(5 minutes to read)

In today’s complex financial landscape, assembling a team of knowledgeable experts isn’t just a luxury—it’s a necessity for achieving long-term financial success. When assembling your own team, here are some key elements to keep in mind.

Core team functions

The three core functions most individuals need from their financial team include:

Long-term financial strategy. A financial strategy is needed to help you meet your financial goals and objectives, such as planning for “work optional” or your next great post-work adventure, funding a college education, or buying a second home. This role is often filled by a financial advisor, and more specifically by an advisor who is a CERTIFIED FINANCIAL PLANNER™ professional. The financial planner helps set reasonable time frames for your goals, establish savings targets, and determine required investment returns, which are key in managing your investments.

Investment strategy and implementation. An investment advisor helps you create an investment strategy that supports reaching your financial goals, and implements that strategy for you. Creating an investment strategy involves determining your “asset allocation,” the pie chart of different types of investments and in what proportion.

Implementing an investment strategy involves deciding whether to use passive or active investment styles, or a combination of both, and then selecting from among the more than 28,000 publicly traded mutual funds and exchange-traded funds (ETF), and thousands of individual stocks and bonds, to build your investment portfolio, maintain it, and track its performance.

Some people use automated investing services, which are primarily an investment implementation solution but don’t necessarily involve investment strategy or link investments to financial strategy.

Tax compliance and planning. Tax compliance is primarily the painfully familiar process of filing your federal and state income tax returns. It also includes making sure you’ve paid enough tax during the year through paycheck withholding or estimated tax payments. On many teams, this function is performed by a tax preparer who is either a certified public accountant (CPA) or enrolled agent (EA). Some people also use tax preparation software such as TurboTax.

Tax planning, on the other hand, is the ongoing process of trying to reduce the amount of tax you pay. Whereas tax compliance is mainly about documenting what has already happened, tax planning is about working in advance to change the outcome—reducing your tax bill. Tax planning is often performed by tax preparers or financial planners.

Many people take on one or more of these roles themselves, and that’s great. The question then becomes, would they get a better result if they handed off some of those roles to experienced professionals? The answer depends on the specific circumstances, but often the answer is yes.

In addition to the three core functions, many people should work with an estate planning attorney to develop a plan for their or a family member’s death or incapacity. Once you have children or have started to accumulate assets, it’s best to work with an attorney to create your estate plan.

These areas are all interrelated. Changes in one area of a family’s financial system can have an impact on the other areas and the ultimate outcome. For that reason, another important function within your financial team is the ongoing coordination of all the areas and providers. This can be you, or it can be one of the other team members. Often, a financial planner serves as the overall coordinator and project manager.

Bringing in additional expertise

While each of these core team members may be experts in their own right, they may need to bring additional expertise onto the team to address particular issues in your unique situation.

For example, insurance brokers are experts in obtaining the correct coverage for a variety of risks and situations. Health insurance brokers can help you navigate the complicated areas of private health plans, supplemental Medicare policies, and long-term care insurance. Life insurance brokers can help you find the most affordable life insurance given your unique health conditions. A property and casualty broker can help you shop your home, auto, and umbrella liability insurance policies among several carriers to find the best pricing.

The experts on your core team and additional specialized experts are valuable because they know an incredible amount of detail within their area and keep up with the constant changes within industries. They understand complex information and make it accessible to you. Because they know the big picture, they can often quickly, and correctly, see how your situation fits within it. They know what to do when things go wrong, and—even better—they can utilize their experience and intuition to anticipate what can go wrong, and thus mitigate it in advance.

Considerations for tech execs, founders, and professionals

If you’re an executive or professional in a public or private tech company, or a tech company founder, you may need a few additional experts on your team to go beyond or deeper within the core functions. You probably have complicated equity compensation, such as stock options, restricted stock, founder stock, or restricted stock units, that require special attention and planning.

Equity compensation lives at the intersection of investments and taxes. Experts in this area have a deep understanding of the tax treatment of various types of equity, and experience with difficult questions about when to exercise and sell. They are also familiar with the mechanisms for reducing your concentrated holdings, such as exchange funds, exchange fund replication, and secondary market transactions for private company stock. The core team members may be experienced in this area, or you may need to find another expert with the necessary experience, such as a tax attorney.

Executives and founders on occasion can benefit from the advice of securities law attorneys and from more sophisticated estate planning.

This expertise that may be needed isn’t always so different than the three core functions, but it is more specialized to the unique issues within the tech industries.

Considerations for small business owners

Similarly, small business owners can often benefit from a few additional specialists. Many small business owners, particularly of larger businesses, rely on business attorneys, corporate transactional attorneys, and management consultants for the ongoing management and structuring of their business. Valuation specialists help them monitor and improve the value of their business, which for many business owners represents the bulk of their net worth. Accountants often provide services to both the business and owners because they are so closely linked. Retirement plan specialists can also be very helpful for small businesses of all sizes in helping owners to save more, reduce taxable income, and retain employees.

Real estate investors

If you’re an active real estate investor, you may have the biggest team of all. You are likely to maintain a network of real estate brokers, lenders, and mortgage brokers to assist with purchasing and financing new investment properties. Depending on the scope of your investments, one or more property managers may be necessary to oversee your properties, and they will coordinate with a range of service providers such as contractors, handymen, painters, and flooring specialists to ensure proper maintenance.

Additionally, a relationship with a real estate attorney is helpful to handle lease documents, evictions, and the creation of legal entities (e.g., LLCs). A 1031 exchange intermediary can help to reinvest the proceeds from sold properties to avoid tax. For insurance needs, an insurance broker knowledgeable about rental properties is essential. While a tax preparer (CPA or EA) typically prepares your tax returns, you might also engage an accountant or bookkeeper to manage your financial records and compile financial reports.

As you can see, your financial team serves an essential and often wide range of functions, which go far beyond what any one individual can do—with deep competency and expertise—alone. And it’s of vital importance to make sure you have the right individuals supporting you. Building a strong core team and adding experts when needed can help you navigate life’s changes with confidence and secure your financial future.

Parkworth Wealth Management provides holistic wealth management services including financial planning, equity compensation planning, investment management, tax planning, and others, on a fee-only basis and as a fiduciary, acting in clients’ best interests. If you would like to explore building out your financial team, schedule a complimentary consultation.