Jake was visibly upset when he came to see us. He had been planning to retire in 3 years by age 55, based on the combined value of his personal investments and his company. This was now on hold for an indefinite period of time. Like many, he had suffered a significant hit in the 2008 through 2009 stock market declines. He wanted to visit about the benefits of a comprehensive wealth plan - something he hadn't taken the time to explore in the past.
The Next Step Program identifies the top 12 principal reasons which have caused business owner transitions and exits to be unsuccessful. Each of these reasons impacts the company's ongoing annual profitability as well as an owner's transition and future exit results. This article addresses the 6th of these 12 reasons:
In order to grow your investments, it's critical that you take the following action:
A business owner's personal wealth planning is critical to successful transition and exit planning. The failure to address your personal wealth planning can delay or diminish the odds of meeting your key business transition and exit objectives.
A properly prepared Comprehensive Wealth Plan will review and evaluate your personal investment growth plan. This involves a review of your present personal investment plan and will address step-by-step guidance for achieving the personal investment goals you have set.
Before developing any type of Comprehensive Wealth Plan, it is critical to first determine your principal investment goals. Obviously, the underlying goal of any investment or wealth management program is to make money, rather than to lose money.
However, when implementing an investment or wealth growth plan, it is key that both you and your financial advisor have a deeper understanding of your particular situation and objectives.
This is particularly true when you are the owner of a business. Often, for business owners, a very high percentage of your net wealth is still invested in your business. Often, the principal wealth invested outside the business may be in the qualified retirement plan established through the company. In addition, you may have some separate savings and investment accounts. Generally speaking, the strategy and asset allocation for these accounts will largely depend on how near in time you are to completing your transition from your business.
There are a variety of ways in which Comprehensive Wealth Planning is approached today by various financial advisors. While we have included below some of the more common areas which are covered by financial advisors during the course of developing a Comprehensive Wealth Plan, this list of items we have included should not be considered as exclusive or as necessarily required by every financial advisor.
A Comprehensive Wealth Plan, regardless of a consistent and persistent solid investment return, is not completely successful if you have not taken care of your most valuable assets, which are you and your family. Every business owner should take a few minutes to make an honest assessment of your and your family's health and wellbeing with the intention of taking those actions that are necessary to help provide reasonable assurance that you and your family can live long lives and enjoy the "fruits of your labor."
The Next Step Transition Growth and Exit Planning program has been specifically designed to address and overcome each of the 12 principal reasons for failure. This program consists of 12 critical building blocks. We are using this program to help business owners design and implement their Transition Growth Plans for accomplishing their transitions and exits successfully.
Nicholas K. Niemann, Esq., is a transition and exit planning advisor and a partner in the law firm of McGrath North. The firm's website is www.McGrathNorth.com.
Andrew D. Horowitz, CPhD, is a wealth advisor and president of The Estate Management Group. The firm's website is www.EMGPlanning.com.
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