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Podcast #6: RMDs, Reskilling and Impact Investing

June 30, 2020

Listen below for this week’s Financial Connections Update.


2020 RMDs
RMDs for the year are waived, but many who received them early in the year were unable to take advantage of 60-day rollovers to return the funds. The IRS has finally provided guidance regarding this issue. Below are the highlights.

•    Repayment of RMDs are permitted until August 31, 2020
•    Allows repayments without regard to the once-per-12-month rollover limitation
•    Repayment of RMD from Beneficiary IRAs are permitted

Note: In order to fully rollover the waived RMD, the entire gross distribution would need to be returned. If there were any tax withheld, these would be recuperated when you file your 2020 tax returns. 



Hi Everyone,                                                                          

Thank you for the well wishes for my birthday. I had an enjoyable weekend and obviously it will be a memorable one.

Today I’d like to share information on three different topics. The first is the nature of markets going down, the second, Impact Investing aka SRI or ESG and the third is a new word called reskilling.

We experienced the rapid descent of the stock market in late February followed by its recent rise. However, here is another way to think about it. The analogy below is modified from a recent webinar from T. Rowe Price, an investment management company. The speaker’s father was a finance professor.

When the market declines, especially rapidly, it is like the building is on fire and everyone is trying to exit at the same time. So that’s the equivalent of the selling frenzy. But now you need someone to buy what you are selling. This is the equivalent of finding someone willing to run into the burning building. In order to entice someone to buy, the price has to be low enough to go into the fire.

The Federal Reserve Board, usually referred to as the Fed, is the organization who has been running into the burning building to keep the markets liquid – at least on the bond side. They first bought treasuries, then started buying a basket of bonds through Exchanged Traded Funds or ETFs. Now they have started buying individual corporate bonds. It is largely through the Fed’s efforts that the market has been able to come back.

With the Fed’s backing, some of the volatility is reduced. If they hadn’t created this backstop, market gyrations and downward slides might have been worse. It is also possible the Fed may make money on these transactions.

Whether the market should return to almost its pre-COVID level is an entirely different question. I heard one analyst say that the markets don’t know how to price in the pandemic so they are ignoring it. Not very realistic from my viewpoint.

You may recall we introduced Flavia in our January newsletter. She is our Business Manager and was hired to share some of my work – so I can gain a little Play time. Flavia and I are working on a project to expand and improve our Social Impact investing. As many of you know, we can accommodate your desire for Social Investing for all or part of your portfolio. But we would like to take it a bit deeper. We’re able to start researching more options because this area of investing is currently the flavor of the month. Many mutual fund companies are dedicating resources to developing Social Impact options. Even Morningstar, a provider of investment research, developed special rating criteria for Social Investing.

With this back drop, Flavia and I are reviewing our current holdings and new ones to develop a menu of funds that not only can provide an Impact investing core portfolio but also allow a client to emphasize a theme – such as clean energy. The caveat is some of these options are new and don’t have even a 3-year track record yet. If this is an area of interest to you, please get in touch.

Lastly, I’d like to turn to the topic of Reskilling aka known as Uptraining or as some of us used to call it – re-training. I guess the distinction is similar to cars. It used to be called a Used Car; then became a pre-owned car.

There is a disconnect between the skills people have and the skills needed to fill future jobs. I’ve advocated for what used to be called vocational schools to come back but it hasn’t happened.

Some of the reskilling will occur within worker’s employment. For instance, COVID-19 has accelerated the pace of working remotely. In the UK, less than 1% of appointments were handled digitally. Now of course it is 100%. Of those, only 7% are ending up with an in-person meeting. Medical personnel are receiving additional training on how to diagnose remotely.

JP Morgan Chase paired with MIT to look at future job skill requirements. They now have a $350 million, five-year global initiative to reskill their workers. It is called New Skills at Work with a focus on upskilling low-skilled jobs to meet technology and business needs.

AT&T has program called “Future Ready” to reskill their employees.

Not surprisingly, Amazon and Walmart have similar programs.

Unfortunately, other companies aren’t so enlightened. Anyone who has worked in management knows how costly turnover can be and the resources needed to bring on new employees. GM plans to reduce 8,000 jobs including engineers and product designers. Yet they are hiring to expand their electric and autonomous vehicle divisions. Imagine how much better the outcome might be if they upskilled some of their staff.

Now for some good news. On June 21st, the Senate actually passed a bill. The Great American Outdoors Act. The bill will be used for delayed maintenance in national parks and public lands. It is now up to the House. The revenue comes from not less than 50% of all revenues made from energy production on public lands.

In a paper published in the June 23rd journal of Advanced Energy Materials, Dr. Rahman Daiyan and Dr. Emma Lovell from the University of New South Wales discovered a way to convert carbon dioxide into useable industrial components – inexpensively. This could be a key to keeping our air cleaner as we convert to renewable energy.

On a different note, some of you have asked if it is okay to forward my podcasts and emails. Definitely. I make sure there is nothing confidential on the recording. Until next time, please stay safe.


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