Do you feel overwhelmed with the amount of information and opinions there are out there regarding planning for your financial future and investing? Have you ever Googled “how to manage my money better”?  I did.  In just under a second, I got back 1,500,000,000 results. That’s 1.5 BILLION.  So it makes sense that you may feel overwhelmed or not know where to spend your energy and time regarding your wealth.

For those of us that have the honor of advising and serving clients in regards to their wealth, we are not immune to the “information overload” either. Every week my team and I spend hours analyzing different cash flow distribution simulations for clients, reviewing success rates for various pension distribution options, researching investment strategies, strategizing how best to reduce an executive’s stock compensation exposure, and designing estate plan options based on our clients’ desires. Each of of these topics, let alone the hundreds of other topics, has dozens of variations of advice for different clients. While we are not immune to “information overload”, we are fortunate enough to have the education and skills to know where to start and how best to analyze the situation.

How can someone who can’t spend the time focusing on this become an expert and stay up on all the trends? Simply put, they can’t. The great clients we work with are spending all their time growing businesses, climbing corporate ladders,  perfecting crafts, having fun with their families, going on vacations, or doing other more important things they love. 

The decision on where to focus and spend the most important thing, your time, is a personal choice.  There are people who truly love to analyze their personal financial data, learn about changes to tax codes, review insurance contracts, and decide on how best to invest.  For those that want to focus on all the other things in life and rely on experts to help them, that’s where we come in. 

This writing came out from a great conversation I had the other week when I was asked what are some high level things that I thought everyone should focus on to do better with their money. I’m going to attempt to answer that and provide some context to what we believe good wealth management advice looks like.

First, we start with the idea that no one should waste time focusing on things they do not have an impact on or control over.  So, you will find I do not talk about finding the next great stock or investment, as that is out of your control. I do cover investment management but that is because it is, partly, something you can control.

For those that haven’t yet been able to save up a lot or are still trying to build a foundation, your focus should be on reducing any high interest debt load, how to increase your income (change jobs/promotion/side hustle), having proper insurance coverage, and then saving into the right type of accounts.

Now, if you are like most of our clients, you have a successful career/business and are too busy to spend a lot of time on your growing wealth.  But, you have been saving a lot over time and have a decent amount saved up, thus a lot to lose if you mess up. If this is you, congratulations!  You have worked hard and gotten yourself into a position financially to really start taking advantage of the snowball effect of growing your wealth.  These are big assumptions but I am going to assume you know to have a clear and articulated list of goals, save as much as you can, and get rid of high interest debt. With that assumption, I would recommend focusing on three things: 

  1. Financial organization – know what you have, where it is, and have a plan for it all when you pass away

  2. Risk management – evaluate the various risks you are taking on and, if possible, get proper coverage to reduce them or invest differently to reduce known risks

  3. Tax management – make sure you are reducing your taxes today but also giving yourself the opportunity for lower taxes in the future

Financial Organization

Financial organization is a key area of focus as you increase your wealth and it covers a lot of areas.  First, put together a real-time net worth statement.  This helps you get your hands around where you stand and, if you are married or have a partner, gets both of you on to the same understanding of what you have. Make sure it is easily accessible and automatically updated.  

Next, consolidate as much as you can.  There are many great companies that can hold, almost, all your accounts in one place (they are called custodians, i.e. Charles Schwab, Fidelity, …) and typically give you great service.  It use to matter where you had an account because that allowed you to have access to different investment options and services, but that’s not the case anymore.  Most investments can be held at all custodians and their services are very similar across the board.  Why have a dozen different statements coming each month and have to keep track of it all?

Now that you know where you stand, make sure your estate planning is up to date and inclusive of all you have.  Put together the basics:

  • Will

  • Living Will

  • Power of Attorney

  • Proper Beneficiary Designations – This is key as the beneficiaries on your will does not overrule any beneficiary designation on accounts. 

And, if it makes sense, have trusts created.  This helps facilitate your wishes and brings in additional levels of protection from a variety of places before and after you pass.  There are many different types, which we will cover in a future post, that can help facilitate many different wishes: revocable, irrevocable, ILIT, QTIP, CRAT, CRUT, Grantor, etc.  Also, if you want a non-spouse as your beneficiary, think about using a transfer on death account rather than just including them in your will.

Risk Management

Nothing can hurt a family’s financial well being like the main breadwinner passing away or becoming disabled.  Therefore, make sure your insurance coverages are evaluated every handful of years by a qualified and reputable advisor.  The basics to have are group/employer life insurance and disability. That is only the start though.

Unlike how the costs of insurance have gone up in health care, they have actually gone down in life and disability insurance.  Many of the policies written a decade or so ago are now cheaper to own, even though you are now older. But you will not know unless you have it looked at.  By reviewing policies and having a knowledgable advisor help with it, you can get better or cheaper coverage. Also, review the benefit of term vs permanent insurance.  Many policies were sold as a way to get tax-free income in the future but were not funded properly or now have better options.  And, as before regarding Financial Organization, make sure your beneficiaries are up to date here.

You also need to review your home, auto, business liability, and umbrella coverages.  Most people do not reassess these their home policy after putting it into place and forget about coverage values after they have done a remodel, addition, or other upgrade. Did you put in a pool?  You definitely need to look into an umbrella policy. Also, if you have an older car, do you still need full auto coverage or just collision?  How about updates to your business liability?  Are you increases the services or number of people but haven’t adjusted the coverage?

Last in the risk category but not least important is portfolio risk management. Similar to how we just talked about how easy it is to get proper coverage for risk in your life and livelihood, it is actually relatively easy to get proper “coverage” with your investments. The hardest part of investing is sticking with an investment after it has lost 50%. One reason is simple math. It’ll take 100% gain to get back to even!  Just losing 30% takes 43% to get back to even.  So, what can help “cover” that risk and the difficulty from BIG losses, diversification and trend.

The most commonly used and discussed is diversification. As I’m sure you are aware, this is knowing which types of investments you own (stocks, bonds, real estate, alternatives, etc.), how much of each type, and how they interact with each other.  Typically, the riskier the investment the more POTENTIAL return and vice versa.  We could talk extensively on just this but will leave that for another time. The great thing is that being able to analyze how they interact and how much and what type of risk each holding takes on continues to be easier and easier for everyone to evaluate. Yes, there are a lot of proprietary tools and much more advanced ways for us to analyze portfolios but the basic risk of an investment and how correlated it is to the rest of your portfolio is relatively easy to figure out. (If you need help or a second opinion, please reach out.) Also, regarding diversification, this is something that you need to monitor and adjust over time. A consistent rebalance to the desired diversified allocation is needed to keep this “coverage” in place.

The one that isn’t talked about a lot but we have seen it be very powerful for investment risk management is using trend in your portfolio management. Now this one takes a bit more time and work, unlike everything else I’m writing about here, but can be set up to automatically occur in your portfolio. There is a vast amount of research done on many different ways to use trend and which “signals” to use. The basic gist is that you only want to own an investment that is going up or in an upward trend, as measured by being above (own) or below (don’t own) some trailing moving average. The reason we believe in trend and utilizing it in portfolio management is that it, by design, helps minimize the BIG drawdowns. It will not get you out of an investment at the top or buy back into at the bottom. Instead, a proper use of trend will allow you to miss the “big middle” portion of drops in the market. We recommend using a longer term trend, something easy to monitor like the 200-day moving average.  This will help minimize the amount of monitoring and trading you need to do and also the amount of times that the “signal” will be wrong.  Yes, this will happen a lot. Especially in very long up markets that rebound quickly from a pullback (i.e. the last 10 years). 

Tax Management

Who doesn’t love to talk about taxes?  While almost everyone feels they pay too much in taxes, those of you with higher incomes and taxable investment accounts probably are paying a pretty high tax compared to most.  There are a lot of different strategies to use here as well but make sure you are doing the basics.

If you have high income, save as much as you can into tax-deferred retirement accounts (401k, SEP, IRA, etc). If you have it available, contribute the maximum to a HSA and invest it similarly to your retirement plans. This is a great tool with triple-tax benefits, which is very unique. On top of that, if you are allowed, save after-tax into your 401(k) or other retirement plan.  This will allow for a Roth IRA conversion in the future, which can be a huge tax arbitrage strategy. Do “back door Roth IRA conversions” as often as you can but do not get caught doing it wrong by forgetting about the Pro-Rata Rule (

If you have investments in a taxable account make sure you are: using municipal bonds not corporate bonds; own low or no dividend paying stocks; do not have any REITS in those accounts; use tax-managed funds/ETFs; and harvest losses when possible.  All of these moves can individually combine for thousands of dollars or more in tax savings each year.

If you are an executive who receive restricted stock as part of your compensation, specifically ISO (Incentive Stock Options), look into the Section 83 election.  This has been a great way for clients to save a lot in taxes.  Similarly, if you have stock options as part of your compensation, look into lumping together charitable donations and other tax deductions or itemizations into the years where you will exercise those options.

As I said at the onset, focus on what matters, you can control, and where you have the biggest impact. Although this is a lot, this is by no means an exhaustive list because, as you may have noticed above, there are so many different strategies and options for different circumstances and situations. We handle these and many, many more topics for our clients. I would love to connect and see if we can help or just give you a little direction in regards to your wealth management and advice.  Connect with me here.  Thank you for you time!

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