By: Edward J. Leach, CFP®, MBA, CEPA®
In July, I had the opportunity to participate in an NJBIZ panel discussion focused on family-owned businesses. During the discussion, I shared an analogy that has become one of the simplest ways I explain how I think about planning because I believe it applies well beyond business owners.
I call it the Three-Legged Stool.
Although we were discussing family businesses, the same concept applies whether you own a company, lead an organization, build a professional career, or plan for retirement. The biggest decisions in life are rarely just business decisions or financial decisions. They are life decisions.
I believe every major decision should support three equally important areas of your life:
Your Business – Whether you own a business, lead a company, or have built a successful career, this is the work that creates opportunities, generates income, and provides purpose.
Your Personal Life – Your family, relationships, health, and the life you are ultimately trying to build.
Your Financial Life – Coordinating taxes, investments, estate planning, liquidity, and cash flow so your financial decisions support your work and your personal goals.
If one leg becomes weaker than the others, the entire stool becomes unstable.
Throughout the discussion, we talked about questions that almost every business owner eventually faces:
When is the right time to transition my business?
How do I prepare the next generation?
How can I reduce taxes?
What is my business really worth?
What happens if my plans change?
Those are all important questions, but I have found they usually lead to a much more meaningful one:
What are you ultimately trying to accomplish?
Once that answer is clear, the path forward often becomes much easier.
The most successful people, whether they are business owners, executives, or professionals, do not wait for a major life event to start planning. They intentionally build flexibility by:
Investing in future opportunities.
Building systems and support that reduce unnecessary risk.
Important conversations need to be had before difficult decisions are made.
Making work, personal, and financial decisions that support one another.
That is how better decisions are made: not by looking at one part of your life in isolation, but by ensuring all three legs of the stool remain strong.
I hope you will take a few minutes to watch the discussion.
Click Here to Watch the recording.
Ed Leach, CFP®, MBA, CEPA, is a Partner and Wealth Advisor at HIGHLAND Financial Advisors, LLC in Wayne, NJ, and works directly with clients advising them on their financial planning and investments. Ed’s work focuses on the unique needs of business owners, helping them extract value from their businesses while creating efficiencies in their business and personal financial plans. He is also a member of NAPFA, which is dedicated to serving fee-only advisors.
The foregoing content reflects the opinions of Highland Financial Advisors, LLC, and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct.
Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns.
Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful or that markets will act as they have in the past.
The above article was written with the assistance of artificial intelligence (AI).