13 Wealth Management Issues

13 Wealth Management Issues



The 13 Wealth Management Issues act like balancing scales.  Once you do something to one side, it impacts or tips the other.  It is vital that one individual have a thorough understanding of the client’s overall financial picture and intentions.

Investment Planning may be the single biggest issue for affluent and wealthy individuals.  If this were not the case a few years ago, it is certainly now.  When building an investment plan for a client, we assemble information on all client assets in a consolidated view. We develop a unique plan based on client’s expectations of income, risk tolerance, time horizons, feelings towards income and capital gains tax, constraints, attitude and expectations for communication, and liquidity needs.

Insurance is a unique financial tool.  In addition to allowing protection of assets from loss or damage, it can also be used to solve both personal and business financial problems.  For example, life insurance alone can be used for liquidity for taxes, funds to transfer a business, replacement of a charitable gift, reduction of debt, and equalization of inheritances, just to name a few. Our firm provides a detailed Efficiency Review of a client’s overall risk management plan, covering all four types of insurance. These are life, disability, long-term care, and liability.  All four types need to be assessed from three distinct vantage points; adequacy of coverage, appropriateness of policies, and cost effectiveness.

When discussing banking and credit management issues with clients, we focus on four broad categories. First, helping the client understand how credit can be used to effectively leverage their wealth.  Second, we focus on the coordination of credit management with the accumulation or investment plan the client maintains. Third, is the relationship between tax efficiency and utilization of credit.  Fourth and last, is the better understanding of how credit can be utilized to mitigate cash flow crunches that tend to perpetuate poor decision making in other areas of a client’s financial life.

Retirement Planning

Executive compensation issues provide a unique challenge when building a wealth plan. We provide advice on strategies to maximize a cash, deferred compensation, life insurance, qualified retirement plans, nonqualified retirement plans, incentive stock options, nonqualified stock options, and lastly restricted stock.

A titling and beneficiary designation review is one of the most important discussions we could ever have with a client and their family. We specialize in helping clients navigate the IRS icebergs when transferring retirement accounts. It is essential to work with an advisor that is knowledgeable as mistakes can seldom be reversed once made. Poor advice could cause beneficiaries to pay $100s in unnecessary taxes to the IRS.

Business succession planning is time consuming, complex, and often emotional for the party that is exiting the business.  There are typically two options for a business owner to consider:

1)             To transfer to children/descendants (family)

2)             To sell the business to employees or a third party entity

Both of these options are available to business owners during their lives or after their deaths.  The timing of the transfer or sale, and the resulting transfer tax or income tax issues, need to be addressed in each business owner’s wealth management plan.

Tax planning is a vital part of nearly every aspect of wealth management for the client.  In many cases, taxes represent the largest single expense for the affluent and high net worth client.  Structuring their investments, and their personal and their business transactions to minimize this expense is critical in helping our clients achieve their goals and objectives. We work closely with your tax advisor to minimize tax obligations and maximize portfolio efficiency.

Charitable giving is of great importance to many of our clients.  When reviewing this topic with our clients, we address tax-efficiency and control issues.  Clients can gift with direct transfers or indirect transfers, and both come with many advantages and potential disadvantages.  Also, our clients can structure gifts during their lifetimes and after their death for very targeted reasons.

Planning for incapacity is a crucial component of any wealth management plan.  Most people would prefer to choose someone to act on their behalf, rather than have that person appointed for them by a court.  Since this is a significant decision, when discussing this topic with your clients, make sure to bring up three issues with regard to their Power of Attorney:

1)             Who is named

2)             Is this person knowledgeable of where the pertinent documents are located

3)             Who the incapacitated person has confidence in and should be consulted by the Attorney-in-Fact