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The Full Picture

Thursday, April 23, 2020

The Full Picture

If you are a regular reader, you may have noticed the title of this section has changed from Personal Trust to Wealth Management.   Although past subject matter included topics beyond trusts, we believe this heading is emblematic of the comprehensive financial advice and solutions you should expect from your First Merchants Private Wealth Advisors team.

So what exactly is comprehensive financial advice?   Why is it important to achieving your goals?   What should it include?   How can you be sure the advice you receive from one expert does not undermine or conflict with that of others?   These are just a few of the questions that may cross your mind when considering this topic.   

Given the headlines of the day, a medical analogy seems in order.   While you may have a specialist who focuses on a specific area of your health, your primary care physician is responsible for ensuring your overall well-being.   Very often, it is your primary care physician who identifies conditions which require the skill of a specialist or team of specialists.   Further, the treatments prescribed by your specialists should work together in support of your overall health to avoid adverse interactions.   For example, it is up to the specialist and primary care physician together to determine if your overall health can endure a procedure or if you need to focus on strengthening another area first.   Without a coordinated plan for your care, you may encounter unintended consequences or diminish well-intended efforts to improve other areas of your health.  In the same way, advice relating to all aspects of your financial goals should be considered together to achieve success.   This is especially true for longer term goals, but shorter term goals share this principle as well.  

The primary categories to address when developing a comprehensive plan are investing, retirement plans and savings, along with risk mitigation and management.   The latter is primarily accomplished through insurance and may overlap with tax strategies and, trust and estate planning, which will also determine how your assets will be transferred after death.  Another key consideration is credit use.   It may be advantageous to make use of loans to fund certain purchases or ventures.   You should expect your advisor to understand both sides of your balance sheet.  Comprehensive advice and planning will anticipate cash flow and liquidity needs to support your goals as well.   

There is an overriding risk to your financial goals if these areas are addressed independently rather than collectively.   Each has a direct impact on the others.   As portrayed in the medical analogy, well-intended advice and solutions could produce unintended consequences in the absence of a coordinated plan.   Enlisting the guidance of an advisor skilled to listen and understand the interactions of your financial goals is crucial to achieving them.  It is unlikely any one advisor has the expertise to offer in-depth guidance in all areas.   But, a competent and engaged advisor will have the ability to assemble the team of experts needed to deliver a suite of solutions designed to accomplish your overall goals.

To illustrate, an advisor working with a business owner on his/her trust needs, may need to include an insurance specialist to design solutions which could provide for care in later years and liquidity to facilitate succession planning.   Further, this advisor may work with a retirement plan specialist to address retention of new leadership in the company and minimize or defer taxes on distributions.  These distributions may find their way into the aforementioned trust which would be strategically designed in collaboration with attorneys and CPAs to minimize or defer taxes and ensure flexible disposition of assets beyond what could be accomplished through a will.   The strategic use of credit may be advantageous at any point in this scenario as well.   A more common example is the use of multiple investment managers, along with a 401(k) or two, in the case of a married couple, to save for retirement.   Your advisor should ensure there is a clear understanding of your overall risk/return expectations.   When combined into a single portfolio, are you taking on more risk than you are willing?   A comprehensive approach will highlight areas in need of attention. Maintaining an up-to-date plan is essential to staying on a path to successfully achieve your goals.    

So what should you expect from your Private Wealth Advisors team or for that matter, any advisor?   How can you be sure your overall financial picture and goals are understood?   It starts with an advisor who listens and asks the right questions.  It is impossible to provide solutions that work together without understanding your priorities, aspirations and areas of concern along with life changes.  You should expect your advisor to engage with other experts as well.    First Merchants Private Wealth Advisors offers clients a team of experts who provide guidance in all areas of planning.   We work alongside you, attorneys and accountants to provide solutions which are truly comprehensive.  You should expect your advisor to approach each interaction with an objective to understand your life goals and how they connect to your financial goals.  Virtually every life event connects to a financial decision, even if the outcome is to confirm your plan should remain on course.   Recent events have certainly reminded us of this fact.   All of our lives have changed over the last several months.   When considering your financial health, are all areas of your plan still working together to ultimately reach your goals?   Whether the answer is yes, no or I don’t know, our advisors are focused on proactive outreach to listen, ask good questions, understand and offer solutions that can keep you moving you toward your goals, no matter what life events take place.  
Audrey Mistor