The Investor Blog

Can your business fund your retirement?

Posted on January 13th, 2017 by wmi-admin | No Comments

Often, business owners work their entire lives and put all of their efforts and assets into their businesses.  They rely on it to fund their retirement, at least in large part.  I have worked with business owners for many years assisting them in the sale and acquisition of businesses, and one thing I have found in most cases is that business owners THINK they know the value of their business, but most often they are overestimating its value, based on “country club valuations”—i.e. a value based on what somebody they know told them they received when they sold their business.  This is highly unreliable, because many times these owners may be exaggerating, or perhaps their business is a different type  that is valued differently than their own, or it may be much more profitable than the comparable business, or it may simply be better prepared for the sale than its competitor.

I have seen all too often that a business owner relies on the business to fund his/her retirement, and when I value the business, it is worth  far less than what was expected.  At this point, the owner is ill, burned out, older or for some reason can no longer wait to sell, and they can’t take extra time to improve the business so it can yield a greater sales price.   It is sad and all too common.  A business is only worth what someone will pay for it.  This is why I am so passionate about working with our clients well in advance of the time that they expect to sell.  An owner who values their business five years or more before they plan to sell has a baseline number and can use this as a basis for their personal financial planning to determine what additional funds they may want to put aside to help fund their retirement. Also, if the value is not what they feel they need to retire, we can discuss ways to improve value and get them to their goal.   The old saying “those who fail to plan, plan to fail” is so very true when it comes to business owners relying on the sale of their business to fund their retirement.  It is too important to leave to chance.

Our process is inexpensive and well worth the time and effort, to provide goal setting, suggestions for improving value and financial peace.

What’s the Number One Cause of Divorce? It’s Money!

Posted on January 6th, 2017 by Paul Winkler | No Comments

By: Arlene Brown, ChFC, CDFA

Paul Winkler, Inc.


There’s something to celebrate about the latest statistics on divorce.  The divorce rate has dropped to its 40 year low, and Tennessee’s ranking has dropped from the 10th highest divorce rate in 2015 to 19th among the 50 states. However, money issues are still one of the leading causes of divorce.  Why is that? Couples don’t like to talk about money. In fact, according to an American Express study, 91% of couples avoid money talks with their partner.  A study conducted by the National Foundation for Credit Counseling (NFCC) revealed that 68 percent of engaged couples express negative attitudes toward discussing money, with five percent indicating the discussion would cause them to call off the wedding.


As an Investor Coach I’ve found how imperative the need is for couples to break this money silence. It’s deafening!  I remember when I was still dating my husband 16 years ago.  Whenever I would actively engage him in a money discussion, he would complain that he didn’t find talking about money romantic at all.  I quipped back that it’s the most romantic thing he could do for me, talking about money and the emotions that come along with it.


At that time, I didn’t know that we all have what the financial and psychology field refer to as “money script” or “money demons”– I was just being mindful of the cultural differences that might trigger a clash over money.  I’m from the Philippines and, to me, money is a tool to help lift my family from poverty.  I told my husband that I can’t afford wasteful spending, and that I’m frugal almost to a point of parsimony.  He smiled and said, “Oh, so you’re telling me that you’re stingy when it comes to money?”   I didn’t realize at the time that the dialogue about money would promote intimacy in our relationship. It allowed us to share our dreams, goals, fears and think of strategies to help us deal with our fears effectively.  We were able to offer each other alternatives, and ways to realize my dream of helping my family in the Philippines in a more impactful way than I could have done alone.   It also allowed us to understand our own mindset towards and about money.  We married six months later.


I’ve noticed among my clients that the more successful the marriage is, the more comfortable they are in the discussion about money.  Most of these couples are also comfortable about talking to their children about money and spending plans.  This is very significant to me.  If there is no Money Talk between couples, how can you grow financially fit children?  The American Express study also showed that 69% of couples that don’t talk about money stated that they are more comfortable talking to their teens about sex than money, 50% of Baby Boomers reported that they have never talked to their children about money.  This is one of the reasons why assets are not properly transferred to children and heirs because of the absence of such dialogue. We need to change this mindset.


I love talking about money.  I know some of you might say, “That’s easy for you to say; it’s your job.”  This is true, but it’s not just a job– it’s a mission!  I believe that if you want financial freedom, then you and your spouse should be able to discuss money matters openly.  When I take a couple through our coaching process, more often than not it’s the wife’s first time discussing money with her husband in a more engaged manner.  There’s laughter, sometimes tears, but more importantly they go home with HOPE and a PLAN. Thus, it’s very important to understand your own mindset towards and about money, and your partner’s feelings and attitude towards money.



I like what a lady columnist wrote.  She said, “Money may not buy love, but fighting about it will bankrupt your relationship.”  So you should tell your significant other, Happy Valentine’s Day honey, let’s talk about MONEY!!!


Arlene Brown, ChFC, CDFA

Paul Winkler, Inc.

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*Advisory services offered through Paul Winkler, Inc. (“PWI”), a   Registered Investment Advisor. PWI does not provide tax or legal advice; please consult your tax or legal advisor regarding your particular situation. This  information is provided for informational purposes only and should not be construed to be a solicitation for the purchase or sale of any  securities.




ETF Demand and Our Emotions

Posted on August 20th, 2016 by Paul Winkler | No Comments

In a recent article in the Wall Street Journal, columnist Jason Zweig wrote, “More than 1,900 exchange-traded funds offer almost every investing strategy you could think of — and many that might occur to you only if you were drunk. Maybe the manic innovation needs to stop, and the fund industry should go back to basics.”

While I agree, I don’t believe they will anytime soon. Investors are driven by all kinds of biases that aren’t unlike the things we deal with regarding our health. I know many people who smoke. They know it’s not good for them, but they find it impossible to quit. (Many of the reasons are emotional. The connect it with a break from work, it is a form of rebellion left over from youth. They got social acceptance when they took it up. They had people they respected or admired who smoked (stars, celebrities).

Food is the same way. There are probably things that I eat that are more out of upbringing and childhood connections than anything. They may or may not necessarily be bad. We also chose foods based on conventions. Why don’t we eat pizza for breakfast, or a sandwich? Well maybe some do… “It’s because you don’t do that.” There are certain foods that we call “comfort” foods. Why? It’s emotional. Some investments might be called “comfort” investments, since we like owning them. Why? Maybe because my dad invested in it, worked for the company. My mom used to listen to talk radio on investing. She owned a certain well-known fund company’s funds for a long time. They have great marketing that really leads you to believe that they are all about taking care of you and they are fantastic. I had a hard time selling those even though I knew the funds I use now were far better diversified and are better managed. I knew the other fund company lazily weighted the funds based on company size in the name of low cost, but it still made the decision hard.
My point is that we are so driven by emotions and we often don’t even recognize it. Fund companies know this and will keep coming out with products to meet the demands created by these emotions. Where there is demand, supply will show up.
Coaching is the answer. I often find myself dipping into psychology to help investors stay on the right track. I often refer back to my days in college where I was making a decision between psychology or economics as a major. I had enough coursework to go either way. Now I’m glad I chose economics, but all that psychology background sure has come in handy.

Path Act Of 2015 Can Save Small Business Owners Money Upon Sale Of Business

Posted on August 12th, 2016 by Staff | No Comments

Congress just gave some small business owners looking to retire soon a huge gift! In December of 2015, a previous extension of IRS Code s. 1202 of the Protecting Americans from Tax Hikes Act of 2015, or PATH Act, was made permanent. Under this provision, small business owners and investors can exclude 100% of any gain they realize from the sale of qualified small business stock.

In the past, taxation varied from partial taxation of gain to full exemption from tax. Planning was difficult however because the amount of the exclusion changed and planning was too difficult.

In order to benefit from this exemption, the stock must meet certain requirements, such as:

  1. The stock must be directly secured as an original issuance from a C corporation;
  2. The company must have $50 million or less in capital;
  3. 80% of the value of the corporate assets must be used in the active conduct of the business or trade;
  4. The stock must be held for at least five years;
  5. The stock must be active in eligible sectors. Excluded business types include personal services, law, banking, finance, leasing, hospitality, health, farming or mining.


Why is this significant to business owners? Business owners often have a significant portion of their assets in their business. When they want to sell their business to fund their retirement, they need to calculate the final amount they will receive from the sale, after repaying any debt, ongoing expenses, brokerage fees, and taxes. If tax on the gain in a given circumstance would have been perhaps 20% in the past, and with this new exemption, there is no tax due upon sale, this is a significant added amount of money a business owner can yield from the sale. These additional hundreds of thousands of dollars, or millions of dollars, can make the difference between an owner feeling that a deal is acceptable or just not enough to make it worthwhile. The added tax forces an owner to require a higher sales price to meet his needs than if there is no tax being deducted on the sale.

This will be significant also going forward for new start up businesses. In the past, C corporations were avoided in many circumstances due to the spectre of higher taxation, more complicated legal requirements. Business owners and their advisors, including their investment advisors, accountants and lawyers, will play a critical role in advising businesses on which entity to choose and whether it makes sense to choose a C corporation to take advantage of this new permanent tax break.

article by Anne Ertel-Sawasky

A Good Exit Strategy Is Worth A Fortune: Selling your business for maximum profit

Posted on August 12th, 2016 by Staff | No Comments

You pay for insurance to protect your assets, why not implement an Exit Strategy now for the same protection of your greatest asset?

Selling your business can be an organized process where each step maximizes profit and your advance preparation expedites the sale, or it can be a dismal failure full of gut wrenching interactions and tremendous amounts of your money left on the table at the close. Fortunately the choice is yours. A good Exit Strategy starts with simple awareness of the process of selling and can be implemented in advance in your day to day activities with little additional effort. Thinking of the sale of your business in health terms, consider the sale with no preparation as last minute surgery with no anesthesia, and a properly done Exit Strategy as preventative medicine that will keep you out of the pain and cost of surgery.

Your Exit Strategy begins with awareness that one day you will sell your business. Reasons vary with each business owner and can be as simple as boredom with your own company that you have built, to complex issues such as health or divorce. Only you know when it is time for you to sell. However having implemented a written Exit Strategy will assure maximum profit at the sale and great peace of mind should you be selling under less favorable circumstances such as the mental duress of a downturn in business or poor health. You pay for insurance to protect your assets, why not implement an Exit Strategy now for the same protection of your greatest asset?

Once the decision to sell is made, the contacting of a business broker to discuss the market conditions and the various options you have to sell your business is imperative. Most businesses are sold to other individuals through a broker who facilitates the transaction, working in your best interest. Buyers can be entrepreneurs that have the same zeal you had when you started your business or industry players that will purchase your business to expand or enhance theirs. A qualified business broker can be instrumental in helping you write a good Exit Strategy that encompasses the sale scenario viewed from every angle.

You will want to discuss a Buy/Sell Agreement with your business broker and other professionals like your attorney and CPA. Existing agreements with partners, stockholders, landlords, and others will be examined to ensure your goals, expectations, and terms and conditions of sale are not remedied void and as few as possible conflicts arise during the due diligence process. Due Diligence is the process of verifying the accuracy of the assertions made regarding your business.

View your Exit Strategy from the viewpoint of a buyer. What would you be looking at and for if you were to buy your business? Do your P&L’s match your Balance Sheets and Tax Returns? Imagine the lack of confidence you would have to move forward as a buyer of your business if discrepancies arose in your financial documents at the due diligence stage of the sale. What about the physical state of your facility? If you were the buyer would you want to walk in to a facility that needed immediate attention or a facility that was clearly neat, clean, and organized, allowing you to transition easily into the pertinent matters at hand and not worry about disorganization and safety issues? How is the attitude of employees and what would clients of yours say about you if they were randomly called?  Are your sales and profits on the increase and expenses on the decrease? The purpose of the Exit Strategy is to apply a tiny amount of effort in the right direction each day to achieve maximum profit for minimum effort when you do sell. Working on these issues a little bit each day brings huge profit and joy tomorrow.

Tax consequences and what you will do with both money and time after the sale is finalized need to be considered. Many times to close a deal you will be asked to help in some capacity with the transition. You want to decide in advance with the help of your tax attorney or CPA how the proceeds of the sale will be best distributed and conserved. The financing arrangements and or cash at closing will greatly affect your tax position and all options should be considered. Can you get more for your business by offering terms on a carry-back note and still protect your interests and save on taxes? Being proactive at this stage will greatly enhance profits at the sale.

With your plan laid out and preliminary players like a CPA and a business broker identified, you can now break it down into bite-sized pieces that can be a part of your everyday business routine. This process of implementing little daily routines produces maximum profits at the sale of your business. If your business sells for 10% more due to this organization and planning, you may have just put $10,000, $100,000, $1,000,000 or more in your pocket by simply being prepared.

article by Anne Ertel-Sawasky

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