When Does Hiring a Financial Advisor Actually Make Sense?
It’s not about a magic net worth number; it’s about the complexity of your life. Discover why high-earning professionals and business owners are moving away from DIY management and how to distinguish between a salesperson and a true fiduciary partner who is legally bound to put your interests first.
A fact-based guide to identifying the inflection point between doing it yourself and a professional partnership.
Stop spending your valuable time on administration.
A quick, 30-minute intro to see if we're a good fit.
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For many successful professionals and business owners, "Do-It-Yourself" investing is a point of pride. You're smart, you're capable, and you've managed well to get to this point.
But success creates complexity.
The "when" for hiring an advisor isn't a magic number. It's an inflection point where the complexity of your assets, taxes, and legacy goals exceeds the time and specialized knowledge you have available.
This isn't about intelligence; it's about specialization. You’ve proven that you’re an expert in your field. The question now is whether you also have the time and desire to become a part-time expert in tax law, estate planning, and global markets.
If your financial life includes any of the following facts, you may have crossed the threshold where hiring an advisor now makes sense.
Key Takeaways From This Article:
Hiring an advisor makes sense when your financial success creates gaps that DIY management can no longer effectively or efficiently fill.
The Competence Gap:
Your finances now involve complex issues (like RSUs, business ownership, or multi-year tax strategies) that may benefit from a specialist with tax, equity-comp, or business-owner planning experience.
The Convenience Gap:
Your time has a higher, measurable ROI when spent on your profession or business, rather than on the second job of managing your own portfolio.
The Coaching Gap:
You recognize that disciplined, objective guidance is essential to help reduce the likelihood of costly, emotion-driven decisions such as ‘performance chasing’, with an understanding that no approach can fully prevent losses or investor mistakes.
The Continuity Gap:
You need a formal, structural plan: not just a will - to protect your family and ensure your legacy transfers efficiently across generations.
Your Compensation and Tax Picture Is No Longer 'Standard'
The first sign is that your tax return no longer resembles a "simple" filing. You've graduated from a straightforward W-2 to a mix of complex equity and business income.
It's time to seek specialized competence when your balance sheet includes:
Executive Compensation: You're managing a schedule of Restricted Stock Units (RSUs), Incentive Stock Options (ISOs), Non-Qualified Stock Options (NQSOs), or Employee Stock Purchase Plans (ESPPs), each with different tax treatments and grant dates.
Concentrated Equity: More than 10-15% of your net worth is tied up in a single company stock; or worse yet, the stock is that of the company you work at or own. This creates a significant, undiversified risk.
Business Ownership: You're dealing with K-1 distributions, buy-sell agreements, succession planning, or structuring a tax-efficient exit.
Complex Tax Liabilities: You are subject to the Alternative Minimum Tax (AMT), pay state taxes in multiple states, or are looking for advanced, multi-year tax-optimization strategies; not just minimizing a single year’s tax bill.
Alternative Investments: You're vetting private equity, venture capital, or real estate syndications and need to understand their risks, tax implications, and role in your portfolio.
These aren't "DIY" problems; they are sophisticated legal and tax strategies. This is also where an advisor's philosophy is critical. When solving these problems, is their incentive to a cost-aware and suitable solution for you? Or is it to sell you a specific, high-fee product (like a complex insurance vehicle or proprietary fund) that their firm incentivizes? A fiduciary is legally bound to the first approach; a broker-dealer is not.
Your Time Has a Higher and Better ROI Elsewhere
This is a straightforward, mathematical calculation of convenience. Your most valuable asset is no longer your investment portfolio; it's your time and your ability to earn in your own profession or business.
Calculate the hours you spend per month on:
Investment research, analysis, and rebalancing.
Coordinating phone calls and emails between your tax preparer, and your estate attorney.
Tracking cost-basis, managing cash flow, and reviewing insurance policies.
Understanding and executing your equity compensation.
Now, multiply those hours by your effective hourly rate. In most cases, the cost of the time you spend doing this work often exceeds the fee for delegating it. Consider comparing your hourly value with an advisor’s fee to see if delegation makes sense for you.
But this calculation only works if you can trust the person you're delegating to. True convenience isn't just offloading tasks; it's offloading the mental energy and worry. That's only possible when you know your advisor is a fiduciary, legally bound to act 100% in your best interest. If you have to spend mental energy wondering if their advice is conflicted by a commission, you haven't truly bought back your time.
You Are Trying to Outsmart Yourself (And Failing)
This is the most painful sign because it’s not about a lack of intelligence; it's about human nature.
The greatest risk to your portfolio isn't a bad market; it's your own behavior in a bad market.
The most famous case study in this is Peter Lynch's Fidelity Magellan Fund. From 1977 to 1990, Lynch was arguably the greatest fund managers, posting an astounding 29% average annual return* (past performance does not guarantee future results). It would seem that anyone invested in that fund would have become incredibly wealthy.
But they didn't.
A study by Fidelity on its own fund revealed a shocking fact: the average investor in the Magellan Fund actually lost money during that same period.*
How is this possible? The data shows a classic example of what is commonly referred to as a "behavior gap." Investors, excited by the stellar returns, would buy into the fund after a period of strong performance. Then, when the fund hit an inevitable rough patch or a market correction, they would panic and sell at a low point.
They were chasing performance instead of practicing discipline. This is the coaching component, and it's a crucial philosophical test of an advisor: Is your advisor paid to help you stick to a plan, or are they paid by transaction? A fiduciary's incentive is 100% aligned with your long-term success. A non-fiduciary advisor’s incentive may be to encourage you to make a move, even if it's the wrong one, because trading is a component of how they get paid.
Your Legacy Plan Lacks Structural Continuity
If your entire financial strategy exists primarily in your head or a personal spreadsheet, you have a single-point-of-failure risk. This is the continuity component.
Your plan lacks continuity if:
Your spouse is not actively involved in the financial plan or prepared to take over if you are unable.
Your estate plan is a set of "what if I die" documents, rather than a "how-to" guide for your family.
Your children's engagement with the family’s wealth is undefined; risking conflict, mismanagement, and misunderstanding.
You have no formal plan to efficiently transfer assets, minimize estate taxes, or align your wealth with your philanthropic goals.
History is filled with case studies of significant wealth evaporating in 2-3 generations (the "shirtsleeves to shirtsleeves" phenomenon). The failure is almost always one of continuity. As you build this structure, be mindful of how it's being built. Is the plan centered around objective, flexible strategies, or is it built around high-commission products with long lock-up periods that may or may not be the most efficient way to achieve your goals? A fiduciary's incentive is to design the best plan for your needs; one that can pivot as new information is presented.
From DIY Manager to CEO of Your Wealth
Hiring an advisor is not an admission of failure. It’s a decision of practicality; to delegate a specialized function so you can focus on your highest-value work.
You want to find a professional partner whose incentives are 100% aligned with yours. This frees you to focus on what you do best: building your business, excelling in your career, and living your life.
If you've checked the boxes on any of these points, it's likely time to have a conversation.
You deserve a partner whose incentives are 100% aligned with yours.
Speak directly with a fiduciary. No sales pressure.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
The Oracle’s Exit: Warren Buffett’s Final 20 Lessons on Wealth, Legacy, and Dodging Banana Peels
Warren Buffett, the man who’s made 'boring' investments into billions, just delivered his final address. In his latest—and likely final—letter to Berkshire Hathaway shareholders, the 95-year-old 'Oracle of Omaha' announced he’s “going quiet.”
But before he fades out, he offered a candid peek at his own playbook—one that focuses less on quarterly earnings and more on life, legacy, and dodging metaphorical banana peels.
As a busy healthcare professional or business owner, you might think a letter from a guy reminiscing about his 1938 appendectomy has nothing to do with your practice or your portfolio. You’d be wrong. I’ve sifted through the nostalgic anecdotes to pull out the 20 best insights that apply directly to your financial strategy, your career, and the legacy you’re building.
💰 Money, Management, and The Market
1. The 65-Year-Old Finish Line is a Myth (Longevity Requires Purpose)
If you’re a physician or business owner, you likely didn’t spend years earning advanced degrees just to clock out the moment you hit Social Security age. Buffett, still at his office five days a week at 95, confirms this. His point isn't that you must work forever, but that the goal isn't necessarily to retire at 65.
Instead, it is to have financial independence, which grants you choices, options, and freedom. The biggest secret to his longevity? Work is beneficial. Your career offers a structure, a community, and a sense of purpose that contribute deeply to a long, engaged life. Find your purpose and keep showing up.
2. Thrift is the Original Life Hack
Buffett mentions how Charlie Munger worked at his grandfather’s grocery store for $2 for a 10-hour day, noting that "Thrift runs deep in Buffett blood". This isn't just a fun fact; it's a foundational financial principle. Before you chase complex investments, make sure you have the basics down: live below your means. If it works for the Oracle, it can work for the rest of us.
3. Regulatory Reform Can Backfire (The Law of Unintended Envy)
Ever think regulations sometimes miss the mark? Buffett noted that reforms intended to embarrass CEOs by comparing their pay to the average employee's salary completely backfired. Instead of promoting moderation, it created massive envy.
The result? CEO pay (and board pay) skyrocketed because everyone wanted to be "worth more" than their competitor. Lesson: Good intentions don't always equal good outcomes. Be wary of unintended consequences in policy and in your own financial strategy.
4. Envy is the Wealth Killer
Expanding on the point above: "Envy and greed walk hand in hand". The thing that often bothers wealthy CEOs is that other CEOs are getting even richer. As a busy professional, focus on your own lane. Comparing your success to a colleague or competitor is a dangerous game that leads to chasing bad returns or making rash decisions.
5. Size Kills Speed
Buffett admits that Berkshire’s massive size takes its toll, and that a decade or two from now, many smaller, nimbler companies will likely have done better. As a business owner or employee, this is a friendly reminder that efficiency and being nimble can be a huge competitive edge over large corporations. Don't worry about being the biggest; focus on being the best and most effective in your niche.
6. Don't Despair If the Stock Market Tanks
This is a must-know for any investor: Buffett warns that Berkshire's stock price will move unpredictable at time, "occasionally falling 50% or so as has happened three times in 60 years under present management". The market gets emotional. If you own a fundamentally sound company with good management, don’t panic-sell. This is a powerful antidote to market fear.
7. Admit Your Mistakes (and Change Direction Fast)
Remember "New Coke" in 1985? Don Keough, then President of Coca-Cola, made a famous speech apologizing to the public and reinstating "Old" Coke after mail addressed to "Supreme Idiot" was delivered to his desk. The simple lesson: If a project or strategy isn't working, course-correct. Fast. The public (or your staff) ultimately owns the product, not you.
8. Rule from the Present, Not the Grave. (Accelerate Your Legacy)
Buffett is accelerating his gifts to his children’s foundations because he wants them to have the maturity and energy to disburse the fortune before alternate trustees replace them.
He states: "Ruling from the grave does not have a great record, and I have never had an urge to do so." Action Item: For high-net-worth individuals, this is a clear sign to prioritize estate planning and consider the benefits of lifetime giving while you can guide the process and enjoy the impact.
9. The Power of Proximity (And Old Friends)
Buffett recounts countless successful people he worked with—Charlie Munger, Stan Lipse, Don Keough, Greg Abel—all of whom lived blocks from him in Omaha, often without him realizing it for years. Lesson: Your network and community are often right under your nose. Building deep, long-term relationships with the people around you can profoundly influence your life, financially and personally.
👨👩👧👦 Legacy, Luck, and Leadership
10. Don't Hoard Your Luck
Buffett is explicit: he drew a "ridiculously long straw at birth," being born healthy, reasonably intelligent, and in America in 1930. He states that many leaders and the rich receive far more than their share of luck, which they often prefer not to acknowledge. The takeaway: As your wealth increases, so should your generosity to those less fortunate. He sets the example by increasing his lifetime gifts to his family foundations.
11. Thank America (It Maximized Your Opportunities)
Even while acknowledging its capricious distribution of rewards, Buffett reminds us to thank America for maximizing our opportunities. It’s a nuanced view: be grateful for the foundational environment that allowed you to succeed, but also be aware that the system isn't perfect. Keep perspective, especially in moments of great financial achievement.
12. Focus on Being a Good Example
When discussing his children's success in philanthropy, Buffett jokes that they received a "dominant dosage of their genes from their mother". But he also mentions he became a better model for their thinking and behavior as the decades passed. Lesson for raising your own: Genetic lottery aside, your modeling of behavior matters more over time. The best way to "raise your children well" is to live the values you want them to adopt.
13. Be Grateful for Your Health
The Oracle is grateful and surprised by his luck in being alive. He notes how others, can be born into less fortunate circumstances or have disabling infirmities.
As a healthcare professional, you see this disparity daily. His core message: Be thankful for being alive and the sheer amount of good luck that paved your path.
14. Today's Idol May Be Tomorrow's Disgrace
This is one of the wittier, more cynical lessons. As a child, Buffett revered J. Edgar Hoover. He later realized that he should have "fingerprinted J. Edgar himself" as Hoover became disgraced for misusing his post. Don't idolize blindly. People who are praised currently may end up not being praised in the future.
15. Marry Well (Seriously)
Though not a direct lesson, Buffett casually speaks of his first wife, Susie, and her positive influence on his children. When you're building a dynasty (even a small, family one), choosing your spouse wisely is perhaps the most important decision you'll ever make.
16. Get the Right Heroes and Copy Them
Expanding on the previous point, Buffett advises: "Get the right heroes and copy them". He specifically calls out Tom Murphy: "he was the best". You can't choose your family, but you can choose who you emulate. Find mentors and friends—like Charlie Munger or Don Keough—who make you better and avoid those who are toxic.
17. The Second Half of Your Life Should Be Better
A surprisingly optimistic view from a 95-year-old: "I'm happy to say I feel better about the second half of my life than the first". His advice is simple: "Don't beat yourself up over past mistakes—learn at least a little from them and move on". It is never too late to improve.
18. Decide Your Obituary Today
Buffett brings up Alfred Nobel, who reportedly read his own mistaken obituary and was horrified, realizing he needed to change his behavior.
Don't wait for a newsroom mix-up. Decide what you would like your obituary to say and live the life to deserve it. Time can sneak up on you.
19. Greatness is Costless Kindness
This is a profound capstone to his life lessons. "Greatness does not come about through accumulating great amounts of money, great amounts of publicity or great power in government". Instead, when you help someone, you help the world. Kindness is costless yet priceless. Whether you're religious or not, it's hard to beat The Golden Rule as a guide to behavior.
20. Pick a Base and Build
Buffett recounts buying his first and only home in 1958, just miles from where he grew up. His children were raised there, and he felt Berkshire and he "did better because of our base in Omaha than if I had resided anywhere else". While moving might seem necessary for career growth, Buffett suggests that putting down deep roots in one place—socially, professionally, and personally—can be an underappreciated key to long-term success.
The Final Word: Be Better
Buffett is "going quiet," but his lessons are shouting at us. His final thoughts, delivered with his signature humility and wit, remind us that the biggest returns aren't found in the stock market; they're found in the impact we have on our people and our principles.
You can choose your heroes carefully and emulate them. You will never be perfect, but you can always be better. The Oracle has spoken. The question is: Are you ready to implement the playbook?
Buffett knows that life—and the market—is full of unexpected pitfalls. From unexpected market drops to mismanaged estate plans, there are too many predictable, avoidable mistakes.
Do you want a financial strategy built to withstand the market volatility and time’s relentless advance? Contact me below to discuss how to build a financial plan for stability and longevity that will help you dodge the financial banana peels. 🍌
Here is the link to Buffett’s full letter to the shareholders if you would like to read it. https://berkshirehathaway.com/news/nov1025.pdf
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
5 Money Habits That Separate Wealth Builders from Wealth Drainers
In 2025, financial success looks different. The world is changing quickly, and there’s always a new shiny object trying to grab our attention. With the cost of living rising—and with AI-driven investing, digital banking, and new remote income streams—the gap between wealth builders and wealth drainers is wider than ever.
The good news? You still have control.
Millionaires aren’t made by the income they earn—they’re made by intentionality and the ability to consistently live below their means. Your daily money habits, not your salary, determine whether your finances grow or shrink.
Here are five money habits that separate people who build wealth from those who unknowingly drain it.
1. Automate Your Finances Instead of “Winging It”
Wealth builders use automation to make smart decisions effortless. Automatic transfers for savings, investments, and bills ensure their money goes where it should before they’re tempted to spend it.
When we review your cash-flow plan, we identify opportunities to automate your savings and investing in a tax-efficient way. This “backwards budgeting” gives you spending freedom while still keeping your long-term goals on track.
Wealth drainers, on the other hand, rely on memory or motivation. They move money “when they remember,” often missing savings opportunities. Keeping excess cash in your checking account makes lifestyle creep all too easy. Don’t let short-term spending derail long-term wealth.
2. Invest Consistently—Don’t Wait for the “Perfect Time”
A core wealth-building habit is consistency.
Wealth builders know that time in the market beats timing the market.
Wealth drainers wait for “the right moment,” losing years of compounding potential.
Do what you can now. Start somewhere—small steps taken today can turn into miles of progress later.
3. Track Your Net Worth — Not Just Your Income
Making more money is great—but using that money to move closer to your goals is what determines success.
Wealth builders track their net worth (assets minus debts) to measure real financial progress. I track my clients’ net worth each year so we can see whether they’re on course or need a strategic adjustment.
Wealth drainers focus only on income, celebrating raises while their expenses (and debt) grow even faster. A higher salary doesn’t hold as much value towards impacting your financial freedom if your net worth isn’t moving in the right direction.
4. Buy Time, Don’t Waste It
Time is the most valuable currency in 2025.
Wealth builders invest in tools, systems, or support that buy them time for higher-value activities—learning, strategizing, planning, or generating income.
Wealth drainers trade their time for temporary comfort, losing hours to busywork or endless scrolling.
Wealth grows where time compounds.
5. Live Below Your Means—Not for Appearances
In a world full of digital flexing and influencer lifestyles, restraint is rare—and powerful.
Wealth builders prioritize financial freedom over image. They practice intentional spending, save aggressively, and invest the difference.
Wealth drainers fall into lifestyle inflation, mistaking looking rich for being rich.
Define what “enough” looks like for your lifestyle, and invest anything above that threshold.
Build Habits, Not Just Income
Wealth isn’t about luck or even income—it’s about discipline, consistency, and systems that support intentional choices. Technology can help, but your habits ultimately determine your long-term financial independence.
Ask yourself: “Are my habits making my money work for me—or keeping me working for money?”
Start small. Automate one bill. Track your net worth. Set up a transfer to your investment account, even if it’s modest.
The gap between wealth builders and wealth drainers isn’t about opportunity—it’s about the daily choices that shape your future.
And remember: wealth is more than a bank account balance. It’s the ability to make your money work as efficiently as possible so you can design your life intentionally—reflecting your priorities, values, and goals. Small habits today create long-term flexibility and freedom.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Pre-IPO Incentive Stock Options (ISOs) Tradeoffs
Deciding when and how to manage your stock options, especially with a potential IPO on the horizon, can be daunting. You're likely wondering: Should I exercise my Incentive Stock Options (ISOs) before the IPO? How can I leverage these ISOs to reach my financial goals while still benefiting from its potential growth?
Before exercising your ISOs pre-IPO, consider these benefits and drawbacks that come with this decision. These factors can help you evaluate potential impacts on your taxes, risk profile, and overall financial situation.
Advantages:
Favorable Tax Treatment Sooner: ISOs qualify for long-term capital gains if held for at least one year from the exercise date and two years from the grant date before selling. Exercising pre-IPO accelerates you towards this favorable tax status.
Potential for Lower Alternative Minimum Tax (AMT) Bill: If the Fair Market Value (FMV) of your shares pre-IPO is lower than post-IPO, your AMT liability may be reduced if you exercise before the company goes public.
Disadvantages:
Cash Requirement: Exercising ISOs requires a substantial amount of cash, not just for the exercise itself, but also for any potential AMT obligations.
Company and Illiquidity Risk: There's a risk that your company's IPO may be delayed or not happen at all. This means your cash is tied up in illiquid shares. Even with an IPO, you'll likely face a lock-up period (90-180 days) during which you can’t sell your shares.
In summary, if you have readily available cash you're comfortable deploying and believe strongly in your company's long-term value and growth, exercising ISOs pre-IPO can be one potential strategy for those comfortable with the associated risks and liquidity considerations. However, be mindful that immediate liquidity may not be an option due to the factors mentioned above. If your primary goal for exercising pre-IPO is to fund short-term needs, this strategy carries significant risks. But if you have flexibility regarding when you'll need access to your cash, pre-IPO exercise is a viable consideration.
What to do with RSUs?
As an employee of a public tech company, navigating your equity compensation package can be complex. Should you hold onto your shares for the long term, or is selling sooner a better
option? And if you sell, how much and when? Let's explore a common scenario:
I'm a public tech company employee, and my vested RSUs account for 40% of my net worth. I'm halfway to saving a down payment for my dream home and also aim to retire
early in 15 years. How can I optimize my stock compensation?
A 40% concentration in a single stock presents significant risk. While your company’s stock could perform very well, it could also decline substantially, even to zero in extreme cases.
Consider gradually selling down your RSUs in a tax-efficient manner until they represent 10% or less of your net worth. Here’s how you can achieve this:
Strategically sell specific share lots: Prioritize selling shares with the least unrealized gains or the most unrealized losses. This frees up cash for short-term goals and diversifies your concentrated stock position tax-efficiently.
Leverage tax loss harvesting: Utilize any tax loss harvesting opportunities within your brokerage account to offset capital gains or income.
Immediately sell future quarterly RSU vests: These are already taxed as ordinary income upon vesting, offering minimal tax advantages if held. Selling them immediately also provides cash to cover tax liabilities that exceed the flat withholding rate.
The proceeds from your RSU sales can be used to:
Contribute to a diversified portfolio: This can help reduce concentration risk and support your long-term financial goals, including early retirement if market and personal factors align.
Add to your down payment fund: For short-term goals, keeping funds in a high-yield savings account can help preserve liquidity and reduce exposure to market fluctuations.
Make quarterly estimated tax payments: This covers your current tax liability and helps avoid penalties and interest. Consult with a tax professional and/or financial advisor for a tax projection.
DACFP Feature: Stablecoins as the Institutional On-Ramp: Advisory Best Practices
Jeffrey Janson had the privilege of being featured by Digital Assets Council of Financial Professionals (DACFP) where he shares his perspective on how stablecoins have emerged as a cornerstone for bridging traditional finance and blockchain technology.
Jeff demystifies stablecoins – contrasting traditional plain vanilla options from yield-bearing variants – and explores fresh bank partnerships like Citi-Coinbase as catalysts for broader adoption. He also delves into best practices for integrating them responsibly in a post-FIT21 regulatory landscape.
Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
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Healthcare Costs Threatening Your Retirement?
Healthcare expenses are a critical and often unpredictable component of any financial plan. As a successful professional, you can't afford to let surprise medical bills compromise your long-term goals for asset growth and legacy preservation. Our strategic framework outlines eight actionable steps to help you move from reactive expense management to proactive financial control. We'll show you how to leverage tax-advantaged accounts, optimize your insurance coverage, and integrate long-term care planning to safeguard your wealth against the rising cost of health.
Plan Now to Protect Your Wealth (And Sanity)
Read Andrew’s Story
For successful professionals and thriving business owners, achieving financial freedom is a journey mapped with investments, tax optimization, and legacy planning. You're not in retirement yet, but you're wisely looking ahead. However, a less-talked-about, yet potentially devastating, financial drain often lurks in the shadows, with the power to unravel even the best-laid plans: how healthcare costs impact retirement. These expenses, vital for ensuring the longevity to enjoy your carefully crafted financial plan, can be both unpredictable and substantial, presenting a unique challenge to your long-term financial goals and overall peace of mind.
You've dedicated years to building your wealth with diligence and foresight. Our objective now is to ensure that medical expenses, whether anticipated or a sudden surprise, never compromise your ability to grow assets or secure your family's future when you do reach retirement. With proactive planning for healthcare costs in retirement, these potential drains can be effectively managed, becoming a predictable component of your comprehensive financial picture rather than an unexpected and sanity-gutting threat to your future.
As a financial advisor specializing in integrating healthcare cost planning into broader financial strategies for clients like you, who are actively planning for retirement, I've compiled eight practical approaches. This guide will help you confidently manage these potential expenses now, keeping your financial progress steady and your future wealth secure.
Key Takeaways From This Article:
● Understand your current medical spending
● Plan ahead for expenses when possible
● Make sure your health plan works for you
● Take full advantage of your health benefits
● Comparison shop for medical services
● Maximize HSAs and FSAs
● Consider medical expense tax deductions
● Explore long-term care insurance
Understanding Your Current Medical Spending: A Baseline for Future Planning
Effective management of future healthcare needs begins with clear data. Take stock of your current healthcare expenditures to identify where your money is going. Reviewing past bills, bank statements, or patient portals can provide a comprehensive overview of your medical spending habits. This baseline is critical when you're planning for healthcare costs in retirement. Some key data to collect are items such as:
● Monthly health insurance premiums
● Copays and Coinsurance
● Prescription costs
● Vision and dental expenses
● OTC drugs and medical devices
Proactive Planning for Anticipated Medical Expenses: Don't Get Caught Off Guard
While medical emergencies are unforeseen, many healthcare costs can be planned for well in advance. Treating these expenses as a predictable part of your financial landscape allows for strategic preparation, safeguarding your retirement savings from medical costs. Some to consider are:
● Ongoing treatments for chronic conditions
● Maternity expenses or costs related to family expansion
● Elective procedures
● Genetic/hereditary conditions that will need to be addressed
Considering your family's health needs with a long-term perspective can help determine appropriate coverage and potential savings. Establishing a dedicated fund; such as an HSA, FSA, or even a cash reserve can ensure you're prepared without impacting your long-term strategy or incurring debt as you save for healthcare in retirement.
Optimize Your Health Plan: Is Your Coverage Aligned with Your Future Needs?
It's a common misconception that more extensive health coverage automatically equates to the best value, especially when planning for healthcare costs in retirement. Periodically assessing your health plan is crucial to ensure it aligns with your actual usage and your long-term financial objectives. Are you paying for benefits you rarely utilize, or are out-of-pocket costs becoming a burden?
● Low-Deductible Health Plans (LDHPs): These plans typically feature higher monthly premiums but lower out-of-pocket costs for medical services. They may be suitable for individuals with chronic health conditions or regular medical needs, providing immediate financial predictability.
● High-Deductible Health Plans (HDHPs): Characterized by lower monthly premiums and higher deductibles, these plans often offer eligibility for a Health Savings Account (HSA), which offers significant tax advantages for saving for future medical expenses. HDHPs can be an effective choice for healthy individuals with fewer anticipated medical expenses, particularly those focused on building substantial HSA for retirement planning.
Andrew's Insight: For many of my clients, an HDHP combined with an HSA proves to be a fiscally sound strategy. The blend of lower premiums and a tax-advantaged savings vehicle for future medical costs offers both immediate and long-term benefits, helping you fortify your retirement planning against medical costs.
Maximize Available Health Benefits: Don't Overlook Valuable Resources for Future Wellness
Your health plan often includes more than just coverage for illness or injury. Utilizing preventive care and wellness programs now can lead to both health improvements and financial savings by addressing issues before they become more complex or expensive, thereby reducing medical expenses in retirement.
● Annual physicals and routine screenings: These are an investment in your long-term health, helping to prevent more significant health issues down the road.
● Mental health services, fitness discounts, and wellness initiatives: Many plans offer these, contributing to overall well-being and potentially reducing your future healthcare needs.
Andrew's Insight: If a claim is denied, investigate. Errors occur, and a simple inquiry can often resolve coverage issues, saving you from unnecessary expenses. It’s a small effort now that can yield tangible financial returns later, protecting your retirement savings from medical costs.
Comparison Shop for Medical Services and Prescriptions: Smart Spending for Today and Tomorrow
When you can plan ahead for medical expenses, use the time to shop around for better pricing. Collaborate with your healthcare provider and insurer to obtain accurate cost estimates. Compare costs for prescriptions, procedures, and medical appointments (without sacrificing quality, of course). Generic medications, for instance, are often a cost-effective alternative to brand-name drugs, helping you stretch your healthcare budget as you plan for healthcare costs in retirement.
Leverage HSAs and FSAs: Powerful Tools for Saving for Healthcare in Retirement
If eligible through an HDHP, a Health Savings Account (HSA) is an invaluable tool for saving for healthcare in retirement. Similarly, Flexible Spending Accounts (FSAs), if offered by your employer, can provide significant tax advantages for common medical expenses such as copays, dental work, prescriptions, and vision care. These accounts are crucial for optimally planning for medical expenses in retirement.
Be aware, however, that there is a variation in utility between HSAs and FSAs, especially regarding their long-term potential for retirement planning:
● HSAs: These accounts offer a triple tax advantage: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. This translates into substantial tax efficiency for your healthcare spending. These accounts can accumulate value year after year and are portable, meaning they are not tied to a specific employer, making them ideal for long-term medical expenses retirement savings.
● FSAs: Funded with pre-tax dollars, these accounts typically operate on a "use it or lose it" basis within the plan year, though some employers offer limited grace periods. This account is employer-sponsored, meaning if you are to leave your employer, any funds in the account are forfeited. While useful for current expenses, they lack the long-term retirement savings benefits of an HSA.
Andrew's Insight: Beyond immediate expenses, an HSA can serve as a potent long-term savings vehicle. Funds roll over annually and can be invested, growing tax-free. Consider covering future medical needs in retirement with an account that has compounded tax-free for decades. This is a powerful component of comprehensive financial planning for healthcare and a key strategy to mitigate how healthcare costs impact retirement.
Consider the Medical Expense Tax Deduction for Significant Costs: A Potential Relief Valve
For years with unusually high medical expenditures, you may be eligible for a tax deduction. If your qualified unreimbursed medical expenses exceed 7.5% of your Adjusted Gross Income (AGI) and you itemize deductions, this can provide notable tax relief, helping to alleviate the burden of significant medical expenses on your retirement savings.
Eligible expenses can include:
● Fees for doctors, specialists, and mental health professionals
● Inpatient hospital care
● Prescription medications
The IRS has a complete list of medical expenses which are eligible for deducting.
Long-Term Care Insurance: Safeguarding Your Legacy
While Medicare provides crucial support once you reach retirement, its coverage for long-term care needs, such as in-home care, assisted living, or nursing facilities, is limited. Long-term care insurance fills this critical gap, helping to protect your accumulated assets and ensuring that future care costs do not erode your legacy plans or retirement savings.
Exploring this option earlier can lead to more favorable premiums. For example, acquiring a policy in your 40s when in good health typically results in lower costs than waiting until later in life when health issues may arise. This proactive step is a key part of planning for healthcare costs in retirement and securing your financial future.
Ready to Integrate Healthcare Planning into Your Financial Strategy?
Managing healthcare costs doesn't have to be a source of stress as you plan for retirement. As part of your holistic financial plan, we can help you strategically address these expenses. Our objective is to ensure that medical costs are a managed component of your financial journey, allowing you to focus on achieving financial freedom and securing the legacy you envision for your family.
Questions we can solve together:
● How can I plan for the costs of a future medical procedure?
● I don't have access to an HSA; where should I save money for future medical expenses that might arise?
● How much should I contribute to my HSA to maximize its benefits for my financial future and retirement planning?
● What are the best strategies for saving for healthcare in retirement given my specific financial situation?
● How can long-term care insurance fit into my overall retirement plan?
Recent Articles Written By Andrew:
Recent Publications Featuring Andrew:
Podcasts Featuring Andrew:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Welcoming a New Family Member: A Personal and Financial Journey
As many of you know, my family just grew in exponential joy and also chaos — we welcomed Lucy Joy Daniels into our lives earlier this month. It’s an incredible, joyful milestone, full of excitement. Beyond the diapers and sleepless nights, though, I’ve been reflecting on the reality of the importance of thoughtful financial planning to protect and provide for our expanding family.
Having helped many clients through similar life transitions, I want to share some important steps I’m taking personally — and that you might consider if you’re welcoming a new child or family member yourself.
1. Open a 529 College Savings Plan
Education costs can feel overwhelming, and starting early is one of the best ways to ease that burden. Opening a 529 plan for your child is a smart, tax-advantaged way to save for future college expenses — and it can be used for K-12 tuition or educational credentials as well. Even small, consistent contributions over time can make a meaningful difference down the road. Each state has its own plan - let’s talk about which one makes the most sense for you.
2. Update Beneficiaries
One of the most common oversights when expanding your family is forgetting to update beneficiary designations on retirement accounts, life insurance policies, and other financial accounts. Ensuring your new child is included where appropriate helps guarantee your assets go to the right people without unnecessary complications.
3. Consider a Trust or Detailed Estate Plan
As our family grows, so does the complexity of protecting our legacy. A basic will might not be enough to cover everything you want for your child’s future. Establishing a trust or updating your estate plan can provide clear instructions on guardianship, asset management, and distribution — offering peace of mind that your child will be cared for as you intend.
4. Review Your Life Insurance Coverage
Welcoming a child often means reevaluating your life insurance needs. If something were to happen to you, would your current policy provide enough to maintain your family’s lifestyle and meet future expenses? It’s worth reviewing your coverage, potentially increasing your policy, or adding new policies to ensure your family is financially protected.
5. Review Employee Benefits
Don’t forget to take a close look at your employer's benefits as well. With a new family member, you might be eligible to make changes or enroll in plans such as:
Health Coverage: Add your new child to your health insurance plan to ensure their medical needs are covered.
Dependent Day Care Flexible Spending Accounts (FSAs): These accounts allow you to set aside pre-tax dollars for child care expenses, helping reduce your taxable income.
Hospital Indemnity Plans: These supplemental insurance plans can provide cash benefits for hospital stays and related expenses, offering an extra layer of financial protection. **This is often an overlooked benefit when you know you’ll be giving birth in the future year. If you are pregnant, this is a way to help put a few thousand dollars into your pocket**
6. Other Important Financial Updates
Emergency Fund: Reevaluate your emergency savings to ensure it can handle new expenses.
Budget Adjustments: Review your monthly budget to accommodate new costs and savings goals.
Aligning Your Financial Plan With Your Goals
A new family member often means your goals and priorities might shift—or, in some cases, become even more clearly defined. It’s essential to take a moment to reflect on whether your financial goals are changing or staying the same, and to make sure your financial plan is singing the same song.
Your plan should be thoughtfully designed and properly implemented to support your evolving needs, providing both flexibility and security as your family grows.
Recent Articles Written by Kristiana:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
DACFP Feature: My Take on Digital Asset Treasury Companies (DATs)
Jeffrey Janson had the privilege of being featured by Digital Assets Council of Financial Professionals (DACFP) where he shares his perspective on Digital Asset Treasury companies, or DATs, and why he thinks they’re potentially worth a look for the speculative sleeve of client portfolios.
Jeff emphasizes that DATs could become a key diversification tool, but we’ve got to balance their potential with the volatility and governance risks.
Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
Recent Articles Written by Jeffrey:
"All-Time-High" Anxiety? Relax.
We’ve all felt the anxiety when the market hits a new all-time high. But what if that feeling is based on a media narratives and emotion, rather than logic? We'll use data to explain why the market isn't defying anything, it's just doing its job; and why staying the course on a well-defined plan is more important than timing the market.
The Market Isn't Defying Gravity. It's Just Doing Its Job.
Read Andrew’s Story
Key Takeaways
Market highs are not a red flag. The fear that an up market "must come down" is a myth. All-time highs are a sign that the system is working exactly as it should and are a normal and expected part of a market with a positive expected return.
Market prices aren't arbitrary numbers. A stock is a "perpetual claim ticket" on a company's future earnings and dividends. Its value isn't fighting a force of nature but is based on the collective judgment of its future profitability.
Patience beats panic. Data shows that investing at a market high has generated similar returns to investing after a sharp decline over the subsequent one, three, and five years. Your efforts to improve results by trying to time the market is more likely to penalize them.
Your mind is your biggest opponent. The real challenge isn't the market itself, but managing the emotional responses it triggers. A disciplined strategy is more important than trying to time the market
Time, October 15, 1990 (High Anxiety); Money, August 1997 (Don’t Just Sit There… Sell Stock Now!)
There's a persistent myth in financial news, especially when the market is climbing: that stocks are "defying gravity" and are due for a painful fall. You see the headlines; the ones that talk about the market "heading back to Earth". It's a great story, but it's a terrible metaphor for how markets actually work.
Your investments aren't heavy objects being kept aloft by some mysterious effort. They're not a hot air balloon that must eventually descend. They are, in a far less poetic but more accurate sense, perpetual claim tickets on companies' future earnings and dividends. The value of a stock isn't fighting a force of nature; it's simply a reflection of the market's collective judgment on a company's future profitability. In other words, when stocks hit a new high, it's not a sign that the system is broken; it's a sign that it's working as expected.
Think about it: every day, thousands of businesses are working to innovate, grow, and generate profits. Their success, over time, is what drives market values higher. To put it bluntly, it would be difficult to imagine a scenario where investors freely put money into stocks with the expectation of losing money.
The Data Doesn't Lie.
The idea that you should avoid buying at market highs is a powerful emotional signal, but the data tells a different story. In fact, reaching new record highs is a normal and expected outcome if stocks have a positive expected return. Over the 94-year period ending in 2020, the S&P 500 Index produced a new high in more than 30% of those monthly observations.
But here’s the the real take: a study from Dimensional Fund Advisors shows that purchasing shares at all-time records has, on average, generated similar returns over subsequent one-, three-, and five-year periods to those of a strategy that purchases stocks following a sharp decline:
The numbers don't show a clear advantage to waiting for a drop. All they show is that staying invested pays off over time.
The Real Job of a Financial Advisor
Your biggest opponent isn’t the market; it's your own mind. Our human brains are conditioned to think that after a rise, a fall must follow, tempting us to "fiddle" with our portfolios. But as the data shows, these signals only exist in our imagination, and trying to act on them can hurt your long-term results.
That's where I come in. My job isn’t to predict the market, it’s to help you navigate your emotions and stick to the plan we've built together. It's about ensuring your portfolio is structured to handle the market's ups and downs so you can focus on what really matters: your business, your family, and your legacy.
We’re not fighting the laws of physics. We're embracing the power of a disciplined strategy.
Let's Talk About Your Strategy
If you're a business owner or a successful professional, you've already built your wealth on a foundation of discipline and long-term vision. Let’s make sure your financial plan is built with the same strategy.
Frequently Asked Questions (FAQ)
Q: What is "all-time-high anxiety"?
A: This is the common feeling of apprehension or hesitation that investors experience when stock prices reach a new record high. This feeling is often fueled by the belief that "what goes up must come down" and that a market downturn is imminent.
Q: Should I wait for the market to drop before investing more?
A: The data suggests that trying to time the market in this way is not an effective strategy. A study showed that purchasing stocks at all-time records has, on average, generated similar returns over subsequent one-, three-, and five-year periods to a strategy that purchases stocks following a sharp decline.
Q: How does a financial advisor help with this type of anxiety?
A: A financial advisor helps by providing a disciplined, long-term strategy. My role is to help you navigate your emotions and biases so you can stick to your plan, allowing you to focus on your personal and professional life while your wealth works for you.
Recent Articles Written By Andrew:
Recent Publications Featuring Andrew:
Podcasts Featuring Andrew:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Get on Track for Retirement with RightExpress—It's Free & Straightforward
Are you a busy physician, advanced practice provider, or nurse who wonders if you're on track for retirement, but isn’t sure about working with a financial advisor just yet?
Our firm uses RightCapital, a powerful financial planning software, to build comprehensive plans for our clients. I’m excited to offer you free access to their new, no-cost version called RightExpress. It's designed to help you quickly address key financial questions, see where you stand, and decide if you want to dig deeper.
This streamlined tool is the perfect way to get a clear picture of your financial life without any pressure.
What You'll Discover with RightExpress
RightExpress provides a clear snapshot of your financial situation through simple, focused modules. Here’s a look at what you can explore:
Social Security Optimization: When should you start your benefits to get the most money? This tool analyzes over 700 different claiming strategies to find the one that could maximize your lifetime income. You can compare different options side-by-side to see a breakdown of annual income and find out exactly when one choice becomes more profitable than another.
Retirement: Will you have enough money to retire comfortably? This module goes beyond a simple calculator. It runs thousands of different scenarios to project how likely your plan is to succeed. You can create a "Proposed Plan" to instantly see how changes—like saving a little more or retiring a few years later—could impact your future.
Debt: Ready to pay off your loans faster? This module helps you create a clear path to becoming debt-free. You can enter your credit cards and loans to create a new payment strategy. The tool shows you a clear timeline of how long it will take to pay off each loan under different scenarios.
Risk: Are your investments right for you? After answering a few questions, you’ll get a personal risk score. The tool then compares that score to how your money is currently invested and shows you if your portfolio is a good match for your comfort level.
Ready to Try It Out?
You dedicate your life to caring for others; now it's time to take control of your own financial health and care for yourself. RightExpress offers a simple, no-pressure, and high-value way to begin.
After you've explored your financial snapshot, if you have more questions or want to build a more detailed, personalized plan, I am here to help. Feel free to reach out to discuss how we can work together on a plan tailored to your unique goals. This could include topics like:
Roth Conversion Strategies
Charitable Giving
Insurance Planning
Asset Location
Mega backdoor Roth Contributions
Direct Indexing
And many more!
Setting and achieving financial goals
What investing accounts to use
Tax Planning
Asset Allocation
Backdoor Roth IRA Contributions
Tax Loss Harvesting
Estate Planning
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Are You Leaving Money on the Table? Hidden Employer Benefits You Might Be Missing
When most people think about employer benefits, the usual suspects come to mind: health insurance, 401(k) matching, and paid time off. But dig a little deeper and you might be surprised by what your employer actually offers—and what you could be missing out on.
Many companies offer a suite of lesser-known benefits that can boost your financial well-being, improve your work-life balance, or simply make life a little easier. The catch? They’re often buried in your onboarding documents or HR portal, and easy to overlook.
Here’s a rundown of commonly missed or hidden employer benefits worth checking out:
1. Student Loan Repayment Assistance
More companies are stepping up to help employees tackle student debt. Under current tax law, employers can contribute up to $5,250 per year toward your student loans tax-free through 2025 (thanks to a CARES Act provision). Yet many employees don’t realize their company offers it.
What to do: Ask your HR department if they participate in a student loan repayment program or offer any partnerships with refinancing providers.
2. Tuition Reimbursement or Continuing Education
Even if you’re not pursuing a degree, your company might reimburse you for professional development courses, certifications, or even conferences. These benefits often have annual limits, but can save you thousands—and boost your career.
What to do: Look for policies on tuition or education reimbursement in your employee handbook or HR site. You may need to get courses pre-approved.
3. Legal Services
Some employers offer access to legal services as part of their benefits package—often at no cost to you. This can include estate planning, will preparation, tax consultations, and even identity theft protection.
If your financial situation isn’t complicated, this is often the cheapest and easiest way to address these important documents like wills, durable power of attorney, living wills, and even trusts!
What to do: Check your benefits to see what it would cost you to sign up for the services for a year and get it all done! Make sure to do the research on how much those documents cost you in addition to the employee benefit service.
4. Dependent Care FSAs & Backup Childcare
Dependent Care Flexible Spending Accounts (FSAs) let you set aside pre-tax dollars for childcare, after-school programs, and summer camps. Some employers also provide emergency or subsidized backup childcare—a lifesaver when your regular care falls through.
What to do: Check your benefits portal during open enrollment and keep an eye out for family support programs.
5. Adoption, Fertility, and Surrogacy Benefits
Many larger employers now offer financial support for fertility treatments, IVF, egg freezing, or adoption assistance. These benefits can be worth thousands of dollars—and are often available regardless of marital status.
What to do: Ask HR if your benefits plan includes any reproductive health or family-building support.
6. Sabbaticals or Paid Volunteer Time
Some companies offer paid sabbaticals after a certain number of years or paid volunteer days each year to give back to your community. These benefits don’t always show up in your standard time-off policy.
What to do: Ask about long-term tenure perks or community involvement policies.
7. HSA Contributions and Wellness Incentives
If you have a high-deductible health plan, you may be eligible for an HSA (Health Savings Account)—and your employer might contribute to it. Some companies also offer cash or gift card incentives for completing wellness activities, like health screenings or fitness challenges.
Let’s go even further and discuss the benefits of investing your HSA and what tax savings that means for your family!
What to do: Log into your benefits portal and review your wellness or HSA sections—you might already have free money waiting.
8. Commuter Benefits or Travel Reimbursements
If you commute or travel for work, you may be eligible for pre-tax transit benefits or reimbursement for work-related travel expenses (including bike maintenance in some cities!). These can be easy to miss if you’re remote but occasionally go into the office.
What to do: Look for a transportation or commuter section in your benefits site—or ask your HR rep directly.
Don’t Assume, Ask
Many of these benefits go unused simply because employees don’t know they exist. If you're not sure what's available, don’t hesitate to ask. You might be sitting on free money, extra perks, or valuable resources that can support your financial and personal goals.
Taking full advantage of your employer’s benefits is one of the easiest ways to improve your financial life—without needing to earn another dollar.
As a client of mine, I review employee benefits on an annual basis. I’d be happy to review your benefits on a complimentary basis. The little details and decisions matter to the health and well-being of your full financial plan. Let’s connect!
Recent Articles Written by Kristiana:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Your Business May be Your Rocket Ship. But Where is Your Mission Command?
Your business is a rocket ship; an unparalleled engine for wealth creation. But relying on it for 100% of your net worth creates a dangerous concentration risk and is one of the biggest financial mistakes an owner can make. The single most important move for your family's long-term security is to consistently and strategically move money out of your business. This video is not about being less committed to your company; it’s about building a financial fortress around it. We break down the four critical strategies for building your family's "Mission Command": a structure of outside assets that protects your wealth, funds your life, diversifies your tax strategy, and secures your legacy for generations to come. Are you the CEO of your business, or the CEO of your family's future?
Why the smartest thing a successful business owner may do is systematically build wealth outside their company.
Read Andrew’s Story
Key Takeaways
Diversify Your Wealth: Relying solely on your business for wealth creates dangerous concentration risk. Building outside assets provides critical diversification.
Fund Your Life Separately: Use outside wealth to fund personal milestones like retirement and education, decoupling them from your business's performance.
Embrace Tax Diversification: Complement your business's pre-tax retirement plans with post-tax Roth accounts and taxable brokerage accounts to hedge against future tax changes.
Build a Complete Estate Plan: A true legacy plan goes beyond a will and includes trusts, powers of attorney, and strategies for liquidity and gifting to protect your family and assets.
In our last discussion, we broke down why comparing a dynamic business like the Lakers to a passive S&P 500 fund was like comparing a rocket ship to a passenger train. The business, with its leverage, cash flow, and tax advantages, is an unparalleled engine for wealth creation.
And I stand by that. Your business is likely the cornerstone upon which your family's greatest financial assets will be built.
So, what I'm about to say might feel a little hypocritical: The single most important financial move a successful business owner may make in their career is to consistently and strategically move money out of their business.
This isn't about being less committed to your company. It’s about being more committed to your family's long-term security. You’ve already built the empire; now it's time to build the fortress around it.
What is Concentration Risk for a Business Owner?
Being the owner is exhilarating. You control your destiny. The flip side? All of your financial destiny is tied to a single asset. We love to talk about diversification when it comes to a stock portfolio, but we often ignore the fact that for most owners, their business represents the least diversified portfolio imaginable.
It’s like being a Michelin-star chef who only eats his own cooking. The food is brilliant, but you’re crippling future growth by not expanding your, or your family’s, horizons.
Market shifts, industry disruption, a key employee leaving, or your own health can put the entire enterprise at risk. This is concentration risk. You've spent years building your golden goose; a savvy financial plan ensures you have a stockpile of golden eggs held safely in a completely different basket.
Why Fund Your Personal Goals Outside the Business?
Your company's balance sheet is not your personal balance sheet. The business needs to retain capital for growth, but your life has its own capital requirements. Systematically building wealth outside the business allows you to firewall your personal goals from your business's performance.
Retirement on Your Terms:
You may plan to sell the business for your retirement, but what if the perfect buyer doesn't show up the month you want to hit the golf course? What if the market is in a downturn and valuations are compressed? A separate, liquid nest egg gives you the power of choice. It means you can retire when you want to, not when you have to.
Funding Life’s Big Moments:
Your daughter's wedding, your son's college tuition, that vacation home you've been dreaming of; these things shouldn't be dependent on your company's Q3 revenue. Funding these goals with assets completely decoupled from your business removes immense pressure from both you and the company.
What is Tax Diversification and Why Does It Matter?
In the last article, we’ve established the incredible tax advantages of running a business; from deducting vehicles to super-charging retirement accounts. Plans like a 401(k) or a Cash Balance Plan allow for massive pre-tax contributions that lower your income today. But true tax strategy, like investment strategy, benefits from tax diversification.
Building wealth outside the business opens up a new set of tools:
The Roth Bucket:
Business retirement plans are fantastic for those massive pre-tax contributions, but you're creating a future tax liability. By funding Roth IRAs (or executing Roth conversions), you use post-tax dollars to build a bucket of money that is 100% tax-free in retirement. This is a critical hedge against the uncertainty of the future tax landscape
The Taxable Brokerage Account:
It sounds simple, but having a standard brokerage account, funded with after-tax money, is a cornerstone of liquid wealth. It's not locked up in a retirement plan, and when you sell assets held for more than a year, you benefit from lower long-term capital gains tax rates. It’s your financial multi-tool: liquid, flexible, and tax-efficient.
What Does a Complete Estate Plan Look Like?
For many business owners, an "estate plan" often means having a will and a buy-sell agreement. While essential, that’s like a master builder commissioning the quarrying of a mountain of exquisite marble but only drafting a blueprint for the front steps of the actual building he’s constructing. A true estate plan is the full architectural design for the entire multi-generational estate your business has given you the power to build.
The goal is to construct a legacy that protects your family from taxes, probate, and internal conflict. This requires several key structural elements:
Powers of Attorney and Medical Directives:
These are the most crucial, yet often overlooked, documents. Who makes financial decisions for your business and personal life if you're incapacitated? Who makes healthcare decisions on your behalf? Without these directives, your family could face a costly and agonizing court process to gain control, leaving your business and assets in limbo when they need stability most.
Trusts:
A Revocable Living Trust is the foundational drawing for your entire estate. It dictates how your non-business assets are structured and distributed, ensuring they pass to your heirs without the costly, time-consuming, and public process of probate. It provides the framework for the entire structure, giving you control over the final design
Strategic Liquidity:
This is where the challenge of fairness comes in, especially when some children are in the business and others aren't. How do you ensure equity without having to dismantle the main structure? This is where life insurance can become a critical utility. Often held within a specialized trust (like an ILIT), a policy can provide a tax-free, liquid infusion of capital to provide a cash inheritance to non-participating children or give the estate the cash needed to pay hefty estate taxes.
Strategic Gifting:
The tax code allows you to give to your heirs' by gifting significant amounts to them each year (as well as over your lifetime) tax-free. A strategic gifting program, specifically one where the gifts are given with a specific intended goal, methodically reduces the future size of your taxable estate while allowing you to see your family enjoy the security and comfort you’ve worked so hard to create.
Are You a Business Owner or a CEO of Your Family's Future?
Loving your business and protecting your family's future are not mutually exclusive goals. In fact, the latter requires you to look beyond the former.
Building a fortress of outside assets; liquid investments, tax-diversified accounts, and legacy-protecting trusts: is what separates a successful business owner from the founder of a financial dynasty. It’s the difference between merely launching a rocket and establishing a Mission Command that directs the entire operation.
Your business may be your powerhouse for creating wealth. A plan that strategically moves that wealth into your family's Mission Command is the blueprint for ensuring your mission succeeds for generations to come.
Recent Articles Written By Andrew:
Frequently Asked Questions (FAQ)
Q: Why should a business owner build wealth outside of their company?
A: Business owners should build wealth outside their company to diversify away from the concentration risk of having all their assets tied to one entity. This strategy provides liquidity for personal goals, creates retirement options not dependent on a business sale, and enhances family legacy planning.
Q: What is tax diversification for an entrepreneur?
A: Tax diversification is the strategy of holding wealth in different types of accounts to minimize future tax burdens. It involves balancing pre-tax retirement accounts (like a 401(k)) with post-tax accounts (like a Roth IRA) and taxable brokerage accounts, providing flexibility against a changing tax landscape.
Q: What are the most important parts of an estate plan besides a will?
A: For a business owner, a complete estate plan should also include: 1) Powers of Attorney and Medical Directives for incapacitation, 2) a Revocable Living Trust to avoid probate, and 3) strategies for liquidity (often using life insurance) and gifting to manage estate taxes and ensure fairness among heirs.
Q: How can a business owner ensure fairness when leaving the business to only some of their children?
A: A common strategy is to use life insurance, often held in a trust, to provide a tax-free cash payout equal to the business's value to the
Recent Publications Featuring Andrew:
Podcasts Featuring Andrew:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
8 Key Tax Changes in the OBBBA that Doctors, APPs, & Nurses Should Know
The tax laws that affect your money are constantly changing. The new One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, adds some more complexity. This new legislation extends key elements of the 2017 Tax Cuts and Jobs Act (TCJA) and introduces several new provisions.
For healthcare professionals—such as doctors, advanced practice providers (APPs), and nurses—these changes present both challenges and opportunities for financial planning, particularly concerning retirement, protecting your family's assets, and finding ways to save on taxes.
Caleb Spriensma with Count CPA and I have broken down the top 8 changes you should be aware of and consider.
This post is for general educational purposes only. Everyone's individual situation is different, and the information here is not a substitute for professional advice. You should always consult with a qualified financial advisor and/or a Certified Public Accountant (CPA) if you have any specific questions about your personal financial situation.
1. A Tax Break for Business Owners (QBI Deduction)
If you own your own practice, this could be a big one for you. The Qualified Business Income (QBI) deduction gives you a tax break on 20% of your business profits. This new law makes it a permanent rule…for now. If you are a specified service trade or business (SSTB), be aware that this deduction does have an income phase-out if your taxable income is too high.
The law also restores 100% bonus depreciation. This is a fancy term for a simple idea: if you buy new equipment for your practice, like an X-ray machine or a new computer system, you will potentially now be able to write off the entire cost in the same year you buy it. This creates a large business expense that lowers your taxable income, which could help you qualify for the QBI deduction or get a larger tax break.
2. Higher Cap for State and Local Taxes (SALT)
Are you a high-income professional living in a state with high taxes? If so, this is good news. For a few years, you'll be able to deduct more of your state and local taxes on your federal return. The deduction cap is temporarily rising from $10,000 to $40,000, which could save you a lot of money.
However, be aware that this higher limit starts to go down if you make more than $500,000 in a year. The deduction is reduced by 30% for every dollar you earn over that amount. This can significantly increase your tax rate on income within that range. It's like having a special coupon, but the discount gets smaller the more you earn.
3. Your Federal Income Tax Rates Are Staying Put
For years, many of the current federal income tax rates were set to expire. The OBBBA changes that by making them permanent. This means you can expect the same tax rates (10% to 37%) to stick around, with small adjustments for inflation each year.
This allows for long-term planning. You can now make smarter decisions about things like converting a traditional IRA to a Roth IRA (Roth Conversion Strategy) and filling up low tax brackets during retirement with withdrawals from pre-tax (Traditional) retirement accounts at lower rates than were previously scheduled.
4. More Money You Can Pass on Tax-Free (Estate & Gift Tax)
If you have a high net worth, this will be a benefit for your family's future. The amount of money you can give away or leave behind without paying federal estate or gift taxes is now permanently increased to $15 million per person ($30 million for married couples), adjusted for inflation. This allows you to transfer more wealth to your loved ones tax-free if that is your goal. For context, the annual gift tax exclusion for 2025 is $19,000, which is the amount you can give to any person without it counting toward your lifetime exemption.
5. New Rules for Charitable Giving
The OBBBA makes two important changes for those who donate to charity.
For Non-Itemizers: If you don't itemize your deductions, you can now claim a special "above-the-line" deduction of up to $1,000 (single) or $2,000 (married) specifically for cash donations. This means you get to deduct some charitable contributions even if you take the standard deduction.
For Itemizers: If you do itemize, a new rule takes effect in 2026. You'll have a new "floor" of 0.5% of your income for charitable contributions. This means the first half-percent of your charitable donations won't be tax-deductible. A smart strategy to consider is called "bunching"—where you combine several years of donations into a single year by using a donor-advised fund to maximize your tax deduction.
6. A New Way to Save for Your Children ("Trump Accounts")
The OBBBA introduces a new savings tool called "Trump accounts" to help families save for their children's future. These are a special type of savings account that you can open for a child under 18, and unlike a traditional IRA, they don't require the child to have a job to contribute.
You can contribute up to $5,000 per year, and the money grows tax-free. When the child turns 18, the account turns into a traditional IRA, giving them a head start on retirement savings. This is a new tool, so we are still awaiting guidance on the exact details. There are already 529 accounts, UTMA accounts, and custodial IRA accounts for children, so it will be interesting to see where and if this new account fits in.
7. More Deductions for Seniors
The bill didn’t get rid of taxes on Social Security, but it did create some additional deductions to help retired professionals. The law permanently keeps the standard deduction amounts at a higher level, which is a benefit for everyone.
For senior healthcare professionals (age 65+), the law temporarily adds a special $6,000 deduction for each person, which can help lower your taxable income. This extra deduction starts to go away if your income is over $75,000 (single) or $150,000 (married), so it's a good idea to plan your income if you want to try and receive the full benefit.
8. Expanded Use of 529 Plans
529 plans are a great tool for saving for college, but the OBBBA makes them even more useful. Now, you can use the tax-free money from a 529 plan for more things.
The law expands the eligible expenses to include:
K-12 Expenses: Up to $20,000 per year for things like private school tuition, tutoring, and educational therapy.
Professional Credentials: Funds can now be used for professional development, including tuition and fees for industry certifications and licenses, like a CFP certification.
This makes 529 plans a powerful tool for both your family's educational needs and your own professional growth.
Final Thoughts
The "One Big Beautiful Bill Act" presents a complex web of changes that can significantly impact your financial well-being. Understanding these provisions is a crucial first step for physicians, advanced practice providers, and nurses who want to implement a sound financial plan.
Each provision offers unique considerations that could either boost your financial plan or create unexpected challenges. So, don't just read this list and forget it. Do your own research or schedule a meeting with a financial advisor/tax professional. Use this article as a guide to start the conversation. Ask them how these specific impacts integrate with your current income, career stage, and long-term goals. Your financial health is just as important as your physical health, and proactive planning is key to maximizing both.
References:
Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
How to Use 529 Plans (and What’s New with the OBBBA)
When it comes to saving for education, 529 plans remain one of the most powerful tools available. They offer tax advantages, flexibility, and now—thanks to recent updates from the Opportunity to Build a Better Budget Act (OBBBA)—even more options for how families can put that money to use. Whether you’re a parent, grandparent, or just someone planning ahead, it’s worth understanding how these accounts work and what’s changed.
What Is a 529 Plan?
A 529 plan is a tax-advantaged investment account designed to help pay for education expenses. You contribute after-tax dollars, the investments grow tax-free, and withdrawals are also tax-free—as long as they’re used for qualified education expenses.
There are two main types of 529 plans:
Savings Plans: Investment accounts for future education costs.
Prepaid Tuition Plans: Lock in current tuition rates at eligible public colleges.
Most people use the savings version, which offers more flexibility and broader investment choices.
What Can 529 Funds Be Used For?
Historically, 529s could only be used for college tuition and fees, but in recent years the rules have expanded. Here's what they now cover:
Tuition and fees for college, graduate, and vocational schools
Room and board (for students enrolled at least half-time)
Books, supplies, and equipment
Computers and internet access if required for school
K–12 tuition (up to $20,000 per year per student starting in 2026)
Student loan repayment (up to $10,000 per beneficiary)
What’s New Under the OBBBA?
The Opportunity to Build a Better Budget Act (OBBBA), passed in 2025, made several updates to how 529 accounts can be used—expanding their appeal and usefulness.
Here are the key changes:
1. 529s Can Now Cover Certain Educational Support Services
The OBBBA expands qualified expenses to include services like:
Educational therapy
Behavioral support
Specialized tutoring
This is a big win for families with neurodivergent learners or students with learning differences.
2. More Flexibility for Career & Technical Education
Vocational and trade school expenses have always been eligible, but the OBBBA clarified and expanded this to include:
Apprenticeship programs
Credentialing and licensure prep
Tools and equipment required for training
This change recognizes that not all paths require a traditional four-year degree.
3. Rollovers to Roth IRAs – Final Clarifications
While the SECURE 2.0 Act allowed limited rollovers from 529 plans to Roth IRAs starting in 2024, the OBBBA clarified some rules:
Maximum lifetime rollover: $35,000
Account must be open for 15+ years
Contributions (and earnings on those contributions) made in the last 5 years don’t count
This gives account owners another backup use for leftover funds—but it’s not a free-for-all.
Pro Tips for Using a 529 Plan Wisely
Start early. The earlier you begin saving, the more time your money has to grow.
Name yourself as the owner. This gives you control, even if the beneficiary changes.
Overfunding? Consider using excess funds for:
Another child or relative - creating a legacy education account for generations to come!
Your own continuing education
A Roth IRA rollover (if eligible)
Watch for state tax perks. Many states offer deductions or credits for in-state 529 contributions.
Coordinate with other aid. 529 withdrawals can impact financial aid calculations—timing matters.
529 plans were already a smart way to save for education. With the updates from the OBBBA, they’re now more versatile and inclusive than ever before. Whether you’re funding college, trade school, or supporting a child with unique educational needs, your 529 can be a powerful piece of your financial strategy.
Need help setting one up—or making sure you’re using it efficiently? Let’s talk.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
VettaFi Feature: Jeff Janson Embraces Disruptive Tech in Exchange 2025 Interview
Jeffrey Janson had the privilege of being featured by VettaFi where he was interviewed on his bread and butter: serving clients by leading with advice for a changing world
Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
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Business Ownership vs. Index Investing: A Deeper Look at the Buss/Lakers Debate
A popular stat suggests indexing the S&P 500 would have been a better investment than Jerry Buss's purchase of the Lakers. This article dismantles that myth, revealing how the real math of leverage, cash flow, and tax efficiency tells a much different, and more profitable, story about building true wealth through ownership.
Why the viral stat about the Lakers' sale misses the point on how real wealth is built.
Read Andrew’s Story
There's a fascinating piece of financial trivia that often circulates among investors and sports fans alike. It lays out a simple, and seemingly mind-blowing, comparison:
At first glance, the takeaway seems simple: even owning a storied franchise like the Los Angeles Lakers couldn't beat a simple index fund. But for savvy owners, advisors, and executives, this comparison immediately raises red flags. It represents a fundamental misunderstanding of how strategic wealth is built, and it overlooks the immense financial and personal advantages of business ownership.
This article is for anyone who suspects there's more to the story. We’re going to go beyond the surface-level analysis and break down what the one-dimensional math ignores, from the real financial returns to the priceless advantages that ownership provides.
Key Takeaways:
IRR vs. ROI: When accounting for leverage and annual cash flow, the Lakers investment likely produced an Internal Rate of Return (IRR) more than double that of the S&P 500.
Tax Efficiency: Business owners can use before-tax dollars and deductions (like Section 179 and QBI) to significantly increase their financial efficiency compared to passive investors.
Priceless Returns: The true value of ownership includes non-financial returns like legacy, hands-on experience, and networking opportunities that an index fund cannot provide.
The Problem with the $13 Billion Number
Let me be clear: the S&P 500 is a fantastic investment tool, and its long-term performance is a powerful force for passive wealth creation. The problem isn’t with the index; it's with using it as a simplistic benchmark against a complex, multi-faceted asset like a business. The headline comparison falls apart under the weight of two realities that every business owner understands intuitively: Leverage and Cash Flow.
The Initial Investment Wasn't $67.5 Million in Cash
The first flaw in the comparison is the initial figure. Jerry Buss was a master of the deal. The $67.5 million transaction was for a portfolio of assets that included the Lakers (NBA), the Los Angeles Kings (NHL), The Forum arena, and a 13,000-acre ranch. More importantly, the deal was incredibly complex and highly leveraged. It involved multiple escrows, property swaps (including a transaction involving the Chrysler Building), and the efforts of over 50 lawyers. While the exact cash out of his pocket is not public, reports from the time estimated that Buss’s actual cash invested in the entire transaction may have been as low as $125,000, not including closing costs. Another analysis suggests his down payment was closer to $16 million. Let's be conservative and use the higher figure. If a $16 million investment grows into a stake worth billions, the return multiple is astronomical; far exceeding the S&P 500. This is the power of using leverage to control an asset, a tool unavailable to a typical index fund investor.
The Final Sale Price Ignores 45 Years of Income
The second, and arguably bigger, flaw is that the $10B valuation only represents the asset's value at the end. It completely ignores the decades of annual income the Lakers generated for the Buss family. The Lakers are a financial powerhouse. Even going back a decade, Forbes estimated the team's operating income for 2015 was $133 million. For the 2022-2023 season, their revenue was $516 million with an operating income of $159 million. This doesn't even account for the team's league-leading local TV deal with Spectrum SportsNet, worth hundreds of millions per year. While precise distributions are private, the publicly available data shows that the team generated billions in both revenue and profit over the Buss family's ownership tenure. That profit is money that could be enjoyed, reinvested in other ventures, or used to more quickly service the very debt that bought the team in the first place. This is why, for complex assets, a simple return multiple is the wrong tool. The only way to properly measure a deal like this is with a metric that accounts for all the cash flows (in and out) over the entire life of the investment: the Internal Rate of Return (IRR).
A Tale of Two IRRs: The Headline vs. Reality
The table below models the two approaches. The first column details the 'headline' scenario, which assumes an unlevered $67.5 million investment in the S&P 500. The second column models the more realistic 'reality' scenario of a leveraged $16 million investment in the Lakers, including estimated annual distributions.
The key takeaway is staggering. The Lakers ownership deal generated nearly an identical total net profit, but did so using less than a quarter of the initial capital and produced an IRR that was more than double that of the S&P 500.
The Money You Don’t See (Cash Flow & Perks)
The fundamental error in the "S&P is better" argument is its failure to recognize that a business is not a static number on a screen; it’s a living, breathing engine designed to generate income. The final sale price of an asset like the Lakers ignores the decades of cash flow produced along the way. This ongoing financial benefit generally comes in two forms: direct compensation and integrated perks.
The Annual Paycheck: Salary & Distributions
Unlike a passive stock holding, a profitable business pays its owner. For an active owner, this typically begins with a reasonable salary for the work they perform in the company. This is the reward for the day-to-day effort of running the enterprise. But the more significant reward comes from the profits. After all expenses are paid, including that salary, the remaining profit (the "net income") belongs to the owner and can be taken as a distribution (or dividend). This is the direct return on investment an owner receives for their capital and risk. This ability to generate cash without selling the underlying asset is a cornerstone of an owner's financial freedom
The "Lifestyle Asset": An Apples-to-Apples Look at Your Dollars
Beyond direct pay, the ability to run legitimate expenses through a business creates a massive financial advantage through the power of paying with before-tax dollars versus after-tax dollars. To show the real-world impact, let's create a clear, apples-to-apples comparison using only the 2025 federal income tax brackets for simplicity. Imagine two individuals: one is a high-income salaried employee, and the other is a business owner. Both need a new $80,000 vehicle. For an employee at this income level, their earnings for that purchase alone would place them in the 24% federal marginal tax bracket if they were to purchase the vehicle outright. This means the last dollars they earn, the ones they'd use for a large purchase, could be taxed at an even higher rate.
The Salaried Employee:
To have $80,000 in cash to buy the car, they must first earn that money and pay federal income tax on it. To get $80,000 of take-home pay, they would need to earn approximately $105,263. After paying 24% in federal taxes on those earnings (about $25,263), they are left with the $80,000 they need.
$105,263(Gross Pay)−$25,263(24%Federal Tax Owed)=$80,000(Net Pay)
The Business Owner:
The owner also needs an $80,000 vehicle, which will be used solely for legitimate business purposes. The business can purchase the vehicle directly. That $80,000 is a business expense. Thanks to tax provisions like Section 179 or bonus depreciation, the business may be able to deduct the full purchase price from its income in the first year. This deduction reduces the business's taxable income by $80,000, saving the company (and by extension, the owner) $19,200 in federal taxes (24% of $80,000).
The Bottom-Line Impact
To afford the exact same vehicle, the employee had to use $105,263 of their gross earning power. The business owner, by using their company as the purchaser of the vehicle, effectively only used $60,800 of their earning power ($80,000 cost - $19,200 tax savings). This isn't a loophole; it's a fundamental principle of the tax code designed to encourage business investment.
A Masterclass in Tax Efficiency
If cash flow is the engine of day-to-day wealth, then tax strategy is the high-performance oil that keeps that engine running at maximum efficiency. It's not about 'finding loopholes'; it's about strategically using a rulebook that is specifically designed to reward business investment and growth. For a business owner, the U.S. Tax Code provides a rich and dynamic playbook for legally minimizing tax liability. This advantage is built on three pillars: choosing the right foundation, understanding the full universe of deductions, and leveraging industry-specific opportunities.
The Foundation: Why Your Entity Structure is Your Financial Blueprint
Before a single dollar is earned, the most critical decision a business owner makes is choosing their entity structure. This choice dictates how profits are taxed, what deductions are available, and how the owner is compensated.
LLC (Limited Liability Company):
A popular starting point, the LLC is a legal entity (not a tax entity) that offers liability protection. Many sole proprietors will elect to have this treated as a "disregarded entity" for tax purposes, making filing simpler as it can all be done on their personal return: the 1040. As income increases, the next step is to choose how the entity is taxed.
S-Corporation (S-Corp):
For many profitable small businesses, the S-Corp is the gold standard of tax efficiency. It allows the owner to pay themselves a reasonable salary (subject to payroll taxes) and then take any additional profits as distributions. These distributions are not subject to self-employment taxes, which can result in thousands of dollars in annual tax savings compared to taking all compensation as salary.
C-Corporation (C-Corp):
The structure of major enterprises like the Lakers, a C-Corp is a separate tax-paying entity. While its profits are subject to corporate income tax, potentially leading to double taxation, it offers maximum flexibility for growth, raising capital, and providing more extensive, and deductible, employee benefits; many of which can also be additional forms of compensation for the owner.
The Universe of Deductions: Lowering Taxable Income Year After Year
Once the structure is set, owners can leverage a vast array of legitimate business expenses to lower their taxable income. We saw the power of this with the vehicle example, but it extends much further into building personal wealth.
A Deeper Dive: Super-Charging Retirement Savings
This is where your choice of entity becomes incredibly powerful. A primary example is in retirement savings. While a traditional employee might be limited to their company's 401(k), a business owner can establish plans with dramatically higher contribution limits. Let's look at the popular Solo 401(k) for an owner with no employees. For 2025, the savings potential is split into two parts:
The Employee Contribution: The owner acts as their own "employee" and can defer up to 100% of their salary, up to a maximum of $23,500 for 2025.
The Employer Contribution: The business then acts as the "employer" and can contribute up to 25% of the owner's compensation. The power is in combining them. The total contributions from both sources cannot exceed $70,000 for 2025. This allows a business owner to save nearly three times more in a tax-advantaged account than a typical employee, drastically reducing their current taxable income while accelerating their retirement goals. A SEP IRA is another strong option, consisting solely of employer contributions up to 25% of compensation.
This entire strategy is made possible by the salary and compensation structure you can create with the right business entity.
For owners looking to save even more aggressively, a Cash Balance Plan can be a powerful tool. This is a type of "private pension" that allows for massive, age-dependent, tax-deductible contributions that can often exceed six figures annually. These plans can also be used in addition to a 401(k), allowing for a stacked approach that can drastically reduce a high-income owner's tax bill while rapidly building wealth.
Other High-Impact Deductions
Beyond retirement, an owner has a toolkit of other powerful deductions to enhance financial efficiency:
The Qualified Business Income (QBI) Deduction: Also known as Section 199A, this is one of the most significant deductions available to owners of pass-through businesses (S-Corps, partnerships, sole proprietorships). It allows for a deduction of up to 20% of qualified business income directly from your taxable income. It's a complex deduction with limitations based on income level and business type, but for those who qualify, it's an incredibly powerful tax-saving tool.
Health Insurance Premiums: For self-employed individuals and S-Corp owners, the cost of health insurance premiums is often 100% deductible, turning a major personal expense into a significant tax deduction. For businesses electing to file as a C-Corp, the premiums for all employees are deductible to the business.
Asset Depreciation: This is a game-changer. When a business buys a significant asset: be it manufacturing equipment, computer hardware, or even a sports stadium; it can deduct the cost over time. Provisions like Section 179 and bonus depreciation often allow an owner to deduct the entire cost of an asset in the year it was purchased, creating a massive, immediate reduction in taxable income.
Industry-Specific Opportunities: It's Not Just for Sports Teams
Different industries also benefit from tailored tax incentives designed to encourage specific economic activities. This proves that tax advantages aren't just for billion-dollar franchises. Some examples are as follows:
Real Estate Investors: Beyond standard deductions, real estate professionals can use depreciation as a powerful tool to create losses that can offset other income. Advanced strategies like cost segregation studies can accelerate this depreciation, maximizing tax savings in the early years of owning a property.
Tech & Manufacturing: These industries can benefit from the R&D Tax Credit, a significant dollar-for-dollar credit for expenses related to innovation and improving products or processes.
Professional Services (Doctors, Lawyers, Consultants): For these owners, the primary advantage often lies in optimizing the S-Corp structure for salary and distributions and maximizing contributions to sophisticated retirement plans, like a defined benefit or cash balance plan, which allow for even larger, six-figure deductions.
The Priceless Premiums: Legacy, Experience, and Opportunity
If we stopped after the financial analysis, we would still be missing the most important part of the story: the elements of ownership that don't appear on a balance sheet but represent what is often the deepest forms of wealth. An index fund can give you a return. A business can give you a life. This "builder's premium" is a powerful form of return that manifests in three key areas:
The Legacy Asset: Building for the Next Generation
You cannot teach executive-level life skills by showing your children a brokerage statement. An entrepreneur creates an environment where the next generation can gain hands-on experience. When Jerry Buss passed away, he didn't just leave his children stock; he left them an empire. This is the ultimate goal for many entrepreneurs: creating a generational asset that provides purpose and opportunity not only for them, but those they most care about.
The Experiential Return: The 'Fun' Factor
A purely numerical comparison misses a simple, undeniable fact: the journey of building a business is often its own reward. The passion, the challenges, and the victories create a psychological income that can be more valuable than any financial return. The word "wealth" itself is derived from an Old English term for a state of being happy and healthy, not the financial riches that we often equate it with in modern times.
The Opportunity Network: Doors Opened and Deals Done
Owning a significant business creates a universe of opportunities that passive investing cannot. It puts you in rooms with other high-level operators, investors, and centers of influence. This network is, in itself, an asset that can lead to new ventures and strategic partnerships far beyond the scope of the original business.
Are You Building a Nest Egg or an Empire?
So, where does this leave our comparison? We've seen that the initial headline stat withers under scrutiny when you account for leverage, cash flow, and tax efficiency. The financial return on an asset like the Lakers is in a different universe than that of a passive index. But the analysis runs deeper. We've explored the benefits that can't be quantified: legacy, experience, and other opportunities.
The S&P 500 is an exceptional tool for building wealth passively. But it is just that: a tool. It is not an engine for creating a family legacy or a tax-efficient cash flow machine. To compare it to owning and building a business isn't just comparing apples to oranges; it's comparing a passenger train to a rocket ship. Both can move you forward, but they operate in entirely different dimensional planes with vastly different purposes.
Ultimately, your financial strategy must reflect what you are trying to build. If your goal is simply a number, a passive approach may be sufficient. But if you are building an engine for your family, for your life, for your future; you need a financial partner who understands that your business may be your most powerful asset. You need a plan that enhances its growth, not one that fights it.
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Frequently Asked Questions (FAQ)
Q: Is owning a business a better investment than the S&P 500? A: While the S&P 500 is an excellent passive tool, this analysis shows that a well-run business, utilizing leverage, cash flow, and tax advantages, can offer a significantly higher Internal Rate of Return and provides non-financial benefits like legacy and experience.
Q: What is the biggest tax advantage of an S-Corp? A: A primary advantage is the ability to pay yourself a "reasonable salary" and take remaining profits as distributions, which are not subject to self-employment taxes.
Q: What is the IRR? A: The Internal Rate of Return (IRR) is a financial metric that calculates an investment's profitability by accounting for all cash inflows and outflows over its entire lifetime, making it more accurate for complex assets than a simple return on investment.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Why Your Financial Plan Should Include More Than Just Investments
When most people think about financial planning, their minds often jump straight to stocks, bonds, and other investment vehicles. While investing is undeniably a critical component of building wealth, a truly robust financial plan encompasses much more than just your portfolio. To build lasting financial security and peace of mind, it’s important to consider several other vital elements that support and protect your financial future.
Here’s why your financial plan should include much more than just investments:
1. Tax Planning: Keep More of What You Earn
Taxes can significantly impact your net returns, and smart tax planning helps reduce your liabilities. This means more of your hard-earned money stays in your pocket instead of going to the government. Tax planning involves strategies like timing income and deductions, maximizing tax-advantaged accounts, tax diversification, asset location, and understanding how different investments are taxed. Without attention to taxes, even the best investment returns can be diminished by unnecessary tax burdens.
2. Estate Planning: Protect Your Loved Ones and Your Wishes
Estate planning isn’t just for the wealthy or elderly—it’s for anyone who wants to ensure their wishes are honored and their loved ones are cared for. Important documents like wills, trusts, powers of attorney, and healthcare directives lay out how your assets should be handled, who will make decisions if you’re unable, and how your family will be supported. Having these plans in place helps avoid confusion, legal battles, and delays during difficult times. Also, you’d be shocked at how many estate plans go unfunded and are incomplete! Your advisor should help ensure that your beneficiaries align and your trust is funded.
3. Insurance: Guarding Against Life’s Unexpected Setbacks
Life is unpredictable, and setbacks can quickly derail your financial progress. Insurance products—such as life insurance, disability insurance, and health insurance—are essential safety nets. They protect your income, cover medical expenses, and provide financial support to your family if something happens to you. Integrating insurance into your financial plan ensures that you’re not left vulnerable to risks that could otherwise cause significant financial hardship.
4. Charitable Giving: Align Your Values with Your Financial Goals
For many, financial planning is not just about accumulating wealth but also about making a positive impact. Charitable giving is a powerful way to align your values with your finances. Strategic giving can provide tax benefits while supporting causes you care about, creating a legacy that reflects your priorities. Including philanthropy in your plan can bring deeper satisfaction and purpose to your financial journey. With strategic planning, your dollars can make the biggest and most efficient impact.
Why Summer Is a Great Time to Revisit Your Full Financial Plan
Summer often brings a natural pause in the busyness of life—a perfect opportunity to step back and review your financial picture. While it’s easy to focus solely on investments during check-ins, make sure to take time to evaluate your tax strategies, estate documents, insurance coverage, and charitable goals as well. Revisiting these components ensures your plan is comprehensive and resilient to life’s changes.
Is Your Financial Plan All-Inclusive?
Investing wisely is only one piece of the financial planning puzzle. By expanding your focus to include tax planning, estate considerations, insurance protection, and charitable giving, you create a more holistic and effective plan. This approach not only builds wealth but also provides security, peace of mind, and purpose.
If you haven’t reviewed these areas recently, consider making it a priority this summer. If you’d like help crafting a complete financial plan tailored to your unique needs, I’d love to start you on the process of financial organization and freedom.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
Are Your Finances "Good Enough," or Just Better Than the Neighbors? (Spoiler: There's a Difference)
Feeling 'good enough' about your finances, especially compared to others? This common mindset might be a trap. Discover why simply 'keeping up' falls short and how a financial plan truly 'right for you' can secure your ambitions.
We all know that feeling. You glance over the proverbial fence (or these days, the carefully curated social media feed) and think, "Alright, I'm doing okay. Probably better than that guy." And maybe you are. But when it comes to your financial future; the one that supports your family, builds your legacy, and lets you sleep at night: is "better than the neighbors" the gold standard we're aiming for?
Read Andrew’s Story
Feel free to watch and/or listen to my narration of this article.
Let's be honest, many are navigating the complex world of investments, tax strategies, estate planning, and even their monthly budget with what amounts to a well-meaning but somewhat outdated map. A recent survey highlighted that the average U.S. adult could only answer about 48% of basic financial literacy questions correctly.¹ Scary thought, right? Especially when another survey from early 2024 found that 36% of American adults reported finding it somewhat or very difficult to pay for usual household expenses in the prior week.² Clearly, "winging it" isn't a wealth strategy.
The real issue isn't always a lack of information; it's often a misplaced sense of "good enough." We see ourselves as generally competent individuals (and you are!), and by extension, assume our financial acumen is equally sharp. Even worse, we fall into the trap of comparing our situation to those around us. If we're treading water at the same pace as everyone else, then at least we’re not falling behind, right?
Well, no. Not if "everyone else" is also quietly wondering if they're missing something. The "keeping up with the Joneses" mentality is a race to mediocrity, not financial freedom. True financial empowerment comes from looking inward, not sideways. It’s about being brutally honest with yourself about what you know, what you don't know, and where you truly want to go; irrespective of Mr. & Mrs. Jones and their new boat.
For business owners and successful professionals like you, "good enough" in your career or company simply isn't. You strive for optimization, efficiency, and growth. Why should your personal finances be any different? The journey to financial success isn't accidental; it's intentional, and it starts with a clear, unvarnished understanding of your starting point.
So, where do you really stand?
This isn't about assigning blame or inducing panic. It's about recognizing that financial landscapes shift, tax codes evolve, and opportunities (and pitfalls) are constantly emerging. What was a brilliant strategy five years ago might be a leaky bucket today.
Here’s a thought: Even if you’re fairly confident in your financial trajectory, wouldn’t a professional second opinion be valuable? Think of it as a specialist consultation. You're the CEO of your life; even the best CEOs have a board of trusted advisors.
Perhaps you’re already on the perfect path. Fantastic! Once we confirm that, you’ll be able to sleep even better. But what if there's an opportunity you've overlooked, a tax optimization strategy that wasn't on your radar, or a more effective way to structure your legacy?
Instead of wondering if you're just "doing okay," let's find out how you can do exceptionally.
Ready to swap "good enough" for "right for you?" Let's talk. Reach out today, and let's ensure your financial reality aligns with your ambitions.
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Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.
Fiduciary Financial Advisors does not give legal or tax advice. The information contained does not constitute a solicitation or offer to buy or sell any security and does not purport to be a complete statement of all material facts relating to the strategies and services mentioned.
DACFP Feature: Bitcoin Goes Mainstream: A Financial Revolution Unfolding Before Our Eyes
Jeffrey Janson had the privilege of being featured by Digital Assets Council of Financial Professionals (DACFP) where he shares insights on Bitcoin and the importance of engaging with this transformative asset.
Jeff emphasizes that Bitcoin is here to stay and the implications for financial advisors and their clients.
Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
Recent Articles Written by Jeffrey:
It’s not about a magic net worth number; it’s about the complexity of your life. Discover why high-earning professionals and business owners are moving away from DIY management and how to distinguish between a salesperson and a true fiduciary partner who is legally bound to put your interests first.