Connecting Your Business and Personal Wealth
THE VALUE OF A COMPREHENSIVE WEALTH ASSESSMENT
86% of business owners agree that having a transition strategy is important both for their future and the future of their business, but 60% don’t have a plan.1
Most business owners do not consider or define their succession plan until they are ready for the actual sale or succession event. However, the ideal time to involve a professional in the development and execution of a succession plan is at least 3 years ahead of the event. When business owners fail to start planning soon enough, they sacrifice potential opportunities to maximize the value of the ultimate succession event.
City National Rochdale (CNR) and your financial advisor are here to help you navigate the complexities of wealth and business ownership in order to protect what you’ve built, manage family dynamics, and establish a formal succession plan.
<33% of family businesses survive the transition from first to second generation ownership. Another 50% don’t survive the transition from second to third generation.²
Business owners are often focused on running the day-to-day aspects of their business and can benefit from a higher level approach that considers both their business and personal wealth.
CNR’s complimentary service, Comprehensive Wealth Assessment (CWA), focuses on evaluating and correlating the objectives and needs of your business and personal wealth by identifying gaps and opportunities across your entire financial well-being.
Our process empowers you to make informed decisions that will serve to enable the successful transition of your business and optimize your wealth throughout your lifetime. Once the assessment is complete, you and your financial advisor are well positioned to work with your attorneys and accountants, as appropriate, to implement the recommended strategies.
STRATEGIC PILLARS OF WEALTH
CNR’s holistic approach to assessing a HNW business owner client’s wealth encompasses what we refer to as the Strategic Pillars of Wealth. These pillars enable CNR and financial advisors to expand the client value proposition into areas that are often ignored or forgotten.
When considering business succession planning, the topics of intergenerational wealth and trust and estate planning are closely interrelated. City National Rochdale (CNR) and City National Bank (CNB) have industry leading specialists with the experience and fiduciary responsibility needed to guide you and your clients on this dynamic journey.
To learn more about the Strategic Pillars of Wealth, refer to the “A Holistic Approach to Your Wealth” resource.
We also review your business priorities and needs using specific considerations in regards to financial planning, asset protection, business continuity, and business succession.
Clients who can benefit most from a CWA are those who control the business entity and have:
- $25M + of annual revenue
- $2M+ of EBITDA
- 25 or more employees
A business owner was negotiating the sale of his family business and needed someone to help review the strategies that his attorney had recommended to him. He engaged his financial advisor and CNR Senior Investment Consultant (SIC), who offered the services of a CNR Senior Wealth Strategist (SWS) as a resource.
The CNR SWS acted as an independent third-party resource for the business owner, helping him navigate and better understand the complexities of the strategies that his attorney and accountant were proposing (the sale was preceded by a series of discounted gifts).
Across several virtual meetings/conference calls over a three month period, the SWS reviewed documents and fielded questions regarding various aspects of the pending sale and its related planning issues.
Thanks to the help and guidance of their advisor, CNR SIC and the SWS, working collaboratively with client’s attorney and accountant, the business owner was able to transfer the family business out of his estate at a 25% discount and utilize a comprehensive investment plan for the after tax proceeds of the sale.
HOW TO GET STARTED
Your financial advisor and City National Rochdale (CNR) can help you define, meet, and optimize your business and wealth goals and objectives. Even well-defined plans need to be refreshed periodically as your business matures, life events occur and the regulatory environment changes. If you are interested in learning more about our Comprehensive Wealth Assessment service, reach out to your financial advisor.
QUESTIONS TO CONSIDER
- Are you aware of strategies to consider now for a tax-efficient business transition later?
- Do you have the right type and structure of entity for your business succession plan?
- Is your liquidity and cash flow adequately protected from potential creditors?
- Is your business protected from the loss of services of a key employee or yourself?
- Have you identified your ultimate succession outcome?
1Based on a City National Bank survey of its Private Bank clients conducted in April 2020
2Source: Exit Planning Institute. Exploring the Psychology Behind Exit Planning. Retrieved January 2021 (www.youtube.com/watch?v=VgAul4NS-Hw)
The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. This presentation is not an offer to buy or sell, or a solicitation of any offer to buy or sell, any of the securities mentioned herein.
Any opinions, projections, forecasts, and forward-looking statements presented herein are valid as of the date of this document and are subject to change.
Investing involves risk, including the loss of principal.
As with any investment strategy, there is no guarantee that investment objectives will be met, and investors may lose money.
Past performance is no guarantee of future performance.
City National Rochdale, LLC is a registered investment advisor and a wholly-owned subsidiary of City National Bank. City National Bank provides investment management services through its sub-advisory relationship with City National Rochdale, LLC.
This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.
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