Executive Market Update...Sep 29, 2020 · Mr. Timmer is responsible for analyzing market trends...

and Making the Most of Your Equity

September 29, 2020

Executive Market Update

Featuring Jurrien Timmer, Aimee Kwain, and Ryan Boland

Fidelity Executive Services Presents:

and Making the Most of Your EquityExecutive Market UpdateMeet today’s speakers:

Jurrien Timmer, Director of Global Macro StrategyMr. Timmer is responsible for analyzing market trends and synthesizing investment perspectives across Fidelity’s Asset Management business to generate market strategy insights for the media, as well as for Fidelity’s clients. He has 35 years of industry experience, and frequently appears on CNBC, Bloomberg, and Fox Business News.

Aimee Kwain, Vice President, Advanced planningAimee partners with Fidelity advisors to help their clients create their estate planning and family wealth transfer strategies – including estate, trust, gift and charitable planning techniques.

Ryan Boland, Vice President, National Corporate & Executive GivingMr. Boland is focused on effective charitable giving for corporations and their executives who sponsor or participate in equity compensation programs. He works to help individuals leverage the benefits of Fidelity’s Charitable donor-advised fund program to strategically give more to the charities they support.

and Making the Most of Your EquityExecutive Market Update

Today’s Agenda:

• Event kick off - Aimee Kwain

• The State of the Market – What can history teach us? – Jurrien Timmer

• Donor Advised Funds and Philanthropy in Action - Ryan Boland

• Round table discussion – Year End Tax Planning Strategies– Ryan Boland/Aimee Kwain

What can history teach us?

September 2020

The State of the MarketJurrien Timmer

Director of Global Macro@TimmerFidelity

What a Ride it has Been

5 Data source: FMRCo, Bloomberg, Haver Analytics, FactSet. Data as of September 28, 2020.

A Large Gap to Fill


Excess Liquidity = Higher Asset Prices


Debt & Taxes


1940’s Reflation Analog


Inflation or Deflation?


Is the Market Disconnected from Reality?


Discounted Cash Flow Model


Where Are the Share Buybacks?


Secular Questions


The Market Cycle in Secular Context


Drawdowns in Secular Context


Presidential Elections


F I D E L I T Y C H A R I T A B L E

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Philanthropy in ActionTrends in COVID-19 Response

Increased support of human services

Nationwide prioritization of food security

Continued support for all charitable sectors

Accelerated Generosity

E Q U I T Y C O M P E N S A T I O N A W A R D S A N D C H A R I T A B L E G I V I N G

Source: Fidelity Charitable Communities in Crisis Report


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Donor-advised funds

MAKE A DONATION SUPPORT CHARITIESGROW THE BALANCE

• Take an immediate tax deduction

• Donate long-term appreciated securities and illiquid assets, and generally deduct the fair market value

• Simplify recordkeeping as they recommend grants to their favorite charities

• Recurring giving or one-time support with a ready reserve

• Due diligence on behalf of the donor

• Potentially give more through the investment of charitable contributions

Tax-efficient vehicles that can support both short-and long-term giving:

F I D E L I T Y C H A R I T A B L EE Q U I T Y C O M P E N S A T I O N A W A R D S A N D C H A R I T A B L E G I V I N G

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• Client is in the 37% federal income bracket• Owns appreciated securities valued at $50K with long-term unrealized gains of $30K that, if sold, will be subject

to the 20% capital gains and 3.8% Medicare surtax

In addition to assumptions noted in chart, this example assumes a married couple, filing jointly, and a fully deductible donation at fair market value to a qualified public charity. It does not take into account state or local taxes, the alternative minimum tax, or limitations on deductions for taxpayers in higher income brackets. The charitable deduction is only available at the federal level if you itemize deductions. Charitable contributions of capital gain property held for more than one year are usually deductible at fair market value. Deductions for capital gain property held for one year or less are usually limited to cost basis. This is a hypothetical example for illustrative purposes only. Results will vary depending on an individual’s tax situation.

Donate cash proceeds Donate securities directly

($7,140) $0Capital Gains and Medicare surtax paid on $30,000 (23.8%)

$42,860 $50,000Net Charitable Donation*

$15,858 $18,500Value of income tax deduction

$7,140 moredonated to charity

with directly donated securities

$50,000Value of long-term appreciated securities

Giving more with appreciated securities

F I D E L I T Y C H A R I T A B L EE Q U I T Y C O M P E N S A T I O N A W A R D S A N D C H A R I T A B L E G I V I N G

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Ideal award types to donate

• Vested or exercised/purchased and held > 1 year (or longer for ESPP, which needs to be held to qualifying status)

• Provides outright company shares

• Potential for capital gains event

• Ordinary income assessed

Awards

RSUs

RSAs

NSOs

ISOs

Not all donated equity compensation offer the same tax savings

ESPP qualifie

d

ESPPNon-

qualified

Considerations for Gifting

Additional planning is required for Rule 144 Restricted and Control Securities


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This is a hypothetical example for illustrative purposes only. This chart assumes a married filing jointly couple, under 65, and neither blind, who contribute a cash gift. The tax savings referenced here are specific to the charitable donation made above the $24,800 standard deduction. Information herein is not legal or tax advice.

Timing of gifting is key

$45K

$30,200 OVER$210 TOTAL SAVINGS

$15K

$200 OVER

$70 SAVINGS

$5K

$5K

2020

$5K

$5K

2022

$15K

$200 OVER

$10,570 SAVINGS

$5K

$5K

2020

$70 SAVINGS

$70 SAVINGS

$5K

$5K

2021

$15K

$200 OVER

Charitable Donation

Mortgage Interest

SALT

35% Income Tax Bracket

vs$24.8K

StandardDeduction


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Client case study


Pre-retiree executive


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Senior executive – retirement planning

Planning opportunity:• Leverage low basis, vested long-term company

shares to offset income taxes

• Use a tax-efficient charitable vehicle to implement a ready reserve for giving now and in the future

• Engage the next generation through philanthropy

2020 scenario:• Retiring in 3-5 years

• Has concentrated portfolio of company shares through exercised stock options and RSUs over 15 years

• Has a small private foundation and gives $50k outside of foundation

• Planning goals: asset diversification, family engagement and charitable giving


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Strategic giving E Q U I T Y C O M P E N S A T I O N A W A R D S A N D C H A R I T A B L E G I V I N G

Years to retirement Income tax rate Annual giving strategy Strategic giving strategy (with donor-advised fund)

6 years 33% $50,000 $50,000

5 years (high-income year) 37% $50,000 $150,000




1 year (high-income year) 37% $50,000 $150,000

Years in Retirement

1-10 years 24% $500,000 ($50,000 each year) $0

TOTAL DONATION $800,000 $800,000TAX SAVINGS $229,000 $294,000

This is a hypothetical example for illustrative purposes only. This chart assumes the donor contributes a cash gift. State and local taxes and the federal alternative minimum tax are not taken into account. Information herein is not legal or tax advice. This does not account for any future tax rates after the sunsetting of the Tax Cuts and Jobs Act.

$65,000 in potential tax savings with strategic planning

Ready reserve for short-and long-term grantmaking Potential to give even more through investment gains


Final Thoughts

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Important Additional Information

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The information presented reflects the opinions of Jurrien Timmer, Director of Global Macro, for Fidelity Asset management as of September 28, 2020. These opinions do not necessarily represent the views of Fidelity or any other person in the Fidelity organization and are subject to change at any time based upon market or other conditions. Fidelity disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fidelity fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fidelity fund.

Sources for correlation slide: All data downloaded from Haver Analytics. All country and regional equity indices: MSCI. All bond indices: Barclays Capital. Gold: Handy & Harman. All GSCI: Goldman Sachs Commodity Index. Currencies: Morgan Stanley. Hedge Fund Data: HFRX.

The following information applies to the entirety of this document. Please read it carefully before making any investment. Speak with your relationship manager if you have any questions.

Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with any investment or transaction described herein. Fiduciaries are solely responsible for exercising independent judgment in evaluating any transaction(s) and are assumed to be capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies. Fidelity has a financial interest in any transaction(s) that fiduciaries, and if applicable, their clients, may enter into involving Fidelity's products or services.

“Fidelity Investments” and/or “Fidelity” refers collectively to FMR LLC, a U.S. company, and its subsidiaries, including but not limited to Fidelity Management & Research Company (FMR Co.) and FIAM.

Certain data and other information in this presentation have been supplied by outside sources and are believed to be reliable and current. Data and information from third-party databases, such as eVestment Alliance, Callan, and Morningstar are self-reported by firms that generally pay a subscription fee to use such databases, and the database sponsors do not guarantee or audit the accuracy, timeliness, or completeness of the data and information provided, including any rankings. Rankings or similar data reflect information at the time rankings were retrieved from a third-party database, and such rankings may vary significantly as additional data from managers is reported. Rankings may include a variety of product structures, including some in which certain clients may not be eligible to invest. FIAM cannot verify the accuracy of information from outside sources, and potential investors should be aware that such information is subject to change without notice.

Data source for periodic table: SG: Russell 2000 growth, REIT: MSCI REIT index, SC: Russell 2000, SPX: S&P 500, SV: Russell 2000 value, LG: Russell 1000 growth, EUR: MSCI Europe, EAF: MSCI EAFE, EM: MSCI EM, LV: Russell1000 value, HY: Bloomberg Barclays high yield, JPN: MSCI Japan, EMD: JP Morgan EMBI, TIPS: Bloomberg Barclays TIPS, LT: Bloomberg Barclays long duration, gold: Bloomberg spot gold, IGB: Bloomberg Barclays investment grade bonds, HFs: HFRX hedge fund index, com: Bloomberg commodities index, cash: 3mo T-Bill yield.The tax information provided is general and educational in nature, and should not be construed as legal or tax advice. Fidelity Charitable does not provide legal or tax advice. Content provided relates to taxation at the federal level only. Charitable deductions at the federal level are available only if you itemize deductions. Rules and regulations regarding tax deductions for charitable giving vary at the state level, and laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of the information provided. As a result, Fidelity Charitable cannot guarantee that such information is accurate, complete, or timely. Tax laws and regulations are complex and subject to change, and changes in them may have a material impact on pre-and/or after-tax results. Fidelity Charitable makes no warranties with regard to such information or results obtained by its use. Fidelity Charitable disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Fidelity Charitable is the brand name for Fidelity Investments® Charitable Gift Fund, an independent public charity with a donor-advised fund program. Various Fidelity companies provide services to Fidelity Charitable. The Fidelity Charitable name and logo, and Fidelity are registered service marks of FMR LLC, used by Fidelity Charitable under license.

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Executive Market Update...Sep 29, 2020 · Mr. Timmer is responsible for analyzing market trends...

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