Leadership

The Personal CFO

Building a small business requires a 24-7 commitment and an enormous amount of blood, sweat, and tears. And while entrepreneurs may pour all their energy into growing the business, they often neglect to consider their personal finances.

A recent CNBC poll, in fact, found that 70 percent of business owners’ wealth is tied up in their business, with only 30 percent invested elsewhere, such as in stocks, bonds, or real estate. That same study also found that 54 percent of wealth managers worry their clients lack adequate protection against financial risks (28 percent said their clients were well-protected, another 19 percent said they were not sure).

The successful entrepreneur understands the value of having a chief financial officer at the office, but what about at home?

“We’re taking the CFO role that they have in their office and bringing it to their personal assets and generally working at a much higher level than just an investment tool,” said Rich Schuette, CFP, the CEO of Avalan Wealth Management.

Avalan Wealth Management provides customized investment management solutions based on client goals. The firm has no minimum to investment for small business owners looking to get their personal financial houses in order, but non-entrepreneurs need to hold $2 million in investable assets. The reason for that dovetails with what CNBC found, business owners push resources to their business and their wealth is often tied down as a result; Avalan Wealth Management looks for ways to serve those clients while taking their unique circumstances into account.

Those unique circumstances require open lines of communication and honest advice, Schuette said. Avalan Wealth Management is a fiduciary firm, meaning that it puts the client’s interest before its own.

The Department of Labor’s new fiduciary rules – which would have extended fiduciary responsibilities to insurance brokers and other finance professionals – may be in limbo, but that doesn’t change the way Avalan Wealth Management does business. Schuette said the new rules were “overreach” by the DOL, but that something does need to be done given how many advisors scam naïve investors. For Schuette, tailored plans and client goals are the key to upholding fiduciary responsibility.

“I’ve never given a ton of thought to this new momentum behind the idea of customized solutions because I’ve always believed that that’s the only way to do it,” Schuette said.

Goals especially are key. Schuette said he believes that advisors focus too much on returns, without considering how an investment or product helps the client get from point A to point B.

“It doesn’t matter if the market was up or down last year … What matters is: What that client had at risk, how did it change in value, and what did it do to their goals?” Schuette said. “We need to talk more about risk, less about returns, and more about goals.”

For more information see www.avalanwealth.com

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