Insights & Commentary

As we close out 2025 and look ahead, financial markets are navigating a complex environment shaped by evolving monetary policy, shifting geopolitical dynamics, and an economy that has proven more resilient than many predicted. While uncertainty is a constant in investing, we believe that a disciplined, diversified approach remains the most reliable path to long-term wealth creation. Here is our outlook and how we are positioning client portfolios.

The Macro Landscape

The Federal Reserve's measured approach to monetary policy has been the dominant variable for asset prices throughout 2025. After beginning an easing cycle in late 2024, the Fed has signaled a more cautious pace of further rate reductions, citing persistent inflation in services and housing. We expect the federal funds rate to settle in the 3.75–4.25% range through mid-2026, which continues to provide attractive yields for fixed income investors while supporting moderate equity valuations.

On the fiscal side, the approaching sunset of key provisions of the Tax Cuts and Jobs Act creates both planning opportunities and uncertainty. Our tax strategy team, led by Michael Rivera, has been working with clients throughout the year to position portfolios and estate plans ahead of potential changes.

Equity Markets: Broadening Participation

U.S. equity markets delivered strong returns in 2025, but the concentration of gains in a handful of mega-cap technology names has created a market that is narrower than many investors realize. We believe this concentration risk warrants attention. Our positioning favors a broadening of equity exposure — tilting toward mid-cap value stocks, international developed markets, and select emerging market opportunities where valuations offer more attractive entry points relative to earnings growth.

Earnings growth will be the primary driver of equity returns going forward. Consensus estimates project approximately 10% earnings growth for the S&P 500, which is achievable but not without risk. Any meaningful deterioration in consumer spending, corporate margins, or global trade would pressure these estimates and likely lead to increased volatility.

Fixed Income: A Compelling Opportunity

For the first time in over a decade, fixed income investors are earning attractive real yields. We see an opportunity to extend duration modestly and lock in rates that remain historically compelling. Investment-grade corporate bonds and municipal bonds for tax-sensitive investors offer particularly strong risk-adjusted returns at current spread levels. Our bond allocation serves as both an income generator and a portfolio stabilizer.

Our Approach

We are maintaining a balanced, diversified approach across client portfolios. Key themes include: broadening equity exposure beyond U.S. large-cap growth, extending fixed income duration to capture attractive yields, maintaining adequate cash reserves for rebalancing opportunities, and continuing to harvest tax losses where available. As always, our investment decisions are anchored to each client's long-term financial plan — not short-term market predictions.

This commentary is provided for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Please consult your advisor for guidance specific to your financial situation.

Roth conversions have been a recurring topic in client conversations throughout 2025, and for good reason. With key provisions of the Tax Cuts and Jobs Act set to sunset at the end of 2025, the current tax rate environment may represent the most favorable window for Roth conversions that many investors will see for years to come. In this article, we break down the mechanics, the math, and the decision framework we use with clients.

Why Roth Conversions Matter Now

A Roth conversion involves moving assets from a traditional IRA or 401(k) into a Roth IRA, paying ordinary income tax on the converted amount in the current year. The benefit is that all future growth and qualified withdrawals from the Roth account are completely tax-free. With the top federal income tax rate currently at 37% and potentially reverting to 39.6% in 2026, converting now allows you to pay taxes at what may be a historically low rate.

The decision is not as simple as comparing current versus future tax rates, however. Our financial planning team runs multi-year projections that account for your total income trajectory, anticipated retirement spending, required minimum distributions, Social Security benefits, and potential changes to the tax code. This analysis helps us determine the optimal conversion amount each year — enough to take advantage of available tax bracket space without triggering unnecessary costs.

Who Benefits Most?

Roth conversions tend to be most beneficial for clients in the following situations:

• Early retirees (ages 60–72) who have a gap between earned income and the start of Social Security and RMDs, creating a low-income window ideal for conversions
• High earners expecting continued high income who want to reduce the size of their traditional IRA and the associated RMD burden later in life
• Families with estate planning goals who want to pass Roth assets to heirs tax-free, particularly given the 10-year distribution rule under the SECURE Act
• Business owners experiencing a temporary income dip who can convert during a lower-bracket year

The Pitfalls to Avoid

Converting too much in a single year can push you into a higher tax bracket, trigger the 3.8% net investment income tax, or increase your Medicare Part B and Part D premiums through IRMAA surcharges. It is also important to pay the conversion tax from non-retirement funds whenever possible — using IRA assets to cover the tax bill significantly reduces the long-term benefit of the conversion.

Next Steps

If you are considering a Roth conversion, the time to act is now. Year-end deadlines are approaching, and the analysis requires careful coordination with your tax professional. Contact our team to schedule a Roth conversion review and determine whether this strategy belongs in your financial plan.

This article is for informational purposes only and does not constitute tax advice. Please consult your tax professional regarding your specific situation.

Estate planning is one of the most important — and most commonly neglected — areas of financial planning. Despite its critical role in protecting families, studies consistently show that a majority of American adults do not have a complete, up-to-date estate plan. At BlueChip Financial, we believe that estate planning should not be an afterthought; it should be integrated into your overall financial strategy from day one.

The Core Documents Every Family Needs

Regardless of the size of your estate, there are several foundational documents that every family should have in place:

• Last Will and Testament: Directs how your assets are distributed, names guardians for minor children, and designates an executor to manage your estate
• Revocable Living Trust: Allows assets to pass to beneficiaries without the cost, delay, and public nature of probate. Provides for management of your assets in the event of incapacity
• Durable Power of Attorney: Designates a trusted individual to manage your financial affairs if you become unable to do so yourself
• Healthcare Power of Attorney: Appoints someone to make medical decisions on your behalf if you are incapacitated
• Living Will / Advance Directive: Documents your wishes regarding end-of-life medical treatment

Beyond the Basics: Planning for Wealth Transfer

For families with significant assets, the estate planning conversation extends well beyond basic documents. The federal estate and gift tax exemption is currently approximately $13.6 million per individual — but with the TCJA sunset approaching, this amount is expected to be reduced by roughly half. Families with estates above the anticipated reduced threshold need to act now to take advantage of the current elevated exemption.

Strategies we are implementing with clients include spousal lifetime access trusts (SLATs), grantor retained annuity trusts (GRATs), irrevocable life insurance trusts (ILITs), and strategic gifting programs. Each of these vehicles serves a different purpose, and the right combination depends on your specific goals, family dynamics, and financial circumstances.

The Beneficiary Designation Audit

One of the most overlooked areas of estate planning is beneficiary designations. Your retirement accounts (IRAs, 401(k)s), life insurance policies, and transfer-on-death accounts pass to beneficiaries outside of your will or trust. If these designations are outdated — naming an ex-spouse, a deceased relative, or no one at all — the consequences can be severe and irreversible. We recommend a comprehensive beneficiary review at least every two years, and after any major life event.

Family Governance

For multi-generational families, estate planning is also about values, communication, and governance. We help families develop structures for managing shared assets, preparing the next generation for wealth stewardship, and establishing philanthropic vehicles that reflect the family's priorities. These conversations are often the most meaningful work we do.

Getting Started

If your estate plan is incomplete, outdated, or nonexistent, we encourage you to schedule a review with our team. Jennifer Walsh, our Director of Estate Planning, coordinates closely with our clients' estate attorneys to ensure every element of your plan is aligned with your financial strategy and your family's wishes.

This article is for informational purposes only and does not constitute legal advice. Please consult your estate planning attorney for advice specific to your situation.