By Scott Melbrod
Multitasking is great—sometimes. But what usually happens is that something gets lost in the process, whether that’s attention to detail, enjoyment of the task itself, or quality work. One of the greatest icons of multitasking is the spork. Stay with me here. The spork seems like a genius invention. You combine a spoon and fork, which not only means fewer utensils to wash, but it also makes it easier to eat a variety of food. But truthfully, unless you’re a child, sporks just don’t work as well as a spoon and fork on their own. Most things just work better when they were built for a sole, specified, intended purpose.
Your Finances Need a Specialized Touch
Let’s face it, if you had a major plumbing issue in your house, would you call a general contractor to take care of the issue? No, you would call a plumber. When you have a serious medical problem, you’ll ask your primary care physician for a referral to a specialist. But we often don’t apply the same common sense to our finances. Most people go to a financial advisor one of their friends recommended or the guy down the street that “helps everyone in town”, but what if that friend is in a completely different line of work than you or has a way simpler financial situation? These advisors may be competent in their own right, especially if they are a fiduciary and offer comprehensive services, but if they don’t specialize in what you need, they likely aren’t the best advisor for you.
How do I know this? Because I was that “generalist” financial planner. I ran a legacy firm started by my father. He is a generous man and truly wanted to help anyone and everyone he could. But financial advisory firms are also businesses, and when you have all these diverse, complex clients, the business becomes almost impossible to run. Also, it’s hard to keep track of the details and the overall service offering tends to get watered down across the board.
At my legacy firm, we made the hard decision to focus on a specific set of clients: retirees. We focused on creating income streams for retired clients from assets they accumulated over their working years. We also had tax expertise and estate planning experience to round out the offering, which simplified things for us and were services these specific clients particularly needed. We even built out a lower-cost service offering for younger, accumulator clients, mainly the children of our retiree clients, so they could also benefit from our advice (which is what they wanted) rather than getting sold high cost products (exactly the thing they don’t need at this stage of life).
How Taxable Wealth Got Started
Over the years at my legacy firm, I realized I was spending more and more time working with two groups of clients who have a lot in common with regards to their financial lives: real estate investors and business owners. I gravitated to them for three main reasons:
- Each has a complicated financial situation where expertise in certain strategies (tax planning, cash management, risk management, and the liability/lending side of the balance sheet) can pay off.
- Both these types of clients often don’t like (or need) more of an allocation to equities/the stock market. These clients have enough of their capital tied up in “risk assets” already, whether it be the business equity or real estate portfolio.
- In reference to #2, most financial advisor’s main service is allocating funds the client hands over to them to the stock market. Although we often put together low-cost, diversified portfolios for our clients’ retirement plans, investment management is usually put on the back burner as we tackle all the other tax, estate, cash management, and lending needs that real estate investors and business owners really need help with.
We built Taxable Wealth with specific, targeted service offerings for each of these clients (see them here and here). We know that each client is different, so we don’t have “model portfolios.” Each of our clients’ household balance sheets are allocated to meet their specific needs and goals. A lot of what we recommend has to do with where we can help to diversify and lower risk. Again, this is the opposite of most financial advisors that typically add risk to clients portfolios. This allows our clients to grow their wealth through their efforts in either real estate, their business, or both. We think that the investment management-only firms are going to come under increasing pressure over the next couple of years, whether it be from robo-advisors, the “do it yourselfers,” or firms like ours that basically give away investment management for free as we help our clients with other services that truly add value. Again, our goal is to provide “advice” and take away the burdens of financial questions off our clients plates so they can concentrate on running their business or their next real estate deal.
Can Our Specialized Services Help You?
If your financial situation is not that complicated yet, you may be able to find some good online tools to help you keep things moving in the right direction and stay organized. But there comes a time when you look around and realize that there is more to life than managing a spreadsheet of your net worth or making sure that your 401(k) is perfectly allocated. Marriage, and especially becoming a parent, made me realize that outsourcing anything I can is usually the best use of money and often pays for itself. This is especially true when you own a business or are working on a growing real estate portfolio.
At Taxable Wealth, our sole goal is to help real estate investors and business owners optimize their financial lives. If you think we would be a good fit for you, drop us a line at firstname.lastname@example.org or for more info check out www.taxablewealth.com.
Scott Melbrod is the founder and CEO of Taxable Wealth, an independent wealth management firm in San Diego, CA. Working with a wide array of clients and focusing on real estate professionals, investors, and business owners, his mission is to provide impactful and targeted financial advice at a transparent cost to people who want to reduce their tax burden and minimize investment and insurance-related fees that eat away at their savings. With more than 15 years of industry experience, Scott uses his knowledge to develop solutions and structured, tailored financial plans designed to guide his clients toward financial freedom.
The information provided in this article is for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Taxable Wealth’s views as of the date of this presentation. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessary come to pass. Taxable Wealth does not provide legal advice. To the extent that any material herein concerns legal matters, such information is not intended to be solely relied upon nor used for the purpose of making legal decisions without first seeking independent advice from a legal professional. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. Taxable Wealth is not responsible for the consequences of any decisions or actions taken as a result of information provided in this article and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of Taxable Wealth.