Latest news with #RichardMcWhorter
Yahoo
5 days ago
- Business
- Yahoo
5 Ways the Wealthy Put Their Money To Work That the Middle Class Can't
Wealthy people often operate in a completely different financial world than the middle class. They have access to exclusive investment vehicles, unique tax-friendly strategies and investment structures, to name a few differences. And many affluent families can take advantage of financial tools that help them grow, protect and transfer wealth in ways most Americans simply can't. Learn More: Read Next: 'Middle-income individuals can build wealth in the areas where they have access (for example, low-cost, exchange-traded funds) just like the wealthy but may not have enough to put money into more alternative investments like private equity or hedge funds,' said Richard McWhorter, managing partner and private wealth advisor with SRM Private Wealth. Experts explained what the wealthy can do that the middle class can only aspire to. Access to Exclusive Investment Vehicles Wealthy investors often have access to private equity, hedge funds and other 'alternative investments,' which typically require high minimums or accreditation, McWhorter said. These opportunities are usually out of reach for middle-class investors. Most of the investments within the alternative investment bucket (hedge funds, private equity, venture capital) are not available due to certain criteria to be accepted and/or minimum investments imposed by the investment sponsors, McWhorter said. Even if these investments are volatile or don't have a quick return, wealthy investors have the financial padding to take on that risk without threatening their basic needs. 'They might have less leverage that can be impacted during this time as well,' he added. Find Out: The Long-Term Advantage Because wealthy individuals don't rely on their invested assets for day-to-day expenses, they're able to invest for the long term and potentially get higher returns over time. 'This means that affluent individuals can begin investing sooner, which translates into significantly higher returns over time, thanks to compounding dividends and returns,' said Leslie Kehoe, managing director and senior wealth strategist at CIBC Private Wealth, US. Advanced Financial Structures Wealthy individuals also benefit from unique financial structures like trusts, donor-advised funds and private foundations, McWhorter explained. These structures offer tax advantages and greater control over how their wealth is invested and transferred. 'Wealthier people have more funds to lock away in a trust structure or to donate monies to a donor-advised fund than those with less wealth as it could impact their standard of living,' McWhorter said. 'Trusts are central to many strategies,' Kehoe said. She explained that different types of trusts — such as Grantor Retained Annuity Trusts (GRATs), Spousal Lifetime Access Trusts (SLATs) and Dynasty Trusts — can help reduce estate taxes, protect assets from creditors and facilitate tax-efficient wealth transfers across generations, keeping money in wealthy families. Charitable Strategies and Tax Efficiency Charitable giving is another area where wealthy individuals have a great ability to take advantage of the financial benefits of their philanthropy. Vehicles like donor-advised funds, private foundations and charitable remainder trusts can help reduce taxable income, defer capital gains and establish long-term giving plans. 'These strategies aim to … ensure a smooth and tax-efficient transfer of wealth across generations — all within the framework of U.S. tax compliance,' Kehoe explained. Family Offices and Comprehensive Planning Some wealthy families also protect their wealth by using private family offices — essentially in-house financial firms — to manage their wealth. These offices handle everything from estate planning to portfolio management and then some. 'These offices help structure portfolios to take advantage of tax-efficient investments and use entities like LLCs or partnerships to consolidate control and manage income and estate tax exposure,' Kehoe said. While most middle-class investors won't have access to such services, it's still possible to hire financial advisors and planners for strategic support. 'Aside from valuable advice that often limits liabilities and risk exposure, having a strong relationship with a wealth advisor can help individuals craft a highly customized financial strategy to meet the specific goals of their clients,' she added. What Middle-Class Investors Can Do While the average middle-class investor may not have access to these elite financial tools, they still have meaningful ways to grow wealth. Experts emphasized consistency, planning and leveraging accessible vehicles like retirement accounts and low-cost index funds. 'They should still continue to build their wealth with the tools available to them, which,' McWhorter said, 'are ample.' More From GOBankingRates Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck This article originally appeared on 5 Ways the Wealthy Put Their Money To Work That the Middle Class Can't


Fast Company
7 days ago
- Business
- Fast Company
Is it time to bring on a financial advisor? 13 factors to consider
As a business evolves, there often comes a point when leaders need expert guidance to manage complex finances, plan for growth, and protect what they've built. While a professional's qualifications are important, there are many other factors to weigh when choosing a professional in the finance world that you can trust. It's crucial to find someone whose approach, ethics, and understanding of your business truly align—and when you do, it can have a positive impact on your company's long-term success. To help you make this important decision, Fast Company Executive Board members share 13 key questions to think about before inviting a financial advisor into your inner circle. 1. DO YOU HAVE THE KNOWLEDGE AND BANDWIDTH TO MANAGE THE BUSINESS FINANCES? A business leader must realize when they don't have the bandwidth to follow their financial investments and financial decisions on their own. Leaders hire us to follow the ramifications of various factors that are happening daily—and to watch out for their best interest—so they can spend their time doing whatever they need to do directly. – Richard McWhorter, SRM Private Wealth Subscribe to the Daily newsletter. Fast Company's trending stories delivered to you every day Privacy Policy | Fast Company Newsletters 2. IS THERE ALIGNMENT IN VALUES AND APPROACH? Select a financial advisor whose professional ethics, transparency, and approach align with the company's strategic goals and culture. Financial advisors have a profound influence on strategic decisions; therefore, leaders should thoroughly vet candidates, focusing on their demonstrated integrity, accountability, and proven history of discretion and sound judgment.- Britton Bloch, Navy Federal Credit Union 3. WHAT ARE THEIR DATA PROTECTION PROTOCOLS? Ensure they have robust data protection protocols for your sensitive financial information. Ask about their cybersecurity measures, backup systems, and how they handle data breaches before sharing confidential business details. – Chongwei Chen, DataNumen Inc. 4. DO THEY HAVE A FIDUCIARY DUTY TO THEIR CLIENTS? Trust and transparency are key. Business leaders should ensure the advisor has a fiduciary duty, meaning they are legally obligated to act in the client's best interest. This helps avoid conflicts of interest and ensures financial advice is aligned with long-term goals, not personal gain. – Maria Alonso, Fortune 206 5. IS THERE TRUST, TRANSPARENCY, AND A FOCUS ON LONG-TERM STRATEGY? One key factor business leaders must consider is trust and alignment of values. A financial advisor should not only have expertise but also understand the company's goals and risk tolerance. Their advice must support long-term strategy, not just short-term gains, while maintaining transparency and integrity. – Stephen Nalley, Black Briar Advisors 6. ARE THEY ADEPT AT USING AND INTERPRETING NUMBERS, SPREADSHEETS, AND DATA? Math is just another language, so make sure all members of your leadership team share the same objectives and understanding of the business. Numbers and spreadsheets by themselves are merely tools to organize data and help guide decisions, so choose a financial partner adept at using those tools to accelerate the growth of your business and not slow it down. – Tim Maleeny, Quad 7. DO THEY UNDERSTAND YOUR BUSINESS'S UNIQUE PATTERNS AND CHALLENGES? Ensure they understand your business's unique cash flow patterns and challenges. Many advisors excel with traditional portfolios but lack experience with irregular revenue cycles. Ask them to walk through scenarios specific to your situation, such as seasonal revenue dips or growth capital needs. If they push generic solutions without understanding your operational realities, keep looking. – Joynicole Martinez, The Alchemist Agency advertisement 8. CAN THEY SUCCESSFULLY INTEGRATE PERSONAL GOALS AND FAMILY DYNAMICS INTO WEALTH PLANNING? Business leaders should choose a financial advisor who can align wealth planning with personal goals and family dynamics. The right advisor helps navigate emotional, financial, and governance complexities—especially during transitions like a sale or succession. – Mark Valentino, Citizens 9. WHAT ARE YOUR EXPECTATIONS? One critical factor business leaders must consider when bringing on a financial advisor is being crystal clear in expressing the expectations you have for the role. Not only must they be aligned with your vision, but you must also be clear with them on what goals you are trying to achieve (improve margin, cut costs, improve ROI). Your advisor needs clarity on how you view success. – Rich DePencier, Brand Growth Accelerators 10. CAN THEY SUPPORT YOUR COMPANY'S LONG-TERM GOALS? One important thing to consider is whether the advisor truly understands your business goals, not just your numbers. It's not just about managing money, but about finding someone who can offer guidance that fits your long-term vision. Trust and clear communication matter just as much as expertise. – Gianluca Ferruggia, DesignRush 11. DO THEY HAVE EXPERTISE IN THE AREAS THAT MATTER MOST TO YOUR BUSINESS? When bringing in a financial advisor, make sure they have expertise in the areas most critical to your specific business, whether it's fundraising, FP&A, or debt management. It's hard to find someone who excels in all these areas. For startups, which are typically leaner teams, you also need someone who can dive into details and roll up their sleeves, not just stay high-level. – Alejandro Botto, Turing 12. HOW DO THEY DEFINE THEIR ROLE, GOAL, AND METHODS? Listen to their language and how they express and define their role, their objectives, methods, and processes. Listen for what matters most to them. Do they see themselves as operating within a circle or as a separate point on the circumference of the circle? What does the content of what they speak about say about their focus of attention? What is their process-to-people ratio of focus? – Jay Steven Levin, WinThinking 13. DO THEY KNOW YOUR INDUSTRY AND BUSINESS MODEL? Business leaders should consider the financial advisor's knowledge of the industry and business model to be of primary importance. The advisor must have not only strong financial capabilities but also knowledge of the sector and its potential unique challenges and opportunities. This will ensure they provide advice that's relevant and tailored to the business's growth trajectory. – Asad Khan, LambdaTest Inc.