I have worked with auto dealers for more than 20 years. Many of them are very successful business people who have mastered the automotive world and reaped the benefits.
The great dealers have surrounded themselves with great talent. Most have a general sales manager to oversee the front end, a fixed operations director for the back end and a chief financial officer or controller for the financial side. They help steer the dealership in the right direction.
However, many dealers, while giving all their efforts to the dealerships, have all but ignored their personal financial matters.
Utilizing the abilities of others and managing those professionals has paid off wonderfully on the business side. Dealers know how to delegate to help them run a successful dealership. But when it comes to the personal side, they have not sought adequate council. It is also difficult to make enough time to attend to personal financial strategies.
The right solution is to seek a financial advisor that can function as your personal CFO planning and coordinating your personal business, just as you have professionals working at the dealership.
There are many people who can fill this role — a CPA, an attorney, or a financial planner to name a few. Some dealers choose a team approach with all three professionals involved. Pick someone whose opinion you value and someone you trust.
I'll highlight areas of personal financial matters that are often overlooked. See if any of these hit home.
Plan where you want to go. Just like a trip, if you don't map it out, it is unlikely you will get there directly. Where do you want to be in five, 10, even 30 years? A good road map is essential to a successful personal financial plan.
Do you have a will? If so, when was the last time you updated it? Be sure your will is consistent with your wishes. It is good to review your will at least every five years.
Estate-tax planning should be a high priority. A critical part of your plan is projecting your future assets of your estate and estimating your tax liability.
Do you have adequate life insurance coverage? Consider the use of insurance to provide for both the payment of your estate taxes and the upkeep of your dependents. Plan early. Get adequate coverage before a serious health problem limits your insurability.
When is the last time you looked at other personal insurance? Is your disability insurance adequate? Review you homeowner's coverage. Be sure you are covered if a catastrophe hits.
Check your car insurance coverage. Most dealers are driving demos, but what about the kids? Do you have a large enough personal liability coverage. A relatively inexpensive rider can be made to your homeowner's policy to protect you.
What is your succession plan? Will you hand over the dealership keys to your spouse or children? If they aren't able to run the business, you might consider a business partner. Put in place a buy-sell agreement with your business partner that will adequately cover your family's needs. This agreement is often funded with life insurance.
Diversification of assets and investment portfolio management are areas that many dealers neglect and, therefore have little portfolio diversification.
Because you are successful in your profession will not necessarily make you a good investment analyst. Seek advice on your investment portfolio. A good investment plan must also have an element of accountability. A good rule to follow: Inspect what you expect. Grade your investments and investment manager on an ongoing basis.
In summary, results of a successful planning process include:
- Comprehensive assessment of financial goals and understanding of where you want to go.
- Customized solutions/strategies for each household.
- Clear action plan and activity.
- Proactive management of affairs.
- Ongoing updates and education about new opportunities
Don't wait until it is too late to put your personal financial house in order. Start today!
John A. Davis is a CPA with Dixon Hughes PLLC. He is at 404-575-8910 and firstname.lastname@example.org.