When life is busy and business is hectic, you may be tempted to divide and conquer everything, including both your personal finances and your business finances.
While it’s natural to want to compartmentalize these things and deal with each decision as strictly a personal one or strictly a business one, doing so may mean missing those strategic opportunities that require a broader view of your comprehensive financial plan, says Doug Myers, senior vice president, private banking group manager at Associated Bank.
“As a bank works with corporate executives, principals of closely held companies and professional services firms, they often find that comprehensive financial planning is a key element in meeting the financial needs of those companies,” says Myers. “Decisions about risk assessment, retirement planning and distribution, college planning, tax planning and more require an in-depth understanding of both business and personal goals, seen side by side. By identifying the right bank as a partner, your business can take advantage of its expanded financial planning services, enhancing your company’s experience to both recognize and realize its long-term goals and objectives, both from a business and a personal perspective.”
Smart Business spoke with Myers about how to partner with your banker to take a comprehensive look at finances and determine how to best maximize assets.
What should be covered in financial planning?
A comprehensive financial plan includes many elements and may cover any or all of the following services.
■ Cash and credit management, which will create a budget, as well as properly structured debt with appropriate rates and terms.
■ Investment portfolio management, which includes an assessment of asset correlation, concentration risks, global asset allocation and risk tolerance.
■ Insurance analysis, which examines liquidity issues, income and wealth replacement needs, an analysis of survivors’ needs and a total risk assessment.
■ Estate planning and wealth conservation, which should include tax and transfer issues.
■ Business succession planning, to map out a business exit and/or continuation strategy. And while reviewing your business succession plan as part of your financial plan provides an edge in your strategy, it is not a primary focus of that strategy.
How do you begin planning?
Your private banker will help you define and prioritize your goals. You should work together with your banker as a partner to determine an action plan and to set a reasonable time frame to meet your financial objective. It is important to include not only the accumulation phase of your financial life, but also determine a plan for the preservation, distribution and transfer of your wealth.
How can the expertise of a private banker help with financial planning?
Depending on your needs, your private banker may bring appropriate specialists into the financial planning process, including investment strategists, trust officers, mortgage advisers, risk management and insurance advisers, business banking advisers and private bankers. All of these specialists will work as a team with you and your other trusted advisers, such as your attorney and your CPA.
Your banker has the ability to bring in financial partners who have the expertise to educate you and provide knowledge so that you can see where there may be both potential risks and potential solutions. The communication is a two-way street. And as you continue to learn about your options, your banker will continue to learn about both your personal and business finances.
What are the benefits of comprehensive planning?
A plan provides peace of mind. Often, people put off planning until a specific concern prompts them to seek out financial planning services, such as an upcoming retirement, receiving an inheritance or the sale of a business. Although financial planning is definitely valuable when you are facing a life-changing event, it’s regrettable when people wait for an issue to arise before seeking help. By the time you get to that point, some potential solutions may have already been eliminated because you waited and it’s too late to get started.
It is far better to be proactive. By creating a comprehensive financial plan, you can preserve opportunities for the future.
