Biz Tips: Don't invite the government to your funeral
By Chuck Shelley
Every business owner understands that plans help you achieve your goals. But when it comes to your personal finances, have you planned for your own future? If you haven't, don't worry - the government has plans for your assets, and you may not like them.
Despite starting two companies and years of teaching students how to become entrepreneurs, I'd never had my own financial plan. I'm not a financial, insurance, investment, accounting or tax expert.
So, when I looked over my finances, I felt like I'd been hit with a two-by-four. I was nearing retirement, and my head was spinning. I had an old will, no trusts, little life insurance, a distant CPA, and a financial planner who never called. I wasn't sure I had enough income, and most of my assets would disappear when I did.
But there is a happy ending. I got my finances in order, and here's how I managed it: I found a guide who tapped a team of independent professionals who actually worked together.
Before retiring, I met with a financial partner to discuss long-term care insurance. After we spoke, it became obvious insurance was just the beginning of the conversation. He pulled in a wealth management team to craft a unique solution for my stage in life. Because they talked to each other, I had a coordinated plan.
As in business, synergy emerges from collaboration. There are enormous benefits when your CPA, attorney, insurance agent, financial and other advisors discuss together your overall situation. They can coordinate asset protection, safety and growth. This one-stop approach to optimizing the components (and their effect on my taxes) was essential for a plan that was just right for me.
Team building
Personal financial planning isn't as complex and time consuming as I thought. I approached it like any other business challenge: I set goals, mapped out a plan and a strategy, and implemented that plan. The key asset – my team – helped me make informed decisions.
To define those goals, I was long on dreams but short on specifics. One of my team members, a mortgage broker, said more than once, "Financial decisions shouldn't be based on feelings or what 'everyone knows,' but on facts." Yes, finances stir up feelings, but whenever I had concerns, the team pulled the numbers together to address them. And now I see my mortgage as a valuable tool, not simply debt.
Another team member who runs a family-owned property and casualty insurance agency loved questions. "Calling and asking will never raise your premiums," he told me. His input helped me understand the insurance implications of changed circumstances - like renovating my kitchen or establishing a home office.
"I want to make sure that one mistake, like a car accident, doesn't allow someone to take what you have worked your whole life for," he said, explaining how to protect my assets without being over-insured.
My wife's friend had a similar "light bulb moment" when the team reviewed her situation. Their solution reflected her specific goals, risks and asset structure by optimizing the interplay of taxes, growth, safety and insurance. They exchanged information efficiently, and the team structure acted as "a form of quality control," she said. One finding kept her out of a dangerous liability situation.
"This is a new model," she said. "Their common goal is my financial peace of mind."
While independent professionals teaming up is hardly novel in business, it's a new concept for this business owner's portfolio. Now my financial plan gives me the warm, fuzzy feeling that my assets are safe from the taxman. And my headache's gone.
Chuck Shelley retired last year from Suffolk University as a professor of entrepreneurship.
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