How taxes, diversification, intergenerational support, retirement timing and more fit into preparing for changing times.
This week, my twin sons had a “moving up” celebration marking their transition from 8th grade to high school. Their head of school spoke on the theme of “readiness” to the sea of anxious yet excited young men, in various stages of adolescence: from heights of 5 feet to just over 6 feet, some complexions rosy and others oily, some with burgeoning muscles and others still with baby fat. He spoke about the demands of balancing a high school schedule in a competitive world, with academics, athletics and extracurriculars all demanding time and focus, not to mention the social and emotional development hurdles they will face as well.
Notably, he passionately called them to action to be a positive force of change in this world being transformed every second by the impacts of AI. He invoked Pope Leo XIV’s just released and provocative encyclical, Magnifica Humanitas, that caught the market’s attention for its sharp rhetoric urging tech developers, governments and society to “disarm” AI and ensure it remains aligned with the common good.
Within the voluminous document, and notably with Chrisopher Olah, co-founder of Anthropic at his side at the Vatican this week, Pope Leo urged: “Let us remain faithful to the truth! Living amid incessant flows of information, opinions and images, we know how easy it can be to influence decisions and preferences through increasingly sophisticated algorithms. In this context, it is imperative to cultivate hearts that love the truth, prefer what is right despite the most appealing content, and pursue wisdom rather than immediate results.”
May we all take that sage advice to heart, whether like my sons, you are making ready for your future, or considering how to make thoughtful financial decisions in a world that is changing rapidly around us.
This fast pace of change has reduced many of us to the same uneasy state of those 14-year-olds—excited but anxious, overwhelmed and unsure. But we must all remember we have agency in how we choose to act in this new world; we may use AI as a tool to make better the world and ourselves without losing the primacy of who we are as people and what we want to achieve.
Planning together to ensure your “readiness” for this future has never been more important. The news broke this week that the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index (PCE), showed inflation growing 3.8% year-over-year in April. This marks the largest annual gain since 2023, and it serves as a reminder that we must contemplate and plan for an extended period of elevated inflation and the potential for higher-for-longer interest rates.
Many of you will not be able to refinance to a lower mortgage rate, as you may have hoped. Some of you may be considering how to help your child or grandchild afford that first home in this untenable reality of high rates and even higher prices. Others may be deciding whether to defer retirement for a few more years to add cushion to your savings. And all of us are looking carefully at the impacts of these rising costs on our projections of net worth to ensure we are still feeling confident that meeting our lifestyle expenses is sustainable for the rest of our lives.
Your portfolio must also be made ready for the future. After multiple years of compounding double-digit market gains, with most of those results coming from a few narrow pockets, there is portfolio allocation maintenance work to be done, not to mention consideration of ways diversification may benefit your investment plan.
In addition, one of the most valuable levers we can pull in striving for readiness is to consider the impact of taxes on your plan. Where appropriate, we can incorporate tax-managed and tax-aware investments, actively deploy tax-loss harvesting at the portfolio level, and develop strategies to make charitable gifts with appreciated securities.
We cannot mention readiness for the future without considering your plans for your loved ones. Whether that means helping support education costs or a first-time home purchase, making annual cash gifts, funding long-term trusts for generational wealth, readiness is a call to stewardship for those you hold dear, and a means of sharing values, lessons and memories. For yourself, consider how you want things to be if your health changes or when your time on Earth ends.
This is the work that matters in a world riddled with overwhelming amounts of change and uncertainty. Soon enough, today’s landscape will likely be overtaken by next order changes and new risks that we can’t even imagine. I was struck by Olah’s remarks at the Vatican about how he and his team “keep finding things that are mysterious, even unsettling” in their development of AI.
Olah, Pope Leo and all of us are keenly aware that the world is changing rapidly around us right now. But we are not powerless; like my 14-year-olds, we must prepare. And that preparation matters more to our achievement of long-term success and satisfaction than handwringing over the latest Truth Social post or IPO announcement or Fed speaker comment.
“By failing to prepare, you are preparing to fail.” So said Benjamin Franklin, and we join him in urging action and engagement. We look forward to helping you with your preparations and finding hope and confidence even in a time of immense change.
Written by a human.