Jeremy Brenn of Sensenig Capital recently participated in an event known as the Tough Mudder. As explained on its website, the Tough Mudder is a hardcore, 10–12 mile obstacle course designed by British Special Forces to test strength, stamina, mental grit, and camaraderie. According to Jeremy, the most interesting part of this challenge was the ability to work together as a team in order to complete this physically demanding course. In the absence of a team, the odds of finishing the event are significantly reduced. Similarly, firm president Carl Sensenig recently completed his 14th consecutive year riding in the American Cancer Society’s Bike-a-thon, a 65-mile ride from Center City Philadelphia to the New Jersey shore. Carl notes the importance of joining a team of riders in a pace line and “drafting” the rider in front of you, blocking the wind and saving considerable time and energy on the extensive ride.
Below, Brenn and Sensenig draw a remarkable parallel between the teamwork aspect of these events and that of a true wealth management experience.
At Sensenig Capital, we serve a considerable number of small business owners and their families, many of whom are busy people who have somewhat complicated financial obstacles to overcome. If you own a small business, work for one, or are involved in a business through partnership or family ties, then you are probably aware of these financial hurdles and how many of them overlap each other.
For example, by some estimates, roughly 80% of typical small business owners’ net worth is tied up in their company. While this makes sense since they have invested in the company’s growth over the years, it’s vital to get assets out of the business and into retirement accounts in the years approaching retirement. This is also important in providing the owner with a psychological advantage when it comes time to sell the business; they already have money set aside for retirement, so they can be patient in finding the most appropriate buyer at the right price. The decision making process in this example requires having a team of expert advisors in place to assess matters of estate planning, taxation, business valuation, and retirement plan design. Despite the fact that these financial decisions overlap, it is unfortunately rather common to find they’ve been made in isolation.
The biggest obstacle for most people, especially small business owners, is integrating financial planning issues so that all gaps are filled and all decision-making is cohesive. In our experience, a lack of proactive coordination on the part of the client’s advisors is the main reason … decisions are made in isolation because the advisors are not communicating with one another. When was the last time your attorney reviewed your estate plan in conjunction with your insurance expert? Or, how often does your investment advisor speak with your accountant regarding ongoing tax matters? If you are unsure how to answer the preceding questions then consider the following thoughts.
The ability to coordinate specialists in order to help clients make more informed financial decisions is critical. Just like in the Tough Mudder event, it requires a team effort. No one advisor, or firm, has the expertise to service needs ranging from investments to legal matters to tax considerations, and beyond. Therefore, you should seek out a true wealth manager—a firm that has the ability to build and manage an expert team designed to integrate and enhance every aspect of your financial life. Without that quarterback relationship, without somebody who is touching each advisor, the total planning gets compartmentalized. This team is guided by the wealth manager and might comprise of one or more of the following: an estate attorney, business attorney, CPA, insurance specialist, credit specialist, investment banker, and possibly even a psychologist trained to handle business or family conflicts. In many cases, as a client will already have one or more of these advisors in place, it then becomes the job of the wealth manager to work with each advisor in facilitating the necessary planning. In addition, it is important that your advisors are operating free from conflict of interest. This means that none are being compensated for referrals or being paid commissions. This ensures that each is working solely in your best interest.
An additional item to note here: If the wealth manager is truly serving your best interests as the quarterback in the relationship, it’s incumbent upon them to ensure that each team member has the appropriate background and expertise to serve on the team. In our experience at Sensenig Capital, a business owner will probably need advice with more depth of knowledge than what most generalists can provide. For example, an auto, home, and life insurance professional isn’t going to be the right person to help truly assess the insurance needs of your business. Furthermore, a family law attorney may not have the appropriate expertise in navigating specific business matters. Using the wealth manager to discover the right experts is critical. This allows you as the business owner to continue focusing on what you do best—managing the business—while the wealth manager handles the rest.
In summary, when making financial decisions, it is important to consider all aspects of your financial life and ensure that each of your advisors is communicating appropriately to best serve your needs. Consider the use of a true wealth manager, like Sensenig Capital, that has the resources to coordinate all financial matters, not just your investments, be it integrating what you already have, or helping you fill the gaps. Just like the camaraderie and effort it takes to run the 10–mile Tough Mudder obstacle course, the same determination and team effort is required in the continuous process of meeting your unique financial needs.