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Keys to a Successful M&A

A merger or acquisition (M&A) can have a huge impact on your business, regardless of if you are the seller or the buyer. Mergers and acquisitions can offer business owners the opportunity to create more value for their business, expanding beyond what they could do alone. The process of merging or acquiring a company, however, can be a lengthy, complicated process.

Why Would You Pursue an M&A Transaction?

First, let’s discuss why you would decide to pursue an M&A transaction. Typically, the objective behind a merger and acquisition is clear from the start.

Some of the most common reasons that business owners pursue an M&A transaction include to:

Improve company performance
Improve a product’s time to market
Reduce excess production capacity
Acquire a company’s technology, products, expertise, or resources
Lower operating costs by making use of economies of scale

Sometimes, an M&A transaction occurs as a result of seeing potential in a younger company.

Regardless of why you’re considering undergoing a merger or acquisition, it’s important for the success of the transaction that both parties stand to benefit from the deal.

What Makes an M&A Transaction Successful?

According to Harvard Business Review, about 70 to 90% of mergers and acquisitions fail. This considered, how can you make sure your business is a part of the slim 10 to 30% of companies that succeed in this stage of your business?

Mutual Benefit for Both Parties

As we stated above, part of a successful M&A transaction involves a mutually beneficial deal. Both parties should experience some kind of gain, even if that means simply avoiding a potentially negative alternative.

A mutual benefit is essential to your M&A success, as you need to be sure both parties are fully committed to the deal. If one company stands to gain a significantly greater benefit, it may be a sign that the other party may not be as committed to the transaction–which could lead to the M&A’s demise.

Vision Alignment

Another element that leads to success in a merger or acquisition is a clear, shared vision of the future for both companies. For both the buyer and the seller, what does the company look like post-merger or post-acquisition? Having a clear understanding of what this looks like will allow for a smoother transition.

Uncover Your Plan B

In any plan where negotiations between two or more parties are involved, there’s a greater chance of failure. If negotiations stall, hit a dead end, or combust, what happens to your company? Set a plan B before this situation occurs, so you can confidently move into negotiations.

Set a Clear Timeline

Lastly, be sure to set milestones and deadlines throughout your M&A transaction. M&A transactions have a reputation of dragging on for months, even years at times. Having a set timeline with clear milestones and goals is essential to keeping the deal on track.

Why Do Some Merger and Acquisitions Transactions Fail?

As we mentioned above, the majority of mergers and acquisitions fail. But how is this failure defined? A merger or acquisition failure is defined by whether or not the transaction met the original objective of the transaction.

With that being said, there are a few things to look out for before you undergo this process:

Culture Fit

One of the primary reasons that M&A transactions fail is due to the cultures of the two companies coming together. If the two cultures clash and leadership is unprepared, you may run into quite a few issues. This clash can carry over to your customers, and your original company can lose what made it successful in the first place.

Lack of Due Diligence

Performing an in-depth due diligence process prior to your M&A transaction is essential to the success of your deal. If you have an insufficient understanding of the other company’s financials, processes, and overall business, you may be blindsided post-transaction.

Integration Planning

The integration process after a merger or acquisition occurs can be lengthy. This integration comes into play in every aspect of the business, but buyers should pay specific attention to the technology integration, as it tends to be the most complicated and time-consuming.

Overly Optimistic Forecasting

Buyers are typically overly optimistic regarding the savings they will experience from acquiring a business. It can be difficult to predict operational and manufacturing costs, as there are often unforeseen complications that arise.

Now that you understand what it takes to experience a successful M&A transaction, you can enter the planning stage. Whether you choose to pursue a merger or acquisition or a different avenue for exiting your business, take a look at this article to start preparing to sell your business.

April 9, 2022

ESTATE PLANNING, EXIT PLANNING, NEWS

Exit Planning vs Succession Planning vs Legacy Planning: What’s the difference?

The terms succession planning and exit planning are sometimes used interchangeably. At the same time, legacy planning is a part of succession and exit planning strategies but can be addressed on its own for those high-net-worth individuals (HNWIs) who are not also business owners. While succession, legacy, and exit plans require care and attention, there are some important differences.

Both succession planning and exit planning fall under the umbrella of Business Transition Planning.

Business Transition Planning is the umbrella term for any strategy focused on creating, maximizing, and preserving the value of a business as it prepares for and experiences transition.

A successful strategic business transition plan targets three crucial areas of need:

Maximize the value of the business while the business owner is still in place
Prepare the business owner for the transition from tax strategies to life plans
Optimize the organization structurally and culturally to weather the transition

What Makes Up a Successful Exit Plan?

Exit planning takes a comprehensive look at the structures, financial, cultural, and legal that make a successful exit possible. It is the strategic process employed when a business is going to be sold or is going to merge with a third party. Because an unknown element will impact the business valuation, its leadership, its culture, and its productivity, the process of setting up a successful exit plan can take between 3- 5 years.

Some of the essential elements of a successful exit plan are:

Identify the Owner’s Objectives: financial goals, timing details, and people-focused objectives.
Understand the Business’ Value: Intellectual Property (IP), revenue, market conditions, multiples, projections, bubbles, and upcoming industry trends.
Plan for Leadership Succession: Identifying the key people who will remain with the business through the transition to ensure the business retains its value and incentivize them to weather the transition.
Tax Planning: Implementing tax strategies to reduce the tax burden of a multi-million dollar transaction requires months if not years of planning and implementation of tools from Defined Benefit plans to life insurance tools to philanthropic bequests and more…
Financial and Legal Structuring: Ensuring that the company’s financials accurately reflect the business’ profitability will protect the seller from future exposure to litigation. Simultaneously, it increases the value of the business while legal protection and well-structured contracts with employees, vendors, and clients will help retain the value of the business.

Who Should Have a Succession Plan?

Succession Planning is focused primarily on the transfer of leadership and financial control of the business to a family member or key employee.

When a succession plan is put in place early enough, there is an opportunity for the successor to develop their skills and experience in order to step into the leadership role and make a smooth and successful transition. For this reason, a successful succession plan can be built into the business from the beginning or, at least be implemented well before discussions begin surrounding the business owner’s transition out of a decision-making role.

When the succession plan involves an ESOP or the transfer to a key person inside the organization, there are components that need to be addressed:

Legal details involving representations & warranties
A transitional period during which the owner will remain in an advisory capacity
The structure of the acquisition of the company from a financial standpoint

Generational succession requires identifying issues of control, family structure, rivalries, and the future of the company that should be addressed from a financial and cultural standpoint.

How Does a Legacy Plan Play into Exit and Succession Planning?

Legacy planning can also play a part in exit planning and succession planning. While exit and succession planning are both focused on the business owner’s departure from their role as chief decision-maker, legacy planning is focused on the impact of how:

Increased time may have on the owner’s life and
Increased funds may have on the community around them.

Integrating elements of legacy planning into an exit or succession plan may involve bequests to philanthropies to both offset taxes and leave a permanent positive impact behind. It may be as straightforward as the choice to remain on a board in an advisory capacity in a boardroom named for you or as complex as a trust that funds the education or ventures of generations to come.

For business owners who are HNWIs, the complexities around major money-in-motion events are not to be understated. With so much on the line, it is essential to get the right advice.

Trusted wealth advisor relationships, family back offices with lawyers who know your business structures, and reliable advisors to your family as a whole – not just to you the business owner – are important as you start to plan for an exit or succession in your business. Putting a plan in place does not mean that you have to stay on that timeline.

At Centura Wealth we help set up exit planning, and tax-advantaged strategies for major wealth transfer events and then have the flexibility to pivot when clients’ plans change. Our team focuses on unique strategic plans that are customized to your family’s needs and objectives. Reach out to learn more about how we help our clients be ready for what’s next.

For more information on generational wealth and how to transform your strategy to make it last, read our article here.

April 4, 2022

Young man arms outstretched by the sea at sunrise enjoying freedom and life, people travel wellbeing concept

LIBERATED WEALTH, NEWS, TAX PLANNING

5 Steps: The Liberated Wealth Process®

If you’ve worked with any of our advisors at Centura Wealth, you have most likely heard us talking about the Liberated Wealth® process.

We believe that it’s our role as stewards to embrace the details of your existing financial situation. This is where the Liberated Wealth® process comes into play.

In the spirit of transparency, we want to provide information to our clients about our processes and findings. Let’s dive deeper into what the 5 steps of the Liberated Wealth® process look like.

Our tax planning generally starts with your existing baseline. After a comprehensive review, we illustrate and synthesize the complexities of your tax profile into sophisticated options. Our goal is to reduce your tax burden and drive meaningful outcomes for you, your family and friends, and charitable organizations.

Since real estate is often one of the major components of a family’s balance sheet, our expertise in real estate planning is frequently at the forefront of our clients’ minds and needs.

Our team functions based on 5 main steps. They are as follows:

1. Uncover

First, we pursue holistic discovery by gathering and understanding data; the client’s purpose, path, and professional roster.

2. Unlock

The next phase is to follow a precise design by analyzing and triangulating existing strategies, establishing a baseline plan, considering “what if” scenarios, and identifying a planning scope.

3. Design

The design element is a core piece of the Liberated Wealth® process. The design element includes a multi-phase action plan, a wealth scorecard, and charting new pathways.

4. Liberate

This step involves understanding purposeful deployment. This includes implementation and advancement with plan implementation, coordination of professionals, portfolio implementation, and scorecard reporting.

5. Steward

The final step of the Liberated Wealth® process is to monitor and pivot through purposeful deployment. This includes plan monitoring, timely recalibration, and life events reset.

This is a detailed explanation of what a process can look like for a client. It’s important to understand what the short and long-term goals are for your wealth management and understanding your advisor’s process is the first step to achieving that goal.

All of these steps revolve around the importance of predicting and planning for the future. Let’s take a closer look into how planning is implemented into the Liberated Wealth® process.

Planning

Planning is a multi-step process that may seem tedious but is essential to progressing your wealth. It’s easy to be financially disorganized, that’s where we step in. Centura Wealth helps you create order and organization, and most importantly — peace of mind.

Planning to liberate your wealth looks different for each family, individual, and institution. At Centura, we offer different areas of planning, including:

Tax Planning

Short Range Tax PlanningLong Range Tax PlanningPermissive Tax Planning Purpose-Driven Tax Planning

Retirement Planning

Wealth Accumulation
Lifetime Income

Portfolio Planning

Portfolio ReviewPortfolio ProposalPortfolio Stress-testingBespoke Alternatives

Estate Planning

Charitable Planning
Multi-generational Planning
Life Insurance Planning

Real Estate Planning

Real Estate Portfolio Analysis 1031/ExchangesRefinancingExit PlanningLike Exchanges (TICs, NNN, DSTs)

Clearly, there are many planning options available to meet your unique needs. Depending on your position and interests, one of our advisors can work with you to narrow down which options deliver the highest value for you.

Precision

Our tax planning starts with your existing baseline. After a comprehensive review, we illustrate and synthesize the complexities of your tax profile into sophisticated options that drive meaningful outcomes to reduce your tax burden for you, your family and friends, and your organizations.

Precision is key, and our team will analyze and triangulate your purposes and want to design a unique liberated wealth plan.

Part of the precision element includes:

Identifying Existing Strategies
Establishing a Baseline Plan
Unlocking “What-If” Scenarios
Identifying Planning Scope

Purpose

The purpose of liberating your wealth will naturally stem from planning your finances with precision. Once Centura designs your personalized Liberated Wealth® Plan, the next step is to implement and advance the plan. This includes coordinating professionals, portfolio implementation, and scorecard reporting.

With any big step, there are going to be adjustments that come up along the way, and we make sure they still align with your purpose. Centura will help you steward your Liberated Wealth® Plan, even if that means pivoting original goals.

There are tangible ways your plan can be stewarded, including:

Plan monitoring
Timely Recalibration
Life Events Reset

Do you know what it means to find your North Star? Read our blog to find out.

Our process does not discriminate between uniqueness and commonalities and therefore is well-adjusted to serve our audience. We place importance on our passion for finding and solving complex problems.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability, or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

January 22, 2022

Senior couple doing home finances using laptop indoors

ESTATE PLANNING, NEWS

How to Optimize Your Retirement Plan

At Centura Wealth Advisory one of our core values is stewardship. We believe in partnering with our clients to liberate their wealth management process.

Part of our role as stewards to our clients is walking them through the entire financial planning process, from present-day to the coming years. One of the main areas we address with our clients is optimizing their retirement plans.

Listen to the Live Life Liberated Podcast for a detailed perspective from Derek Myron and Kyle Malmstrom, as they discuss how the potential estate tax changes may affect your retirement plan distributions.

One question we often ask our clients is, “Are you ready to overcome the complexities and burdens that come with your success?” Learning how to optimize their retirement plans is one of the foundational steps in overcoming the complexities that come with wealth management.

The two also share effective strategies to help transfer your accumulated wealth to your desired beneficiaries in a tax-efficient manner. Here are a few of the topics covered in the podcast linked above.

A brief overview of the proposed Build Back Better Act
Different ways to take your money out of Individual Retirement Accounts (IRAs)
“Live-on” assets versus “leave-on” assets — what is better for you?
Reasons to start planning your wealth transfer as early as possible
And more

*It should be noted that the information about proposals is subject to change from the time this article is published.

Employee Retirement Income Security Act

Prior to 1974, employees who worked at one or two companies their entire life would generally be given a pension. A pension is a defined benefit plan.

Some of the factors that would define an employee’s pension plan include:

Years of contribution
How much they made

These factors would determine how much money the employee would receive in the event of retirement, death, or become disabled or unable to work.

In 1974, however, the Employee Retirement Income Security Act (ERISA) was introduced. ERISA was the advent of the Individual Retirement Account (IRA).

The main difference between ERISA and IRA is that ERISA plans are defined benefit plans. The IRA, on the other hand, was a defined contribution plan. This means that the employee can make investments that they control: stocks, bonds, and mutual funds.

Roth IRA

Since then, the rise in popularity of contribution plans has introduced other factors like a Roth IRA, which as far as optimizing your retirement plan, is a great starting point.

A Roth IRA is a retirement account that grows tax-free and can have tax-free distributions (as long as you hold it for five years and are above the age of 59).

There are two ways to optimize your retirement plan with a Roth IRA. The two ways are to contribute on an annual basis or to convert Converting your Roth IRA is taking your existing, non-Roth IRA asset and converting it into a Roth IRA in order to reap the tax benefits.

A Common Challenge

The challenge, however, is getting wealth from a traditional IRA into the Roth IRA. If an individual is in a low-income tax bracket, it’s not a terribly painful process. However, if you’re in a high-income tax bracket, it can present more of a challenge.

Due to the tax benefits that a Roth IRA provides, a large portion of people used this benefit. Because of this, the government did not predict the substantial amount of money put into these accounts. This brings us to the Build Back Better Plan.

Build Back Better Plan

The Build Back Better Plan was proposed by Congress in 2021. It aims to place further restrictions regarding Roth IRA contributions on wealthier individuals.

As stated by CNBC, “Wealthy individuals with more than $10 million in retirement savings would have to draw down their accounts each year, in a new type of required minimum distribution, or RMD. Lawmakers would also close “backdoor Roth” tax loopholes, used largely by the rich, and prohibit further individual retirement account contributions once those accounts exceed $10 million.”

One primary example of the reasoning behind the Build Back Better plan is the Paypal founder, Peter Thiel. Thiel has been able to amass $5 billion in his Roth IRA. Many people are upset and wondering, “How is this fair?”

How the Build Back Better Act Impacts Our Clients

Since 2019, Congress has been looking for loopholes to limit a plan owner’s options for optimization. In this case, “plan owners” include those who have a million dollars or more in their retirement plans and have an estate. Oftentimes, at this level of retirement planning, wealth transfer issues arise.

Plan owners are worried about how to optimize their distributions from their retirement plans because they know that Congress is looking to change the rules.

What Now?

There are many ways to continue to optimize your retirement plan while you’re alive.

You Can Make a Distribution

One option is to do a Roth conversion (depending on your facts and circumstances and the timing of income). You could then distribute from the Roth with the tax advantage. There’s also a way to do an in-kind distribution of different assets out of an IRA that may be tax efficient.

Another option is a qualified charitable distribution. This method eliminates tax liability and the funds are sent to a charity of your choice.

Set Future Goals

We believe your plan is not a one, two, or three-year plan.

Instead, we focus on a 10 or 15-year plan. The goal is to figure out how you’re intending to manipulate your cash flow and income tax, then to distribute your assets. This could mean distributing them to your spouse or even future generations.

In light of the potential changes coming from Congress, it’s important to start preparing for what’s to come. We encourage you to get in touch with your advisor and figure out a plan of action for your financial future.

As mentioned above, charitable giving is a great wait to improve your bottom-line, while also giving back to the community. Learn more about how charitable giving can improve your bottom line on our blog.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

January 8, 2022

Smiling senior couple jogging in the park

NEWS, TAX PLANNING

An Insider’s Guide to Tax Deductions

2022 is here, which means April 15th is not far behind. This considered it’s crucial to begin planning ahead for the tax season.

You have most likely exhausted most of your options as far as tax deductions go, but there may be some you might have missed with the potential tax changes on the horizon.

*It should be acknowledged that the information in this article is subject to change based on what may or may be altered with the proposed tax changes.

Corporate Gifts

Since the holiday season just passed, corporate gifting might have been top of mind for your company.

If you have employees who have birthdays, babies, or anything that requires a gift, corporate gifts can be deducted to a certain extent.

The Internal Revenue Service (IRS) states that “you [may] deduct no more than $25 of the cost of business gifts you give directly or indirectly to each person during your tax year.”

Sole Proprietor Tax Deductions

As far as deductions go, it’s important to be aware that half the cost of your 1040 form can be deducted if you are a sole proprietor (an unincorporated business owned and run by one individual).

As defined by the Social Security Administration, you are considered “self-employed if you operate a trade, business or profession, either by yourself or as a partner.” There are two income tax deductions that can reduce your taxes.

The first is that your net earnings from self-employment are reduced by half the amount of your total Social Security tax.
The second is as mentioned above, where half of your Social Security tax can be deducted from your 1040.

Educational Expenses

If there are any events that you or your company has participated in for educational purposes, those can be written off as well.

For example, if you’re a Digital Marketing agency, and your team attends a conference about the latest social media updates for 2022, the cost of the conference can be deducted.

General Business Expenses

While you likely know that most business expenses can be deducted from your tax return, you may be leaving some unknown deductions out. But what is considered a business expense?

Any cost that is helping a business grow
Any cost that is helping your team improve their performance

For example, if your HR Manager purchased an audiobook on human nature and communication styles, that can be useful for their role in the office – therefore deducted from your tax return.

Office supplies also fall into the business expense category. (As we’re sure you know, that printer ink cost can really add up!) This also includes office supplies like pens, electronics, paper, organizational tools, and more.

Home Office

Since hybrid and remote workforces have become the new normal, assisting your team in creating a home office that breeds productivity can be pricey. The good news is that cost can be considered a write-off for your 2022 tax returns.

In fact, this might even mean deducting a portion of your mortgage or rent as your office space. Of course, this calculation requires the square footage that is actively being used as a home office and applying that to your total rent or mortgage.

Travel Expenses

Your first thought might be, “Of course I can deduct the airfare for business travel,” but don’t forget about all the other expenses that come with travel. You can often deduct:

Food
Wifi fees
Parking
And more

Entertainment and Meals

Networking is a large part of most industries.

Networking usually consists of some form of entertainment or food. Any meals that are shared with prospects and/or current clients can be deducted. Any entertainment (or events) hosted by your company can also be deducted.

Donations

Lastly, charitable contributions are tax-deductible. Be sure to keep your records of charitable contributions in order to utilize the tax benefits of your company’s effort to give back.

At Centura Wealth, we have tools in place to assist our clients in using charitable giving tools to not only improve their bottom-line but, more importantly, to give back to their communities.

As you look towards the next year, it’s important to take a look not only at the upcoming tax season but also at your financial planning as a whole. At Centura, we understand that the intention behind your planning can positively impact your wealth management, read more in our article here about how intention can influence your financial planning.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

January 1, 2022

Location icons of gps navigation, Global 5g high speed internet connection and Big data analysis process background

LIBERATED WEALTH, NEWS

Up and Coming Technology for Wealth Advisors

As a wealth advisor, you want to provide the best service to your existing clients and prospect for new clients in the most effective way. That can be a challenging balance without the proper technology in place to support you.

The big wirehouses have access to behemoths of technology that supports wealth advisors; however, they can lose the personal touch and the collaboration that a wealth advisory might offer. These technology systems require intense customization and onboarding, which can be difficult to handle on your own.

At Centura, we prioritize being both innovative in our advisor’s access to technology, while also providing that personal collaboration that drives success. In an effort to display this priority, we have pulled together a list of the top-up and coming technologies for wealth advisors to start implementing.

A La Carte Your Tech

At Centura Wealth, we found that building a tech stack with three different ‘a la carte’ solutions matched our needs more specifically than one ‘do-it-all’ program (like EMoney).

All three solutions we decided on integrate with our hubs to create a specialized approach that works for us.

Our tech stack is made up of:

Salesforce
Orion
Right Capital
Hidden Levers
Wealth Access

This a la carte approach to technology is one we’ll likely see become more common in the future depending on your size, clientele, and resources.

Most Common Technologies Used to Support Wealth Advisors

With today’s current technology environment, there will always be ‘the next best thing’ which can make it challenging to narrow down what technology actually works for you and your client’s needs. As we said above, a combination of softwares can really enhance the way you do business. Here are a few of the most popular technologies we see used in the industry.

eMoney

While eMoney seems to be the program that does it all, there are certain restraints with using this software.

eMoney claims “financial discussions don’t have to be difficult. Neither do tech solutions that power them. At eMoney, we’re committed to delivering innovative, planning-led solutions that power your business. Our comprehensive financial program is built for the way you work and designed to scale and meet the growing needs of your firm.”

With eMoney, a client has access to:

A “Financial Feed” of data, providing news and alerts
Planning and Analytics for “conventional retirement and education planning, cash flow-centric planning, estate planning”
Reporting on Data
Balance Sheet
Client Portal
Third-Party Integration and Data Aggregation

This software is used on a large scale, which can have a downside. With lots of notifications that can disturb client relations and research, it can be a challenging software to personalize your process.

Advicent

Advicent, also known as NaviPlan, is another major contender for a program that might work for the masses. This software is great to get you started.

Some of the main features that are listed for Naviplan include:

Account aggregation
Advanced tax planning
Asset allocation & risk tolerance
Business planning
Cash flow planning
Client portal
Collaborative financial planning
Compliance workflow
Custom client reports
Equity Compensation
Estate planning
Financial fact finder
Goals based planning
Guided retirement
Insurance Planning
Monte Carlo analysis
Retirement income modeling
Scenario analysis

A Wealth Advisory Tech Stack

As mentioned above, we use Salesforce, Wealth Access, and Orion. Choosing to mix and match our tech stack has created the balance of using tech and affordability.

Wealth Access

Wealth Access is used for data aggregation. Although there are predictions that data aggregation is the future of technology in wealth management, there are some flaws to the system that will hopefully be resolved in the near future.

Wealth Access uncovers “clear, consistent, and complete stories about your customers when you unify your data,” leading to hyper-personalization that turns existing customers into loyal fans.”

Wealth Access focuses on four pillars:

Complete Customer Information
Deep Insight
Hyper-Personalized Experiences
Serious Savings

Wealth Access is Centura Wealth Advisory’s most useful data aggregator.

Orion Advisor Tech

Orion is the key to earning back your time. “From billing to compliance and reporting, these daily responsibilities eat up the clock, leaving a short window to focus on prospects and clients. Through innovative tools, easily complete your tasks at hand and leave time for scaling your business.”

Orion helps with household and portfolio data and gathering information quickly. The tech works seamlessly with advisor needs to serve a number of roles, including:

Independent advisors
Chief Compliance Officers
Chief Operations Officers
Financial Planners
Breakaways
RIAs
Broker-Dealers
Banks
TAMPs
Aggregators

Orion says in regards to financial planning, “even the best financial blueprint is useless unless you have the tools and the technology to bring the vision to life.”

Orion has helped Centura Wealth create a loyal client base towards the systems we use and adds value.

Salesforce

Salesforce is a customer relationship management (CRM) software that allows Centura Wealth to keep automation at the forefront.

Along with data organization, the specific tool in Salesforce, named Pardot, allows Centura Wealth to provide marketing information to our clients. This is where we build stronger relationships with our clients because we answer the common questions we get as advisors (on our blog and through workflows).

While technology can assist with your client service and prospecting, it is not the entire picture. Adding value in ways that go beyond the basics is a way we differentiate ourselves from other advisories. Learn more on the blog.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

December 19, 2021

Asian business people discussing while walking

LIBERATED WEALTH, NEWS

How Our Advisors Bring Value and Expertise to Our Clients

At Centura Wealth Advisory we bring value and expertise to our clients by deeply understanding their goals and objectives on both personal and financial levels.

When client goals are addressed and discussed thoroughly from the beginning, then the process of managing their wealth becomes a collaboration. So, what does our typical client look like, and how do we separate ourselves from other wealth advisories?

How Centura Serves Our Client Base

Our niche clientele falls into four unique groups.

High-Income Earners

Although all our clients are typically high-income earners, this includes families, businesses, and individuals. High-income earners generally make $500,000 or more annually, however, it depends on the situation.

Individuals Experiencing Money in Motion Events

A large portion of our clientele base is people experiencing money-in-motion events. In other words, there are life or business events that are going to involve large amounts of money coming to an individual. Some examples of money in motion events are:

Inheriting large sums of money, property, or business assets
Businesses changing ownership
Business growth
Mergers and acquisitions

High Estate Values

Many of our clients have high estate values (which is considered 25 million or more). We add value by implementing diversification in their portfolios while addressing tax abatement and legacy planning geared to these high-value estates.

Clear and regular communication with all clients is important, but it is especially important with high estate value clients because there are often multiple generations involved and increased business, real estate, and legacy complexity.

The constantly changing tax laws can negatively impact the value of these large estates. Because of this, we are always adjusting tax strategies to optimize our clients’ planning for minimal taxes.

High net worth individuals and those with large estates, have to plan efficiently and with enough lead time to implement intelligent tax strategies. We have some strategies for talking to your aging family members about wealth and inheritance. Read our blog to learn how to create the space to have healthy conversations with your loved ones when there is significant wealth on the line.

Business Owners and Executives

Business owners and executives are already dealing with the stress of their industry constantly changing, so it’s crucial for them to partner with a wealth advisor that can help alleviate some of the stress of running a business.

From the perspective of the advisor, being proactive and understanding the changing market is integral to providing valuable insights.

How Does Centura Create Connection with our Clients?

Many of our clients come to us through our trusted referral partners. Because we strive to provide real answers to the questions high-income earners, high-net-worth individuals, and families with large estates face, we are always working to build trust and connection.

Our Liberated Wealth® process provides the blueprint for our ongoing engagements with clients. Initially, we evaluate what level of technical expertise is needed for each client’s individual plan, and assess what the timeline might look like for them. Our plans address strategies for the long term and short term, addressing goals as well as what may be coming in the next six months.

Planning requires that we look not only at the life-goals of clients but also: What are the most actionable things we can do for near-term benefits?

What Problems Do Our Clients Face?

At a high level, our clients typically face four problems:

Income Taxes

For clients who come to us with an annual income of $1 million or more (if they reside in California) without strategic tax planning, they could pay up to $400 hundred thousand in income taxes. With well-designed tax strategies, however, we can help them save 20 to 50% of that tax burden.

Wealth Transfer Taxes

Wealth transfer taxes are also referred to as the Generation-Skipping Transfer Tax (GSTT) applies to transfers of more than $11.5 million dollars (2021). We help clients navigate the costs and understand direct and indirect transfers when dealing with GSTT.

Balance Sheet Optimization

Most clients require some level of balance sheet optimization. Our advisors look at assets and liabilities and how our clients’ wealth is insured against certain risks.

State Tax Administration

Our wealth advisors know the importance of staying on top of the California Department of Tax and Fee Administration. This means evaluating their portfolio and cash flow plan and providing the kind of administrative work that takes the burden off of clients.

At Centura Wealth Advisors, we recognize that simply uncovering an issue in a portfolio is not where we bring our value, our value lies in presenting the right path forward for our clients. Our Liberated Wealth® process, elevates planning and provides a blueprint for processes and communication with our clients facilitating an understanding of our clients on a deeper level.

How We Keep our Clients Engaged with Planning

Since market and tax environments are always changing, we at Centura are dedicated to being proactive, offering solutions that are timely and relevant to each client’s portfolio and situation.

Part of establishing long-term relationships with our clients is understanding their investment and estate planning goals and gaining deep knowledge of their business and wealth structures. Knowing our clients on a personal level helps us understand why our clients have the goals they have and what is important to them. Some of the key questions and points we consider when communicating with our clients include:

What are they passionate about
How do they like to communicate
How do they best process information
- (i.e. One client might value a visual white paper, while others prefer a verbal or video explanation)

Having a diverse client base means being able to pair the right communication style, cadence, and method for the right client.

Are you worried about what changes are coming for Estate taxes in 2022? Learn what to expect from the upcoming changes on our blog.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

December 12, 2021

Family Climbing Hill On Hike Through Countryside In Lake District UK Together

LIBERATED WEALTH, NEWS, TAX PLANNING

Why Stewardship is at the Core of Everything We Do

At Centura Wealth, we are committed to our clients and their goals. We take our role as stewards seriously and align their goals with our implementation.

This means communication throughout the small life events and changes, and the big “money in motion” events that can bring stress to a family. We are here to take the decision-making burden off your plate.

Communication, Communication, Communication!

Communication is key. This is a phrase thrown around a lot, but it still rings true for wealth advisors. This means that through the constant changing of tax laws or personal life changes, we are transparent with our clients.

There are studies that show that overall, clients want more communication. Over time, there has been a shift in expectations for the relationship between wealth advisor and client— the expectation is hearing from your advisor four times a year.

ReachStack released some alarming statistics about advisor communication that deserve our attention:

“64% of clients hear from their advisor less than 4x a year
50% of clients did not hear from their advisor in the first 3 months of the Pandemic
Yes 85% of clients say advisor communications impact retention & referrals.”

These numbers show the shift that Centura Wealth is hoping to achieve as the standard for wealth management across the board.

Understanding Client Expectations

Client expectations are most successful when established from the beginning. For example, in the age of Zoom, one expectation we might have with our clients is to agree to have the cameras on. There can be miscommunications if a client and advisor are not discussing a financial strategy face-to-face.

If this expectation is set from the beginning between both parties, then there should be no surprises throughout the process of creating a financial plan.

Dynamic Tax Planning

We understand that tax planning needs to be dynamic because tax laws are constantly changing. As advisors, it is our responsibility to be on top of these changes.

Dynamic tax planning is also part of our core because with the responsibility of being a steward; dynamic tax planning is crucial.

There are various factors that contribute to the efforts of dynamic tax planning, which include:

“Timing of income
Size
Timing of purchases
Planning for expenditures.”

These factors are the foundational efforts of dynamic tax planning. For example, the estate tax going into 2022 is likely changing drastically and is a conversation we need to present to our clients.

Staying on Top of Complexities

What do clients actually value in a financial advisor? They just want the advisor to care. Simple enough, right?

Well, there are many complexities when it comes to wealth. We’ve found that wealthy families and individuals carry wealthy burdens. On top of the complexities of changing tax laws, there are changes in family structures, goals, and situations.

With these changes come time-sensitive decisions that the advisors at Centura Wealth take seriously as part of their role.

Things happen quickly so it’s crucial that our advisors keep in touch with our clients. As the survey mentioned above, the general consensus from clients is that they do want to hear from their financial advisors more frequently.

In the end, keeping consistent communication with our clients about financial and personal events is essential. At Centura, one way we like to keep in touch with clients is by consistent Stewardship meetings on a frequency that is agreed upon with the client.

Predicting Client Needs (Past Logistics!)

Picture this:

There is a sudden death in a family, and the looming responsibilities of the immediate family members are already a lot to handle. The already emotional time has the added stress of figuring out financial and succession planning.

But, you haven’t heard a word from your family’s financial advisor. Even if there isn’t a solidified plan for what’s next, when your advisor is willing to communicate, even as simple as, “We’re so sorry for your loss. When you’re ready, we’re here to discuss upcoming financial plans and goals” it makes you feel valued.

Predicting clients’ needs is another way stewardship is at the core of Centura. We recognize that a client is going to need kind direction in the case of sudden life changes. This means our advisors think about what could happen in the future and plan accordingly.

Have these reminders of stewardship made you want to solidify the trust in your relationship with a wealth advisor or client? Start the conversation with the five questions to ask your financial planner.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

December 4, 2021

LIBERATED WEALTH, NEWS

Finding Your North Star

At Centura, we believe everybody has a North Star. The “North Star” we’re speaking of refers to your purpose, and the legacy you leave behind. Our role as a firm is to help our employees, clients, and larger network find and align with their North Star.

We view our role— both as advisors and employers— to facilitate purposeful meaning in both your finances and in your life. Our job as advisors is also as a life coach, in which we help people understand how to achieve their goals and the best way to get there.

Internally at Centura, we place a great emphasis on aligning your purpose and your goals with your work. Why is that?

It Allows for More Valuable Goal Setting

First and foremost, you will gain greater clarity and focus when your purpose is aligned with your goals. Working with an unclear purpose makes it challenging to set your goals and plan for your future.

A lack of direction and focus can leave you feeling purposeless. By implementing short and long-term goals, we help our clients implement tangible action items that help avoid a sense of purposelessness. We place such a heavy emphasis on this core value of finding your North Star because we’ve found that this value leads to a happier and more fulfilled life (in all areas, including your financial strategy).

Living a more fulfilled life

When you work to find your purpose, you’re better positioned to live it each day. We’ve found that our clients who align their passions in life with their passions in work find a purpose that is cohesive and sustainable. Whether those passions come from your job, or in your personal life, knowing what drives you allows you to have comfort and security on your path forward.

Passion and Purpose Collide

Typically, people find that their passions align with their purpose in life. When the work you’re doing cultivates the feeling of passion, you are more likely to make the extra effort. As Simon Sinek says, “Working hard for something we don’t care about is called stress. Working hard for something we love is called passion.”

Passion doesn’t completely drive the equation here. We understand that there has to be a level of determination and discipline to reach success, and a fulfilled life. However, when your work has personal meaning, it showcases your strengths, and it allows you to be curious, you are better positioned to find success.

Becoming a Part of the Bigger Whole

One of the main reasons we place a great emphasis on helping both our clients and employees find their North Star is because when you’re aligned on your unique purpose, you provide more meaningful contributions to your community and the world at large. When we see our clients and employees embrace their most authentic selves, we find the areas where they truly stand out. This is what we aim to foster in our culture and in our client relationships every day.

At Centura, our purpose is stewardship, in guiding our team members and employees toward their North Star. What makes you feel fulfilled? What legacy do you want to leave behind? And, how do you get there? That’s where we come in!

How does our company actually put this North Star-centered value into practice? Take a look at one of our recent articles, How Does Centura Wealth Create Energy? which provides first-hand insight from our team, and how they have implemented these values.

Centura Wealth does not make any representations as to the accuracy, timeliness, suitability or completeness of any information prepared by any unaffiliated third party, whether linked to or incorporated herein. All such information is provided solely for convenience purposes and all users thereof should be guided accordingly.

We are neither your attorneys nor your accountants and no portion of this material should be interpreted by you as legal, accounting, or tax advice. We recommend that you seek the advice of a qualified attorney and accountant.

For additional information about Centura, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you engage our firm for advisory services.

November 29, 2021

estate agent giving house keys to woman and sign agreement in office

EXIT PLANNING, NEWS

ESOPs vs. Third Party Sale – What’s the difference?

A commonly asked question that Centura Wealth Advisory receives is, “What is the difference between ESOPs and a sale of my company?”

The advantages of choosing to implement Employee Stock Ownership (ESOP) as a part of your exit plan, vs. selling your company to an outside entity depends on your specific situation.

ESOPs are available to C Corps and S Corps as a tax mitigation strategy to offset capital gains taxes. For those business owners who want to sell a part of their stake in a company, or in the case of one partner wanting to exit and the other(s) wanting to remain in control of the business when those remaining partners lack the desire to buy out the departing partner, ESOPs are a viable option.

Structuring your ESOPs sale is complex and outside the scope of this article, however, as a high-level overview of the choice between a straight third party sale to a competitor or venture capital/private equity sale let’s review the benefits of each type of exit.

What is an ESOP?

The National Center for Employee Ownership (NCEO) states that an ESOP provides “A variety of significant tax benefits for companies and their owners. ESOP rules are designed to assure the plans benefit employees fairly and broadly.”

ESOPs are Employee Stock Ownership Plans, as the name suggests, selling stock in your company to those employees who are already part of the organization. As a business owner, you may wonder how you can protect loyal employees after an exit. Certainly, a third-party sale leaves those who may have helped build your company alongside you vulnerable to termination or worse, the dissolution of their leadership role or disintegration of the company culture they helped build.

An ESOP not only protects loyal employees from termination but also gives them ownership of up to 100% of the company. From a tax perspective, ESOPs are valuable in that your seller notes earn on average 13% – 20% in contrast to the 6% average rate of return for stock market assets. When a business owner or owners sell to their employees, the transaction is tax-free. Here is an example of the structure of a cash sale vs ESOPS from The Menke Group:

“Let’s assume that the value of your company is $10 million and you decide to sell it to a third party for all cash. After paying a combined federal and state capital gains tax of say 30% (assuming a zero basis), you would be left with net proceeds of $7 million, which you could reinvest in […] public stocks that historically earn 6% on the average over the long term.

In comparison, if you are a C corp. […] you could sell your stock to an ESOP and receive $10 million in seller notes, tax-free, and your seller notes could earn an all-in rate of return ranging from 13% to 20% or more. Similarly, if you are a S corp. or switch to S corp. status, you could sell your stock to an ESOP in exchange for $10 million in seller notes, pay the capital gains tax on the installment sale basis and earn an all-in rate of return on your seller notes ranging from 13% to 20% or more.”

NCEO states that “ESOPS are most commonly used to provide a market for the shares of departing owners of successful closely-held companies, to motivate and reward employees, or to take advantage of incentives to borrow money for acquiring new assets in pretax dollars.”

Selling your business to a Third Party

For larger businesses (above $10 million in sale price) selling to a third party may be your best option. Larger sales often require the deep pockets of Private Equity PE) funds. Typically, larger companies have less concern for the future of their key employees. This may be because the owners have stepped away from the careful management of running of the business or because the hierarchy has become so stable that a purchasing entity would not touch the existing structure for fear of damaging the profitability of the acquired company.

The typical PE sale will give the seller a large portion of cash that they can allocate to whatever they wish. For example, they can give it to their family, buy a property, or invest as they wish without the long-term funds that accompany an ESOP. Being acquired by PE almost always means the owner stays on to ease the transition with a decreasing amount of influence over the subsequent 1-3 years.

Selling to a competitor can mean a lower sale price but likely the retention of your service offerings and potentially the merging of your company culture into the new entity.

From a tax perspective, selling to a third party means you will have to pay capital gains taxes on the full sale price of your company. For some sellers, this is a necessary evil and there are ways to offset those capital gains taxes such as:

An Installment Sales Agreement. An Installment sales agreement allows a buyer to pay a part of the sale price annually allowing them to adjust their annual income to maximize tax savings.
An Asset Sale keeps the company’s ownership in the hands of the seller to earn on the various components of the business as opposed to the entire business. In an asset sale, the seller may be able to write off the purchase more effectively though it leaves vulnerabilities for the seller.

The Pros and Cons of ESOP

Pros

Some of the main ESOPs uses are:

“To buy the shares of a departing owner. Owners of privately held companies can use an ESOP to create a ready market for their shares. Under this approach, the company can make tax-deductible cash contributions to the ESOP to buy out an owner’s shares, or it can have the ESOP borrow money to buy the shares.
To borrow money at a lower after-tax cost. ESOPs are unique among benefit plans in their ability to borrow money.
To create an additional employee benefit. A company can simply issue new or treasury shares to an ESOP, deducting their value (for up to 25% of covered pay) from taxable income.
Major tax benefits. Some of these tax benefits include: contributions of stock are tax-deductible, cash contributions are tax-deductible, contributions used to repay a loan the ESOP takes out to buy company shares are tax-deductible, and sellers in a C corporation can get a tax deferral.”

Cons

The potential downside of ESOPs from NCEO include:

The law does not allow ESOPs to be used in partnerships or in most professional corporations.
ESOPs can be used in S corporations, but do not qualify for rollover treatment.
Private companies must repurchase shares of departing employees, which can become a major expense.
The cost of setting up an ESOP is substantial—$40,000 for the simplest plans.
Any time new shares are issued, the stock of existing owners is diluted.

Which is best for you?

ESOPS are complex structures as are sales of businesses to third-party buyers. While we can’t tell you which is right for you, the important aspect of a well-planned exit is a holistic view of the company, the owners’ wishes, and the timetable. As you plan for your company exit, please reach out to one of our trusted advisors to learn more about structuring an exit at 5 years, 3 years, and into the final 6 months before your sale.

As you look to plan for the future of both your personal finances and business finances, it’s important to understand what kind of financial assistance you may need. Understand the difference between a wealth manager and a financial advisor and which role is right for you in this blog.

November 28, 2021