The wealth management industry is at a key inflection point, with many firms falling into a "comfort trap" and hesitating to act boldly, write Steve Gresham and Suzanne Schmitt of NextChapter. They urge firms to proactively redefine their value proposition amid key structural shifts including digital disruption and a looming advisor talent shortage.

Financial advisors may get more questions from clients about charitable donations this year due to changes from the recently passed tax and spending bill. While the legislation reduces tax deductions for philanthropy among wealthy itemizers, it also offers benefits, including a new above-the-line deduction for non-itemizers starting in 2026. Sara Montgomery of Plante Moran notes that while taxes do not drive philanthropy, they often influence how donations are structured.

Financial advisors are advising high-net-worth clients on strategies to mitigate the "SALT torpedo" -- the sharp increase in marginal tax rates due to the phaseout of the state and local tax deduction under the recently passed tax and spending bill. Advisors recommend postponing income events, timing Roth conversions during low-income years, using qualified charitable distributions from IRAs and leveraging deferred compensation plans.

The Federal Reserve is expected to lower interest rates by a quarter percentage point on Wednesday to support a weakening US labor market, signaling a shift in policy after months of holding rates steady due to inflation concerns. Economists anticipate two rate reductions in 2025, but officials are divided over how aggressively to cut, as inflation remains above target while job growth has slowed.

A recent IRS private letter ruling focused on a situation in which the assets of a private foundation were used to create two charitable trusts. The IRS ruled that the trusts "wouldn't be treated as newly created organizations, and the transfer of assets from the original PF to the new trusts wouldn't be subject to tax under Internal Revenue Code Section 4940," writes attorney Thomas Norelli.

Author and blogger Nick Maggiulli has introduced the 0.01% rule, a financial guideline that suggests spending decisions involving 0.01% or less of one's net worth can be made without worry. However, Maggiulli notes that there is potential for misuse by justifying frequent small splurges.

Funding a spousal IRA may be a wise move for clients who are no longer working and earning an income through traditional employment. "In such cases, a spousal IRA can be an effective and often overlooked tool to help build retirement savings for both partners, even if only one spouse is employed," according to a Colcom Group report.