Aligning Assets for the Future

Leveraging businesses & investment properties for retirement

There are 32.5 million small businesses in the United States, according to the U.S. Small Business Administration. Many are now selling their businesses and properties with an eye toward retiring comfortably. There were changes in 2017 in the capital gains tax code that can make this tricky.

Specifically, the 1031 Exchange section of the IRS code used to mean that if someone sold a business for another similar property, the capital gains didn’t need to be reported and paying taxes on them could be avoided.

Wilkinson headshot“But such business owners cannot utilize the 1031 exchange anymore, and many need to use the entire gain from selling their businesses toward their retirement,” Oakland-based Steven Wilkinson Sr. told Advisors Magazine in a recent interview.

As managing principal at Wilkinson Wealth Management, Wilkinson said his primary focus nowadays is on this 1031 Exchange issue, retirement planning and the markets.

“More broadly, I’m working with seniors, business owners, and property owners on this issue of appreciated assets,” he emphasized. “Anyone who would like to sell and defer taxation so they can align their assets with their future needs in retirement.”

Wilkinson said many of his clients are in complicated situations where they have assets that have large capital gains. “So, we’re looking at ways to change and diversify those assets,” Wilkinson said. “The goal is to have the entire amount going towards their retirement.”

In fact, Wilkinson started his own small business at the age of 15: Wilkinson Enterprises, a vending machine company that later evolved into real estate ownership and management.

“I have either owned or worked with small businesses ever since,” he said. “Small businesses are the foundation of our communities. “They create a lot of wealth.”

An early passion for business and investing

Wilkinson’s passion for small businesses actually dates back to high school in Nashville, Tennessee—when he first came to appreciate his classmates’ parents running their own businesses and seeing their profound impact on the community.

As early as seventh grade, in fact, Wilkinson became interested in finance and investing as a student at The University School. A school that was part of the Vanderbilt University community.

“At that school, during junior high, we played a stock market game. They had us choose teams and read the “Wall Street Journal” and compete against each other,” he recalled. “And then, at the end of the competition, we visited, J.C. Bradford, a local investment bank where a classmate’s parent was a partner. It all made an impression on me, and I wanted to learn more.”

Wilkinson TallWilkinson also grew up around the Civil Rights Movement, and he developed a strong conviction for economic equality. He went on to major in finance at Indiana University and received an MBA from Harvard Business School. He began his financial career as an FDIC bank examiner and then in financial services with Morgan Stanley. He founded Wilkinson Wealth Management in January of 2004 as an independent advisory firm to serve The Bay Area.

“This kind of became a second act,” he smiled. “I decided to go independent largely because technology was a game-changer that would allow me to customize the services for my clients.”

As part of his own education, Wilkinson became knowledgeable about how the world’s economy works, how a nation’s economy works, how the global financial system works, and how it all ties into the markets and various asset classes. He has been appointed by two different Oakland Mayors as a Trustee for the city’s Police and Fire Retirement System. He often serves as a panelist or moderator for institutional investment conferences around the country.

Such expertise not only connects him and his clients with some of the best fund managers in the U.S., but he is able to impart broad knowledge to his clients as part of their own financial education. They come to appreciate the macroeconomic impact on their personal situation.

“Education is vital,” Wilkinson said. “And there is a lot of information that can be boiled down to a very simple level and aligned with commonplace terms that our clients understand.”

He added: “Once they have those concepts and understand the variables that you’re working on, it gives them a lot of confidence and understanding of how they can actually control what happens in their own personal economic environment.”

Flexibility is vital

The pandemic has changed our economic environment and Wilkinson like many others—especially business owners—found that flexibility is key.

“You have to be knowledgeable of the changes that are happening in your environment, and you have to be willing to adjust to the changes,” he said. “Those that don’t adjust are no longer relevant in the future.”

Working through the pandemic accelerated the acceptance of Zoom meetings and other conferencing technologies, which Wilkinson said now allow for more client touches. Other technologies like electronic docu-signing have lessened the need for mailing and faxing.

“All these factors, as well as using technology to create more customized financial solutions, have given us more detailed records and made us even more productive.”

Wilkinson also serves as Chairman of the Board of the Northern California Small Business Financial Development Corporation. A state guarantee loan program that is part of the California Infrastructure Economic Bank.

During the pandemic, he noted, a lot of small businesses struggled, and many went out of business.

“But you saw a lot of big businesses like Amazon, Walmart, Target and Chipotle—as well as some new startups—grow, just because of the destruction of small business,” Wilkinson added.
Many families depend on small businesses, which is why he’s so enthusiastic about helping them.

“It’s a major reason I work with business people,” Wilkinson said. “And also, why for the last 15 years I’ve chaired the Nor-Cal Financial Development Corporation—to help get small businesses that capital to be able to grow and sustain their businesses.”

What’s more, Wilkinson Wealth Management has always provided tailored solutions for wealth creation, retirement, and as part of advanced financial planning.

“It’s not just about returns,” he said. “To get higher returns, you have to take more risk—but that’s not necessarily appropriate for each and every client.”

Working wilkinsonSo, during an over-hour-long meeting, Wilkinson conducts his discovery process, learning all the different aspects of a client’s life—from their financial state to what they value and are aiming to accomplish. From that, he begins to formulate a tailored plan based on what a specific client is most concerned about.

“With that foundation we are then able to get into all the different advanced wealth management topics,” Wilkinson said. “These might include estate planning for the next generations, detailed tax planning, financial planning, and more, depending on whatever needs to be customized for each client.”

Nonetheless, planning during a period of rampant inflation has now become part of every client’s tailored solution—although to varying extents. It’s all about how to keep up with inflation—or possibly stay ahead of it—but at a suitable risk level, according to Wilkinson.

“If you kept your money under a mattress for the past year, its purchasing power has nearly declined by double digits,” he said, “and it’s likely to continue to do so over the next year.”

Wilkinson added: “So you have to put your money to work and allow it to reduce any erosion from inflation.”

And that comes down to the lifestyle of each client as well as the lifestyle the client wants in the future.

The key question when working to develop an inflation-fighting plan: “What’s the cost of that lifestyle?” asks Wilkinson.

At the same time, Wilkinson’s firm is currently focusing on any looming storms, including the possibility of a recession, which he believes is more likely in 2023-2024.

Living and practicing in the Bay Area, he and his clients have experienced earthquakes, which he cites as an analogy for surviving any financial upheaval.

“Homeowners here are aware of where they live and can prepare for earthquakes in advance,” Wilkinson said. “They can take steps to strengthen the foundational points of their houses. Likewise, we are doing exactly that for our clients’ financial foundations.”

Wilkinson noted: “Minor earthquakes happen every day and market volatility is common. Mainly, you want to be ready to survive when the big one comes.”

For more information on Wilkinson Wealth Management, please visit:


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