THE VALUE OF A COMPREHENSIVE WEALTH ASSESSMENT
Connecting Your Business and Personal Wealth
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.2
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 knowledgeable specialists with the experience and fiduciary responsibility needed to guide you and your clients on this dynamic journey.
We also review your business priorities and needs using specific considerations in regards
to financial planning, asset protection, business continuity, and business succession.
CONSIDERATIONS FOR BUSINESS OWNERS:
ASSET PROTECTION
Take measures to protect your assets and mitigate risks from creditors.
- Creditor Protection
- Risk Management
- Insurance Planning(Liability, Life, etc.)
- Funding Buy-Sell Agreements
BUSINESS SUCCESSION
Understand your readiness for succession and develop a smooth transition plan that reflects your needs.
- Transition Planning
- Sales to Third Party
- Sale to Insiders
- Transfer to Heirs
FINANCIAL PLANNING
Evaluate the plan for your business and identify gaps and opportunities as it continues to grow and evolve.
- Cash Flow
- Income Tax Education
- Employee Benefits Planning
- Charitable Planning
BUSINESS CONTINUITY
Preserve your business in the event of natural disasters, loss of key employees, or other unexpected disruptions.
- Emergency Planning
- Key Employee Compensation & Life Insurance
- Credit and Financing
BENEFITS FOR BUSINESS OWNERS
A Comprehensive Wealth Assessment can benefit you in the following ways:
REAL-LIFE EXAMPLE
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).
Clients who can benefit most from a CWA are those who control the business entityand have:
- $25M + of annual revenue
- $2M+ of EBITDA
- 25 or more employees
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)
Important Information
Information in this document was compiled by the staff of City National Rochdale (CNR) from data and sources believed to be reliable, but CNR makes no representation as to the accuracy or completeness of the information. The opinions expressed, together with any estimates or projections given, constitute the judgment of the author as of the date of the presentation. CNR has no obligation to update, modify, or amend this document or otherwise notify you in the event any information stated, opinion expressed, matter discussed, estimate, or projection changes or is determined to be inaccurate.
City National, its managed affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory, or legal advice. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. Any strategies discussed in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies or information presented taking into account your own particular circumstances.
This presentation (or any portion thereof) may not be reproduced, distributed, or further published by any person without the written consent of CNR.
City National Rochdale, LLC is an SEC-registered investment adviser and wholly-owned subsidiary of City National Bank. Registration as an investment adviser does not imply any level of skill or expertise. City National Bank is a subsidiary of the Royal Bank of Canada.
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