Do Your Financial Pros Know Each Other? Top Benefits Of Coordination
A coordinated financial plan can help take your money from good to great.
Your finances have several moving pieces and many of those may be executed by multiple professionals—a financial advisor, CPA, attorney, broker, etc. Instead of staying in their own lane, what would happen if their paths intentionally crossed?
There’s a reason the “unlikely friends” narrative is so compelling in movies, books, plays, and, it turns out, even in real life. Building a deliberate and coordinated strategy brings more nuance, finesse, and continuity to your financial life.
How can you create a coordinated financial strategy designed to bring confidence and joy to your life? Let’s find out.
Build Your Core Team
The first question you have to answer is who’s in the room where it happens? (Hamilton fans certainly catch our drift). In general, these are the three professionals who should be working together to help build your plan:
- Financial advisor
- Estate planning attorney
- Tax professional/CPA
You want to have the right professionals in close contact as you move through your financial plan. Why? Because every aspect of your financial plan is connected. Let’s take a closer look.
The Sneak Tax Attack: A Case Study
Your financial choices don’t just affect one area—each decision can have a domino effect. Take your investments, as an example. Let’s see how the cookie could crumble, step by step.
- Your allocations, as well as buying and selling habits, don’t just impact your portfolio’s balance and growth. They can also impact your tax liability. High buying and selling rates (along with costly securities) could lead to excess capital gains tax.
- If your choices bump you into a higher tax bracket, you may have other tax fallouts like triggering Alternative Minimum Tax or Net Investment Income Tax, increasing your tax bill.
- If your tax bill increases, you will need a larger cash reserve to make the payments. This could lead to dipping into a cash-fund for a short-term goal like a vacation or even using your emergency fund to foot the bill.
Do you see how one, seemingly small, event can set off a chain reaction? If your financial planner and CPA are in close contact, they could work together to build a uniform, seamless, and proactive tax strategy. Our office works closely with several great tax professionals, so you can feel confident that your plan would be coordinated from the start.
Your estate planning attorney is another major player in this space. Sometimes people find it difficult to connect their estate plan to the rest of their financial lives, but that’s our bread and butter. We love helping people make intentional and informed choices that tell a continuous and authentic story for their lives.
When done right, your estate plan, financial plan, and legacy should all be an extension of the other, weaving together documents and processes that best portray your goals and values.
Coordination Opens Opportunities
In our opinion, working with a high-functioning team is a valuable asset in nearly every aspect of life, whether at work, with your spouse, or with the community.
Each member of the team has their unique set of strengths, and a strong team maximizes each member’s specialties to help produce the best outcome. Making the most of your team’s efforts can also lead to solutions and outcomes that one member might not have been able to find on their own.
The same idea should be true with your financial plan!
Working in tandem with your professionals ensures that no stone gets left unturned. You won’t make a financial choice without also considering the legal and tax implications, for example. Let’s give this idea some context.
Handling an Inheritance: A Case Study
Assume you inherited an IRA in 2020. This inheritance inspires several important decisions and discussions.
- How can you continue your loved one’s legacy with the inheritance?
- What financial goals could the money help you accomplish? (Pay off debt, add to retirement, pay for kid’s school, etc.)
- How does this inheritance inform your own estate plan? Are your beneficiaries aligned with your goals for the money/assets? Have you talked to your loved ones about your estate plan?
- What tax consequences and opportunities can extend the life of the inheritance? (Without the “stretch” provision, how can you keep your tax liabilities at bay?)
All three members of your financial team play a critical role in helping you chart the best course of action. Coordination empowers you to walk into your financial decisions with confidence and clarity, knowing that each step has been carefully planned.
It Protects Your Financial Present and Future
A solid, coordinated team works to help protect your finances both now and in the future. When your pros are working together, they can better anticipate potential roadblocks and strategize solutions. This ensures that you never feel alone or in the dark about your financial life.
Your team can help you stay the course since everyone is working toward the same goals: yours.
So much of financial planning is developing strategies that suit your unique vision for your life. Entrusting it to a robust team helps protect that vision.
Coordinating Gives You Time To Focus On Your Goals and Priorities
When you’re not stressing about your financial plan, you have time to live your life. Knowing that your money is in trusted hands can be a weight off your shoulders and give you the space to live your life according to your goals and values.
Instead of pouring over products, markets, and strategies, you can plan a picnic with your family or have a date night with your spouse.
It also allows you to put your finances in context with your life. Sometimes when you’re too in the weeds, you can lose perspective on what goals you really want to work toward. Having a team to help guide your resources in the right direction, opens you up to focus on your priorities.
You’ll find that a coordinated plan can help give you more confidence and security moving forward. A coordinated plan can truly transform your finances. We’d love to speak with you about streaming your finances to give you more time to live your life. Reach out to us today to learn more.
Advisory services are offered through Legacy Wealth Advisors, LLC dba Legacy Wealth Advisors, an Investment Advisor in the State of Michigan. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted.
All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Moreover, this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed. Legacy Wealth Advisors does not offer tax planning or legal services but may provide references to tax services or legal providers. Legacy Wealth Advisors may also work with your attorney or independent tax or legal counsel. Please consult a qualified professional for assistance with these matters.
