Integration of Personal and Business Financial Planning
- If an adviser provides advice for a pre-retirement client who has only wages, it may be sufficient to only provide advice on personal assets. But if the adviser is providing advice to a client who has material portion of their wealth in a closely held business, the advice must consider the business in the planning advice given and too often it doesn't.
- Advice about the business might include:
- Valuation of the business is a critical factor.
- How are they going to come out of it?
- Retirement Planning for business owners.
- Exit strategy for the business.
- Bad Examples: Client's adviser had client hire broker to sell a production business and discussed investment planning for the proceeds. No planning done to address state income tax on sale or estate planning or grooming the business.
- Good Example: Client owns a medical instrument business and is considering retirement. He is age 65. The first step is valuing the business. The next step is to enhance the value or grooming it for sale by looking at each component: people, planning, process, sales, legal and operations. Then address the exit. In most cases advisers might help with the exit or even just focus on managing the wealth.
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