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Wealth extractions: Eight angles to wealth discovery

Jan. 10, 2011
By J. Haden Werhan, CPA/PFS
Quick, what does this octagon mean to you?All of us depend on the basic stop sign to help us reach our various destinations without mishap. In other words, by pausing at critical points along the way, you’re far more likely to reach wherever you’re trying to go. That’s true in wealth planning too. Have you ever stopped to consider the biggest “whys” behind your money? How you invest, what you invest in, and how you protect your investments are all important subjects. But if you’ve rolled straight past exploring why you’re investing to begin with, you are likely to end up with serious gaps in your planning. Identify and address these gaps early on, and you’ll avoid the need for major reconstruction later on down the road. Let me give you a specific example. It’s not uncommon for new clients to come to us with a portfolio full of holdings based on guesswork and hot tips; a mishmash of insurance policies acquired over the years for reasons that made sense at the time; and an obsolete estate plan, if they’ve even got one. They know it’s time for a change. They crave a sense of financial clarity. But they’re stuck in place, uncertain about where to even begin. That’s what happens if you skip the “why” — your specific end goals to guide you, so you can proceed with confidence. Wealth Discovery can be an invaluable tool, as an exercise you can do yourself or with your wealth advisor. Wealth Discovery takes your vague, hazy notion that you should be “doing something” with your assets and replaces it with sharpened focus on the details in your life that are most significant to you and your family: the specific aspirations you want to achieve as well as the real obstacles that stand in your way. We find it helps to divide Wealth Discovery into the following eight components: 1. Values - What is most important about money to you (and yours)? 2. Investment experience - Can you articulate your current investment strategy and what you do and don’t like about it? Do you know how your investments have been doing so far? 3. Goals - What would you like to achieve with your wealth? Do you have a date by which you want to retire; do you want to bequeath a legacy and/or charitable intents? What else? 4. Personal relationships - Who are the important people in your life and how would you like to include them in your wealth plans?5. Assets - What have you got and in what form have you got it? 6. Financial relationships - Who are the key advisors in your financial spectrum, such as your accountant, attorney, insurance agent, and investment advisor? 7. Process - How involved or arm’s length do you like to be in the investing process? 8. Interests - What do you do for personal enjoyment? These are the components that shed a lot of light on where your financial gaps currently exist. They help you shape your wealth management moving forward. It’s a little like taking X-rays and study models of your patient and consulting the appropriate specialists before you begin treatment. Wealth Discovery gives you good reason to smile about your future plans.
J. Haden Werhan, CPA/PFS, says, “Serving the dental community has been core to what I do throughout my career. I tell people it’s in my blood. After growing tired of transacting commission-based real estate sales, I looked for better ways to support practices. I found what I was seeking at Thomas, Wirig & Doll, just as we were setting up Capital Performance Advisors. I’ve never looked back.”Haden has been a member of our affiliated firms since 1998, providing wealth management, accounting, and tax services to successful practitioners. He came to the firm following a lengthy career managing, consulting, and providing accounting services to dental practices ranging from start-ups to acquisitions to large group settings. He has regularly lectured and provided seminars on tax, financial planning, practice management, and practice evaluations at the University of California, San Francisco; the University of the Pacific School of Dentistry; and various dental societies.He can be reached by e-mail at [email protected].