Legislative Risk: What do you need to do to prepare?
With any administration change, you are bound to see changes that affect your business or financial plan, we call it Legislative Risk.
With change comes opportunity. And with risk we see potential.
The Past
In 2019, Centura Wealth wrote a blog, “What Proposed Legislation Could Do to Your Wealth Transfer Plans.” This is a perfect example of legislation that would directly impact your financial planning. The data that came from the legislative acts serve as a reminder that legislative changes can have huge financial planning implications as increased tax burdens are never welcome.
We can learn from history. In 2019 the legislative changes caused Roth conversions to become increasingly valuable as does charitable giving; pairing the two together in the right way can liberate wealth transfer, decrease taxes and fulfill philanthropic goals for your estate.
A current example is the SECURE act (technically “Secure Act 2.0), which could affect your retirement. This bill is an updated version of the original one in 2019. According to Forbes the Secure Act 2.0 could, “Increase minimum wage distribution and raise the catch-up contribution limits.” These are just a couple of changes mentioned that would change retirement and wealth planning.
What is Legislative Risk?
As explained above, the legislative risk is the potential for financial wealth drain because of changes in the law. There are also more specific examples of legislative risks surrounding the workplace. This can be anything from changes in employee benefits or free trade agreements.
Legislative risk can also be phrased as political risk. The goal of legislative risk is that the government should be able to intervene if the industry is failing. However, that is just the goal. There is a continued risk that the government does too much to balance the market, and overly gets involved.
Here’s a few examples of what risks could happen during the shift to a hard market:
- Trade policy
- Tax regulations
- Healthcare changes
- Local product safety and environment laws
- Local labor laws
- Currency regulations
- Political instability
- Legal and regulatory constraints
Framework, Framework, Framework
Risk Management as a whole is a lot to tackle. So implementing legislative risk into that plan is key. It’s important to remember that frameworks can be simple and effective.
At Centura Wealth Advisory, we invest in our client’s future financial stability. Contact one of our advisors today to see how you can get started liberating your wealth!
How to Prepare
Again, the market is unpredictable, but there are steps you can take to prepare for the worst-case scenario with financial planning. At Centura Wealth, we go beyond the traditional standards for a wealth management plan.
This means to plan for legislative risk, you should consider a couple of options:
- Monitor your liberated wealth plan
- Analyze future legal risks
- Communicate with trusted professionals
- Commit to an organization tactic and framework
At Centura Wealth Advisory, we invest in our client’s future financial stability. Contact one of our advisors today to see how you can get started liberating your wealth!
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