Volume 3 , Issue 3 |Third Quarter 2020

MID-YEAR PERSPECTIVES

CONTENTS

| Message from Our President

| Market Insight

| Mid-Year Is a Good Time to Fine-Tune Your Finances

| How Long Should You Keep Financial Records?

| IMA’s 2019 Community Report

| Associate Spotlight

| This Day in History MESSAGE FROM OUR PRESIDENT

Dear Valued Clients,

We are halfway through 2020 and it has been quite investment. Even if someone is nearing retirement, it a ride. As I write this message, I am wondering if this is important to think in terms of their life expectancy, is our “new normal”. Despite the many unexpected not just their retirement date. Historically, the U.S. stock adjustments we have made this year, our steadfast market has been dynamic and resilient in moving on commitment to our clients has not wavered. Like many from crisis after crisis. The recent market volatility should of you, our associates have been working remotely bring into sharper focus what we have always said: Be since early in the year. Our hope is that the level of mindful of the current situation but don’t abandon service has felt the same. your long-term investment strategy and goals. Investors should act in their own best interests, while the stock As a wealth management and retirement plan market reacts to the current coronavirus pandemic and consulting firm, we are working with many clients the uncertainty it brings. Sometimes staying the course impacted by COVID-19 (the coronavirus). Our thoughts (doing nothing) is the best course of action. go out to those impacted personally by the virus and to our communities at large as they deal with the Even though the world is full of uncertainty, we will get pandemic. The wellbeing of our employees, clients, through this together. Strong, lasting relationships are plan participants, partners and communities are of forged through difficult times and we plan to continue utmost importance to us. building our relationships with all of you. As always, we appreciate your business and ongoing trust. We recognize these are challenging times for our economy, our country, and our clients. In 21 years I wish you and yours the very best. of business, IMA Wealth (formerly TrueNorth) has Stay strong and be safe. managed through three bear markets, the dot-com bubble of 2000-2002, the global of 2007- 2008 and now, a pandemic. We have always kept an eye toward the future, which enables us to manage through times like these and continue to be here – through, and after, the disruption – for our employees, clients, and communities.

The key word in a time like this is patience. On a conference call recently the comment “panic is not an investment strategy” was used. At IMA Wealth, we believe this is true. Our primary message for clients is to remember a strong financial plan is a long-term

RICHARD HOLT, CFA®, PRESIDENT, CHIEF INVESTMENT OFFICER

2 IMA WEALTH - THE FIDUCIARY MARKET INSIGHTS

BY JUSTIN KITTLE, CFA, CFP®, CAIA®, AND IMA WEALTH VP & PORTFOLIO MANAGER

“Uncertainty actually is the friend of the buyer of long-term values.” Warren Buffett said this in 1979, and nearly 40 years later this will be put to the test. Uncertainty in both the economy and financial markets is prevalent, and the Federal Reserve (“Fed”) has been very clear about this—in fact, the word uncertainty showed up 21 times in the Federal Reserve Beige Book1. Nonfarm payrolls increased over 2.5 million in June, pushing the unemployment rate down to 11.1%. A combination of the virus, the economic contraction, oil price collapse, and government policy response has made “UNCERTAINTY ACTUALLY IS THE FRIEND OF THE forecasting impossible in the current BUYER OF LONG-TERM VALUES.” environment and creating an outlook WARREN BUFFETT for the 2nd half of 2020 is challenging.

EQUITY MARKETS

Equity markets rallied nearly 40% from has rebounded dramatically, there is still an abundance the March 23rd lows. Despite millions of of pessimism. Money market funds ballooned to job losses and an unprecedented drop in economic nearly $5 trillion, representing an almost 30% increase. activity, April was the best month for the S&P 500 since This surpasses the peak of the 2008 Global Financial 1987, and in June, the market briefly turned positive for Crisis2. Money markets aren’t the only sign that investors the year. In the face of multiple “worst-ever” economic are afraid—bank deposits have also spiked. This cash indicators, US equity and credit markets rallied back to pile will help support the markets as a “buy the dip” near pre-pandemic levels. The market rebound caught mentality returns. The market is still at risk of pulling most by surprise and the divergence between the back on negative news, but the extraordinary amount perceived economic landscape and the stock market of cash on the sidelines should provide support leaves us with mixed signals. Even though the market during pullbacks.

IMA WEALTH - THE FIDUCIARY 3 FIXED INCOME MARKETS Fixed income markets have been almost every year (due to an expanding economy and challenging for investors with interest rates ) finally declining to about 35% of GDP by at historic lows. The interest rate landscape has changed 1975. We find ourselves in a similar situation, except dramatically from the beginning of the year. In the US, instead of WWII, we have COVID-19. control the short end of the yield curve remains near zero and seems increasingly likely as we continue to increase our this is likely going to be the case for the foreseeable deficit throughout the year and target higher inflation. future. For rates to rise, there would need to be a surge Whether it be artificially done by the Federal Reserve in inflation expectations, which seems highly unlikely or naturally by a weak economy, prepare for near zero for now. If rates do start to rise in any meaningful way, interest rates for the foreseeable future. the Fed will likely intervene with additional purchases Progress toward reopening the economy has spurred to keep rates low. Capping treasury yields, also known some optimism worth noting: as yield curve control, is another tool the Fed can use. • Fiscal and monetary stimulus likely to continue The Federal government deficit has skyrocketed, and total debt outstanding is expected to be 130% of Gross • Cautious investor positioning with high cash Domestic Product (“GDP”) by the end of 2020. The positions only other time in history we’ve witnessed this was • Promising research of potential treatments for during World War II when gross Federal debt reached COVID-19 121% of GDP. During this time yield curve control was • Improving economic indicators such as weekly implemented, interest rates were capped, and they let jobless claims inflation run up to 10%, thus inflating away the debt as a percentage of GDP. During the WWII era, when the debt While this is encouraging, the sustainability of the ratio exceeded 100%, inflation was used as a tool to recovery relies on infection rates, public health policy, cut the debt ratio nearly in half, and over the following and the development of therapies and vaccines. few decades, debt as a percentage of GDP decreased

CONCLUDING THOUGHTS As we noted in our first quarter market will all be favorable for equities going forward commentary, the COVID-19 and and we remain cautiously optimistic about the recovery will likely be short and dissimilar to recent underway. The world looks historical . This is not an endogenous very different today than it did 2 months ago and triggered by large imbalances like the technology will likely look very different in 2 months when collapse in 2001 and the housing crash in 2008. second quarter data is released. Virus headlines are The US Government’s support to help address the changing every day and the Presidential elections COVID-19 crisis has been sizable and decisive and are beginning to be front and center. Uncertainty is unlikely to end anytime soon. Near zero interest will undoubtedly remain high for the remainder of rates, increasing money supply, conservative investor the year. positioning, and a rebound in corporate earnings

Source: 1 The Beige Book is a summary of commentary on current economic conditions by the Federal Reserve district. The July 15, 2020 Beige Book can be located here: https://www.federalreserve.gov/monetarypolicy/beigebook202007.htm. 2 The financial crisis of 2008, also known as the global financial crisis (GFC), was a severe worldwide financial crisis. Excessive risk-taking by banks combined with a downturn in the subprime lending market in the culminated with the bankruptcy of Lehman Brothers on September 15, 2008 and an international banking crisis.

IMA WEALTH - THE FIDUCIARY 4 MID-YEAR IS A GOOD TIME TO FINE-TUNE YOUR FINANCES

The first part of 2020 was rocky, but there should be better days ahead. Taking a close look at your finances may give you the foundation you need to begin moving forward. Mid-year is an ideal time to do so, because the planning opportunities are potentially greater than if you waited until the end of the year.

RENEW YOUR RESOLUTIONS At the beginning of the year, you may have vowed then, you may need to rethink your priorities. While to change your financial situation, perhaps by saving it may be difficult to look at your finances during more, spending less, or reducing your debt. Are these turbulent times, review financial statements and resolutions still important to you? If your income, account balances to determine whether you need to expenses, and life circumstances have changed since make any changes to keep your financial plan on track.

IMA WEALTH - THE FIDUCIARY 5 TAKE ANOTHER LOOK AT YOUR TAXES Completing a mid-year estimate of your tax liability You can check your withholding by using the IRS Tax may reveal planning opportunities. You can use last Withholding Estimator at irs.gov. If necessary, adjust year’s tax return as a basis, then factor in any anticipated the amount of federal or state income tax withheld adjustments to your income and deductions for this year. from your paycheck by filing a new Form W-4 with your employer. Check your withholding, especially if you owed taxes or received a large refund. Doing that now, rather than waiting until the end of the year, may help you avoid a big tax bill or having too much of your money tied up with Uncle Sam.

MORE TO CONSIDER Here are some other questions you may want to ask as part of your mid-year financial review:

REVIEW YOUR INVESTMENTS Review your portfolio to make sure your asset allocation For 2020, the contribution limit is $19,500, or $26,000 is still in line with your financial goals, time horizon, and if you’re eligible to make catch-up contributions. If you tolerance for risk. Look at how your investments have are close to retirement or already retired, take another performed against appropriate benchmarks, and in look at your retirement income needs and whether relationship to your expectations and needs. Changes your current investment and distribution strategy will may be warranted, but be careful about making them provide enough income. while the market is volatile.

Asset allocation is a method used to help manage READ ABOUT YOUR INSURANCE COVERAGE investment risk; it does not guarantee a profit or protect What are the terms of your homeowners, renters, and against investment loss. All investing involves risk, including auto insurance policies? How much disability or life the possible loss of principal and there is no guarantee that insurance coverage do you have? Your insurance needs any investment strategy will be successful. can change; make sure your coverage has kept pace with your income or family circumstances. CHECK YOUR RETIREMENT SAVINGS If you’re still saving for retirement, look for ways to increase retirement plan contributions. For example, if you receive a pay increase this year, you could contribute a higher percentage of your salary to your employer-sponsored retirement plan, such as a 401(k), 403(b), or 457(b) plan. If you’re age 50 or older, consider making catch-up contributions to your employer plan.

6 IMA WEALTH - THE FIDUCIARY HOW LONG SHOULD YOU KEEP FINANCIAL RECORDS?

Once tax season is over, you may want to file your most recent records and discard older records to make room for the new ones. According to the IRS, personal tax records should be kept for three years after filing your return or two years after the taxes were paid, whichever is later.* (Different rules apply to business taxes.) It might be helpful to keep your actual tax returns, W-2 forms, and other income statements until you begin receiving Social Security benefits.

The rules for tax records apply to other records you use for deductions on your return, such as credit card statements, utility bills, auto mileage records, and medical bills. Here are some other guidelines if you don’t use these records for tax purposes.

FINANCIAL STATEMENTS AUTO RECORDS You generally have 60 days to dispute charges with Keep registration and title information until the car is banks and credit card companies, so you could discard sold. You might keep maintenance records for reference statements after two months. Once you receive your and to document services to a new buyer. annual statement, throw out prior monthly statements.

MEDICAL RECORDS RETIREMENT PLAN STATEMENTS Keep records indefinitely for surgeries, major illnesses, Keep quarterly statements until you receive your lab tests, and vaccinations. Keep payment records until annual statement; keep annual statements until you you have proof of a zero balance. close the account. Keep records of nondeductible Other documents you should keep indefinitely include IRA contributions indefinitely to prove you paid taxes on birth, marriage, and death certificates; divorce decrees; the funds. citizenship and military discharge papers; and Social Security cards. Use a shredder if you discard records REAL ESTATE AND INVESTMENT RECORDS containing confidential information such as Social Keep these at least until you sell the asset. If the Security numbers and financial account numbers. sale is reported on your tax return, follow the rules for *Keep tax records for at least six years if you tax records. underreported gross income by more than 25% (not a wise decision) and for seven years if you claimed a LOAN DOCUMENTS deduction for worthless securities or bad debt. Keep documents and proof of payment until the loan is paid off. After that, keep proof of final payment.

IMA WEALTH - THE FIDUCIARY 7 IMA’S 2019 COMMUNITY REPORT

Making a difference where we live, play and work!

IMA is excited to announce our community report for 2019 is here. With nearly 12,000 volunteer hours completed by IMA associates, it’s clear our team is dedicated to making a difference where we live, work, learn, and play. Here are a few quick highlights:

• Over 400 of our IMA associates, friends, and families volunteered during IMA’s annual I Make a Difference Day

• Youth Mental Health was added as an area of giving under the IMA Foundation’s Advancing Youth focus area

• Our fundraising events, Ping Pong on the Plaza, Pickleball, Pickle Jam and Sandblast raised $300,000

• The IMA Foundation provided grants to nearly 100 nonprofit organizations View and download IMA's • IMA associates gave almost $135,000 in personal 2019 Community Report: giving, and an additional $23,000 was donated by the imacorp.com/community IMA foundation through our Matching Gifts Program

Our associates continue to live IMA’s mission to protect assets and make a difference.

8 IMA WEALTH - THE FIDUCIARY SPOTLIGHT ZACH HILDEBRAND VICE PRESIDENT, RETIREMENT PLAN MANAGER

Originally from Pittsburgh, PA, Zach and his wife Jackie Let’s get to know Zach: now reside in Colorado where they enjoy spending time outdoors hiking and skiing the beautiful Rocky Mountains. • Favorite food – Sushi Zach joined IMA Wealth in 2016. Located in our Denver • First car – 2002 Mercury Mountaineer which I finally office, Zach serves businesses of all sizes by designing traded in this year. and implementing retirement programs that help their • Favorite movie – Top three are “Saving Private Ryan”, employees embrace planning and saving for their financial anything with John Wayne, and the Marvel series. futures. Prior to joining IMA Wealth, Zach served as a Retirement Plan Specialist with Northwestern Mutual. • Who’s your hero? - My father. He lost his dad when he was only 13 and worked to put himself through high- He holds a Bachelor of Science in Management with a school and college. My father always puts his family first concentration in Finance from St. John Fisher College and makes time for all the important events in my life. He School of Business in Rochester, New York. Zach holds is the type of man I strive to be. the FINRA Series 6, 63 and 65 examinations and earned the Certified Retirement Plan Specialist (CRPS®) from the CONTACT ZACH College for Financial Planning in 2017. [email protected] | 303.615.7691

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The IMA Financial Group, Inc. (“IMA”) IMA is the parent company of IMA Wealth and IMA Select. IMA has subsidiary corporations which are engaged in retail and wholesale insurance operations, including IMA Select. If you need professional insurance services for yourself or your business, IMAW Wealth will refer you to IMA and its subsidiaries. Should insurance products be purchasedIMA WEALTH as a result - THE of FIDUCIARY this referral, IMA Wealth’s associated persons could be eligible to receive a percentage of the commissions generated by these sales. You are not obligated in any way 9 to use IMA and its subsidiaries to purchase insurance products. Referrals made by IMA Wealth’s associated persons will be made in accordance with our privacy policy under SEC Regulation S-P. THIS DAY IN STOCK MARKET HISTORY JULY 11TH

1863 July 11th Government curbs land speculation by forcing federal land agents to only accept gold and silver as payment. The order, now known as the “Specie Circular” was done via an executive order issued by . The order created repaid deflations in the economy. Lack of credit available lead to a collapse in land prices, and was the primary cause of the panic of 1837, which would be one of the nation’s worst financial depression in history. The law was repealed less than 2 years later, but the damage had been done.

1985 July 11th Coca-Cola announces that it will revert back to its old recipe after introducing new coke 79 days before. The move is widely considered one of the largest marketing blunders of all time. Although it may have resulted in a lot of headaches, it had very little impact on Coca-Cola’s stock during the period.

10 IMA WEALTH - THE FIDUCIARY 2008 July 11th Indy Mac bank is closed by the F.D.I.C. The bank had $19 billion in assets at the time, and would be the largest bank failure since the two decades prior. The bank was heavily involved in subprime mortgages, and its failure would be a warning of the trouble to come for the mortgage and banking industry.

1932 1931 Best July 11th Worst July 11th in Dow Jones Industrial Average History in Dow Jones Industrial Average History 3.27% | 1.36 Points 2.85% | 6.28 Points

IMA WEALTH - THE FIDUCIARY 11 LET’S CONNECT

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