Handling personal finances is a complicated endeavor, perhaps now more than ever. Where once upon a time employees counted on a pension and perhaps one other investment account as they aimed for financial security, today it is typical to have numerous accounts—opened while working for a variety of employers. Time and again we encounter those who have lost track of such accounts as the years pass, especially when they misplace their logon credentials. And the difficulty does not end there. It continues with a revolving door of tax and legal changes that affect what we individuals need to do to maintain our financial well-being.
As this new paradigm began to surface a number of years ago, Entrust revised the holistic approach we use to partner with clients, and began including Personal CFO (Chief Financial Officer) services. Three reasons prompted this fine-tuning:
Click on each reason for an example of how Personal CFO services may enhance your financial well-being.
Jeff, an only child, figured that it made sense for him to purchase his elderly mother’s house from her for $1. This would remove responsibility from her, and she could live in her home while he paid for the real estate and school taxes and maintenance costs—giving her a break on her living expenses.
Less than a year later, failing health resulted in his mother moving to a retirement community and selling her home. What complication ensued? Jeff now owned the home and his cost basis in the home was $1. Therefore, the IRS was thrilled to charge him capital gains taxes on 100% of the value of the property when sold.
Had Jeff understood the potential complexities of what seemed to him a simple decision, all those taxes—and effort—could have been avoided.
Molly loved working, and like most business owners, had not spent much time considering the nature of the assets she was building. “I make plenty of money,” she reasoned, and kept procrastinating about hiring a financial advisor/Personal CFO to help her be certain that she held onto her “plenty of money.”
It took a frivolous lawsuit to get her attention. Molly learned that her personal insurances did not provide the coverage she assumed she had, her firm’s 401k had lots of hidden costs of which she was unaware, and the titling of her portfolio earmarked for retirement put it at risk to creditors.
Yikes! Had Molly understood that making plenty of money was just the beginning, she would not be faced with the painstaking task of responding to a lawsuit while worrying that if it did not end well, she could be on the hook for a large financial settlement.
The velocity of change with which we all live needs no explanation. Our reliance on our phones, complete with endless updates and new ways of accessing information and using them, is example enough.
For most of us, aiming to maintain financial well-being—especially in the midst of constant change—requires partnering with a team of trusted professionals so that our decision-making is informed and keeps pace with what is most important to us. One of the business owners with whom we work, Emi Kirschner, thinks of the power of partnering with a team in the same way that mothers discover it takes a village to raise a child.
By now you can see that handling personal finances is complicated, and that a Personal CFO aims to bolster your financial well-being by keeping you on track and by quarterbacking your professional team. Enhance your results right now by contacting us to schedule a consultation: 610.687.3515 or firstname.lastname@example.org.