Wealth Management

When It Comes To Your Long Term Financial Goals, Be Your Own Boss

By February 25, 2020 No Comments

You typically see two major types of ownership structures that have a direct impact on the livelihood of business owners and their immediate families. In the case of a family-owned business, several relatives are involved in the daily operations, management, and sales at a company. Family-owned businesses from small to large typically have some mix of family and non-family employees working there. Other businesses are wholly owned by an individual, the breadwinner for the family. No family members are employees in this case. Still, other firms achieve success through partnerships. Partnerships, via LLPs or S-Corps, can resemble either of the two types of family businesses listed above.

In any event, smart business owners know they must also consider an exit strategy as part of planning for their company. Once a business owner has achieved his or her long-term financial goals, or is losing the enthusiasm that it took to get that company to thrive, they know that it’s also time to begin looking into business valuation services. It’s a difficult decision to make, to recognize that you can only take the company so far or that someone may now be better suited for the future of the business than you are. Whatever your situation, whether you’re a business owner, individual, or looking secure your family, you will need to take charge of your financial situation.

Liquidity events and long-term financial goals

In wealth management, the day you sell your stake in a business, you create what is called a liquidity event. Liquidity events set off a chain of secondary events, and you, as an investor, will need to prepare a plan. Your long-term financial goals as an independently wealthy former business owner are tied directly to how well you manage that check or wire that you receive in 30 to 60 days. Sometimes proceeds occur in tranches where assets are sold off over time.

Even if you and your family have lived comfortably up until that date, you no longer have new sales from your old company to fall back on to absorb financial mishaps. It is, therefore important to establish an investment policy to live by early on. If you have not worked with a wealth manager before, it is better not to take for granted that kitchen table discussions alone will keep your family financially secure. It takes careful consideration to make your lifetime goals possible.

Family wealth planning and management

Old habits are hard to change. Everyone has their priorities. Accusations of preferential treatment are painful, and so is enduring emotional tension. All these scenarios are possible following the sale of your business when the family is involved. You don’t need to be an ultra-high net worth individual with a family office to use some outside advice. Hire an experienced wealth advisor to help you to formalize a new monthly budget and investment strategy to give direction for your family.

Periodic Meetings with a Wealth Manager

When you owned your company, you likely hired people with certifications and licenses at various stages to complete work that would benefit your company long-term. The same concept now applies to managing your wealth. Investment advisors make recommendations and execute trades, but wealth managers go further. They are much more interested in estate planning and preparing for various events in life that make up the bigger picture. Having a wealth manager who can regularly collaborate with your family on planning and strategy will help to lower some of the uncertainty that swirls around what decisions to make and when. 

Different Risk Tolerances

People have different tolerances for investment risk and sometimes limited knowledge of what options are available. Wealth advisors consider your personal goals and structure a portfolio of assets and an income stream from your investment capital. They help to establish an open style of communication where everyone plays a part in achieving long-term financial goals which can lower tension, too. 

Cash Costs Money

Newly acquired wealth can come with costs. Losses from too much uninvested cash is an opportunity cost. There may also be methods to reinvest proceeds from the sale of your company in a trust, lowering income gains that are taxable. Lower that cost and minimize common financial mistakes by working with a business tax advisor.

Wealth management strategies for meeting long term financial goals

If you’re thinking about selling your business soon, or even years from now, it helps to begin that conversation now. You may have owned several businesses in your life. If so, you know it isn’t always clear what the next step is. Pressure from family comes from the need to adjust how they view things. You still have a job, but now it’s in wealth management to preserve your successes in life and perhaps grow wealth for the next generation. A top firm like SD Mayer can help to ensure you achieve that goal, so you have peace of mind now, and for all the years to come.

The wealth management professionals at SD Mayer have decades of experience helping business owners transition into the next phase of their lives. They will sit down with you and create a holistic plan for your finances, so that you can enjoy whatever adventure is next. To set up an initial consultation, contact us today.

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