diversify across different asset classes to mitigate risk and enhance long-term returns. One standout feature? They have a dedicated sleeve for energy, natural resources, and infrastructure investments. We explore why they believe these sectors will remain crucial despite climate change concerns.

2) Time Horizon Matters: One of the most critical factors in investment strategy is your time horizon. The Texas Teacher's Pension has a long-term perspective, allowing them to invest in illiquid assets like private equity and real estate. In contrast, individual investors, particularly those nearing retirement, need to consider their cash flow needs and adjust their portfolios accordingly. Understanding your investment timeline is essential for making informed decisions that align with your financial goals.

3) Benchmarking Performance: The pension fund emphasizes the importance of comparing investments against appropriate benchmarks. They utilize a Public Markets Equivalent (PME) to assess the performance of their hedge fund investments, ensuring they are evaluated on their own merits rather than against unrelated asset classes. This approach highlights the necessity for all investors to establish relevant benchmarks for their portfolios, allowing for a clearer understanding of performance and value.

4) Investment Fees: Did you know that a 1% management fee can add up significantly over time? We share insights on how to keep costs in check and discuss importance of understanding what you pay for investment management.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/89

In this week's episode, we dive into a variety of topics, including:

✅ Cultural Differences in Europe: Join us as we share personal experiences from a recent trip to Europe, exploring the unique cultural nuances we encountered in countries like Belgium, the Netherlands, England, and Germany.

✅ The Tipping Debate: We discuss the evolving landscape of tipping in Europe versus the U.S., examining whether tipping has become out of control and how it impacts the restaurant industry.

✅ Work-cations: Discover why we believe work-cations are underrated and how they can provide a balanced approach to travel and work, especially for families.

✅ Investment Insights: We touch on the valuation differences between European and U.S. equities, discussing the cultural factors that influence productivity and investment returns.

✅ The Overrated Search for the Perfect City: Is it really worth the effort to find the optimal city to live in? We share our thoughts on how lifestyle design and community connections often matter more than the city itself.

✅ Dude Perfect's $100 Million Investment: We wrap up with a discussion on the recent investment in Dude Perfect and what it means for the creator economy.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://www.bwmplanning.com/post/88

In this episode of Financial Planning for Oil and Gas Professionals, hosts Justin Brownlee and Jared Machen dive into the case against private equity. Private equity investments can be an enticing option for investors seeking higher returns, but they come with a distinct set of risks, fees, and liquidity challenges that warrant careful consideration. Here are some key points to keep in mind when evaluating private equity as part of your investment strategy:

Private equity often involves investing in smaller, less established companies compared to public market investments. This different risk profile means these companies may be more vulnerable to market fluctuations and economic downturns. The episode highlights that private equity can be viewed as "leveraged small-cap investing," which inherently carries more risk than investing in larger, more stable public companies.

Private equity typically has a fee structure that includes a management fee (often around 2%) and a performance fee (commonly 20% of profits above a certain threshold). These fees can significantly erode returns, especially when compared to the low fees associated with public market investments. We illustrates how high fees can diminish the net returns that investors actually receive, making it crucial to understand the fee implications before committing capital.

The timing of cash flows in private equity can be unpredictable. Investors may find that their capital is tied up for years while the fund seeks out and invests in companies. This contrasts sharply with public market investments, where investors can buy and sell shares almost instantaneously. We discuss the concept of the "J-curve," where initial returns may be negative as capital is deployed, making it essential for investors to understand the cash flow dynamics. The lack of liquidity can also create behavioral challenges for investors. If an investor's portfolio is down significantly but not marked to market, they may not fully grasp the extent of their losses. This can lead to complacency or poor decision-making during market downturns, as the investor may not feel the immediate impact of their investment's performance.

In summary, while private equity can offer attractive returns, it is essential to approach these investments with caution. The unique risks, high fees, and liquidity issues associated with private equity require a thorough understanding and careful consideration. Investors should weigh these factors against their financial goals and risk tolerance, ensuring that they make informed decisions within the context of their overall investment strategy.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://www.bwmplanning.com/post/87

In this episode of Financial Planning for Oil & Gas Professionals, hosts Justin Brownlee and Jared Machen dive into the recent updates to the SECURE Act, focusing on changes affecting non-spouse beneficiaries and the implications for Required Minimum Distributions (RMDs) under the 10-year rule.

The SECURE Act, passed in 2019, introduced significant changes to how non-spouse beneficiaries manage inherited IRAs. One of the most notable changes is the requirement for most non-spouse beneficiaries to deplete inherited accounts within a 10-year period. This shift has significant implications for tax planning & financial management, particularly for those inheriting large pre-tax retirement accounts.

1) 10-Year Rule for Non-Spouse Beneficiaries: Previously, non-spouse beneficiaries could stretch distributions from an inherited IRA over their lifetime, allowing them to take smaller required minimum distributions (RMDs) annually. This approach enabled beneficiaries to manage their tax burden effectively, even when inheriting substantial IRAs. Under the SECURE Act, however, most non-spouse beneficiaries must now withdraw the entire balance of the inherited IRA within 10 years. This change compresses the distribution timeline, potentially leading to significantly higher taxable income in the years when distributions are taken.

2) Tax Implications: The requirement to withdraw funds within a decade can create a substantial tax burden, especially for beneficiaries already in a high-income bracket. For instance, if a beneficiary inherits a $4 million IRA while earning a significant income, the additional distributions could push them into an even higher tax bracket, resulting in a larger percentage of their inheritance being lost to taxes. This scenario is particularly concerning for those who may not have anticipated such a sudden increase in taxable income.

3) Clarifications on RMDs: The SECURE Act also introduced nuances regarding RMDs for non-spouse beneficiaries. If the original account owner had begun taking RMDs before their death, the beneficiary must adhere to both the 10-year depletion rule and the annual RMD requirements. This dual obligation complicates tax planning, as beneficiaries must ensure they meet both requirements to avoid hefty penalties. The penalties for failing to take the required distributions can be severe, adding another layer of complexity to the management of inherited IRAs.

4) Exceptions to the Rule: While the 10-year rule applies to most non-spouse beneficiaries, there are exceptions for certain eligible designated beneficiaries, such as surviving spouses, disabled individuals, and minor children. These exceptions allow for more favorable distribution options, but they are limited to specific circumstances.

Given these changes, it is crucial for beneficiaries to engage in proactive tax planning. Here are some strategies to consider:

• Timing of Distributions: Beneficiaries should evaluate their current and expected future income levels to determine the optimal timing for taking distributions. For example, if a beneficiary anticipates a lower income in the future, it may be beneficial to delay distributions until that time to minimize tax impact.
• Tax Diversification: Beneficiaries should consider their overall tax situation, including other sources of income and tax-advantaged accounts. This holistic view can help in making informed decisions about how much to withdraw each year.

The SECURE Act has fundamentally changed the landscape for non-spouse beneficiaries of IRAs, requiring careful planning to avoid unintended tax consequences. By understanding the implications of the 10-year rule and the associated RMD requirements, beneficiaries can better manage their inherited assets and optimize their tax outcomes. As the tax code continues to evolve, staying informed and seeking professional guidance will be key to effective financial planning in this new environment.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://www.bwmplanning.com/post/86

In this episode of Financial Planning for Oil and Gas Professionals, we dive into the complex considerations involved in purchasing a second home. We explore the decision from both an investment and lifestyle perspective, providing insights to help you determine if a second home makes sense for you.

The Investment vs. Lifestyle Decision:

We break down the decision to buy a second home into two primary motivations: investment and lifestyle. It's important to consider the potential for appreciation, rental income, and the overall impact on your balance sheet. We emphasize the need for a second home to be a small fraction of your net worth if viewed purely as an investment and highlight the importance of loving the location and considering the true cost of ownership, including property taxes, insurance, and maintenance. We also stress the need to evaluate how much time you will realistically spend at the second home and the impact on your travel plans.

Accessibility and Utilization:

We discuss the importance of accessibility, especially for working professionals with limited time. The ease of travel to the second home can significantly impact its utilization and overall value. Included in the episode are personal anecdotes to illustrate how accessibility can affect the decision-making process.

Mindshare and Management:

We talk about the mental and time investment required to manage a second home. Whether you plan to handle maintenance yourself or hire a management company, it's crucial to consider the mindshare ratio and the potential headaches involved.

Market Timing and Real Estate Trends:

We caution listeners about the current real estate market, noting that home prices are at an all-time high and the easy money has already been made, and discuss the headwinds facing new buyers and the importance of being realistic about potential returns.

Personal Balance Sheet Considerations:

We emphasize the need to understand your personal balance sheet and liquidity when considering a second home. The structure of your assets, whether liquid or tied up in a privately held business, can significantly impact your ability to manage a second home.

We wrap up the episode by reiterating the importance of approaching the decision to buy a second home with humility and a clear understanding of your motivations. Whether for investment or lifestyle, it's crucial to be realistic about the costs, benefits, and potential headaches involved.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.

For more information and show notes visit: https://bwmplanning.com/post/85

In this episode of Financial Planning for Oil and Gas Professionals, hosts Justin Brownlee and Jared Machen discuss their theory on resort town hyperinflation, do a residential real estate heat check, and delve into back-to-school financial topics.

Challenges Faced by Resort Towns and Luxury Vacation Inflation

Resort towns and luxury vacation destinations are grappling with a unique challenge that could result in inflation surpassing that of other sectors of the economy. We dive into how these areas have witnessed a significant surge in prices over recent years, rendering them unaffordable for many. The primary issue highlighted is the struggle to establish the necessary infrastructure to sustain the workforce essential for maintaining these locations.

1. Workforce Shortage: Resort towns often encounter difficulties in attracting and retaining an adequate workforce to support their daily operations. From stocking grocery shelves to providing services at upscale hotels, these towns rely on a large number of employees. However, with housing costs soaring, it becomes increasingly tough to entice individuals to work in these areas.
2. Geographical Challenges: Many resort towns are situated in remote areas, far from major cities and transportation hubs. This geographical isolation further complicates the workforce availability issue. Without a steady influx of workers, these towns find it challenging to uphold the necessary services and amenities for residents and visitors.
3. High Infrastructure Costs: The cost of living in resort towns is often exorbitant, with even basic housing options reaching millions of dollars. This high cost of living extends to businesses operating in these areas, making it financially burdensome to provide affordable housing for employees.
4. Reliance on Wealthy Patrons: The episode mentions instances where ultra-wealthy individuals have subsidized housing for full-time workers in resort towns. This dependence on affluent benefactors to support the workforce underscores the unsustainable nature of the current economic model in these areas.
5. Demographic Shifts: The episode also touches on the demographic trends influencing the demand for resort town properties. With an increasing number of high-net-worth individuals and decamillionaires, the demand for luxury vacation homes is on the rise, further propelling prices in these areas.

The challenges faced by resort towns in providing infrastructure for their workforce are contributing to a scenario where luxury vacation inflation may outpace inflation in other economic segments.

Residential Real Estate

We discuss the current state of the residential real estate market, highlighting its normalization. This normalization is characterized by increased inventory and longer listing times, indicating a shift from the rapid market pace seen in previous years. In areas like Northwest Arkansas and DFW, more homes are being listed for sale, and these homes are staying on the market for longer periods compared to the previous boom.

Public vs Private Schools

The decision between public and private schools for children is a complex and highly personal one, as discussed in the podcast episode. There are various considerations that parents need to take into account when making this decision. One key factor mentioned was the desired end product for the child. Parents often consider what type of education and environment will best prepare their child for the future. This could include factors such as academic rigor, extracurricular opportunities, and overall school culture.

As always, we encourage our listeners to reach out with any questions or ideas for future episodes at [email protected].

Thank you for tuning in, and we look forward to bringing you more insightful episodes in the future.

Connect With Us:

Facebook - https://www.facebook.com/BrownleeWealthManagement/?ref=py_c

Linkedin - https://www.linkedin.com/company/brownlee-wealth-management/

Disclosure: This information is for informational purposes only. Nothing discussed during this video should be interpreted as tax, legal, or investment advice. If you have questions pertaining to your specific situation, please consult the appropriate qualified professional.