My wife and I are preparing for the arrival of our first child. We are busy researching day care options, searching for nursery furniture, and envisioning our new lives with a little one in the house. With all these tasks to complete, there is not much time for anything else. However, I would not be doing my job as the CFO of ‘Kocanda Family Capital’ LLC without thinking of the actions we must take in our personal financial lives to account for the new addition to our family.
Just like my new focus, it is important for financial professionals (private equity professionals, investment bankers, and asset managers) to consider the strategic actions to address as their private wealth management evolves. As lives and careers continue to grow, there are imperative matters that must be accounted for to ensure personal success. Below are some of the critical junctures and considerations to keep top of mind as ‘Your Family’ Capital evolves.
Early Career: Analyst to Associate – Single to Married
The early part of any financial professional’s career usually implies long hours and a rapid acceleration of learning either on the job or in business school. As earnings start to grow and a spouse comes into the picture, it is vital to start thinking about:
- Cash Flow Planning: Understand the cash flow utilization between lifestyle spending, debt servicing, and savings. Create discipline for achieving savings and investing goals. Allow the power of compounding to start working early in your investing life.
- Account Administration: As you begin to merge finances with a spouse, ensure that accounts are titled correctly with beneficiary designations selected and basic estate planning titling (transfer on death or tenants in common).
Mid-Career – Vice President to Director / Principal – Married to Family
As you start to climb the totem pole, your career is moving at a dizzying pace. Airplanes and travel are becoming more of the norm and your family is blossoming to include one, two…or even three kids at home. Your time is becoming more valuable, but make sure you carve out time to think about:
- Estate Planning: Ensure wills, trusts, and powers of attorney are in place and up to date. These critical documents ensure your wishes are carried out and those that depend on you will be taken care of if something should happen.
- Life Insurance: You have a family relying on your income. Implementing a term life insurance policy can replace that income in the event of your passing.
Late Career – Managing Director & Partner to Retired / Family to Empty Nester
You’ve made it to the top – you have grown through your career and oversee high-level decision making. At home, you are sending your kids off to college and re-focusing your energies towards the future. Retirement is starting to look more tangible and these steps can help towards defining your legacy:
- Retirement Planning: As your income producing years end, its important to know your ‘number’ that will allow for a full retirement. Creating a strategic plan to arbitrage the high-income and low-income years can add straight to the bottom line.
- Gifting: Leaving a legacy can start during your life with gifting. This can take the form of both family and charitable gifting. Leaving behind a legacy can also be additive from a tax and estate planning perspective.
The evolution of ‘Your Family’ Capital LLC is determined by both your career and personal life. These items are not an exhaustive list nor are they set in stone. Rather, these steps continue to build and change as your life evolves. I am starting to focus on the next steps for my family and so, I ask – have you taken the right steps thus far and are you prepared for the next step in your evolution?
Matt Kocanda, is a Wealth Manager at BDF and a member of the Investment Committee. The investment committee develops BDF’s overall investment strategy. Matt focuses on advising Financial Service Professionals through their complex needs – including cash flow, tax, or estate planning. Matt received an undergraduate degree in Finance from Indiana University.