Asset Accumulation Planning

what is asset accumulation planning?

Asset accumulation planning involves planning the flow of funds from a business or executive/professional employment to maximise the accumulation of assets for the owners of the business or the executive/professional.

It is genuine financial planning for business people and executives/professionals who enjoy an income surplus. The planning focuses on financial strategies and investment advice, not insurance selling or pre-packaged superannuation selling.

It involves:

Obtaining exposure over a long timeframe (a number of economic cycles) to growth assets such as property, shares and investment projects
Minimising investment risk such as fluctuations in the value of assets and variation in the amount of income derived from such investments (dividends, rent and other income distributions).
Minimising the impact of business risks such as variation in sales and business revenue
Minimising the costs associated with accumulating assets such as bank fees, interest on borrowed funds, time spent on administration etc.
Planning the timing of acquisitions and divestments for best effect.
Identifying objectives and making decisions about resources over a relatively longer time period (10 years) than perhaps you are used to. Not months or a few years.

For business people Asset Accumulation Planning is building investment assets outside your business as you go. It normally means building considerably more wealth as compared to ploughing all your resources back into your business and then selling it.

The exception to this is where you are able to take a private company with successful business projects and list it on the stock exchange for a multiple of up to 10 times the value it would otherwise have in the private business market. If you are in this type of a business with this potential, then you will already have established the timeframe of your business investment and you should get advice on how to structure your investment in your business if you haven’t already.

Asset Accumulation Planning means making decisions about how much of your resources should go back into your business over what time period. It means understanding your business well; its cash flows, its working capital and project capital needs, as well as its potential and the timeframe for, and extent of the expected returns.

Even large businesses take resources out of their business for investment elsewhere, including the largest listed companies in the world. They return capital to shareholders for reinvestment and reallocation through special dividends, share buybacks, and debt retiring when opportunities for reinvestment are not the best option. Ploughing all the capital generated from a business back in, even from large, opportunity-rich businesses is not always the best return.

ascendia asset accumulation planning process

The process is only suitable to individuals or businesses with significant operating or income surpluses.

In most circumstances, building investment assets outside your business or tax effectively accumulating significant assets as a salaried executive/professional as you go (as opposed to waiting until approaching retirement) means building considerably more wealth.

Our practice strongly recommends against relying on the “my business is my superannuation” philosophy without first obtaining an experienced professional opinion. We also recommend against the idea of the executive/professional simply waiting until 10 years from retirement and then ploughing all their surplus into superannuation.

We have a service process that focuses on tax effectively accumulating assets using a variety of tools – whether the resources and surplus to achieve this is derived from a successful business or an executive/professional career. The key to the process is to start early and to do it over a long timeframe.

business

For instance, rather than ploughing all the economic benefits of a business back in, we assist you to develop an Asset Accumulation Plan that allows both the business to grow and deliver the income, while allowing your personal assets to accumulate and deliver the lifestyle and business options that you aspire to.

In short – we have experience of assisting our clients achieve their financial and lifestyle goals through using the success of their business.

Our Asset Accumulation Planning for Businesses is a documented process that is tailored to your situation. We have a multi-disciplinary team comprising legal, tax and financial planning consultants providing formal documented advice.

why your business is not your superannuation

Many business people are familiar with the surveys that come out from time to time relating that a large number of business people regard their “business as their superannuation”. Unfortunately there are a large number of structural economic reasons why the value able to be obtained form the sale of a small or medium sized enterprise is often very low compared to the value available from the business over a 10 year period.

Follow this link for further information regarding the structural reasons why your business is probably not your superannuation - in the ascendia rough guide: why your business is not your super.

professional advice

Asset Accumulation Planning requires addressing a number of issues relating to your specific circumstances. These issues should be dealt with in a manner appropriate to your particular situation so as to develop an Asset Accumulation approach that is most effective for you, allows your business to continue to grow and exhibits a high level of compliance from a tax and legal perspective.

There are a number of resources provided below that will assist you to consider the issues involved in developing an effective Business Persons Asset Accumulation Plan.

Because Asset Accumulation Planning is so specific to a business and the owners’ needs and situation, most online resources and references — which are, of necessity, general in their scope and application - can be misleading to general readers. Accordingly, professional guidance should be sought for your asset Accumulation planning needs.

This service is available via ascendia wealth pty. ltd.

ascendia references

ascendia rough guide to service entities

Basics of Trusts.pdf

ascendia technical references

Please follow this link for a page of references illustrating some of the major legal issues involved in asset accumulation planning.