5 Common Scenarios That Call for Deeper Financial Expertise

Business Strategy | Investment Strategy

 Peter Lazaroff By: Peter Lazaroff

Every family is unique, and everyone has their own questions, priorities, and vision for the future. However, there are certain life events or financial situations that are especially complex and call for deeper expertise from a financial advisor. 

Here are common scenarios when a family’s financial plans require an advisor with more sophistication and a broader set of services:

Executives with Significant Non-salary Compensation

Executives often get a substantial portion of their income from stock options, restricted stock awards, and deferred compensation. These benefits can be a great way to build wealth, but they can also be tricky.

To make the best use of these benefits, you should examine a number of aspects, such as:

  • The best time to take deferred income or exercise options
  • Ways to minimize the tax impact
  • Where equity compensation fits the context of your overall portfolio diversification strategy

That’s why executives need a financial advisor and firm with experience managing non-salary and equity compensation. The right advisor can help you create a strategy to make the most of these benefits — for example, choosing the stock option exercise method with the lowest tax implications, or deciding when to hold or sell company shares. 

Early-career High Earners

Younger people who work in highly compensated professions need sophisticated financial advice right out of the gate. These highly compensated professionals often don’t realize the complexities of their situation and can benefit from personalized guidance on tax strategy, goal setting, and balancing current expenses with long-term needs and opportunities. 

A financial advisor who’s experienced with high-income earners can help you create a comprehensive strategy for long-term success. When you have a high income in your 30s and 40s, the problem is less about saving and more about knowing the right place to direct dollars and maximize tax-saving opportunities.

A financial advisor with the right experience can uncover additional accounts to boost retirement savings and offer strategies that minimize taxes today and in retirement. They can also help balance paying off student debt with pursuing other short and long-term goals.

Business Owners

Running a business means juggling your own family’s finances along with the needs of your company and employees. Business owners often have unique circumstances, like having much of their wealth tied up in the company and receiving income from distributions rather than salary. Then, there are important considerations about offering employee benefits and planning for their own retirement.

Business owners need an advisor who’s intimately familiar with these circumstances. A good advisor can recommend options for an employee retirement plan, help you manage your taxes, and even help create a succession plan that delivers personal rewards with long-term stability for your business.

Families Preserving Multi-generational Wealth

Significant wealth brings security and flexibility, but it can also be difficult to manage over multiple generations. Many families want to ensure that their wealth has a lasting legacy and helps future generations pursue their dreams. 

The right financial team can help families manage that wealth, but also provide important coaching and education for children and grandchildren. A family-wealth advisor can help you articulate and share your family’s values and philanthropic goals, while planning for a smooth transfer of wealth that minimizes the impact of taxation.  

Sudden Wealth

Coming into a large sum of money or valuable assets is a great opportunity, but it’s often overwhelming. It’s a challenge to manage wealth for the first time, and many people are also feeling an emotional impact because their windfall has come through the loss of a loved one or a divorce. Professional guidance from an advisor who’s helped people in similar situations is essential.

A financial advisor can provide unbiased advice on how to spend and save that money in a way that provides the greatest long-term benefit. They can help you decide whether to keep or sell property and how to invest for new goals. Above all, an advisor can help navigate complicated decisions during an emotional time, and even create systems such as a gifting and charitable giving plan that acts as a buffer against family, friends, and organizations that are suddenly asking for financial help.

These are just a few of the more common situations when financial complexity unlocks additional financial tools and strategies to meet financial goals. At Plancorp, we do our best work with individuals and families with financial complexity.

Next Steps...

There are many complex decisions to make when it comes to finances. If you’re ready to take a deeper dive to explore whether you’re doing the right things to build or maintain your wealth, here a few other resources you may find helpful:

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This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice. All investing involves risk. Past performance is no guarantee of future results. Diversification does not ensure a profit or guarantee against a loss. You should consult your own tax, legal and accounting advisors.

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Peter Lazaroff, Chief Investment Officer, first took an interest in investing when his grandmother gave him a single share of Nike stock for his 13th birthday. Today, nearly 20 years later, his investment insights are highly sought after by local and national media. More »