Ahmad Bakhshai, Associate Vice President of advanced Wealth Planning at Wellington-Altus Private Wealth, says all families can benefit from a financial and estate plan. He explains that financial success means different things to different people. A comprehensive wealth plan defines that for each client and establishes a roadmap with specific steps.
For high-net-worth families, wealth plans typically focus on wealth preservation, tax efficiency, estate, and legacy planning. They may be less concerned about funding their children’s education and more focused on responsibly preparing them to handle family wealth. Bakhshai says that money is extremely personal, and everyone views it differently.
It is also very private and often considered impolite to discuss, even between parents and children. Combine that with the technical complexities of financial planning and life’s uncertainties, and everybody has a deep yet unique relationship with it. Risk management is crucial when building a financial plan.
Financial planning roadmap for families
Plans are built based on various variables and assumptions, and it’s important to consider their limitations. Some risks can be easily managed through financial techniques.
Others are mitigated by creating a cushion and using conservative assumptions. Finally, some cannot be sheltered entirely or are too uneconomic to do so; those are accepted, and adjustments are made as needed. Although generally misunderstood, trust can be a powerful wealth-planning tool in the right circumstances.
They allow for flexible and customized planning that would be impossible otherwise. Financial planning first helps identify opportunities by estimating a client’s excess wealth above what is required to meet their needs. Some strategies maximize the tax advantages of charitable giving that benefit both the charity and the client, increasing the pie size.
Giving can be optimized to achieve the same outcome with less money or magnified with the same resources.
