It’s a new year, which means a fresh opportunity to get your finances in order. Here, Mark Doman, one of the country’s top wealth managers and CEO of the asset management office The Doman Group in New York City, whose clients range from entertainers and professional athletes from the NFL, NBA, NHL and MLB to young entrepreneurs, gives five financial resolutions to help make your 2017 a prosperous one.
1. Understand your budget. Whether you have $50 million or $500,000 in the bank, you still need to understand how sustainable your spending is. Sometimes, comprehensive household budgeting gets lost between an investment advisor and a separate tax professional, neither of whom traditionally maintain a dynamic spending or savings report for their clientele. Family offices seek to bridge those gaps and serve as a liaison between your spending now and forecast into the future, and hopefully take those costs into consideration when investing your assets.
2. Ask your financial advisor/CPA about 2017 changes regarding investments, income tax, capital gains and other related taxes. Have him or her outline changes that will come with the new president’s administration. Additionally, if you have money overseas, the new administration will incentivize you to bring it back to the United States. The trick is to know about these changes and make sure your money is being invested wisely.
3. Find out whether your investment professional is a fiduciary. If their response is more than one word, ‘yes’, they are probably not a fiduciary. As of April, the Department of Labor will require that all investment advisors who manage retirement money, i.e. 401(k)s, IRAs, pensions, etc. must be a fiduciary. Currently, the vast majority of ‘advisors’ operate under a suitability standard, which means that the advice they give must be simply ‘suitable’ as opposed to objectively what is best for the client under the fiduciary rule. This rule change is going to cause a tectonic shift in the retirement investment industry this spring and the fiduciary duty should apply to anyone who manages high net worth investors.
4. Aside from helping you save save on embedded costs with structured investments (i.e. mutual funds), multi-family offices can help maximize your financial efficiencies. It’s like having a family CFO.. Federally-registered investment advisors (“RIA”) are under fiduciary duty and many have additional financial planning services to complement their investment advisory practices.
5. It’s never too early to transfer your wealth to people you care about, especially your children. Start gifting to individuals (currently, up to $14,000 annually) if you can afford it. Those gifts should not be subject to further taxation and will contribute to securing your children and other family members’ financial futures.
Reporting by Jennifer Hedley