April 25, 2017

The Business Transition Planning Process: Preparing Personal Finances

Business transition planning is an ongoing process that requires business owners to prepare not only the company but their own finances and personal life as well. Once maximizing the value of the business is under control, it’s time to focus on how to plan for your financial future.

Transitioning When the Time is Right

Most business owners don’t know how much they need to retire and when asked, many will underestimate the amount needed. People are living longer than ever before, and the risk of running out of money in retirement is a huge concern for business owners. Understanding the needs of these owners is crucial to determining the correct time and way to transition a business. Too many financial advisors spend all their time trying to convince clients and potential clients of their ability to select the next best investment.

Evidence proves the real value of wealth management is found in the planning. Determining which investments are best for a client only happen after an extensive financial planning process. The ultimate objective of wealth management is to bring the numerous competing goals and interests into alignment so clients are able to meet their ultimate goals. Creating a portfolio that aligns with goals will de-stress the transition process.

Creating a Personalized Portfolio

During the financial planning process, the wealth manager involves many other professionals such as accountants, attorneys and insurance specialists. The team will go through retirement planning utilizing a Monte Carlo analysis, focusing on tax planning by determining asset location analysis and evaluating estate planning needs. The needs for charitable and family gift planning will be considered, college education examined, and a risk management assessment will be performed. Upon completion of the financial planning process, the portfolio is designed to meet client needs and can access when it’s appropriate to transition your business. After the plan has been implemented, there will be ongoing monitoring to ensure the plan is meeting the client’s needs.

Upon determining financial needs, business owners can decide when is the right time to transition the business to live their desired lifestyle in retirement. The final step in the business transition planning process we’ll cover in our next blog post: planning for life after transitioning out of the company. Learn more about Anders Business Transition Planning, or contact an Anders advisor to discuss how to develop your succession plan.

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