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Business Owners, CFOs

8 Questions to Answer About Your Personal Wealth Before Transacting


When transacting or selling, business owners are typically hyper-focused on how the business, its employees, and its customers will be affected. All too often, they forget to plan for the implications the transaction will have on their personal financial health.

Since every business owner has a different set of priorities for their life post-transaction, it’s important to conduct an analysis of these goals and begin planning accordingly as soon as possible. Wealth advisors work with clients to translate these personal needs and concerns into a distinct financial plan.

If you’re a business owner considering a transaction, analyzing a business venture, or thinking about retiring, asking yourself the following questions may help you ensure a more positive outcome for your personal wealth in the years to come.


1. Have I conducted a goals-based analysis with an advisor?

Before planning for a transaction or exit, it’s important to identify your essential needs, aspirational goals, and desired retirement lifestyle (even if that feels premature!). Your retirement will be the most expensive investment you’ll make, so it’s helpful to understand what it will cost. Based on how you intend to use your money, an advisor can help you get organized and structure your ownership to maximize the benefits to you and your family. Post-sale liquidity can be discussed using a goals-based platform to construct a portfolio and effective investment plan. Together, you and your advisor can create plans for achieving your financial goals today and in the future. 

2. When was the last time I reviewed my investment portfolio’s exposures?

Change is constant. Is your portfolio prepared for the potential for higher interest rates? Is your asset allocation appropriately aligned with your goals and needs? Fixed income portfolios can be far more vulnerable to changes in interest rates than most people realize. Additionally, with the rising popularity of ETFs, business owners are encouraged to really understand what it is that they own and what risk is associated with those investments over time. As a business owner, you should discuss with an advisor the effects of market volatility on your personal wealth over time. A review/analysis of statements can lead to constructive conversations that will mitigate anxiety during periods of volatility.

3. Am I effectively managing my personal cash to achieve the highest yield possible?

For years, interest rates have been low and many business owners have simply become used to keeping their cash in checking accounts. LIBOR rates, which are calculated in an effort to benchmark various loan rates throughout the world, are increasing. This has provoked a modest improvement in the yield of money market funds, CDs, and other instruments that can earn a little more return if properly managed. It’s critical to have some exposure to investment choices that benefit from these rising rates.

4. Is my business maximizing 401K, pension, and other vehicles to shelter my income?

As with personal portfolios, it’s worthwhile to conduct a review of your company’s retirement plans. Be sure to ask your wealth management advisor about which cost-cutting and income deferral strategies your company should consider. Streamlining investment choices increases employee satisfaction and engagement, and can help your personal finance options before exiting your business.

5. When was the last time I reviewed my estate plan with an advisor?

Aside from the basics (will, health care proxy, and durable power of attorney), there are many estate planning techniques that business owners can take advantage of ahead of a transaction that can result in material long-term tax savings. It’s worthwhile to understand these strategies because they can mitigate gift and estate tax consequences while transferring assets from you to your heirs.

6. When was the last time I discussed my investment plan with my family and an advisor?

More often than not, business owners neglect to incorporate their family’s goals and priorities into their wealth management plans. Before considering a transaction or exit, you should ask your advisor to facilitate a conversation about long-term financial planning with your family, especially your spouse. Have you completed an Investment Personality analysis with your spouse? You’d be surprised how many conflicts this can resolve!

7. What are my philanthropic intentions, and have I discussed these with an advisor?

If you’re interested in being philanthropic with your personal wealth, it’s worth investigating the difference between private foundations and donor-advised funds. Each has varying levels of flexibility and varied tax incentives depending on your wealth profile. There are many tax reform proposals the new administration is considering which could impact the timing of when to consider establishing a foundation or endowment.

8. Am I properly insured?

As part of your goals-based wealth analysis, be sure to identify what types of insurance can help your family, your estate, and your business avoid vulnerabilities.

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