Valuing Your Values: A Case Study in Wealth Strategy
At NewEdge Wealth, we believe that the complexity of our clients’ wealth requires more than just creating a financial plan. We seek to work with clients to build a comprehensive wealth strategy. By our definition, a wealth strategy encompasses not only the typical components of financial planning (including retirement planning and education planning) but also incorporates considerations such as generational estate and wealth transfer strategies, philanthropic plans, risk management, banking and lending, business succession planning and tax planning. Also, as important as it is to create a wealth strategy, it’s equally essential to make sure that the next generation understands the plan, which can be accomplished through education and family meeting facilitation.
When working with families through this process, we have found that there can be a difference between establishing a good wealth strategy and a great wealth strategy. A good wealth strategy helps keep you on track to meet your financial goals and objectives. But a great wealth strategy helps keep you on track and incorporates your individual and family values in every facet of your overarching wealth strategy.
Values are important. We make decisions based on our values every day, even if we don’t consciously recognize them. For example, imagine you are faced with two choices: whether to purchase a coveted luxury item representing “pleasure” in your value system or donate funds to a charity representing “obligation” in your value system. The one you choose directly reflects which value you prioritize more.
Why is it important to understand the values that drive you as you go through the wealth strategy process? When your values are not aligned with your plans, you can often feel that something is just not right, but you cannot pinpoint the problem. This lack of coordination with your values can result in multiple revisions to your documents, which can become not only costly and time consuming, but your documents may never adequately reflect the legacy you want to impart to your family.
Perhaps the easiest way to understand how values play into planning is through a case study we have created.