Deciding when to seek financial advice, either before or after a liquidity event, involves weighing the benefits of preparedness against the cost and timing of professional services.
Here’s a pros and cons list for engaging with financial professionals before and after a liquidity event.
Having a plan in place to manage newfound wealth.
Strategies can be devised to mitigate tax liabilities.
Setup trusts and LLCs appropriately to protect assets.
Gain a better understanding of financial and tax implications.
Professional advice can be expensive, especially with limited funds.
The expected liquidity event is speculative and may not occur as expected.
Better financial capacity to afford professional advice.
Financial advice will be based on actual rather than anticipated wealth.
Ability to make financial decisions based on current laws and regulations.
May face unfavorable tax implications or miss out on some asset protection strategies.
Waiting may result in rushed decisions or delayed actions in setting up legal structures.
Managing sudden wealth can be overwhelming without a pre-arranged plan.
Ultimately, the choice to engage financial professionals before or after experiencing a liquidity event hinges on personal priorities, financial readiness, and the desire for proactive versus reactive planning.
