How Affluent Families Can Benefit from Comprehensive Wealth Financial Advisors

Financial planning is an essential part of any successful business. Those who provide wealth management and financial planning services to financially independent clients must know how to develop a comprehensive strategy that meets their needs. At the same time, our approach is not just about money; it’s also about helping people with all aspects of their financial lives.

Doing this successfully takes more than simply having knowledge about various investments or retirement plans. It requires an understanding of human nature and how people react when faced with risk, uncertainty, or loss. In other words, wealth managers need emotional intelligence as well as knowledge about finance in order to help their clients achieve their goals.

Perhaps most importantly, they need to be reliable and trustworthy. That is why Scott Marsh Financial is a fiduciary firm: We are committed to putting your best financial interests ahead of our own at all times, even if doing so were to cost us money of our own. Hiring an experienced fiduciary wealth manager, in simple terms, is an investment in growing your nest egg. 

However, for best results, it should involve a financial advisor willing to invest their services in your financial well-being comprehensively. In other words, you need someone who can simultaneously utilize money-saving and profit-generating possibilities—not just for your business or in planning your retirement, but—in multiple areas of your financial life. 
For example, strategically planning how you pay for taxes (often called “tax planning” in the financial industry) is an area with the potential to beneficially impact nearly everything you do that involves money. 

When it comes to investments, most people want higher returns. This is half of the entire point of Wall Street. 

Granted, neither of the two statements above is likely to be news to you. However, you might be surprised to learn one of the most likely strategies for potentially increasing your ROI. Believe it or not, the best way to get higher returns from your portfolio is not through an amazing stock-picking strategy. 

At times, the best way to go about it is through strategic tax planning to minimize how much you have to pay. If you think about it from a purely mathematical perspective, there is no such thing as a free lunch when it comes to taxation. The government will get its share one way or another. 

We cannot opt out of taxes, but the law does allow us to choose how—and within limits, when—we pay them. This is what can make taking a long-term approach, planning out how you will pay them over multiple years, such an advantage. A proactive tax strategy is essential for any affluent individual or family’s financial plan—because, over time, it helps ensure that your wealth grows faster than your tax liability (the amount you owe) increases. 

In fact, a smart tax strategy, in turn, can increase the value of your portfolio. When it is done with expertise, tax planning should reduce your exposure to capital gains and increase the amount of money you have on hand for investment. This seldom happens overnight, even for the affluent, but given the right wealth manager and a little patience, it is likely. 

We maximize the value of our high-impact tax savings strategies by providing all your tax planning and compliance services in-house. This is part of what we mean by the term “family office” (which is soon explained further in the section “Generational Prosperity in a Trusted Family Office”). 

Before concluding this section on the benefits of our tax planning strategies for high-income earners, we need to emphasize a point that may be of particular importance to you: As your wealth and income increase, your choices increase, but so does your potential tax liability. 

If you don’t believe that, ask Warren Buffett or Bill Gates (both of whom have said they paid more in taxes than they did in philanthropy). Tax planning is a complex process that requires expertise in accounting, estate planning, and financial planning. It also requires knowledge of U.S. tax law—with regard to how it applies to both individuals and business owners. 

Not many accountants understand how to design and implement proactive tax plans that require multiple resources and complex strategies coordinated across different service providers, either. That is why Scott Marsh Financial’s business model is that of a family office.

A family office is a private wealth management advisory firm, often one serving the needs of the highest net-worth investors. Sometimes it also serves as the corporate headquarters for members of wealthy families who manage their own financial affairs independently from their businesses, foundations, and other investments.

On one hand, it is essentially a small private bank catering to you or your family’s needs by serving as an umbrella organization for your assets. On the other, it is also much more, providing comprehensive services in areas such as accounting, investment advising, and tax planning. 

The advantages of working with a family office include:

• Help manage your generational wealth. This can include managing your family’s assets and investments while helping with taxes and estate planning. At the same time, it often factors in assistance with taking advantage of all tax benefits available to you, minimizing any tax liabilities, and ensuring that family members are comfortable with how money management decisions are being made.
• An array of services. It’s not uncommon for the financially independent to have more than one financial advisor: A family office approach typically brings professionals from different areas of expertise together under one roof. This is done to have them work together seamlessly on behalf of all your financial interests.
• Reduced risk of fraud. This is achieved by providing oversight on all financial transactions conducted by advisors working within their network. Everything passes through a single central place first—before going out into public view again. 

Family offices are dedicated to managing your money, not making a commission from every sale. This means we honor our fiduciary duty to act in your best interest rather than selling products that might pay us more money. Similarly, we aren’t subject to the same conflicts of interest that other financial advisors have.

It’s also worth noting that a family office can help manage large families with multiple accounts. For example, if you have multiple generations working together toward common goals, your wealth manager would be able to consolidate all your accounts into one portfolio. This can simplify tracking gains made by each generation over time.

This type of flexible approach to wealth management makes sense for families—and for individuals who want more personalized service than what may be offered at other banks or financial institutions. We can help you review your entire financial life comprehensively, leveraging opportunities in one area to facilitate money-saving advantages in another.

Ideally, by handling multiple family members’ financial planning, we can occasionally create overlapping, mutually beneficial opportunities. An example might be if one family member purchases an office building as an asset for their retirement account. Next, a family construction business might make improvements. Strategizing our actions this way could pave the way for higher leases and simultaneous potential tax credits (sometimes referred to as tax “breaks”). 

These are only a few of the ways in which we may be able to assist you with growth-oriented activities. The overarching goal behind it all is benefiting the legacy of generational prosperity that you plan for your loved ones. Meanwhile, a family office can also help manage the family’s financial dynamics. 

As your wealth grows, it’s likely that you’ll have a greater variety of family members (and their needs) to consider. Assigning official roles and responsibilities to each advisor can help reduce tensions about money and clear up misunderstandings about how your assets will be used. 

Family offices also tend to provide more objective advice than relatives who are invested in the outcome of decisions being made about your finances or estate planning. Free of interfamilial pressures and influences, professional advisors can recommend a potentially optimal investment strategy differing from what a biased family member might suggest at times. 

Our wealth management approach at Scott Marsh Financial utilizes a special financial tool. We call it the “More Money Than You’ll Ever Need” Formula. Fundamentally, it is about the science of personal prosperity. 

However, it also includes aspects of:

• Behavioral intelligence. This is, essentially, understanding your default behaviors. We all have various biases and go-to responses in regard to how we approach things.
• Financial intelligence. Similar to behavioral intelligence, this involves observing your monetary habits, specifically, in order to develop better habits and skills where necessary. 
• Community intelligence. This is an assessment of your awareness and concern for local community matters. For example, you might not be aware of tax-reducing opportunities available for supporters of a local food pantry. 

Once we have assessed these, our Point of Choice™ (PoC) formula helps you replace earned income with unearned income. No, we’re not talking about taking your money away from you: Instead, we help you set it aside for, let’s say, your retirement (your preselected Point of Choice Goal). 

This can make it easier to decide how much money you need for your desired retirement lifestyle. I explain the PoC formula and its typical applications more at length here. 

We’re all human, and we all make mistakes. In fact, research suggests that our brains may be wired to make irrational choices at times. By understanding how your brain works—and then by leveraging the power of behavioral finance—we can help you make better financial decisions. At the same time, we hope to help you cultivate a more efficient, responsible monetary lifestyle.

Put another way; we work with you toward reducing the number of financial decisions you make based on fear or greed. When we feel afraid or greedy, it can cloud our judgment and cause us to make decisions that we regret later. Emotions can be a powerful motivating factor, but they are often at odds with rational thought and good judgment. 

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Behavioral science is the use of psychological research to understand human behavior. It is a scientific discipline that uses empirical evidence to examine how people think, feel and act. It can also help you reach your financial goals by helping you make more rational and effective investment choices.

For instance, an investor with a confirmation bias may accept only data affirming what they already believe to be true about a particular investment. New information—that may not be 100% accurate—gets automatically accepted if it fits in line with this preconception. No mortal human being is bias-free, but once we know what ours are as an individual, we can begin limiting the impact of potentially self-destructive ones.

This is why we use behavioral science to develop smart money behaviors for reaching your financial goals faster than if you were going at it alone (or, at times, with the help of conventional wisdom). Understanding your biases helps you identify where you may be falling into traps. As a result, it can get easier to avoid negatively reinforcing situations and missteps.

When you hear the word “millionaire,” do you think of a person with a lot of money? Someone who is wealthy, successful, and has life completely figured out? 

It isn’t always easy at first. Many people find it easier to spend their money on bills, rent, and other expenses than they do putting aside savings. However, the best time to start saving is when you’re young. This is because, by the time you reach middle age, your finances may be complicated by accommodations for children, a mortgage, and other of life’s predictable circumstances.

The keys to saving are discipline and patience. It requires making a commitment to yourself that no matter what happens during the month (such as an unexpected car repair), you will still deposit some money into your savings account every week or month. It may help to…

• Make a list of all your expenses, prioritize them, and then decide what you can afford to save each month.
• Set up automatic payments from your bank account into a savings account or investment portfolio (that is connected with the budgeting app you are using). This can help you keep yourself accountable.
• Write down all of your goals, how much money they require in order to be achieved, and how long it will take for them if everything goes according to plan without any unforeseen circumstances along the way.
• Pay down debt. If there’s one thing that can help you save a million dollars, it’s paying off loans or debts that you owe. It can be tempting to take on new debt for things like cars and houses. However, these are often costly mistakes that leave you with more to pay off than when you started out. 
• Deposit all of your increase every year. Every single cent you gain over the course of a year should go into a savings account. Even the smallest steps can add up, long-term, to a more comfortable retirement for you in the future.

Being disciplined, having patience, and letting time work for you are some of the most important keys to long-term financial success. This lesson is not an easy one to learn, but it will pay off in the end. In fact, living well and saving money are not mutually exclusive. They just have to operate hand-in-hand.

Are you planning to retire? Mapping out your future golden years is an exercise in financial forecasting. As a result, it’s important to consider a full range of possible outcomes: If your investments perform well, you should be able to retire comfortably (possibly to a lifestyle more enjoyable than your current one). 

Unfortunately, if your investments perform poorly, you could end up having to work longer than expected. No one wants this to be the case, but honesty (and a preferable outcome) requires considering the possibility. Whenever we make decisions about how much money to save or whether retirement will be an issue, it is vital that we think about what it could mean if our assumptions don’t hold true. 

Retirement funding can be even more challenging for high-net-worth people than those of less significant means: Your income may be tied to the performance of the stock market. The affluent have a lot to lose—and it’s no secret that the stock market has been volatile recently. 

Additionally, the retirement process can raise tax issues that most people don’t have to consider during their working years. For example, when should you plan on taking Social Security benefits?

If you are still working, your employer withholds taxes from your paycheck for federal income taxes, state taxes, and FICA (Federal Insurance Contributions Act) payroll taxes, which feed Social Security. Most employers match half of those amounts with their own contributions to FICA. 

Because affluent retirees take a lot of risk, you should have a plan B ready to roll: It’s not enough to merely have a plan B in place. Yours should be well-thought-out, ready to implement quickly, flexible enough to adapt to changing circumstances, and (most importantly) geared to help you avoid financial disaster.

The best time to create a retirement income strategy is long before you need it. Looking ahead to that time, you should review how your money is invested with an eye on how it will produce income, long-term. We also believe you need a plan B that includes a team with the right expertise and experience. 
In fact, if you are like many people today, your current financial advisor may not be as well-suited to help you retire comfortably as someone who specializes in wealth management for the affluent. Among other benefits, this can help ensure that all aspects of your portfolio are managed consistently over time. Therefore, you may be less likely to miss out on any opportunities (or make mistakes) because they were not communicated properly between firms or organizations.

Although a high net worth can certainly complicate things, it can also facilitate additional opportunities. Philanthropy, in particular, can be tailored to maximize your benefit to your favorite causes. At the same time, when a charity you select meets the IRS guidelines, your contributions can sometimes qualify you for significant tax savings. 

Most of us don’t give solely because we want a tax credit. However, that definitely doesn’t hurt. The beauty of well-strategized philanthropy may be that your gifts can sometimes continue generating returns for your favorite charity for a very long time: In some cases, this continues years after the original donor has passed away. 

Put another way, knowing how to optimize your charitable giving can enhance the value of your legacy, allowing you to give more—both now and for decades beyond. A savvy wealth advisor can educate and assist you in creating an estate plan to achieve these things as well as specify how your savings and assets are to be distributed after your passing. 

For instance, establishing a will can keep the financial legacy you intend for loved ones out of a probate court. It doesn’t have to stop there, though: By establishing a legal trust(s), you can set aside funds to provide a monthly living and education benefit for minors. Similarly, if an adult you love isn’t overly responsible with money, a trust can provide a living for them (that cannot be emptied in a fit of poor judgment). 

These are just a few of the services Scott Marsh Financial is ready to provide you and your family. Contact us today to learn more.