What’s the secret to cultivating a workplace where people are empowered, engaged, and driven to succeed?
At Centura Wealth Advisory, it all starts with a commitment to core values and a leadership approach rooted in trust and open communication.
Krystal Puryear, SHRM-CP, Director of People and Culture, and Nicole Hubbs, Talent Acquisition Specialist, share how Centura has built a thriving culture by focusing on transparency, excellence, integrity, passion, and respect.
From using Radical Candor to foster trust and autonomy to creating opportunities for employee growth and innovation, this conversation provides valuable insights for any business leader or HR professional looking to strengthen their organizational culture.
Tune in below to learn more.
The Role of Core Values in Shaping a Thriving Work Environment
At Centura Wealth Advisory, core values play an essential role in creating an engaging and empowering workplace. Krystal, who oversees all things People and Culture, emphasized how the company’s values shape its workplace dynamic: “We have a set of core values that really define who we are as an organization. These values are the foundation of everything we do and the way we interact with our team members.”
The core values of Centura include transparency, excellence, integrity, passion, and respect—values that guide their day-to-day operations and contribute to a culture where employees feel supported and encouraged to reach their full potential.
The Power of Radical Candor in Building Trust and Autonomy
A standout aspect of Centura’s leadership approach is the use of Radical Candor. This method, popularized by Kim Scott, emphasizes clear and direct communication, while also showing care and respect for individuals. Krystal and Nicole discussed how Radical Candor helps create a culture of trust and autonomy, where employees feel empowered to share their opinions and take ownership of their work.
Krystal explained, “Radical Candor allows for open communication between all team members and helps us foster trust. It also gives our employees the autonomy to make decisions and innovate. When they feel trusted, they’re more likely to take ownership and contribute in meaningful ways.”
This trust-building approach encourages employees to take initiative, ask for feedback, and embrace opportunities for growth—ultimately contributing to the company’s success.
Executive Coaching and Leadership Development
One key element of Centura’s success is its investment in leadership development. Both Krystal and Nicole shared how the company emphasizes coaching and mentorship to foster leadership growth within the organization.
Nicole highlighted the value of executive coaching: “We believe in investing in our leaders. Whether they’re new to a leadership role or have been in the position for a while, we provide executive coaching to help them continue developing their leadership skills.”
This commitment to leadership development is crucial to creating an environment where managers and leaders can inspire their teams and lead with confidence.
Open Communication and Social Events for Team Bonding
Building trust and transparency extends beyond formal leadership training. At Centura, open communication is encouraged at every level of the organization. This commitment to communication is not just about talking—it’s about listening and making space for honest feedback. As Krystal explained, “We value open and honest communication, and we always try to create opportunities for our employees to have their voices heard.”
In addition to open communication, Centura fosters strong relationships through social events and team-building activities. These events allow employees to connect on a personal level and strengthen bonds within the team. Nicole shared how social events help reinforce trust and create a sense of community: “We have regular social events and activities that help strengthen relationships within the team. It’s all about creating a sense of belonging and camaraderie, which ultimately drives engagement.”
Hiring for Culture Fit: Aligning Talent with Company Values
One of the most important aspects of Centura’s culture-building approach is identifying and hiring talent that aligns with the company’s core values. Nicole, who plays a key role in talent acquisition, discussed how she ensures that candidates align with Centura’s culture during the hiring process: “When we hire, we’re not just looking for skills—we’re looking for people who will embody our core values. It’s about finding talent that’s a good fit for the culture, which is critical to maintaining a positive work environment.”
By ensuring that new hires are a strong cultural fit, Centura sets the stage for long-term success and fosters a cohesive, collaborative workforce.
Encouraging Employee Autonomy and Innovation
A key part of Centura’s culture is empowering employees with the autonomy to make decisions and take initiative. By creating an environment where employees are encouraged to think creatively and innovate, Centura fosters a sense of ownership and responsibility.
Krystal shared how the company gives employees the freedom to grow and take risks: “We encourage autonomy because we believe that when employees have the freedom to make decisions and explore new ideas, it leads to greater innovation and productivity. It also helps them develop a sense of ownership in their work.”
This approach not only leads to higher levels of engagement but also drives innovation within the company, enabling Centura to continuously improve and adapt to changing market conditions.
The Diamond Team Model: Enhancing Collaboration and Career Development
Centura’s Diamond Team model plays a significant role in enhancing collaboration, knowledge sharing, and career development. Krystal explained: “The Diamond Team model encourages cross-functional collaboration and allows employees to work on diverse projects. It’s a great way for individuals to learn new skills, share knowledge, and grow their careers within the company.”
This model promotes a collaborative environment where employees from different departments can come together, share ideas, and contribute to the company’s success. It also supports career growth by providing employees with opportunities to gain experience in different areas of the business.
Upcoming Team Events and Celebrations
To further strengthen employee engagement and appreciation, Centura regularly organizes team events and celebrations. These events give employees a chance to relax, bond, and celebrate their achievements together. Krystal and Nicole shared some of the upcoming events planned to show appreciation for the team: “We always look for ways to celebrate our team. Whether it’s a holiday party or a team-building retreat, we want to make sure that everyone feels appreciated and valued.”
These events help reinforce the company’s commitment to creating an engaging and supportive workplace where employees feel recognized for their contributions.
Key Takeaways:
Centura Wealth Advisory’s success is driven by a commitment to core values, a leadership approach rooted in trust, and a focus on employee empowerment. By fostering open communication, encouraging autonomy, and investing in leadership development, Centura has created a culture where employees are engaged, motivated, and passionate about their work. Whether you’re a business leader or an HR professional, the insights shared by Krystal and Nicole provide a roadmap for building a thriving organizational culture that drives success.
Connect With Centura
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.
Markets in the summer months are historically sleepy as individuals go on vacation and gear up for a new school year, but the third quarter brought anything but sleep to investors worldwide. Equities were marred with bouts of negative activity throughout the quarter – markets experienced a historic 180% surge in the VIX to an intraday high of 65.7 on August 5, yet, despite the volatility, both stocks and bonds pushed higher to end Q3. The market’s resilience caused the month of September to post its first gain in five years. While initially overreacting to adverse events, markets quickly put them in the rearview mirror as the S&P 500 witnessed the best nine-month start to a year since 1997, which also coincided with the best start to an election year ever, all while registering its 42nd all-time high of the year. The busy quarter witnessed the following:
Yen Carry Trade – On the heels of the Bank of Japan’s rate increase announcement, global hedge funds that capitalized on the arbitrage opportunity presented by zero long-term rates in Japan for years, realized the music was about to stop in early August. Quickly unwinding their trades, Japan’s Nikkei stock market experienced the largest single day loss dating back to “Black Monday” in 1987, resulting in a single-day decline of 12.4% on August 5.
Softening Labor Market – The Bureau of Labor Statistics announced an 818,000 revision lower for the prior 12-months jobs added through March of 2024. The labor reports for June, July, and August confirmed softening with the revised additions of 118,000, 61,000, and 142,000, respectively. Every month in the quarter came in below expectations, as the unemployment rate continued to rise – ending at 4.2% through August.
Assassination Attempts – Former President Trump survived two assassination attempts in the quarter as the Presidential race picks up steam, further adding to the market’s anxiety amid election uncertainty.
Candidate Swap – President Biden dropped out of the Presidential race, paving the way for Vice President Kamala Harris to grab his bid. Since Harris’s party nomination, Democrats have seen a sharp reversal of fortunes, and now hold a slight advantage in the polls as of 10/1.
Fed Rate Cut– In line with traders’ expectations — though surprising to many economists and investors — the Fed aggressively cut rates in September for the first time since 2019, front-loading their easing cycle with a 0.50% reduction in their overnight borrowing rate. This led many to question the Fed’s perception of the economy and whether the central bank could manufacture a soft landing and avoid a recession.
Port Strike– As of 12:01 am Eastern Standard Time on October 1, a union labor strike forced ports on the Eastern US and Gulf Coasts to shut down, threatening the economy. JPMorgan Chase & Co. anticipate the closures will result in economic losses between $3.8 billion to $4.5 billion per day, and will likely cause supply chain disruptions and perhaps transitory inflation. Oxford Economics projects a week-long strike would take about a month to clear the shipping congestion.
Israel-Iran – Iran fired nearly 200 missiles into Israel escalating tensions in the Middle East. Israel cited it would retaliate, and this pledge caused Gold (GLD) prices to reach record highs, a U.S. stock market sell off, losses in Crude oil (USO), and a gain in defense sectors.
In face of the strife and a broadening out in earnings growth, the Fed signaled the start of its easing cycle in July, pointing markets to their first rate cut at the September FOMC meeting. While markets experienced hurdles throughout the quarter, economic growth, fueled by resilient consumer spending, continued to surprise to the upside, and investors chose to focus on these positives, causing both the S&P 500 and bonds, as measured by the Bloomberg U.S. Aggregate Index, to advance more than 5% over the quarter. This solid performance in the face of market angst and during a historically slow period demonstrated that investors’ animal spirits are alive and well.
Market Recap
Equities – After contracting 3.62% in the second quarter, rate cut speculation supported higher returns among the profit-hungry and interest-rate sensitive small caps. The Russell 2000 led the way, up 9.27% in 3Q. Lagging their small cap counterparts, the S&P 500 witnessed a broadening out of market participation away from the Magnificent Seven on its way to a 5.89% return for the quarter, and a 22.08% advancement for the year.
Bonds – Amidst moderating yet conflicting economic growth signals, bond yields fell aggressively during the quarter in anticipation of the first Fed rate cut. Entering July, the yield on the 10-year U.S. Treasury dropped sharply from 4.48% to 3.66%, leading up to the looming rate cut in mid-September. Generating fewer headlines over the quarter, the Treasury market continued to grapple with robust U.S. debt issuance and weakening demand for U.S. Treasury securities. We believe supply absorption concerns will likely continue to apply upward pressure on yields, illustrated by yields slightly reversing course to close the month of September. The 10-Year U.S. Treasury closed the quarter at 3.81%. The Bloomberg U.S. Aggregate Bond Index rose 5.20% in the quarter, erasing the negative 0.71% return in the first half of 2024, finishing up 4.45% through September 30.
Source: YCharts. The Bloomberg US Aggregate Index was used as a proxy for Bonds; the Bloomberg US High Yield 2% Issuer Capped Index was used as a proxy for High Yield Bonds; the Russell 2000 Index was used as a proxy for Small Cap Equities; and the MSCI ACWI Ex USA Index was used as a proxy for Foreign Equities. All returns are based on total return levels as of 09/30/2024.
Economic data remains mixed, and base case expectations still call for the Fed to successfully achieve a ‘soft landing’ and avoid recession. However, as the Federal Reserve’s attention shifts from price to job stability, the path of monetary policy will likely be driven by the health of the labor market.
Economy: The Consumer Surprises
In contrast with the nation’s revised first quarter GDP growth of 1.6%, which was held down by softer consumer spending of 1.9%, the second quarter surprised to the upside. A lift in personal income fueled a resurgence of consumers’ penchant to spend, as spending jumped to a 2.8% pace, and an 8.3% increase in business investment helped push U.S. growth higher at a 3% annualized pace. Building on the first two quarters of 2024, as of September 27, 2024, the Atlanta Fed’s GDPNow model for Q3 has been revised from 2.9% to 3.1%, indicating a stable, albeit moderating economic growth engine. This revision reflects the sustained trends of a resilient consumer and further business investment, though an economy hindered by negative residential investment.
August’s Labor Market Report registered the 44th consecutive month of job gains. Estimates called for 161,000 jobs in August, and the market once again surprised to the downside with the addition of 142,000 jobs and further downward revisions to June and July’s reports to 118,000 and 61,000, respectively. Conversely, the unemployment rate retraced slightly to 4.2%, which is still nearly 1% higher than the 55-year low of 3.4% in April 2023. The deterioration of the labor market has quickly grabbed the attention of the Fed, as softness became evident across several pockets of the economy.
The Bureau of Labor Statistics announced an 818,000 revision lower for the prior 12-months jobs added, through March of 2024, reflecting weaker job growth than anticipated. Since peaking in 2022, job openings (JOLTs) have continued to trend lower, bouncing around from month-to-month. For example, job openings fell to their lowest level since January of 2021 to 7.71 million in July, only to reverse course back above eight million in August, bringing the ratio of job openings to those unemployed down to 1.13:1. While the ratio of 1.13:1 is above historical levels, the ratio has fallen significantly from nearly two job openings for every job opening in 2022, indicating the labor market is showing signs of tightening. Over the course of the year, the number of open jobs has trended lower, while the number of unemployed job seekers has trended higher, as evidenced by the additional 991,000 unemployed persons from January to August.
Since the Fed embarked on its tightening journey and increased rates, the strength and resiliency of the labor market gave them confidence to keep rates higher for longer. Ultimately, the Fed would like to see wage growth continue to trend lower from its current, elevated level of 3.83%. Given the slowing pace of hiring and the increase in unemployment figures, labor market stability has become a primary concern for the Fed. Fears surrounding further labor market weakening cast doubt on the Fed’s ability to avoid a recession and produce a soft landing. The surge in late July Unemployment Claims helped fuel the market selloff in early August that witnessed the S&P 500 enter a nearly 10% correction, although claims have since retraced. Unemployment Claims (both Initial and Continuing) are released weekly and provide the most up to date insight on the health of the labor market. As mentioned, Initial Claims have fallen from 250,000 on July 27 to 218,000 on September 21, while Continuing Claims have been range-bound between 1.73 million and 1.87 million since the start of the year. Both of these levels are nowhere near levels seen in prior periods leading up to a recession, though remain important to monitor.
Inflation
The Fed appears to be in a position to win the war on inflation. However, we would not be surprised to see a few battles lost from month-to-month as pricing pressure moves towards the Fed’s 2% target. All inflation measures are below wage growth of 3.8%, with both of the Fed’s preferred inflation measures (PCE) coming in at 2.7% or lower. Core inflation, as measured by CPI and PCE, remains stickier: core CPI stayed at 3.2% year-over-year, while core PCE saw a slight uptick in August to 2.7%.
Further evidence of falling price pressures should provide Federal Reserve Chair Jerome Powell the confidence to continue down the path of monetary easing, supporting further rate cuts. Threatening the falling trend in inflation measures are the recent port closures across the Eastern seaboard and the Gulf. We are paying close attention to these closures and hoping for a quick resolution. A prolonged strike could result in serious supply chain constraints, potential price increases for goods, and a slowing in economic output.
Fed Starts Strong Out of the Gate
The Federal Open Market Committee (FOMC) elected to lower rates by 0.50% (50 bps) at their September meeting, while leaving the size of future rate cuts open. The Fed’s decision to cut rates was largely expected. The surprise centered around the size of the Fed’s cut and the subsequent updates to their Summary of Economic Projections (SEP). This surprise was best illustrated by the Fed’s updated median projection for total rate cuts in 2024, which increased from a mere 0.25% of cuts projected in the June SEP to a total of 1.00% worth of cuts in the September SEP, signaling to markets that interest rates would be cut at a more accelerated pace than initially expected.
Many expected the Fed to start slow with rate reductions, pointing to the health of the overall economy. A larger cut can indicate the Fed believes the economy is deteriorating quickly and that they waited too long to cut rates; however, the Fed has downplayed this rhetoric, stating that a 50 bps cut was warranted due to the strength the economy has exhibited.
The Committee held its projection for 2025 at 1.00% (100 bps) of cuts, indicating a slower pace of change as the Fed adopts a more patient data-dependent position after front-loading their easing in the final four months of 2024. Barring any exogenous event or resurgence of inflation, we believe Powell’s plan is to settle into a predictable cadence in terms of size and timing as we transition into 2025. We believe the Federal Reserve will align further rate reductions with their quarterly meetings and updated Summary of Economic Projections to the tune of more traditional 0.25% policy changes. We fully anticipate the Fed will hit its policy target for 2024 with 100 bps of cuts. However, the question remains whether they will do so in the form of one more 0.50% or elect a more traditional policy change and reduce the terminal rate by 0.25% in November and December: we are in the latter camp.
Centura’s Outlook
The Fed’s goal to lower inflation to its 2% mandate and avoid recession is still our base expected outcome. However, the Fed will need to monitor the state of the labor market deterioration closely if they are to fully avoid an economic contraction.
Successfully delivering lower inflation and monetary policy normalization should bode well for equities and bonds, however, as always, there are several potential risks looming and investors should proceed carefully.
By most measures, the S&P 500 is overvalued. According to FactSet, as of September 27, the forward 12-month Price-to-Earnings Ratio (P/E) is 21.6x, which is higher than both the 5-year and 10-year averages of 19.5x and 18.0x, respectively. Current valuations pose a risk to the market, as negative sentiment can lead to sharper selloffs. Also posing a risk to the overall market is the concentration of the Top 10 largest stocks in the S&P 500. According to JPMorgan Asset Management, the 10 largest constituents represent 35.8% of the index, as of August 31, while contributing to 28.1% of the earnings. Concentrations of this magnitude make the index vulnerable to significant changes stemming from those underlying companies, which is one of several reasons we favor global diversification across a multitude of asset classes – both public and private.
In the face of higher borrowing costs, corporate profits remain resilient, illustrated by the fourth consecutive quarter of positive earnings growth by the S&P 500, rising 5.1% in the second quarter. As of September 27, FactSet estimates third-quarter earnings to expand at a slower pace, only advancing 4.6% year-over-year. We are encouraged by the positive earnings growth trends, though the second quarter saw investors punish negative earnings surprises more than they rewarded positive beats. Relative to the five-year average, stocks that beat earnings guidance in 2Q rose less (0.9% vs. 1.0%), while those companies that missed guidance fell nearly double the 5-year average (-4.3% vs. -2.3%), indicating the market appears overvalued, and investors are overreacting to news and resetting expectations.
Since 2023, the Magnificent Seven have been responsible for most of the market’s earnings growth, increasing 31%, versus the 4% contraction of the remaining 493 companies’ earnings in the S&P 500 last year. While third quarter earnings for the 493 companies are expected to be flat for 3Q, we remain optimistic by the fact that JPMorgan is expecting the remaining companies outside the Magnificent Seven to catch up and accelerate earnings throughout the remainder of the year. Both the Magnificent Seven and the S&P 500 ex-Mag Seven are expected to experience double-digit year-over-year earnings growth in the fourth quarter of 21% and 13%, respectively. A broadening of earnings growth should bode well for increased market breadth and carve a path for higher broad-based returns on equities, outside of the Magnificent Seven.
Persistent, elevated rates will continue to cause issues for certain companies, such as small caps, though earnings are expected to grow broadly through the remainder of 2024 and 2025; the Fed’s pivot to lowering rates should alleviate some of the pressure on company financials.
While equities generally produce positive returns during election years, we expect volatility will likely increase as we approach the election through October and early November. The recent political turmoil has created a great deal of market uncertainty, particularly given the differing policy initiatives of both candidates. In the face of uncertainty, we generally avoid making changes to investment portfolios in advance of an election, as the policy expectations could change greatly. Markets tend to rally once the election has concluded. We encourage clients to avoid making rash decisions and stay invested, as we are strong believers that long-term investment outcomes are improved by time in the market, rather than timing the market. We suggest investors concerned with historical market behavior leading up to, and after an election, listen to the podcast we recorded with Michael Townsend, Managing Director, Legislative and Regulatory Affairs at Charles Schwab & Company.
The stock market’s resilient momentum, a more favorable rate environment, a potential post-election rally, and expected earnings growth all serve as potential tailwinds to push equities to further highs. However, a fair amount of uncertainty and risks pose headwinds for markets. Outside of further labor market deterioration or a resurgence of inflation leading to a Fed policy misstep, significant geopolitical risks are present and could result in additional volatility, especially if there are escalations in the Middle East, Eastern Europe, or China. For instance, on October 1, Iran fired nearly 200 missiles into Israel escalating tensions in the Middle East. Israel cited it would retaliate, and, as a result, Gold (GLD) prices reached record highs, U.S. stocks sold off, Crude oil (USO) experienced losses, and investors flocked to safe haven investments and sectors.
Real estate tends to be an interest rate-sensitive asset class; as rates continue to move lower, we anticipate a pick-up in activity and a subsequent reversal of valuations over the next several years. We may not have found the bottom of the real estate market cycle quite yet, though based on improving fundamentals and discussions with our real estate partners, we may be bouncing off the bottom, from a valuation adjustment perspective. Access to nearly-free credit post-pandemic resulted in record numbers of new construction, particularly in commercial real estate sectors like multifamily and industrials. As a result of the Fed’s rate hiking cycle, those new constructions screeched to a halt as the cost to borrow and build has been unfeasible. However, 2024 is still expected to deliver more than 650,000 multifamily units, the most since 1974. Like most goods, price is determined by supply and demand, and real estate is no different. Currently, demand, or absorption, is failing to keep pace in multifamily, applying downward pressure on rents. Furthermore, new higher-quality inventory generally attracts higher rents, forcing older vintage properties to offer rent concessions to remain competitive and applying downward pressure on net operating income (NOI). On the opposite side of the ledger, expenses have outpaced income, particularly the cost of insurance and labor.
We believe we are approaching the light at the end of the tunnel. While valuations may trend sideways over the next 12-18 months, we are optimistic that increased activity resulting from lower interest rates, combined with supply concerns evaporating as we enter 2026 and few-to no new construction starts, should bode well for private real estate in the long-term, with 2024 and 2025 vintages potentially producing strong results at disposition. We continue to remain extremely cautious and selective, focusing on select submarkets, signs of possible distress, and attractive risk-adjusted returns.
Private equity, particularly lower middle market buyouts, appears to have stabilized, potentially presenting attractive investment opportunities relative to public market alternatives. Current yield levels still present challenges for private equity valuations, though, like real estate, lower rates should lead to increased exit activity and higher valuations moving forward. With limited private equity exit opportunities since mid-2022 and our expectation for increased activity, we favor managers specializing in co-investments, GP-led secondaries, and late-stage primaries that offer the potential for superior risk-adjusted returns in this environment, a potentially quicker return of capital, and generally lower fee structures.
Private credit is predominantly floating and tied to a base rate such as the Secured Overnight Financing Rate (SOFR) and closely linked to the Fed Funds overnight rate, as such the asset class has benefited from the Fed’s restrictive monetary policy, though we believe the asset class remains attractive. However, yields on private credit will start to come down as the Fed continues to cut rates, though with a lag to the Fed’s timing as the floating rate on private loans does not adjust immediately. Rather, there is a delay before the loan terms reset lower. Should our Fed rate path expectations prove accurate, we expect private credit to continue to produce a high level of income, particularly on a relative basis.
While the third quarter brought both hurdles and strong market performance, we remain laser-focused on long-term objectives and minimizing volatility in the short-term amidst this data-dependent backdrop.
Thank you for your continued confidence and support. If you have questions or concerns, please contact your Centura Wealth advisor.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
Centura Wealth Advisory is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Centura Wealth Advisory and its representatives are properly licensed or exempt from licensure. 12255 El Camino Real, St. 125, San Diego, CA 92130.
https://centurawealth.com/wp-content/uploads/2024/10/iStock-1699822168-scaled-1.jpg11592560Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-10-03 21:59:242025-04-08 16:27:35Q3 2024 MARKET WRAP: Despite Hurdles, The Hot Streak Continues
Managing a successful business requires more than just revenue growth—it demands strategic financial oversight, tax optimization, and precise estate planning. If you are not fully capitalizing on your business’s financial strategy, you could be missing out on significant opportunities.
That is why Live Life Liberated is celebrating its 100th episode with a value-packed discussion.
In this episode, host Derek Myron interviews Jonny Borok, a highly experienced fractional CFO, about how these financial experts help business owners achieve investment and estate planning goals with greater precision.
Now, let’s explore what a fractional CFO is, why business owners should consider hiring one, and how they play a critical role in wealth management.
What Is a Fractional CFO?
A fractional CFO is a highly skilled financial executive who works with companies on a part-time or contract basis. Unlike a full-time CFO, who is a permanent employee, fractional CFOs provide strategic financial oversight without the cost of a full-time salary.
They help businesses with:
Financial planning and forecasting
Cash flow management
Tax strategy and reporting
Investment and estate planning
Cross-disciplinary collaboration with wealth managers and tax strategists
For businesses with $5 million or more in revenue, a fractional CFO can bring the expertise needed to optimize financial strategy while freeing up leadership to focus on growth.
Why Business Owners Should Consider a Fractional CFO
Many business owners struggle with financial complexity, whether it is managing cash flow, reducing tax burdens, or planning for long-term wealth preservation.
A fractional CFO provides:
Strategic oversight – Aligns business goals with smart financial planning.
Cross-industry expertise – Brings best practices from various industries.
Tax efficiency – Works with tax strategists to minimize liabilities.
Estate planning insights – Ensures business assets transition smoothly to the next generation.
By working alongside wealth managers, accountants, and legal experts, a fractional CFO helps ensure that every aspect of your financial life is coordinated.
How Fractional CFOs Support Investment and Estate Planning
Estate planning and investment strategies go hand in hand. Business owners often accumulate substantial assets, but without proper planning, much of that wealth could be lost to taxes, legal fees, and inefficient structuring.
Here is how a fractional CFO can help:
1. Optimizing Tax Strategies
Identify tax-saving opportunities through entity structuring.
Implement deductions and deferrals to reduce taxable income.
Work with estate planners to minimize estate and gift taxes.
2. Improving Financial Reporting for Smarter Decisions
Establish reliable financial systems to track assets and liabilities.
Provide transparency for investors, partners, and future heirs.
Ensure accurate reporting for tax compliance and wealth preservation.
3. Enhancing Liquidity and Cash Flow Management
Find ways to unlock capital without disrupting operations.
Manage debt and financing strategies for long-term sustainability.
Ensure cash reserves align with business growth and personal wealth goals.
4. Coordinating with Wealth Managers and Legal Teams
Align investment decisions with estate planning goals.
Structure business ownership for smooth succession planning.
Protect business and personal assets from legal risks.
Who Benefits Most from a Fractional CFO?
This strategy is ideal for:
Business owners who need financial leadership but do not want to hire a full-time CFO.
Entrepreneurs with complex tax and estate planning needs.
Companies preparing for a sale, merger, or transition.
Families looking to structure multi-generational wealth.
Whether you are looking to scale your business, optimize taxes, or safeguard your legacy, a fractional CFO can provide the expertise to make smarter financial decisions.
Final Thoughts: The Power of a Unified Financial Strategy
A fractional CFO is more than just a financial consultant—they are a key partner in your overall wealth strategy. By collaborating with wealth managers, tax strategists, and estate planners, they ensure that every financial decision aligns with your long-term goals.
https://centurawealth.com/wp-content/uploads/2024/09/iStock-2149838473-1-scaled.jpg11592560Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-09-24 02:26:002025-04-08 16:16:43Ep 100: How a Fractional CFO Can Elevate Your Wealth Strategy
Many small business owners miss out on significant tax savings each year simply because they’re unaware of certain deductions. One of the most overlooked opportunities is the Qualified Business Income (QBI) deduction. This powerful tax break, introduced in the 2017 Tax Cuts and Jobs Act, allows eligible business owners to deduct up to 20% of their qualified business income—but many fail to claim it due to poor planning or lack of proper advisory support.
In a recent episode of Live Life Liberated, hosts Greg Klipstein and Samantha Lawrence break down the QBI deduction, explain why it’s often missed, and discuss how business owners can maximize their tax savings.
Read on to learn more.
What Is the QBI Deduction?
The QBI deduction was created as a response to corporate tax cuts that primarily benefited large businesses. The goal was to ensure small business owners—who employ over 75% of the U.S. workforce—could also receive tax relief.
Eligible business owners can deduct up to 20% of their qualified business income, significantly lowering their taxable income. However, not all businesses qualify, and certain income limitations and restrictions apply.
Who Qualifies?
Sole proprietorships
Partnerships
S corporations
Some real estate investors
Who Doesn’t Qualify?
C corporations
High-income earners in specified service trades (lawyers, doctors, consultants) above income thresholds
Despite its potential, many businesses fail to claim this deduction. Why? Let’s explore the most common reasons.
Why Do Business Owners Miss the QBI Deduction?
Many small business owners either don’t know about the deduction or assume it doesn’t apply to them. Here are the biggest reasons why it’s often overlooked:
1. Incorrect Business Structure
One of the main reasons businesses miss out on the QBI deduction is because their entity type doesn’t qualify. C corporations, for example, are not eligible. Some S corporations may also miss out if they don’t allocate income correctly between salaries and distributions.
2. Poor Tax Planning
Many business owners focus only on year-end tax preparation rather than proactive tax planning throughout the year. Without a strategy, they may exceed income limits that phase out the deduction.
3. Lack of Proper Advisory Support
If your accountant or tax advisor isn’t actively looking for ways to minimize your tax burden, you could be losing money. Some advisory teams don’t fully understand how to structure businesses to maximize deductions like QBI.
4. Failure to Amend Past Tax Returns
Did you miss the deduction in prior years? You may still have time to correct it. Businesses can amend previous tax returns and claim unclaimed deductions, putting real money back in their pockets.
How to Ensure You Maximize Your QBI Deduction
To take full advantage of the QBI deduction, business owners need a proactive approach. Here’s how you can ensure you’re getting the most out of this tax break:
1. Work with a Knowledgeable Tax Advisor
A tax professional who specializes in small business taxation can help identify whether you qualify and how to structure your income to maximize the deduction.
2. Review Your Business Structure
If your current structure isn’t allowing you to claim the deduction, it may be time to restructure your business entity. Switching from a C corporation to an S corporation or partnership might make sense.
3. Monitor Income Levels
Since the QBI deduction phases out at higher income levels, keeping taxable income below the threshold is key. Tax-efficient strategies, such as retirement contributions or reinvesting in the business, can help manage taxable income.
4. Correct Missed Deductions
If you didn’t claim the QBI deduction in previous years, it may not be too late. Talk to your tax professional about amending past returns to recover lost savings.
5. Consider the Bigger Picture
Missing the QBI deduction could be a sign that you’re also missing other tax-saving opportunities, such as retirement plan contributions, business expense deductions, and depreciation benefits. A holistic tax strategy is essential.
Should You Reevaluate Your Advisory Team?
If your current CPA or financial advisor hasn’t discussed the QBI deduction with you, it might be time to find a better advisory team. Many business owners don’t realize they’re overpaying in taxes simply because their advisory team isn’t proactive enough.
A strong tax and financial team should:
Regularly review tax-saving opportunities with you
Help you structure your business for maximum deductions
Advise you on income thresholds and tax-efficient strategies
Ensure you don’t leave money on the table
Take Action Today
The complexity of tax laws often leads to missed opportunities, but the QBI deduction is too valuable to ignore. Don’t let poor planning or lack of advisory support cost you thousands in unnecessary taxes.
To learn more about optimizing your tax strategy, tune in to Live Life Liberated with Centura Wealth Advisory. Listen to the full episode here.
Connect With Centura
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.
Disclosures
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.
https://centurawealth.com/wp-content/uploads/2025/02/iStock-2189657642.jpg14142120Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-09-05 00:59:002025-04-08 16:16:43Ep 99: Is Your Business Missing Out on Thousands in Tax Savings?
At Centura, we’re proud of our team and company culture. Why?
Everyone on our team has their own North Star. They center around serving our clients, our community, and their aspirations.
Wondering what our team has to say about Centura? We’ve already asked. Read on to learn more about us, what we do, and what our culture is like here at Centura Wealth Advisory.
Why Centura Wealth Advisory?
Chris Osmond, Chief Investment Officer at Centura Wealth Advisory, describes what makes Centura different from our competition.
Watch the video below or read on to learn more.
There are many reasons why advisors choose to join a new firm.
Chris remarks, “Of course, economics plays a role in their decision. You need to be able to care for your family, retire someday, etc. But, there are also a few other factors that lead advisors to join a new firm.”
One of the major factors Chris Osmond describes is “the opportunity cost of spending two-thirds of your time doing the administrative work that no one wants to do or worry about software contracts that need to be negotiated. The operational and logistic tasks take away from actually producing and spending time doing what you do best.
The business development area is where advisors typically shine; bringing in new clients, adding value, and enriching clients’ lives. At Centura, we provide infrastructure to help alleviate the cumbersome administrative tasks for our advisors, so they can do what they do best.”
What is Your Favorite Part of Centura’s Company Culture?
Click the link or read on to hear about Samantha’s favorite part of Centura’s company culture.
According to Samantha Lawrence, Associate Advisor, her favorite part about company culture are the Fridays. Why? Samantha explains:
“While at Centura, we do plan large events for the whole company, the routine Fridays are what make Centura great. Fridays are fun at Centura. We aim to make our employees excited to come to work and excited for their weekend. And we want Centura to be a place where our employees are excited to be here on a Friday afternoon.”
What is the Company Culture like at Centura?
Zoe Singh, Associate Advisor, describes the company culture at Centura. Click the link to learn more.
We take pride in the culture we’re creating here at Centura Wealth Advisory. Zoe describes the culture as “like a family in a way, we want to be close to everybody…I get questions about how I’m doing at work, but also how I’m doing in my personal life.”
“Working here for five years, I’ve seen a family-like environment, where everyone cares about each other. Managers care about their employees, and the whole team is really focused on the experience of new people coming in.”
At Centura, we want to make every new member of our team feel welcome. It’s important to us to have a positive work culture. After all, you’re spending so much of your day with the people you work with.
Final Thoughts
Headquartered in San Diego, California, Centura is passionate about our client’s objectives and owns the fiduciary responsibility of protecting their interests.
We strive to be the best in our chosen lines of business, not the biggest.
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Multifamily real estate has long been recognized as a resilient and potentially lucrative asset class. In a recent episode of Live Life Liberated, Chris Osmond, CFA, CAIA®, CFP®, Chief Investment Officer at Centura Wealth Advisory, sat down with Rob Ireland, Managing Director at Continental Realty Assets (CRA), to explore the advantages, strategies, and market trends shaping multifamily investments today.
In this discussion, they break down how strategic real estate investments can enhance portfolio diversification, reduce tax liabilities, and capitalize on long-term housing demand.
The Strategic Benefits of Multifamily Investing
According to Rob Ireland, multifamily real estate remains a strong investment choice due to its necessity-driven demand. “You don’t necessarily need a place to work anymore. You don’t necessarily need to have a brick-and-mortar store to sell your product, but you need a place to live,” he explains.
Some key advantages of investing in multifamily real estate include:
Tax Efficiency: Investors can leverage depreciation, cost segregation analysis, and capital gains treatment to enhance returns.
Steady Demand: Housing is a fundamental need, with supply constraints further driving long-term demand.
Resilience in Market Cycles: Multifamily real estate has historically outperformed other commercial real estate asset classes.
Navigating Market Challenges & Opportunities
Despite current economic fluctuations, CRA remains optimistic about multifamily real estate. “Single-family homes are simply unaffordable for many,” says Ireland. “There’s a $680 delta between the cost to own a home and the cost to rent, so demand for multifamily housing remains strong.”
However, the market is not without challenges. Ireland notes that “high financing costs have slowed down new housing developments, which will compound the supply-demand imbalance in the coming years.” For investors, this creates an opportunity to acquire assets at a discount before the market corrects.
Centura & CRA: A Strategic Partnership
One of Centura’s guiding principles is ensuring strong alignment between investors and asset managers. “When we make any investment, particularly in alternatives, we want to establish a win-win-win outcome: a win for our clients, a win for our asset managers, and a win for Centura,” explains Osmond.
CRA’s rigorous market research and data-driven approach align well with Centura’s investment philosophy. “We look at job-to-permit ratios, affordability metrics, and economic trends before making any acquisition decision,” says Ireland. “We treat every market like a stock analyst would approach equities, ensuring we invest in the right locations at the right time.”
The Long-Term Outlook for Multifamily Investing
As interest rates stabilize and new supply dwindles, Ireland sees significant upside for investors in the coming years. “We believe that in 2025 or 2026, some markets may see double-digit rent growth again,” he predicts.
Quoting Warren Buffett, Ireland emphasizes, “Be fearful when others are greedy, be greedy when others are fearful. Right now is one of the best times in the last 20 years to invest in multifamily real estate.”
Learn More
For those interested in multifamily real estate investments and Centura’s approach, connect with Centura Wealth Advisory or reach out to CRA for more insights.
https://centurawealth.com/wp-content/uploads/2025/02/investing-in-multifamily-real-estate-with-rob-ireland-Episode-98.jpg14532064Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-08-21 10:22:002025-04-08 16:16:43Ep. 98 Investing in Multifamily Real Estate with Rob Ireland
After rising more than 10% in the first quarter of 2024, the S&P 500 stumbled out of the gate in the second quarter. The index contracted more than 4% in April and produced the first negative month of the year as the market reassessed the timing of the Fed’s first rate cut. While the Fed’s higher for longer mantra has not changed, they are stressing their dependence on data, which has proven mixed. The market, on the other hand, has become Fed-dependent, placing great emphasis on each major economic reading, primarily inflation, labor, and economic production. With hopes that the Fed will initiate rate cuts sooner, the market applauds lower inflation and negative growth signals, like a slowing economy or consumer spending. Conversely, traditionally well-received data points, such as a robust and resilient labor market, can trigger market selloffs. This counterintuitive reaction occurs because positive economic news suggests that the Federal Reserve might delay its first rate reduction, extending the timeline for monetary easing.
Following two positive reports that inflation is trending lower, the S&P 500 witnessed solid rebounds of 4.80% and 3.47% in May and June, respectively, driven primarily by gains in Big Tech stocks. With hopes of an early rate cut, the equity markets continued to fuel the Nvidia-led AI frenzy. The sustained AI rally is heavily influenced by expectations surrounding the timing of monetary policy adjustments.
In line with the April selloff in equities, bonds saw the yield on the 10-year US Treasury whipsaw 0.37% higher, from 4.33% to 4.70%, before peaking on April 25. Like their equity counterparts, longer-dated bonds have become too reliant on the path of monetary policy, with return expectations tied to the timing of the Fed’s first cut. As the Fed provides clarity on their path forward, yield volatility should ultimately subside, leading to more stable outcomes. Until then, we expect continued bond volatility.
Market Recap
Equities – Unlike the ‘everything rally’ that closed out 2023, where small caps and technology stocks – both sensitive to elevated interest rates – were the largest benefactors, 2024 has witnessed further decoupling amongst asset classes. Any projected rate cut speculation has tended to support higher returns by the Magnificent Seven and technology stocks, though small caps have lagged behind. Small caps, measured by the Russell 2000, produced only about half the return of their large cap counterparts in the first quarter. The second quarter witnessed smaller companies contract -3.62%, bringing the year-to-date gains to a paltry 1.02%. Meanwhile, the S&P 500’s price advances for the second quarter was 3.92%, bringing the index’s return for the year to 14.48%.
Bonds – As yields reversed course, bonds kicked off the quarter in the red, adding to their multi-year downward trend. With stronger-than-expected economic data and Fed uncertainty, the market repriced Fed expectations, and the yield on the 10-year U.S. Treasury rose sharply. As inflation readings and consumer spending data continued trending lower, the market again reassessed their rate cut projections, sending the 10-year U.S. Treasury yield back to 4.2% and bringing the bond index back into positive territory for 2024. The Fed’s messaging that it needs to witness several months of sustained data before feeling comfortable lowering rates prompted another yield reversal upward with the 10-Year U.S. Treasury closing the quarter at 4.36%. While the market has appeared to reprice monetary policy changes, robust U.S. debt issuance and the demand for U.S. Treasury securities remains relatively weak, failing to absorb supply and applying additional upward pressure on yields. The Bloomberg U.S. Aggregate Bond Index rose by a modest 0.7% in the quarter, while it declined -0.71% for the year.
Source: YCharts. The Bloomberg US Aggregate Index was used as a proxy for Bonds; the Bloomberg US High Yield 2% Issuer Capped Index was used as a proxy for High Yield Bonds; the Russell 2000 Index was used as a proxy for Small Cap Equities; and the MSCI ACWI Ex USA Index was used as a proxy for Foreign Equities. All returns are based on price returns as of 06/30/2024.
Though economic data remains mixed, base case expectations still call for the Fed to successfully achieve a ‘soft landing’ and avoid recession. However, many growth metrics continue to moderate, leading many to question the Fed’s decision to keep rates elevated for longer.
Economy: The Consumer continues to slow
After growing approximately 2.5% in 2023, the U.S. economy continues growing at a moderate pace. Driven primarily by softening consumer spending, the first quarter of 2024 GDP grew 1.4%. Reflecting an uptick over the first quarter, as of July 2, 2024, the Atlanta ‘Fed’s GDPNow model for Q2 has been revised from 2.2% to 1.7%. This revision is primarily due to lower projections for consumer spending and net exports, which have contracted from the initial growth forecast.
The combination of unwavering spending in the face of rising prices and a robust labor market has underpinned the strong economic growth of recent years. However, with the $2 trillion of pandemic savings now exhausted as of March, household debt has reached record levels, and delinquencies are beginning to mount, threatening the sustainability of the nation’s growth. Despite elevated borrowing costs, the consumer continues to spend, albeit at a slower pace, thanks in large part to a strong labor market, producing wage increases that have outpaced inflation for more than a year. While the market is hoping for the labor market to soften and result in an earlier Fed rate cut, too much labor market deterioration could result in further spending reductions, ultimately leaving little room for the Fed to thread the needle and both produce a ‘soft landing’ and avoid a recession.
Unemployment
June’s Labor Market Report registered the 42nd consecutive month of job gains. Estimates called for 200,000 jobs in May, and the market once again surprised to the upside with the addition of 206,000 jobs. On the other hand, the unemployment rate edged up slightly to 4.1%, the highest level since October 2021.
The labor market continues to post robust results. While trending lower since peaking in 2022, job openings (JOLTs) surprisingly broke its three-month trend of fewer job openings in May. They reversed back above eight million (8.14 million), bringing the ratio of job openings to those unemployed to down to 1.22:1. While the ratio of 1.22:1 is still elevated above levels historically witnessed, the ratio has fallen significantly from nearly two job openings for every job posting in 2022, indicating slack is working itself out of the system and the labor market is showing signs of tightening. The number of open jobs has fallen, while the number of unemployed job seekers has trended higher, as evidenced by the additional 687,000 unemployed persons from January to May.
For now, the strength and resiliency of the labor market have given the Fed the confidence to keep rates higher for longer. However, the data point that is giving the Fed continued anxiety is wage growth. Despite falling below the key level of 4% in April for the first time since 2021, wage growth has exhibited stickiness and has been hovering around the 4% threshold, rising 4.1% and 3.9% year-over-year in May and June, respectively. While wage growth outpacing inflation bodes well for continued consumer spending, prolonged, elevated wage growth raises concerns about a potential resurgence in inflation. Several readings below the 4% threshold would certainly be welcomed by the Fed.
Inflation
On the surface, all major inflation readings have fallen below 4%, with both PCE readings coming in at 2.6% in May. Core services increased by 0.2% in May, lifted by higher housing, utilities, and healthcare, and financial services, while insurance costs declined by 0.3% after five consecutive months of growth. Housing, financial services, and insurance costs were among the major drivers supporting elevated services costs, so witnessing a reversal in two of the three variables presents a positive affirmation that inflation is indeed heading lower.
Just as elevated wage growth is troublesome to the Fed, the stickiness of core services, particularly housing, fortifies the decision to exercise patience before cutting rates. Federal Reserve Chair Jerome Powell stated “we want to be more confident that inflation is moving down towards 2%” before lowering rates.
More Evidence Needed
The Federal Open Market Committee (FOMC) elected to keep rates unchanged in June for the seventh consecutive meeting. While the Fed’s decision was largely expected, the big news was centered around the Fed’s changes to their Summary of Economic Projections, particularly their median projection for rate cuts, where policymakers adjusted their expectations from three rate cuts in 2024 to only one 0.25% rate cut. The Committee also raised its projection for 2025 as well, indicating a slower pace of change as the Fed adopts a more patient data-dependent position. The number of Fed officials who projected no cuts in 2024 doubled from two to four, and not one official anticipated cutting rates more than twice. We also saw the Fed lift economic projections for 2024 increasing their 2024 inflation expectations and revising their 2025 rate normalization path.
Powell acknowledged that inflation has begun trending lower, yet expressed concerns that cutting rates too early may jeopardize the progress made towards reducing inflation. Interestingly, the Core PCE print in May was 2.6%, which is higher than the Fed’s year-end projection for Core Inflation. This indicates that the Fed anticipates a slight increase in prices from this point, which would likely be accompanied by ensuing market volatility.
Barring any resurgence of inflation, we believe the Fed has finished its rate-hiking regime and is nearing its first rate cut. Our base case assumptions have not changed given the Fed’s steadfast commitment to bringing inflation down. We continue to believe the earliest the Fed will cut rates is September, which now aligns with current market expectations. However, any prolonged stickiness or resurgence of inflation would likely push our expectations for rate cuts into the fourth quarter this year.
Centura’s Outlook
The Fed’s goal to lower inflation to its 2% mandate and avoid recession is now the base outcome expected by the Fed and most market participants. However, given the slowdown in consumer spending, the Fed will need to monitor the state of the labor market deterioration closely if they are to fully avoid an economic contraction. Successfully delivering lower inflation and monetary policy normalization should bode well for equities and bonds. However, there are several potential risks looming and investors should proceed carefully.
In the chart below, Pitchbook outlines four likely paths forward: scenarios of stagflation, higher for longer, recession, or a soft landing. While any of the four scenarios could occur and the risk of recession has fallen, this risk remains above average due to the restrictive level of interest rates. Ultimately, our expectations fall into the lower right-hand corner: the soft-landing camp. We believe inflationary pressures will continue to ease while labor demand and wage growth will soften, resulting in the Fed slowly beginning to bring short-term rates down.
In the face of higher borrowing costs, corporate profits have remained surprisingly resilient, illustrated by the S&P 500 posting positive earnings growth for the third consecutive quarter in the first quarter of 2024, rising 5.9%. As of June 21, FactSet estimates second-quarter earnings to accelerate and grow at 8.8% year-over-year. Last year, the Magnificent Seven were responsible for most of the market’s earnings growth, increasing 31%, versus the -4% contraction of the remaining 493 companies’ earnings in the S&P 500. While this trend is expected to hold in 2024, with gains of 30% and 7%, respectively, we are encouraged that JPMorgan is expecting the remaining companies outside the Magnificent Seven to catch up and accelerate earnings over the remainder of the year. Both groups are expected to experience year-over-year earnings growth of 17% in the fourth quarter. A broadening of earnings growth should bode well for increased market breadth and carve a path for higher broad-based returns on equities.
The market remains too dependent on the Fed, which has become dependent on poor economic data. Following worsening conditions, the Fed is more likely to pivot and cut rates sooner. We believe economic activity will continue to surprise moderately, putting the Fed on pace to start lowering rates in either September or November, yet any resurgence of inflation will likely spur bouts of volatility in both stocks and bonds.
Persistent, elevated rates will continue to cause issues for some companies, like small caps, though earnings are expected to grow broadly in 2024 and 2025. While equities generally produce positive returns during election years, we expect volatility is likely to increase as we approach the election in the third and fourth quarters. The recent political turmoil in France and India, the first U.S. Presidential Debate, and the ensuing market volatility remind us how sensitive the markets are to political uncertainty. While we anticipate increased volatility as November nears, we do not believe this volatility source is sustainable. Outside of a resurgence of inflation or Fed policy misstep, we believe geopolitical risks pose a major threat and are more fearful of those potential exogenous events that are harder to predict.
While the path may be bumpy, we believe yields should continue to grind lower over the course of the year, presenting attractive opportunities to produce asymmetric returns in bonds. Extending duration within portfolios should allow investors to clip an attractive yield, while also providing them with the opportunity to experience capital appreciation for a total return exceeding what they might clip sitting in money market funds or short-term Treasury bills, particularly in municipal bonds on an after-tax basis.
Elevated interest rates continue to punish private real estate returns, with further slight downward valuation adjustments expected from their previous marks. Real estate serves as an interest rate-sensitive asset class; as rates move lower, we anticipate a pick-up in activity and a subsequent reversal of valuations over the next several years. While we believe we are nearing the light at the end of the tunnel for several real estate sectors like multifamily and industrial, unfortunately, we believe more pain will be experienced, particularly with the underlying debt that real estate operators hold. We anticipate a pickup in defaults across several real estate sectors, likely resulting in further pain across both public and private markets. For the foreseeable future, we remain extremely cautious and selective, focusing on select submarkets and attractive risk-adjusted returns.
Private equity, particularly lower middle market buyouts, appears to have stabilized, potentially presenting attractive investment opportunities relative to public market alternatives. Current yield levels present challenges for private equity valuations, though according to Pitchbook, elevated and expanding public equity market valuations position new buyout investments favorably when compared to their public market counterparts. Generally, when public market valuations are well above historical norms, buyout strategies launched during these periods tend to outperform, particularly smaller and emerging managers, which aligns with our natural preference. With limited private equity exit opportunities today, we also align with Pitchbook’s stance that secondary investments should also create attractive opportunities for investors in this environment.
Given that private credit is predominantly floating and tied to a base rate such as the Secured Overnight Financing Rate (SOFR), closely linked to the Fed Funds overnight rate, we believe the asset class remains attractive. Yields on private credit should remain similar to current levels until the Fed begins to cut rates. Even as the Fed cuts rates, the floating rate on private loans does not adjust immediately. Rather, there is a delay before the loan terms reset lower. Barring a catastrophic event, the Fed is likely to lower rates slowly, supporting higher yields for longer in private credit. According to commentary shared with us from Cliffwater, companies appear to be navigating the higher financing costs well, as interest coverage in their pipeline has increased from 1.75x to 1.93x.
Like markets and the Fed, we are digesting data points as they print, but we remain laser-focused on long-term objectives and minimizing volatility in the short-term amidst this data dependent backdrop.
Thank you for your continued confidence and support. If you have questions or concerns, please contact your Centura Wealth advisor.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.
The views expressed in this commentary are subject to change based on the market and other conditions. These documents may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability, or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
Centura Wealth Advisory is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Centura Wealth Advisory and its representatives are properly licensed or exempt from licensure. 12255 El Camino Real, St. 125, San Diego, CA 92130.
Charlie Neer, Chief Revenue Officer (US) at MiQ, has navigated a transformative financial journey over the past two years as a client of Centura Wealth Advisory. In a candid conversation with Centura’s Managing Director, Derek Myron, Charlie shares his experiences, lessons learned, and how his financial strategy is now more aligned with his long-term goals.
Why Seek Professional Wealth Advisory?
Coming from a humble background and experiencing financial uncertainty early in life, Charlie reached a point where he realized he needed structured guidance.
“I’ve always been a ‘stuff money under the couch cushions’ guy,” he admits. “I had investments scattered across different apps, and it was disorganized. I was losing buying power, missing tax advantages, and not optimizing my wealth.”
The Centura Process: A Holistic Approach
Centura’s Liberated Wealth® process provided Charlie with a structured and strategic approach to wealth management, including investments, estate planning, and tax strategies.
Key phases of the process include:
Uncover: Understanding the client’s personal and financial goals, entity structures, and balance sheets.
Unlock: Identifying tax planning and investment strategies to optimize wealth.
Implement & Monitor: Ensuring execution aligns with long-term objectives.
“The depth of discovery blew me away,” Charlie says. “Centura took the time to understand my family’s goals, including my desire to retire in Mallorca, Spain, and built a plan around that.”
Trust and Transparency in Wealth Management
One of Charlie’s initial hesitations was trust.
“I don’t trust easily,” he admits. “I was waiting for the moment where the background falls down, and I realize I’m sending my money to people in The Bahamas. But Centura earned my trust by being transparent at every step.”
He appreciated Centura’s ability to provide expert coordination across different financial disciplines. “I’ve never had to chase third parties. Every lawyer, tax advisor, or estate planner they introduced me to was already prepped and aligned with my needs.”
The Value of Learning and Mastery
Beyond just financial management, Charlie found tremendous value in the educational aspect of working with Centura. “I enjoy learning, and Centura has helped me understand things I never knew—tax planning, entity structures, estate strategies. Now, I can have informed conversations with my peers about financial decisions.”
Final Thoughts: A Relationship Built on Alignment
Charlie highlights three key factors that have made his experience with Centura invaluable:
Autonomy: “I always have the final say. Centura advises, but I make the decisions.”
Purpose: “They don’t just manage wealth; they align it with my goals.”
Mastery: “I’ve learned so much, and I know I’m in the hands of true experts.”
For those hesitant to take the next step in financial planning, Charlie offers this advice:
“It took me a year and a half to commit. My biggest hurdle was my own ego. But once I realized I wasn’t the expert in this field, I was able to embrace Centura’s guidance and truly optimize my wealth.”
Connect With Centura
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.
Disclosures
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.
https://centurawealth.com/wp-content/uploads/2025/02/Ep-97-Working-with-Centura-Charlie-Neer-scaled.jpg10752560Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-06-26 12:47:002025-04-08 16:16:43Ep. 97 Working With Centura: Candid Feedback From Our Client Charlie Neer
Many business owners assume they are five years away from selling their company. The problem? That five-year window often remains constant, year after year. Without proper planning, the timeline for exit can keep getting pushed back until it’s too late to maximize value and ensure a smooth transition.
In a recent episode of the Live Life Liberated podcast, Centura Wealth Advisory’s Zoe Singh sat down with Andrea Steinbrenner, CEO of Exit Consulting Group (ECG), to discuss what it truly takes to prepare for an effective business exit. Listen to the full episode here:
The Three Stages of Exit Readiness
Exit Consulting Group has developed a structured approach to exit readiness that evaluates a business across three core areas:
Business Readiness: Can the company operate smoothly without the owner? If the business owner stepped away tomorrow, who would run sales, finance, vendor relationships, and daily operations? “Is the business ready to operate without that owner or leader?” – Andrea Steinbrenner
Market Readiness: Does the business have market value? What are similar companies selling for? What financing conditions will potential buyers face? “We run a valuation on the firm and we say, okay, here’s where we think the fair market value is laying up. Are there buyers out there who will pay this for your company?” – Andrea Steinbrenner
Owner Readiness: Is the business owner mentally prepared to transition? What will they do once they step away from their company? “A lot of people will tell us, ‘Oh, we’ll go golfing, we’ll go fishing.’ Well, I guarantee there’s only so many days you can do that before you need to do something else.” – Andrea Steinbrenner
Understanding the Exit Timeline and Sales Process
Selling a business is not an overnight decision—it requires strategic planning and execution. Andrea outlined the key steps in the process:
Business Valuation & Market Research: Determining a fair market price based on industry trends and financial performance.
Confidential Information Memorandum (CIM): Creating a detailed marketing document to attract potential buyers.
Buyer Vetting & Indications of Interest (IOIs): Screening potential buyers and negotiating initial terms.
Letter of Intent (LOI): Once a preferred buyer is identified, an LOI is signed to enter an exclusive negotiation period.
Due Diligence: The buyer reviews financial records, legal agreements, and operational details.
Final Negotiations & Closing: Legal documents are finalized, funds are transferred, and ownership transitions.
“Most companies get a minimum of a hundred NDAs, but you can get hundreds of them. From there, we collect what’s called IOIs—Indications of Interest—so we can begin narrowing down the right buyer.” – Andrea Steinbrenner
Internal vs. External Business Sales
Business owners often sell to either an external buyer (such as a private equity firm or strategic buyer) or an internal buyer (such as a family member, key employee, or business partner). Each approach has distinct challenges and benefits.
For internal transitions, emotions and expectations must be carefully managed. Employees or family members may not fully grasp the complexities of ownership.
“First, we have to bring them up to speed… These are now people who have access to information that before they didn’t.” – Andrea Steinbrenner
Meanwhile, external sales involve finding the right buyer, structuring the deal properly, and optimizing the tax implications of the sale.
The Role of Tax Planning in Business Exits
Centura Wealth Advisory emphasizes that the best time to start tax planning is before signing an LOI. According to Zoe Singh, business owners fall into three categories:
Gold Period: Before signing an LOI—this is when the most tax strategies are available.
Silver Period: After signing an LOI but before December 31 of the tax year—some strategies are still possible.
Bronze Period: After the tax year of sale—minimal tax strategies remain, and most tax liabilities are locked in.
“The best time to start tax planning is two to three years before an exit. That gives business owners the flexibility to optimize their tax strategy and ensure their wealth is preserved.” – Zoe Singh
The Bottom Line: Start Preparing Early
Business exits are complex, but the earlier you start preparing, the smoother the transition will be. Whether you’re planning to sell in one year or five, taking proactive steps today can maximize your business’s value and secure your financial future.
For business owners considering an exit, working with experienced professionals—like Centura Wealth Advisory for tax planning and Exit Consulting Group for transaction guidance—can make all the difference.
“The worst outcome is splitting up partnerships and families. Our goal is to find a path that everybody can agree with.” – Andrea Steinbrenner
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Connect with our team today to learn how we can help you navigate complex financial decisions and secure your financial future with confidence.
Disclosures
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.
https://centurawealth.com/wp-content/uploads/2025/02/Ep-96-Exit-Readiness.jpg14142121Andre Lawrencehttps://centurawealth.com/wp-content/uploads/2024/07/Centura-Logo-White.pngAndre Lawrence2024-06-12 01:01:002025-04-08 16:16:43Ep. 96 Exit Readiness: How to Prepare Your Business for Sale
NIMCRUTs, or Net Income with Makeup Charitable Remainder Unitrusts, are advanced charitable giving strategies designed specifically for high-net-worth individuals. These trusts allow donors to make significant charitable contributions while also providing a stream of income for themselves or their beneficiaries. NIMCRUTs offer a number of benefits, including tax advantages, potential for increased income, and the ability to support favorite causes while also meeting financial goals.
In this blog, we will explain what NIMCRUTs are, how they have evolved over time, and how high-net-worth individuals (HNWIs) can use them as part of their financial planning.
What are NIMCRUTs?
A Net Income Makeup Charitable Remainder Unitrust (NIMCRUT) is a charitable trust that allows an individual(s) to make a donation while receiving an income from the trust for a specified number of years or for the lifetime of the individual(s).
The income received by the individual(s) is based on the net income generated by the trust, usually from investments in a diverse portfolio of assets. At the end of the trust term, the remaining assets are distributed to the charities determined by the donor. We’ll get more into the benefits of NIMCRUTs in a second, but let’s first look at how Charitable Trusts came to be.
A Historical Legislative Landscape for Charitable Giving
Knowing how Charitable Trusts have been shaped by legislation over the years will give you a better understanding of NIMCRUTs and how to receive the best tax benefits.
Tax Reform Act of 1969: The first national policy on charitable planned giving is created.
Revenue Rule 77374 (1977): The probability test for charitable remainder annuity trusts is established. There now has to be less than a 5% probability that you’re going to exhaust the initial capital contribution.
Tax Relief Act of 1997: A maximum payout rate of 50% is established, as well as a 10% minimum remainder requirement.
Tax Relief Healthcare Act of 2006: A Charitable Remainder Trust (CRT) will no longer lose its tax-exempt status for having an unrelated business taxable income (UBTI) in the trust. However, there is now a 100% excise tax on the UBTI in the trust.
Knowing the rules that have been established over the years for Charitable Trusts will allow you to get the most out of their benefits while also being aware of potential pitfalls.
How High-Net-Worth-Individuals Can Utilize NIMCRUTs To Save Money
One of the most valuable features of a Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) is its ability to facilitate tax-free growth of funds over a set period or lifetime. This characteristic sets NIMCRUTs apart from simple Charitable Remainder Unitrusts (CRUTs), and may make them particularly attractive to certain individuals due to the added benefit of a “makeup” feature.
What is the NIM-CRUT Makeup Feature?
With a NIMCRUT, if the trust produces more income than it’s supposed to pay out, the excess money will go back into the trust’s principal. Likewise, if the trust produces less income than it’s supposed to pay out, the beneficiaries may receive less money that year but will have it “made up” to them from an excess year. This feature can lead to the same amount of income over time but without ever attacking the principal. With a CRUT, no matter what kind of year the trust has financially, you’re getting the same amount which can lead to the trust’s principal decreasing gradually.
Donating assets to a Net Income with Makeup Charitable Remainder Unitrust (NIMCRUT) can be a beneficial way to reduce taxable income and avoid capital gains tax. By contributing assets to the trust, an individual is able to diversify their holdings while also mitigating the risk associated with certain types of assets, such as stocks or real estate. This approach to charitable giving allows individuals to make significant donations while also receiving favorable tax treatment and potentially enhancing their financial situation. It is important to note that the specific tax implications of donating to a NIMCRUT will vary based on individual circumstances and the laws governing charitable giving in the donor’s jurisdiction.
It’s important to consult with trusted and professional financial planners when setting up a NIMCRUT as there are potential benefits and drawbacks that should be evaluated with expertise before making a decision.
Connect With Centura
At Centura Wealth Advisory, we go beyond a traditional multi-family office wealth management firm to offer advanced tax and estate planning solutions which traditional wealth managers often lack in expertise, knowledge, or resources to offer their clients.
We invest heavily into technology and systems to provide our clients with fully transparent reporting and tools to make informed decisions around their wealth plan.
Read on to learn more about our 5-Step Liberated Wealth Process and how Centura can help you liberate your wealth.
Disclosures
Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.
We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.
For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.