A financial plan is a strategy to help you reach your goals. Through data gathering, analysis, and guidance, we work with you to create a road map that enables you to achieve your financial objectives and ensure the efficient transfer of assets to your heirs. Financial planning is an ongoing process driven by changing needs and goals.
Comprehensive financial plans consist of the following components:
Some above-referenced components will not be applicable to all clients. All plans are customized to the unique needs of the client.
Due to its distinct and complex nature, investment management is typically carved out as a separate service. How we ultimately shape your investment portfolio is based on a collaborative effort, and the result is something we monitor regularly. The investment recommendations and services we provide are designed to support the personal needs and goals outlined in your financial plan.
Considerations for these activities may include, but will not be limited to:
Investment objective: What is your goal for this portfolio?
Risk Tolerance: With what level of risk are you comfortable?
Investment selections: Where would you like to invest (e.g., stocks, bonds, CDs)?
Contributions/distributions: Will you contribute to your plan over time or make one up-front investment? Will you withdraw from the portfolio or take income payments?
Ongoing monitoring: What level of ongoing monitoring is needed for your account(s) or investments?
With financial planning as the foundation and investment management providing the building blocks, we can work together to help you pursue your short- and long-term goals.
Asset allocation programs do not assure a profit or protect against loss in declining markets. No program can guarantee that any objective or goal will be achieved.
Accumulation planning addresses an individual’s investment needs, asset allocation, and the suitability of different types of securities in light of your goals and risk tolerance.
In today’s world, there are common needs and desires people seek to accomplish. To protect their ability to earn and accumulate wealth, many people choose to hold insurance, as well as maintain an emergency fund, to guard against depleting savings that are intended for other goals.
Asset allocation is used to distribute your investable assets among a variety of investment categories. This process will:
Reduce overall investment risk
Create more reliable investment forecasts
Improve the risk/return tradeoff of your portfolio
Accumulation planning also involves the choice of securities for your investment portfolio. Basic securities are stocks, bonds, and mutual funds. Separately managed accounts, indices, option strategies, short-term assets, and annuities are also used to optimize your portfolio.
Alternative investments may also be an option for the right investor. One of the premier benefits of alternative investments is diversification, resulting from the inclusion of investments that react differently to the markets than more traditional investments. Managed futures, hedge funds, oil and gas, tax shelters, and real estate are all examples of alternative investments. These products generally involve substantial risk and limited liquidity.
Some situations require different expertise than typical stock and bond portfolio implementation. These situations usually pertain to employer-related retirement plans and stock options, margin strategies, and real estate exchanges.
Most investors understand that as risk increases, the potential for return also increases. But there is a point for every individual where the level of risk is not worth the potential return. The goal of asset allocation is to provide you with the risk/return scenario that is most comfortable for you.
Risk management is intended to minimize financial and other losses potentially associated with risks to your assets, business, or health. Some examples of risk are personal and professional liability, business ownership, property loss, and catastrophic illness or disability. Your first line of defense is to identify your sources of risk and then to either avoid or minimize the major exposures. Your last line of defense is insurance.
Asset protection planning manages risks to your wealth. Lawsuits, accidents, property damage, and other financial risks are facts of everyday life and asset protection planning looks to transfer the risk of these events through:
Repositioning asset ownership
Other protections available under the law.
Starting and running a business carries its own set of risk exposures. Certain factors can have a huge impact on how safe your personal and business assets are from risk. These include:
The type of business entity you choose
The state you choose to do business in
How you manage your business
Your human resources
Business risk management identifies your options for handling these risks.
Both genetics and lifestyle affect your risk profile. Being overweight, eating poorly, failing to exercise, smoking, driving unsafely, and not wearing a seatbelt will increase your insurance premiums. On the other hand, making healthier lifestyle decisions can help to reduce your insurance premiums.
While you have no control over your genetics, you do have control over how you live your life. Educate yourself on how making healthy choices can not only improve your general health and wellness, but can also have a direct impact on your health care costs.
Tax planning considers the tax implications of individual, investment, or business decisions, usually with the goal of minimizing tax liability. While decisions are rarely made solely on their tax impact, you should have a working knowledge of the income or estate tax issues and costs involved.
A major goal of tax planning is minimizing federal income tax liability. This can be achieved by:
Reducing taxable income through income deferral or shifting
Investment tax planning
Year-end planning strategies
Investment tax planning involves evaluating how to best position assets in order to minimize the amount of taxes you have to pay on an ongoing basis. This requires year-round planning, and it begins with an in-depth understanding of the tax implications of various investments and investment strategies, including:
The treatment of wash sales
Gains and losses
Passive income and losses
Mutual fund taxation
If you give away wealth, during life or at death, you may incur federal taxes—and possibly additional state taxes. These taxes include gift, estate, income, and inheritance taxes. You can help protect the assets you transfer from excessive depletion by understanding these taxes and the various strategies you can use to minimize them.
Tax issues are never far from the mind of the business owner, and it’s likely that many of the decisions you make will be tax-based. It starts with the formation of your business and continues through the sale. Your choice of business entity, how you pay out profits to the owners, and your accounting decisions will all have an effect on your tax liability.
Some events in life—retirement, for example—come with tax considerations. Life event planning focuses on the impact of significant events on your life, as well as on the stages of your overall investment plan.
Retirement planning involves evaluating your current financial standing and creating an accumulation strategy that will help to ensure a desired retirement lifestyle. Because an individual’s retirement years can span decades, retirement planning generally dominates other financial goals. A successful plan put into place during the wealth-building lifespan should address ways to maximize growth and tax-efficient distributions, as well as how to leave retirement assets to the next generation.
There are several ways to save for retirement:
Qualified employer-sponsored plans
Individual retirement accounts (IRAs)
Executive deferral plans
Qualified plans are employer-sponsored retirement plans such as 401(k)s and pension plans. While there are contribution limits and strict distribution rules, these plans are popular because of their tax benefits. Generally, employers will make participation even more attractive by matching all or a portion of an employee’s contribution. It’s important that you choose the optimum plan to benefit the key people in your company.
IRAs are inexpensive, easy to establish and maintain, and also offer favorable tax incentives. They can be created by an individual or provided by an employer. Most people use IRAs to consolidate retirement savings that were previously held in employer-sponsored plans. Our process coordinates your IRA investments with your other savings plans.
You may find that qualified plans, IRAs, and social security won’t provide enough money to support your desired retirement lifestyle. By identifying your retirement gap, you can develop a strategy for personal savings invested outside of the traditional retirement vehicle.
Business owners or executives may have access to other tax-advantaged retirement savings vehicles. Nonqualified executive compensation is a generic term used to describe a compensation arrangement that provides retirement income—and, in some cases, death benefits—to key employees of a business.
At the heart of any retirement plan is the distribution of accumulated assets. The correct distribution method will help to ensure that your retirement savings last beyond your lifetime with minimum shrinkage from taxes. From premature distribution options that allow access to retirement assets prior to age 59½, to products intended to provide stable monthly payments for retirement, distribution planning is paramount to a successful retirement plan.
Estate planning creates a master plan for the management of your property during life and the distribution of that property at death.
For most people, estate planning will:
Give you more control over your assets during your life
Provide care when you are disabled
Allow for the transfer of wealth to whom you want, when you want, at the lowest
Common estate planning issues addressed in the wealth management process include:
The transfer of wealth
The minimization of transfer taxes
Wealth transfer planning involves the smooth transition and distribution of wealth according to your wishes. With proper estate planning, you decide to whom, how, and when your assets will be distributed, as well as who will manage your estate or business. Special issues you may deal with are providing financial security for others, planning for children of a previous marriage, equalizing inheritances fairly, and retiring from your business. Wealth transfer planning also involves the management of assets during disability or incapacity.
A major goal of estate planning is to minimize potential taxes without interfering with your other financial goals. If you give away wealth, during life or at death, you may incur federal—and possibly state—taxes. You can help protect the assets you transfer from excessive depletion by understanding these taxes and the various strategies you can use to minimize them.
If you own substantial assets, creditor protection can be a concern. Creditors can come in many forms. An asset protection plan first identifies potential exposure and then identifies preventive tools and strategies to reduce exposure. Asset protection planning deals with ownership issues, liability insurance, statutory protections, special needs trusts, offshore and domestic trusts, prenuptial agreements, divorce, and business dissolutions.
Charitable giving is motivated by both personal and tax incentives. Congress encourages charitable giving through tax legislation that can minimize your income and estate taxes. Charitable planning involves selecting the gifted property and charitable structure that will target your needs.
Our process does not end with estate planning but coordinates your estate plan with your overall plans for your business, investments, insurance, and employee benefits.
Business planning focuses on issues specific to business owners and shareholders. For most business owners, the business is their most significant asset, and the financial success of that business has an immediate impact on the economic security of the family. Without proper planning, you may have difficulty tapping the value of your business to support your retirement, or your family may lose the value of your business at your death.
Business planning coordinates the management of your business throughout its life cycle with:
Distributions to the owners
Starting and running a business carries its own set of risk exposures and there are several factors that can impact how safe your personal and business assets are from risk. These include, but are not limited to: the type of business entity you choose, the state you choose to do business in, as well as how you manage your business, your human resources, and your taxes. Business risk management identifies your options for handling these risks.
Executive compensation focuses on both cash and non-cash approaches. The size and structure of the business significantly influences your compensation systems. Large businesses tend to provide owners with sophisticated and sometimes complex compensation formulas. Small businesses tend to adopt a more straightforward compensation approach. Examples of compensation include insurance benefits, qualified retirement plans, stock options, personal performance initiatives, and other tax-advantaged nonqualified plans.
Succession planning focuses on the transition of a business from an existing owner to a new owner. While key factors vary extensively with business type and industry, there are some factors common to all business transitions, including the creation of a sellable business and the formulation of specific transition mechanics at time of sale. Additional succession planning issues include positioning a business for sale, determining valuation and terms, grooming senior management, and creating strategic alliances.