RE: Illinois Consolidation of Article 3 and 4 funds
Dear Clients and Prospective Clients:
As you may have heard, on November 13th and 14th, the Illinois legislature voted to consolidate all downstate police and firefighter pension funds. We are saddened by this news, as we feel that much more could have been done with the existing Article 3 and Article 4 statutes to give pension trustees the tools they required to save money on cost and potentially increase the value of their assets under management.
What’s more troubling is that the Illinois legislature voted for this change instead of addressing the more central problem - funding of Illinois pensions. The claim that the consolidation will increase the value of pension plans distracts from the bigger and more fundamental problem of municipal underfunding. We remain skeptical about this legislation, but it is clear that the pensioners have lost control over the management of their money.
This is the end of an era. David Vaught began his former firm in 1996 with the intent of reducing fees and increasing asset values for police and firefighter pensions. Danielle joined his team in 1998, and we worked hard to make it grow both in clients and remarkable team members like Emily and Amanda. By the time our team spun off from the old firm to form Propel Financial Advisors, LLC, in December of 2018, we had worked with more than 40 pension funds and managed more than $500 million in pension assets.
Sadly, this drastic change by the Illinois legislature will cripple some Illinois investment firms that have relied on managing pension assets. We never wanted to see that happen, even to our competitors, and we extend our sincerest condolences to those in our industry negatively affected by this vote.
While we are also impacted, we are pleased to share with you that we formed Propel to create a more sustainable and effective financial firm. Over the past year, we have been successful in implementing that plan to diversify our client assets so as not to be reliant on one segment of the industry. We work with a variety of individuals, family groups, and small businesses that will allow us to not only survive but to increase our capacity for additional clients.
We are pleased that many of our clients are current and former pension trustees and their family members. We will continue to service them and our other clients in spite of this new legislative change. We strongly urge police and fire pension participants to invest in other retirement accounts like 457 plans and Roth IRAs so that they are not entirely reliant on their future pension. This is especially concerning to us since actual funding to secure Illinois pensions remains in doubt.
Thankfully, our firm has the tools and experience that our clients need to assist them. We can manage 457 plans for municipalities, IRAs and Roth IRAs for individuals, and small business plans like SEP and SIMPLE IRAs for anyone who owns a business or receives 1099s from a side job.
In addition, we work well with two sister firms that offer tax and legal advice. DW Agosto Tax Planning, LLC is co-owned by our own Danielle Woods and Emily Agosto and provides tax preparation, tax planning, and accounting services to clients all over the U.S. DW Lenski Law Group, PLLC is also co-owned by Danielle Woods and her partner Paul Lenski. Danielle is licensed to practice law in Illinois and in Tennessee and has worked with many of our clients to assist them with their business and estate plans. Our extended team makes it convenient for you to work with the same trusted professionals on a variety of your financial needs.
In closing, our team is always available via phone, email and in-person meetings. If you have questions or concerns, you need only reach out.