Don’t ignore your personal finances

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Kenneth Dewitt is a CPA and certified financial planner who serves as a part-time chief financial officer for a variety of businesses, including trucking companies. E-mail [email protected].

Trucking company owners, executives and managers are often so busy these days tending to their company’s financial affairs, that they often ignore their own. Even in turbulent industry times, family financial security deserves disciplined attention. And you may need a pro to help bring that to bear for you.

“Most business executives are woefully unprepared personally,” says Diana Simpson, a certified financial planner in Birmingham, Ala. “They are so busy managing through day-to-day matters, that they rarely look long term at their own situations.”

There are dozens of items often overlooked by busy executives that should be approached carefully. Among the areas Simpson usually covers:

Company buy-sell agreements. “Ownership in a company is often the largest single financial asset,” Simpson says. “Everyone knows that they should have a buy-sell agreement, but few actually do, and even fewer have reasonable ways to fund the purchase if the buy-sell is triggered.” Owners without partners should consider a succession or “business continuation” plan.

A plan to diversify. Whether you own stock options in a publicly traded transportation company, or own a stake in a private concern, you should develop a plan to slowly change your investments as you age. Simpson says that even if you are in your 40s or 50s, you should not put all your eggs in one company basket, either public or private. It takes time to plan a transition.

A lifetime outlook. “Financial planning must consider the second half of your life,” Simpson advises. We’re not just talking about retirement, but about transition to a business that allows you to have a certain quality of life. “People who achieve a sense of family and company security begin planning to have that early on in their lives by seeing what each stage of their life might hold. If you take the time, you can clearly see possibilities for this – for example, children or grandchildren in college, a scaled-back or a second career, or eventual retirement. Then, they work diligently to achieve it.”

Investment strategies. For your 401(k), IRA or other investment accounts, Simpson says that a coordinated asset allocation model is the key to building long-term wealth. Many executives either never get comfortable with such investments and thus lose ground to inflation and taxes. Or they choose inappropriately aggressive strategies that cost them dearly.

Employee benefits and insurance. Business owners rarely know if they are taking advantage of all company benefits they might offer to their employees. In addition, insurance coverage or types of policies owned are often inappropriate, because no independent party has reviewed the situation.

Estate and tax planning. Everyone is concerned about tax planning for the current year. But is your business type appropriate today for the business sale in 10 years? And despite recent reductions to the estate tax, many business owners overlook simple estate planning techniques that take advantage of those reductions.

A coordinated approach. There are several advisors critical to your success – your business advisors, CPA, attorney, insurance agent and investment broker. After helping you set your goals, a certified financial planner works with each advisor to see that each step is actually carried out, and not just “talked about.”

Without a strong “quarterback” on the team, you very well might not score financially.

Resources: Help with personal financial planning, by the Certified Financial Planner Board of Standards (