IT and Business Insights for SMB Solution Providers

Wealth Management for Tech Managers

Channel pros without a wealth manager can miss out on opportunities to grow and protect the money they’ve worked so hard to make. By Rich Freeman
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UNLIKE INVESTMENT ADVISERS, wealth managers help with insurance, taxes, estate preparation, exit planning, and other needs.
IT’S NEVER TOO EARLY to begin discussing all those topics with a trained professional.
THE BEST WEALTH MANAGERS usually have a noncommission fiduciary relationship with their clients.
PEERS CAN BE GREAT RESOURCES for wealth management ideas too.

HAVE YOU CONSIDERED issuing qualified small business stock in your company as part of an exit plan? Too bad for you if the answer’s no.

“It could potentially, in some situations, allow the business owner to ultimately get out of the business and sell without any tax implications,” notes Kristin McKenna, managing director and wealth adviser at Darrow Wealth Management, of Needham, Mass.

That’s just one example of why wealth management matters, according to Dave Seibert, CIO of IT Innovators, an MSP and solution provider in Irvine, Calif.

“Most people when they think about wealth management planning think about the natural things: stocks, bonds, annuities, 401(k),” he says. In reality, though, just as your clients don’t know what they don’t know about IT without your assistance, you may miss out on opportunities way beyond investing to grow and protect the money you’ve worked so hard for without help from an experienced wealth manager.

The High Cost of Waiting

Unlike talking to an investment adviser, a conversation with a wealth manager typically covers all aspects of short- and long-term financial health, according to Christopher Winn, CEO of Portland, Ore.-based Interactive Wealth Advisors.

“It’s not going to just look at one piece of the pie,” he says. “It’s going to look at estate planning, insurance planning, tax planning strategies, investment retirement planning. It could even include specific financial topics like college funding.”

Kristin McKenna

Ideally, McKenna adds, you should have the first such conversation earlier than you probably think, and well before retirement looms on the horizon. “There’s a cost of waiting too long,” she says. “You can’t go back and buy life insurance once you’re dead.”

As Winn notes, moreover, there’s more than just insurance involved in preparing for that grim eventuality. “People die all the time without a proper estate plan,” he says, adding that there are many ways to reduce estate taxes and specify exactly who should inherit your business or your share of it, through vehicles like a so-called “buy and sell” contract.

Death isn’t the only prospect channel pros must plan for. Disability is far more common than most people realize, according to Curtis Hearn, a wealth adviser with Atlanta-based Gratus Capital. “You’re much more likely to use disability than you are really almost any other type of insurance,” he says. “It’s not what I would characterize as cheap, but it’s very important.”

Insuring your business is essential too, Winn adds. “A lot of clients are underinsured when it comes to property and casualty,” he notes, “and since we kind of live in this litigious society, it’s very easy for someone with a high net worth to get sued.”

Seibert urges channel pros to speak with a wealth manager about taxes as well. “The bottom line is most of us pay, ballpark, an average 30 to 35% in taxes, and there are legal, legitimate ways to think about how you’re going to keep your taxes at a minimum versus just paying the full lump sum.”

About the Author

Rich Freeman's picture

Rich Freeman is ChannelPro's Founding Editor

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