Strategic Financial Planning For Business Owners

Turn Business Complexity Into Opportunity

As a business owner, you know how complex the intersection of taxes, allocating capital inside your business, doing strategic financial planning, and estate planning for you and your family can be.  You may know the frustration of achieving breakthroughs in growth only to see taxes produce a smaller-than-expected net profit. You also may know instinctively that your advisors aren’t understanding the complexity of your entire financial operation.

Many financial advisors and CPAs are skilled at helping people invest assets and file their taxes correctly and on time. They are busy and they might even do this by applying standardized rules of thumb and processes no matter the uniqueness of your situation. While this technique helps them take care of an “average” client, it can create inefficiencies for business owners and highly affluent people when their situation isn’t “average,” when their needs have significant complexity.

A more successful approach may be to embrace the complexities of your financial life by utilizing a team of experts devoted to helping you attain your goals. Watch the video to see how this approach can work for successful business owners.

 

Financial and tax specialization is a bit like medical specialization – the expertise people need is spread out among many experts. When you have a specific issue, you probably are going to prefer the expert with deep experience.

Your business and financial life are no different. The specific risks and opportunities faced by your business as well as the mix of issues for personal financial and philanthropic planning always create a unique situation requiring custom solutions . There is no off-the-shelf solution. How likely are standard rules of thumb and formulas to produce optimal results in light of your unique circumstances?

Embrace Your Complexity! Meet Your Goals by Using Multiple Specialists with Expertise in the Specifics of Your Financial Life

Read "3 Important Suggestions about Business Succession Planning."

Palmerston Group Assembles Teams Of Experts For Our Clients

Can Team Of Experts Planning Help You?

1. Every business owner, family, and individual has a unique set of complexities. Experts should be brought together in response to that uniqueness.
2. True optimization and effectiveness requires not only expertise, but also  a deep understanding of your “why.”
3. Palmerston Group Advisors are experts at expertise and create customized Teams of Experts based on in-depth engagement with our clients.

Team of Experts Planning as a Financial Planning Strategy

Because expertise is dispersed and siloed, and

Because scattered expertise is the key upfront problem that needs to be solved,

Team of Experts Planning begins with a process for identifying the specific types of expert advice a client needs – and then bringing the different strands of financial planning expertise together.

When Team of Experts Planning brings independent expertise together, the prospects for comprehensive, customized solutions improve. The creation of a unique team of collaborating experts is intended to overcome all three challenges.

Read more about the Fiduciary Rule and what it entails.

If there’s complexity, practicing collaboration and tapping into diverse sources of expertise is how financial planning can add real value for you.

Is Collaboration Your Missing Ingredient?

You CAN get what you want out of financial planning services. If your situation is unique or complex, our Team of Experts Planning approach may be right for you.

The best way we can start to help you is with a complimentary assessment: Please click here.

We help business owners just like you and families just like yours harness the numerous and diverse kinds of expertise they need, by building and leading customized virtual teams of experts on their behalf. 

Here is a great blog on Investing, Diversification and Choosing a financial advisor.

Schedule a time with us today and get started on your journey to better financial planning.

Advanced Financial Planning

Non-Market Assets Require Dedicated Planning

Business owners and affluent families often have financial planning needs that are much more complex than the standard planner’s agenda of investing and saving for retirement. A growing business has many moving parts, and with growing success often comes greater opportunities, tax liabilities, and challenges in preserving wealth.

The complexities of a growing business and family wealth management demand highly-targeted advice and planning. Unfortunately, research indicates that many clients are underserved on key issues by their current advising teams. A chief cause of this underservice gap may be related to traditional advisor business models, which are ill-equipped to process the complexities faced by many affluent people. Real customization seems to happen a lot less often than you might expect.

 

In America today, tax policy is a matter of ongoing dispute between the two major parties. Differences about the goals and degree of taxation are everywhere you look in American politics at the federal, state, and local levels. And these disputes are unlikely to be resolved any time soon.

And the differences are getting starker.

Embrace Your Complexity! Meet Your Goals by Using Multiple Specialists with Expertise in the Specifics of Your Financial Life

Read "Politics, Taxes, and Planning."

Read "The Expertise Gap for Business Owners in Financial Planning."

Tackling Advanced Planning Utilizing A Team Of Experts

Customization is difficult because it often requires drawing on a wide range of knowledge. The experts who possess the pieces of knowledge required for your situation usually are scattered. They don’t work at the same firm. They need to be brought together. You need a process that addresses your particular complexity, that brings together all the experts that you need.

Here’s the barrier: Your unique combination of issues needs to be determined before the planning can fully begin. But financial planning and CPA firms are built for their own efficiencies, and that means concentrating on their own core competencies - things like compliance work for the CPAs, or asset allocation and retirement planning for financial advisors. These firms generally don’t invest outside those core competencies, because they can’t afford to employ all the possible different specialists that you may need. Your one-of-a-kind situation needs to be assessed first, so that the right combination of experts can then be assembled.  Your needs can be in tension with how these firms tend to operate. 

In contrast, creating a team of independent advisors in response to a unique set of facts and aspirations eliminates the one-size-fits-all problem. There’s a collaboration among experts, each with extensive experience in an area important to your case. It’s our belief that Team of Experts Planning provides a sensible strategy for more fully identifying both opportunities and risks. Planning at this granular, personalized level can improve the chance for real customization.

If you are interested in how exploring Team of Experts Planning might be helpful to you, please reach out to us today.

If there’s complexity, practicing collaboration and tapping into diverse sources of expertise is how financial planning can add real value for you.

What does your financial planning strategy need?

You CAN get what you want out of financial planning services. If your situation is unique or complex, our Team of Experts Planning approach may be right for you.

The best way we can start to help you is with a complimentary assessment: Please click here.

Schedule a time with us today and get started on your journey to better financial planning.

Strategic Risk Management

Risk Can Be Hidden In Undiscovered Complexity

Most advisors educate their clients on risk as it relates to investing by speaking of broader market performance and macro economic trends, portfolio allocation, and risks associated with specific companies and securities. While these and other investment risks exist and need to be addressed, they’re only part of the risk management story. As wealth and financial complexity grow, so, too, does the list of risk issues which need to be addressed. And most of these risks lie outside the world of investing and capital allocation.

Many times challenges seem to come out of nowhere, whether they be health-related, early death due to an accident, business disputes, children going through divorce, and many more.

Unfortunately, many people aren’t getting the advice and planning they need in these areas of complexity. In a survey of wealthy investors, while 83% wanted advice about loan and credit management, only 3% reported receiving it.

An investment of any type carries some level of risk. How can you better understand your tolerance for investment risk? More importantly, how can you improve your tolerance for acceptable risks while increasing your awareness of unnecessary risks?

There’s a lot of conventional opinion about how to understand your risk tolerance. Here are four issues with common interpretations of risk, risk tolerance, and understanding risk tolerance – and four related “sharpened” questions to help you think more clearly about wealth and the risks you take.

Embrace Your Complexity! Meet Your Goals by Using Multiple Specialists with Expertise in the Specifics of Your Financial Life

Read "4 Risk Tolerance Issues to Discuss with Your Financial Advisor"

Read  "Emotional Bias in Financial Planning: What to Do About It" 

Read "Four Mistakes Emotional Biases can cause you to make" 

Broaden The Conversation About Risk To Reflect Your Specific Needs

Crafting a useful risk management strategy requires unlocking the detailed inner workings of the many facets of your life. Business capital allocation and working capital requirements, life insurance protection, wealth transfer strategies, and others - the wide world of risk beyond investing - now needs a variety of additional, very different experts. Risk management can all be tailored to your specific needs - but only if you have the full team of advisors you need across the areas of expertise that your situation requires.

An effective risk management process means uncovering the full picture of complexity through a thorough client-review process. Add in an understanding of your “ideal world” and assemble a team of experts reflecting your complexity, and you’re on your way to being fully served. If you’re worried about the impact of unaddressed risks, please schedule a call and let’s see how we can help.

Can Team Of Experts Planning Help You?

1. Every business owner, family, and individual has a unique set of complexities. Experts should be brought together in response to that uniqueness.
2. True optimization and effectiveness requires not only expertise, but also  a deep understanding of your “why.”
3.  Palmerston Group Advisors are experts at expertise and create customized Teams of Experts based on in-depth engagement with our clients.

If there’s complexity, practicing collaboration and tapping into diverse sources of expertise is how financial planning can add real value for you.

If you have any questions about how "Team of Experts" planning can help you, please reach out for a free assessment: Please click here.

Schedule a time with us today and get started on your journey to better financial planning.

Integrated Estate And Retirement Planning

Are Your Current Advisors Overwhelmed By The Complexity Of Your Financial Life?

Are your financial advisors and tax professionals on the same page, working together to optimize your estate and retirement planning? 

While it might be tempting to assume these professionals collaborate on their clients' behalf, many wealthy Americans report a glaring underservice gap in these areas. One reason for this may be that the average financial advisor's and tax professional’s business models often aren’t designed to go deep and discover the true complexity of a client’s situation. Their incentives lead them to focus on one-size-fits all services that are needed by many (e.g., asset allocation for the financial advisor; tax prep/compliance for the CPA). Less common but critical specialized planning issues can get insufficient attention.

This shortcoming can lead to clients' being underserved. Estate and retirement planning both can involve multiple issues where there are trade-offs between issues such as short-term and long-term tax mitigation, control over assets and placing those assets beyond the reach of creditors and/or under the direction of beneficiaries. Without a full array of relevant experts, clients with multiple layers of complexity in their personal, family, and business finances may end up leaving money and unnecessary risk on the table.

According to the Spectrem Group, the vast majority of wealthy individuals surveyed reported wide gaps between their expectations for planning and advice relating to estate and retirement planning, and the advice they actually receive from their advisors. In areas like business succession planning, life insurance, and trust services - areas with huge impact on retirement and estate planning and tax mitigation- as few as 10% of clients received the advice they needed.

 

When we’re planning for retirement, one of the important things is tax planning and creating a strategy for how we’re going to draw on different sources of income. Decisions made at the intersection of tax planning and retirement planning can have a huge impact. The Secure Act changes to retirement planning are also shifting tax planning and retirement planning strategies.

With the passage of the Secure Act of 2019 and its changes for both distributions and non-spousal beneficiaries, it’s important for people to carefully review and potentially make changes in how and when various retirement-income assets should be turned on and off.

Embrace Your Complexity! Meet Your Goals by Using Multiple Specialists with Expertise in the Specifics of Your Financial Life

Read "When Retirement Planning and Tax Planning Come Together."

Read "Investing, Diversification and Choosing a Financial Advisor."

Where There Is Complexity, There Can Be Opportunity

Customization is much harder than often is assumed. Traditional advisory processes may be ill-equipped to uncover the full range of your estate and retirement planning opportunities. Palmerston Group uses a Team of Experts, approach which starts with the complexities of the client and builds the team from there.

A Team of Experts can then use their knowledge of niche estate planning and retirement planning opportunities and strategies to their client’s benefit. Complexity thoroughly understood can uncover missed opportunities.

If there’s complexity, practicing collaboration and tapping into diverse sources of expertise is how financial planning can add real value for you.

Is Collaboration Your Missing Ingredient?

If you have any questions about how "Team of Experts" planning can help you, please reach out for a free assessment: Please click here.

Schedule a time with us today and get started on your journey to better financial planning.

Underserving Clients: The Case of Multigenerational Wealth Planning

Extraordinary Wealth Requires Planning Beyond The Ordinary

For the wealthy individual or business owner, questions of legacy, stewardship, and taking care of the next generation usually take on increasing importance. Multigenerational wealth planning requires not only advice for growing investment holdings and wealth concentrated in private illiquid businesses or other assets, but also implementing strategies for managing risk and the tax liabilities of growing numbers of people, and balancing the priorities of maintaining your financial freedom of action with empowering loved ones and even future generations to make their own distinctive contributions.

Like other areas of advanced planning, comprehensive solutions require pulling together a wide array of different kinds of expertise. It also appears that all too often, this isn’t happening.

 

People love to give back. For many, being significant in the lives of others is a way of life. Whether you’re doing your own financial planning or working with advisors, here’s a key takeaway: financial planning can maximize your potential to give back. 

If giving back is important to you, teaching friends and loved ones key principles of wealth management and financial planning empowers them to do the same. Educate and encourage them with your knowledge. Here are six important topics of financial planning and wealth management literacy where sharing your knowledge can improve lives.

Embrace Your Complexity! Meet Your Goals by Using Multiple Specialists with Expertise in the Specifics of Your Financial Life

Read "6 Lessons of Financial Planning to Teach Future Generations."

Read "After the SECURE Act: Rethinking Generational Wealth Transfer."

Team of Experts Planning: Discovering And Leveraging Client Complexity

Many traditional financial advisors and CPAs rely on internal firm resources, and consequently, a one-size-fits-all model results – when, actually, multigenerational planning needs to draw from a variety of independent experts. Rather than trying to shoehorn your complexity into a pre-existing mold, your complexity should be leveraged to achieve more efficient results. Using your complexity to assemble the team of specialists you need may offer a better way to achieve multigenerational goals.

Palmerston Group’s Team of Experts Planning focuses on discovering the financial complexity inherent in your success and helping you benefit from it. If you think harnessing complexity is worth exploring, please reach out to us today.

Schedule a time with us today and get started on your journey to better financial planning.

Advanced planning strategies - including business entity planning - frequently become at least as important as investment and portfolio management.

Palmerston Group utilizes a “Team of Experts” process to serve successful business owners: 

1. Dive deeply into the specific, unique situation, issues, and aspirations - personal and business - of the business owner.

2. In response, design a collaborative team of independent, experienced specialists. Each specialist is a leader in a specific niche highly relevant to the business owner.

Why?

Generalists often are a mile wide and an inch deep. Experts frequently are an inch wide and a mile deep. Together, a "Team of Experts" has the potential to create deeper, more comprehensive solutions for the business owner.

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The Background

Many business owners are achieving fantastic operational results. They are growing their companies’ pre-tax profits, hiring more people, and leading their companies to the next level of accomplishment. Yet they might not be as successful when it comes maximizing their companies’ after-tax profits.

Taxes: High marginal tax rates and keeping money become the big issues when wealth and the free cash flow of a business reach a certain point. 

Advanced planning strategies: These include business entity planning and frequently become at least as important as investment and portfolio management. 

Palmerston’s proactive planning focuses on the interrelationship of the activities of

• Growing money
• Keeping money
• Leaving money for loved ones and philanthropy

Big Returns: Many business owners understand that good planning can yield big returns on their invested time – sometimes much more quickly and efficiently than either a new investment or a new product or service offering by their company. 

Growing money through sound investing is always an essential part of the picture, and it’s definitely part of our process.   But for business owners, growing wealth is simply not enough. Doing a better job of keeping more of their hard-earned money is a top priority.

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Whether it's blended families or blending charitable remainder trusts and Roth IRAs, it's all about discovering the client's unique mix of circumstances and objectives. 

Retirement planning at its heart is about ensuring  that retirement income and wealth last a lifetime - or two lifetimes in the case of a married couple.

Estate planning is about insuring that income and wealth last across two or more generations - and often it’s also about being philanthropic and giving back to those in need.

In practice however, the issues of retirement and estate planning overlap considerably.

Tax mitigation, managing portfolio risk, and sequencing income streams effectively and tax efficiently are all part of both retirement planning and estate planning.

The planning needs to be integrated.

Whether it’s blended families or blending charitable remainder trusts and Roth IRAs, it’s all about discovering the client’s unique mix of circumstances and objectives. And then building a customized "Team of Experts" to integrate retirement and estate planning.

The best emotional perspective looks decades ahead, and that's how we try to work with our clients.

 

Investment Management at Palmerston Is Organized Around Three Ideas:

• Investing Is a Marathon and Staying the Course Is an Emotional Discipline
• Learning from Others Is a Core Investment Principle
• Margin of Safety Sharpens Investment Focus

1. Investing Is a Marathon and Staying the Course Is an Emotional Discipline.

There are all kinds of irrational biases that can infect financial decision-making. One of the hardest to resist is following the herd. Another is recency bias, which causes investors to overemphasize recent market movements while underestimating other factors.

As Warren Buffett once said, “Don’t just do something, stand there!” The best emotional perspective looks decades ahead, and takes advantage of the calmest moments to make the biggest decisions. That’s how we try to work with our clients.

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2. Learning from Others Is a Core Investment Discipline

We think it makes sense to watch and learn from some of the world’s greatest investors and then try to apply that knowledge for our clients’ benefit.

These investors share our long-term investment horizon, and seek to invest capital when the odds of success are strongly in their favor.

Their speeches and articles, as well as the disclosure statements of the funds they manage, constitute a valuable and continual information flow about investment possibilities that Palmerston can research itself. 

So there’s a lot of investment expertise in the public domain for those who want to utilize it. That’s what we mean by investment management by learning.

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3. Margin of Safety Sharpens Investment Focus

Palmerston follows a Margin of Safety discipline, broadly defined.

Margin of safety is bargain hunting on steroids. The strategy was pioneered by Benjamin Graham, the dean of value investing and the founder of modern security analysis. And it has been revised and refined by many outstanding investors, most famously Warren Buffett.

Margin of safety investing involves the systematic comparison of values and prices. Value is the sum of future profits earned by a company during its lifetime, discounted back to establish a present value.

The margin of safety investor searches for gaps, ideally very large disparities, between this intrinsic value of a business and the extrinsic, fluctuating price of shares of that business. Price matters.

A margin of safety analysis looks for value in the right places. There are a variety of right places. How sustainable are a company’s earnings? What are the prospects for earnings growth over time? 

Well-run businesses that produce consistent (and compounding) high returns on invested capital can present outstanding opportunities, provided that the price is fair.

Topping this list are companies with unique economic franchises that are difficult for competitors to replicate. Franchises possess key competitive advantages like strong customer loyalty and leadership in markets with high barriers to entry.

Consequently franchises enjoy pricing power. Franchise companies also can also allocate more of their free cash flow to activities like sales and marketing that boost profits and relatively less to those required to maintain a business.

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For those who have accumulated significant wealth, keeping money in the face of taxes is often the top priority. 

Paradoxically, it's the goal which is frequently underestimated by a client's advisors. 

The Keeping-Money Advice Gap

Financial planning and wealth management needs almost always comes down to one of three activities:

• Growing money 
• Keeping money 
• Leaving money for loved ones and philanthropy

For those who have accumulated significant wealth, keeping money in the face of taxes is often the top priority. Paradoxically, it’s the goal which is frequently underestimated by a client’s advisors.

Palmerston Tackles the Keeping-Money Advice Gap by Building Customized "Teams of Experts" to Help Clients Fill the Gap. 

 

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But it’s also important to understand why a keeping-money advice gap can happen.

When wealth reaches a certain point, preventing its depletion by heavy taxation is the big issue. And it often gets less attention than it should because it’s harder, more complex work that lies outside the comfort zone of many financial advisors and CPAs.

Financial advisors tend to concentrate heavily on investing, that is, on growing money. They often tend to emphasize their investment focus, something that’s clearly critical. It’s what they know, and it requires time to build and maintain that expertise.

That bias to go deeper and deeper into investing topics comes at the cost of time which might be better allocated to specialized planning focused on keeping money.

The CPA, whose focus is on the tax code, where many planning strategies are possible, often has a different problem: not enough time.

Even top CPAs work exceptionally long hours doing all the necessary tax filings and financial reports for all their clients. Often, they lack the time to perform proactive research and planning which their top clients need.

We believe team-based approach, that includes proactive CPAs, can help to overcome the keeping-money gap.

CPA Trust Unlimited is a service of Palmerston Group Advisors. It uses Palmerston’s “Team of Experts Planning” approach to free CPAs to focus on their best clients. We have done extensive work to create a deep team of outstanding independent experts who cover critical niches of the tax code. We deliver that team’s comprehensive knowledge directly to the CPA while significantly freeing up the CPA’s time. The CPA retains control throughout; ideally, the relationship with the client should never leave the CPA’s hands.

We also help CPAs access expertise and continuing education in areas such as leadership and relationship training. It is the strength of the CPA-client relationship which earns the CPA the permission to deploy all these valuable skills on behalf of the client. Building trust first is an essential part of the strategic process and it’s why we call the service CPA Trust Unlimited.

Interested? Request a consultation here:

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