Financial implications of marrying later in life

Synergy takes a holistic approach to financial planningWe always enjoy hearing that our clients have found a special partner to share their lives with, whether they are 30 year old business owners or 60 year old millionaires. When people marry later in life, however, there are financial implications that should be thought through. Here are just a few areas to consider:

Prior commitments: If your new partner is divorced, he or she may have financial obligations. In the case of divorce, for example, your new partner may have been ordered to pay half of his or her retirement fund to the former spouse. If your partner has adult children, how will your marriage impact them financially? Will you need to update your will to reflect the change? Also, if you have college age children, will you pay the tuition jointly or alone?

Prenup: Whether one or both partners are financially well off, it is worth considering a prenuptial agreement should things not work out. This can be a sensitive subject, because who wants to think negatively about the relationship when you’re about to start a life together? But it is a subject you can’t ignore. If either of you has substantial assets, consult an attorney to decide how assets would be divided should the marriage end within a specified time period.

Assets: In addition to traditional assets like homes and cars, talk to your financial advisor about other assets like insurance policies and how they will be affected by a new marriage. For example, if you have a life insurance policy that is part of your estate plan, will you add your new spouse as a beneficiary or remove any of the previously named beneficiaries? Does your will need to be updated?

Day-to-day finances: This can be tricky when two adults who have handled their own finances combine into one household. Discuss what financial responsibilities and bills each will take on, or if you combine your income and expenses at all. Each partner may have different expectations, so discuss this up front to avoid unpleasantness later on.

We recommend that you get your professional advisors involved to help you through this process. By working with an objective third party, you can remove some of the emotion from the situation and focus on practical matters. Once you’ve hammered out the details, you can focus on your marriage.

Questions? Concerns? Contact the financial experts at Synergetic Finance today.

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Coming soon: 401(k) Insight: Getting to “Retired!”

401(k) Insight: Getting to Retired! is coming soon.We’re excited to announce that our next book 401(k) Insight: Getting to “Retired!” is coming out soon. Co-authored by 401(k) experts Joseph M. Maas and John A. Flavin of Synergetic Finance, the second in the Insight Series from Merrell Publishing will tell business owners and employees everything they need to know about 401(k) plans.

Employers will learn how to create and manage a plan on behalf of their employees; employees will learn how to use their company’s 401(k) plan to help them enjoy retirement. Watch our blog for details about the book’s release and how you can purchase a copy.

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Insurance advisor and policyholder responsibilities

Life insurance and risk managementInsurance is not a very glamorous topic to discuss, but it is an important one. Continued from our Sept. 4 post, we’re going to discuss the responsibilities of your insurance advisor as well as your responsibilities as the policyholder.

Responsibilities of your insurance advisor:

  1. Create, recommend, and execute an insurance strategy that is consistent with your estate’s objectives, time restrictions, risk acceptance, guidelines, and limitations.
  2. Recommend appropriate insurance companies.
  3. Counsel you about the recommended selection and allocation of insurance assets.
  4. Continuously monitor the performance of your insurance assets.
  5. Recommend changes as necessary to meet your portfolio’s goals.
  6. Be available for meetings as necessary, and at your request.
  7. Prepare and discuss periodic reports.

Your responsibilities:

  1. Observe the progress of your insurance portfolio and be alert about the progress toward your goals.
  2. Be cognizant of the insurance policies’ objectives and how they serve your plan.
  3. Discuss and instruct your advisor to make appropriate changes to the plan, and approve or disapprove of your advisor’s recommendations; be engaged.
  4. Provide your advisor with information about your financial circumstances and risk acceptance; be sure to notify your advisor about changes to your information.
  5. Read, understand and ask questions about the information in your insurance policies’ contracts.
  6. You are responsible for exercising your rights, as attained through the insurance policy purchases, and through your agreement with your advisor.

If you have any questions about the roles that your independent insurance advisor or you play in working toward your short-term and long-term financial goals, it is important to discuss them openly as soon as possible. Confused? Have questions? We can help! Contact Synergetic Finance today with your questions or concerns.

 

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Designing a life insurance portfolio

In previous posts, we’ve discussed the importance and benefits of using life insurance as part of your long-term financial plan. Life insurance is a flexible, financial tool that can help you protect your assets and reduce your risk. It is particularly useful as an estate planning tool. Once you and your independent insurance advisor have discussed your options, we encourage you to:

  • Outline your insurance strategy in writing.
  • Develop a portfolio of diversified insurance policies that will provide short-term and long-term protection at acceptable levels of risk.
  • Delineate risk protection in the insurance portfolio.
  • Recommend an allocation strategy for insurance policies.
  • Create guidelines for the selection of insurance companies and diversification of insurance assets.
  • Identify evaluation criteria for assessing the insurance portfolio’s performance.
  • Promote continuous and effective communication between the advisor and the client.

In a future post, we will discuss the responsibilities of a good insurance advisor as well as your responsibilities as the insured or policyowner. In the meantime, we encourage you to contact us with any questions or to view past articles on the subject.

Life insurance: the basics

7 surprising benefits of life insurance

To your success,

Author Joseph M. Maas

 

 

 

 

Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
President of Synergetic Finance

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Working with a business broker

j0433118You’ve worked too hard and too long to risk selling your business by yourself. You need a professional who knows how to sell businesses, where to advertise, and has industry contacts. The chances are you’ve not sold many businesses in your career, and now is not the time to learn.

Engaging Your Broker’s Services

When seeking a broker to sell your business, your due diligence is required in selecting the most suitable firm. Some things to think about:

  • You want to know how your broker will advertise your business and their budget for this purpose.
  • If your sale is confidential, you’ll want to know how the broker will advertise, yet keep your identity unknown.
  • Does your broker think a cash sale is best for you, or a price with terms?
  • Determine that the broker is a good fit for your type of business; has the firm previously sold a business of your type and size, and in your location?
  • Remember that time kills deals…so is the broker experienced in moving the process along rapidly?
  • Be clear about the frequency of contact you expect from your broker; if you want frequent updates, say so.
  • Find out how quickly the broker responds to buyer inquiries, and the protocol for moving prospects forward.
  • Inquire about how many listings the broker has and determine if he or she is too busy to be a good selection for you.

Reviewing the engagement proposal

Once you have selected the broker you believe will do the best work for you, the broker will require you to sign an engagement letter detailing your working relationship. This letter states the terms of the services and the fees you will pay. Most engagement letters have standard language; some of the elements you should expect are:

  • The services you are hiring, such as preparing a marketing brochure, working with specialists on your behalf, advertising your business’s availability, filtering inquiries, and recommending worthy prospects.
  • Limitations of the services the broker will provide.
  • A term for performance; 3 – 24 months is typical.
  • Client’s responsibilities in support of the effort.
  • A disclaimer describing the broker’s potential for performance.
  • A description of the fees, discussed below.

The broker’s fee

Brokers are compensated either hourly, through a success fee, by a retainer, or by combinations of these options. Here are some details:

Success Fee: A success fee is a commission based on a percentage of the sale price, or a dollar amount. Typically, a success fee is between 5 – 12% and the smaller the sale, the higher the percentage.

Advisor’s Fee, or Retainer: Brokers expect to be paid for their hard costs and minimal services whether you sell or not. If the sale is successful, their fees may be deducted from the success fee. The retainer may include the advertising budget and other upfront costs the broker will commit to doing, such as meeting with members of your professional team.

Reverse Fee: As mentioned above, most of the time a broker will present a graded fee schedule with a higher fee percentage for a smaller sale price. A reverse fee schedule works like this:

Assume that you and your financial planner have determined your business has a value of $700,000 and you have set this as your top price. The broker tells you they charge 10% on all sales under $1 million. However, the broker also tells you his firm will try to sell your business for over a million, and if they do, will you be willing to pay 15%? Do the math and you’ll see that a reverse fee is desirable.

The previous passage is an excerpt (pp. 359-361) from author Joseph M. Maas’ book “Exit Insight: Getting to Sold,” available online now at Merrell Publishing and Amazon. You can also visit us online or call 206-386-5455 for more information about selling your business.

 

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It takes a village…

Exit Insight: Getting to Sold!If you’ve been following our blog, you’ve probably seen a number of posts over the last few months about exit planning, a complex topic that can be difficult to understand. Exit planning in its simplest form is a well-constructed plan to help a business owner to exit his or her business at a specific date in the future.

The plan helps the business owner maximize his or her finances which includes increasing the value of the business before its sale or the owner’s retirement. A good exit plan incorporates many moving parts – a personal financial review, a business valuation, an estate plan, a strong investment portfolio and much more.

Synergetic Finance possesses expertise in many of these areas, but we welcome the opportunity to work with other professionals to help our clients achieve their financial goals, including estate planning attorneys, CPAs, insurance advisors, business coaches and others. If you fall into this category and want to partner with us to better serve your clients, we’d love the chance to talk with you. Contact us today to set up a consultation call or visit.

We also encourage you to take a look at founder and CEO Joseph M. Maas’ book Exit Insight: Getting to “Sold!” to learn more about the exit planning process. You can read excerpts from the book on our blog, or you can purchase your own copy at Merrell Publishing or Amazon.com.

We look forward to hearing from you!

To your clients’ success,

Author Joseph M. Maas

 

 

 

 

Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
Synergetic Finance

 

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Are you for real? Are you ready to sell?

Six Steps to Successful Financial PlanningSelling your business is a big decision and requires a lot of thought and planning. How mentally and financially ready are you to sell your business?

  • When are you seriously thinking about selling? Do you want to sell your business immediately? Or are you thinking about five years from now? 10 years? The more time that’s available before you sell, the higher the probability of receiving a
    higher price and securing a transaction that actually works out.
  • Many businesses aren’t ready for sale, and need to prepare themselves by increasing value and perfecting the many elements such as sales, products/services, facilities, equipment, personnel, brand and documentation.
  • Are you ready to work with a team of professionals whose only focus is to position your business favorably in the market? If your business isn’t freshened, doesn’t have curb appeal, and doesn’t stand up to internal scrutiny, it will never sell.
  • Are you in a financial position to sell? If you need $500,000 on the sale of your business, but the valuation determines a lesser price, you may be unable to sell and will have to stay with your company for several or many more years.

All these topics require self-reflection and a discussion with your financial planner to come to a conclusion about your state of readiness for making a very big change in your life and financial prosperity.

The previous passage is an excerpt (pp. 337-338) from author Joseph M. Maas’ book “Exit Insight: Getting to Sold,” available online now at Merrell Publishing and Amazon. You can also visit us online or call 206-386-5455 for more information about selling your business.

 

 

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What kind of investment advisor is right for you?

Synergy takes a holistic approach to financial planningIn February 2013, I wrote a blog post about choosing an investment advisor. A year and a half later, that advice still holds true. When choosing someone to handle one of your most valuable assets – your money – you want to select someone you can trust and who cares about your goals. Here are some tips for selecting the right advisor for you.

1.  Get referrals from family and friends.
2.  Visit the advisor’s website.
3.  Schedule an introductory appointment.
4.  Ask key questions including:

  • How is the advisor compensated for his or her services?
  • Does the advisor represent one company or multiple companies? This will give you an idea of the range of products and services the advisor can offer.
  • Who manages the firm’s portfolio of assets – someone within the company or a middle man? At Synergetic Finance, we manage our portfolio in house.
  • How often will the advisor meet with you to discuss your portfolio, investment results, goals, time line, etc.?
  • Will you get personalized service from an advisor with whom you can develop a long-term relationship?
  • What is the advisor’s fiduciary responsibility? This can vary. A Registered Investment Advisor (RIA) has a fiduciary responsibility to give you the best options for your situation, not just options that are suitable. The wealth managers at Synergetic are RIAs.
  • What is the advisor’s educational background? How long has he or she been in the business? What’s the advisor’s track record for success?

Whether you are investing a few hundred thousand dollars or a million dollars, you want to choose an investment advisor who will put your goals and needs first. If that’s the kind of advisor you want to work with, contact the wealth managers at Synergetic Finance. We can set up a complimentary consultation to learn more about you and your financial goals. Until then, we invite you to visit our website and blog for more info.

To your success,

Author Joseph M. Maas

 

 

 

 

Joseph M. Maas, CFA, CVA, ABAR, CM&AA, CFP®, ChFC, CLU®, MSFS, CCIM
Synergetic Finance

 

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Setting estate planning goals

Setting estate planning goalsPart of the exit planning process is doing a personal financial review. A thorough exit plan should include an estate plan as part of the process. As you and your attorney begin planning, consider your goals for an estate plan. Here are some common goals to start the conversation:

  • Secure the financial future of your loved ones
  • Guarantee that assets are distributed to the intended recipients
  • Prevent legal conflicts with third parties
  • Reduce transfer taxes and income taxes as much as possible
  • Limit administrative costs and avoid probate
  • Protect family harmony
  • Assure good relations among business owners
  • Provide for the education of children or grandchildren
  • Contribute to a favorite charity
  • Reduce liabilities that might endanger the estate
  • Guarantee the capable management of the estate
  • Assure sufficient funds for the administrators of the estate

For more information about the estate planning process, within the context of exit planning, check out “Exit Insight: ‘Getting to Sold!’” by author Joseph M. Maas, founder of Synergetic Finance, SFM Advisors, Synergy 401(k) and Merrell Publishing. It’s available for purchase at MerrellPublishing.com.

 

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Investment selection, monitoring and control

Exit Insight: What's an exit plan got to do with it?After you and your financial planner have decided on the most appropriate asset classes to include in your investment portfolio, and also have decided on the allocation of assets within the asset classes, the next step is to select the actual investments that are most likely to help your portfolio achieve the desired results.

Here are some excellent criteria you and your financial manager should consider when making investment selections:

  1. Past performance compared to other investments having the same investment objective. Consideration shall be given to both performance rankings over various time frames and consistency of performance.
  2. Costs relative to other funds with similar objectives and investment styles
  3. Size of the fund
  4. Length of time the fund has been in existence, and length of time it has been under the direction of the current manager(s). Also, consider whether or not there have been meaningful changes in the manager’s organization and personnel.
  5. The historical volatility and downside risk of each proposed investment
  6. How well each proposed investment complements other assets in the portfolio
  7. The current economic environment
  8. The likelihood of future investment success, relative to other opportunities

Excerpt from “Exit Insight: Getting to ‘Sold!’” by author Joseph M. Maas, pp. 251-252. For more info. like this, buy the book online now.

 

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