Author: eric

Every family reaches a point when their wealth outgrows basic planning.

It usually happens quietly: a business sale, a second property, or setting up a trust for the kids.

Then one day, you realize you have five different professionals giving five different opinions, and none of them are talking to each other.

That’s not a plan. That’s organized chaos dressed up in a spreadsheet.

At that point, you don’t need another advisor. You need alignment and someone to bring your financial team together. That’s what family office services from a certified financial planner and certified financial advisor deliver.

What “Family Office” Really Means

Most people hear “family office” and picture billionaires with private staff. That’s not what we’re talking about.

A family office is a coordinated system where financial, legal, tax, and investment management work together under one strategy.

It’s the difference between a pit crew and a parking lot full of mechanics. Everyone in a family office setup works in sync, not in silos.

The goal is simple: clarity, control, and coordination.

Wealth should make life easier, not harder. A family office keeps your investments, trusts, businesses, and estate documents working together toward the same goals.

When Basic Planning Stops Working

Our experience shows this is a common challenge: A family with $10-$20 million in assets still runs their finances like they did when they had two accounts and a CPA.

Meaning:

• Their CPA handles taxes.
• Their broker manages investments.
• Their attorney drafts the trust.
• No one leads.

That’s like having four captains and no compass.

When wealth reaches this level, separate advice turns into conflicting advice. You start reacting instead of leading. That’s when it’s time for a family office approach, built around one coordinated plan and one set of priorities.

The Core of Family Office Services

With a certified financial planner or certified financial advisor, you have someone looking at all of the pieces of your wealth and creating a path to achieve your goals. They offer:

1. Centralized Oversight

You need a quarterback, someone who understands how your investments, taxes, insurance, estate plans, and business interests all fit together.

That’s the foundation of family office services.

Everything ties back to one unified strategy and reporting system, so you know where you stand, what’s at risk, and what’s working.

2. Tax and Estate Alignment

We say this often: You can’t build wealth faster than bad planning can destroy it.

A valid CFP or CFA looks at the entire tax and estate picture, not just once a year at tax time, but continuously.

That means reviewing entities, trusts, charitable giving, and ownership structures to ensure every dollar supports your goals.

3. Multi-Generational Planning

Money without meaning doesn’t last.

Our clients care less about spending wealth and more about passing on wisdom with it. Family office planning creates a roadmap for children and grandchildren that includes education, values, and vision.

The goal isn’t to make them rich. It’s to make them ready.

4. Philanthropy and Purpose

When wealth reaches a certain level, giving becomes part of the conversation.

We help families align their giving with impact through donor-advised funds, private foundations, or direct support, making generosity intentional and tax-efficient.

5. Reporting and Transparency

You can’t manage what you can’t see.

A family office structure turns scattered accounts and assets into one clear picture, giving you complete control and zero surprises.

Absolute Clarity for a Business Owner

A Florida business owner came to us after selling his company for $18 million. He had a trust, several investment accounts, two homes, and adult children scattered across three states.

Each professional was doing good work individually, but together it was a mess.

The estate attorney didn’t coordinate with the CPA. The CPA didn’t talk to the investment manager. The trusts were outdated.

We built a coordinated plan:

• Updated estate documents
• Consolidated reporting
• Tax-efficient charitable structure
• Education meetings with the kids

Result? Simplicity, clarity, and peace of mind. His family finally had one strategy and one direction.

We turned complexity into clarity and momentum.

When to Consider Family Office Services

Wondering when it’s time to make the shift? Ask yourself these questions:

1. Do I have multiple entities, trusts, or properties?
2. Does my net worth exceed $5 million?
3. Do I have more than one advisor managing separate areas?
4. Do I feel like the left hand doesn’t know what the right hand is doing?

Nod at two or more of these, and you’ve already crossed that line. It’s time to call a certified financial planner or certified financial advisor.

Myths About Family Office Services

“We’re Not Wealthy Enough”

It’s not about how much you have; it’s about how complex your life has become. Family office services are built for families managing multiple priorities and generations, not just billionaires.

“My Advisor Already Handles This”

Maybe. But is anyone seeing the whole picture? Taxes, investments, trusts, and business structures only work when they’re coordinated. If they’re not, small gaps can turn into big mistakes.

“It Costs Too Much”

Disorganization is far more expensive. Missed deductions, outdated documents, and uncoordinated decisions can cost much more than a structured approach ever will.

The Bottom Line

Family office services aren’t a luxury. They’re a necessity when success starts to create complexity. They bring everything together, including advice, planning, and reporting, into one transparent and accountable structure.

At Great Lakes Private Wealth, we don’t run on autopilot. Every family deserves proactive, hands-on coordination that makes wealth work for them, not against them. Wealth without structure creates stress. Let’s fix that and build a plan that works for your family.

Sources

1. PwC – How family offices are adapting capital deployment in uncertain times  https://www.pwc.com/gx/en/services/family-business/family-office/family-office-deals-study.html 
2. Financial Poise – “The Evolution of Family Offices: From Empires to Modern Wealth Management” https://www.financialpoise.com/the-evolution-of-family-offices-from-empires-to-modern-wealth-management/ 
3. Deloitte – “The Family Office Insights Series. Global Edition” https://www.deloitte.com/uk/en/services/deloitte-private/about/defining-the-family-office-landscape.html 
4. Harvard Business Review – “Is Your Family Office Built for the Future?” https://hbr.org/2022/09/is-your-family-office-built-for-the-future 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8523086.1

As someone who works with families on retirement planning, I get asked this question often:

“Patrick, do I really need a 401k financial advisor, or can I handle this myself?”

It’s a thoughtful question. Managing your own 401k can make sense in some situations, but there are times when professional guidance can be valuable.

According to Fidelity’s 2024 data, the average 401k balance is $93,054, but workers who have been consistently contributing to the same plan for 15 years have an average balance of $448,800. This significant difference highlights how strategic, long-term 401k management can make a meaningful impact on retirement outcomes.

Let me walk you through when DIY 401k management might work fine, and when bringing in a 401k financial advisor could make a meaningful difference.

The DIY Approach: When It Can Work

Before explaining when you might benefit from professional help, let me acknowledge when you probably don’t need it.

If you’re in your 20s or 30s, have a straightforward financial situation, and your employer offers a decent 401k with low-cost index funds, you can likely manage this effectively on your own.

Here’s what “straightforward” typically looks like:

• You’re contributing at least enough to get the full company match
• You’re comfortable with a diversified mix of low-cost index funds
• You’re not trying to time the market
• You have decades until retirement

According to Bureau of Labor Statistics data, 84.9% of employees participate in their 401k plans, and 92% of American workers with 401k plans report that having a payroll deduction helps them save. For many people in straightforward situations, a target-date fund that automatically adjusts over time can be perfectly adequate.

But as situations become more complex, the considerations change.

When 401k Management Gets More Complex

As I work with business owners and professionals, I see situations where 401k financial advisor guidance becomes more valuable.

Complex Fund Menus

Many employer plans offer numerous investment options, and not all of them may be optimal choices. Some plans have 40+ investment options where perhaps only a portion are worth considering for most investors.

It’s not uncommon to see portfolios with multiple funds that essentially own the same companies. Someone might think they’re diversified when they’re actually concentrated in one area of the market.

Research from Morningstar shows that over the decade through June 2024, just 20% of active large-cap funds survived and beat their average passive rival. Additionally, according to S&P’s SPIVA data, 60% of active U.S. Large Cap Equity funds underperformed the S&P 500 in 2023, which tracks closely with the 64% average underperformance over 23 years of data.

Simplifying allocations while improving true diversification and reducing annual fees can be beneficial. Even small fee reductions can add up significantly over time on larger balances.

High-Income Earners and Contribution Strategies

If you’re a successful business owner or high-earning professional, your 401k strategy becomes more sophisticated.

Contribution limits change regularly. For 2024, you can contribute $23,000 to your 401k, plus an additional $7,500 if you’re 50 or older. But there are also backdoor Roth strategies, mega backdoor Roth contributions, and after-tax contribution options that many people don’t fully understand.

Some 401k plans allow after-tax contributions up to much higher annual limits – up to $70,000 total in 2024 ($77,500 if over 50). By restructuring savings approaches, it’s possible to contribute significantly more annually to retirement in tax-advantaged ways.

Business Owner 401k Plans

If you own a business with employees, your 401k decisions affect not just you, but your entire team. Plan design, contribution matching, safe harbor provisions, and fiduciary responsibilities make this much more complex.

According to industry data, compared to about 89% of firms with 100-499 workers and 92% of companies with 500+ employees, just 46% of employers with less than 100 employees provide

a 401k or similar plan. Employers’ main reasons for not offering a plan include that their business isn’t big enough (79%) and expense concerns (31%).

Business owners need to balance maximizing their own retirement contributions with providing meaningful benefits for employees, while managing costs and staying compliant with regulations.

The Coordination Challenge

One area where I see missed opportunities is treating your 401k like it exists in isolation instead of coordinating it with your overall financial plan.

Asset Location Strategy

Different types of investments work better in tax-deferred accounts like 401k plans versus taxable investment accounts. This concept is called “asset location.”

For example, bonds and REITs are generally more tax-efficient inside your 401k, while tax-efficient stock index funds can work well in taxable accounts.

However, many people don’t consider this coordination. They might have similar “balanced” portfolios in both their 401k and their taxable accounts, potentially missing opportunities for tax optimization.

Roth vs Traditional Decisions

The choice between traditional (pre-tax) and Roth (after-tax) 401k contributions isn’t just about current versus future tax rates. It depends on your overall tax strategy, other retirement accounts, estate planning goals, and more.

Some people automatically choose traditional 401k contributions for the current tax deduction, but when you look at their complete picture – including other income sources and family situation – Roth contributions might make more sense.

When to Consider a 401k Financial Advisor

Based on experience, here are situations where professional 401k financial advisor guidance typically provides significant value:

You Have a High Income

If you’re earning $200,000+ annually, the tax implications of your 401k decisions become much more significant. Advanced strategies like mega backdoor Roth contributions, careful timing of

withdrawals, and coordination with other tax-advantaged accounts can potentially save thousands in taxes.

You’re Within 10-15 Years of Retirement

As you get closer to retirement, your 401k management shifts from growth-focused to transition planning. Considerations include:

• When to stop contributions and start distributions
• Managing the shift from accumulation to income
• Tax-efficient withdrawal strategies
• Required minimum distribution planning

You Own a Business

Business owners face unique 401k challenges including plan selection, fiduciary responsibility, employee communications, and maximizing their own contributions while managing costs.

Your Plan Has Limited Investment Options

Some employer 401k plans have expensive or limited investment options. A 401k financial advisor can help you make the best of a challenging situation and coordinate with outside investments to build a more optimal overall portfolio.

You Have Multiple 401k Accounts

Many people have 401k accounts from previous employers in various places. Coordinating multiple accounts, deciding whether to roll them over, and managing the overall allocation across all accounts can become complex.

What a 401k Financial Advisor Actually Does

When we work with people on 401k optimization, here’s what that typically looks like:

Plan Analysis and Optimization

We review plan investment options, identify the most suitable funds, and help build an allocation that makes sense for the person’s situation and timeline.

Contribution Strategy

We help determine optimal contribution amounts, whether to use traditional or Roth options, and how to coordinate with other retirement savings.

Integration with Overall Plan

Your 401k doesn’t exist in isolation. We work to ensure employer plans coordinate well with other investments, tax strategies, and financial goals.

Ongoing Monitoring

Investment options change, situations evolve, and tax laws shift. We monitor 401k accounts and suggest adjustments as needed.

Transition Planning

As people approach retirement, we help develop strategies for transitioning from contributions to distributions in tax-efficient ways.

The Cost of DIY Mistakes

Consider this educational example: A successful small business owner had been managing their own 401k for 20 years, proud of not paying advisory fees.

When analyzed, several issues were apparent:

• The allocation hadn’t been rebalanced in years
• They were invested in expensive actively managed funds when cheaper index options were available
• They weren’t taking advantage of after-tax contribution opportunities
• Their withdrawal strategy would create unnecessary tax complications

According to a 2024 Vanguard study, 55% of job switchers reduced their 401k nest egg by $300,000 over their working lives by failing to adjust their savings rate to their new, higher salary. This demonstrates how seemingly small oversights can compound into significant costs over time.

Research from Russell Investments shows that individuals who worked with financial advisors accumulated, on average, 1.5% more in assets over a 25-year period compared to those who managed everything themselves.

Over time, these issues can potentially cost significant amounts in lower returns and higher taxes. The “free” DIY approach can sometimes become expensive.

The Professional Value-Add

Research consistently shows the value that professional guidance can provide:

Vanguard’s Advisor Alpha Study found that advisors can add up to 3% in annual net returns for clients through services like financial planning, behavioral coaching, and tax efficiency – significantly more than typical advisor fees.

Envestnet Research indicates that advisors have the potential to add more than 300 basis points (3%) in annual value for clients, particularly through tax efficiency and behavioral coaching.

Behavioral Benefits: According to industry studies, 77% of participants are extremely confident in their ability to make the right financial decisions with the help of a financial advisor, compared to just 38% who are confident making 401k investment decisions on their own.

Questions to Ask Yourself

Here are some questions that might help determine if you could benefit from 401k financial advisor guidance:

About Your Situation:

• Do you earn more than $150,000 annually?
• Are you within 15 years of retirement?
• Do you own a business with employees?
• Do you have multiple retirement accounts to coordinate?

About Your Knowledge:

• Do you understand the expense ratios of your fund options?
• Can you explain when Roth contributions make more sense than traditional?
• Do you know how to evaluate whether your plan’s investment options are good?

About Your Results:

• Have you reviewed your 401k allocation in the past year?
• Do you know how your returns compare to appropriate benchmarks?
• Are you confident in your withdrawal strategy for retirement?

If you’re uncertain about several of these areas, it might be worth having a conversation with a 401k financial advisor.

The Technology Factor

Many people assume that robo-advisors and 401k apps can replace professional guidance. While these tools can be helpful, they have limitations.

Research shows that only 40% of investors rely on robo-advisors for getting reliable advice, despite their growing availability.

Most automated services can’t:

Analyze your specific plan’s investment options

Coordinate with your outside investments and tax strategies

Provide guidance for complex situations like business ownership

Adapt to major life changes or market shifts

Help with transition planning and withdrawal strategies

Technology is a useful tool, but it may not be a complete replacement for human expertise in complex situations.

Working with Your HR Department

Let me address something I hear often: “Can’t I just ask HR about my 401k questions?”

Your HR department can help with basic plan logistics – login information, contribution changes, beneficiary updates. But they typically can’t provide investment advice or personalized strategies.

HR professionals are experts in benefits administration, not investment management. They’re generally not permitted to give specific guidance about which funds to choose or how much to contribute.

Making the Decision

The decision to work with a 401k financial advisor ultimately comes down to complexity, time, and value.

According to industry research, 41% of Americans don’t contribute any money at all to a 401k or employer-sponsored plan. Even among those who do contribute, the majority say they are not on track with their yearly 401k savings to retire comfortably.

If your situation is straightforward, you enjoy managing investments, and you have time to stay current with tax law changes and investment research, DIY might work fine.

But if your situation is complex, you value your time, or you want the confidence that comes with professional oversight, working with an advisor can provide significant value.

What to Look For in a 401k Financial Advisor

If you decide to work with a professional, here’s what to consider:

Fiduciary Standard: Make sure they’re legally required to put your interests first.

Fee Transparency: Understand exactly what you’re paying and what services you’re receiving.

Comprehensive Approach: Look for advisors who view your 401k as part of your overall financial plan, not in isolation.

Experience: Choose someone who regularly works with 401k optimization and understands the nuances.

Communication Style: Find someone who explains things clearly and answers your questions patiently.

The Bottom Line

Your 401k is likely one of your largest assets and a critical component of your retirement security. Whether you manage it yourself or work with a 401k financial advisor, the important thing is making sure it’s properly handled.

What you see is what you get – if you’re confident in your ability to optimize your 401k and coordinate it with your overall financial plan, DIY can work. But if you want professional oversight and strategic guidance, a good 401k financial advisor can provide significant value.

The key is being honest about your situation, your knowledge level, and the complexity of your financial life.

For many people approaching or in retirement, their 401k represents a significant portion of their wealth that’s too important to leave to chance.

Sources

1. Fidelity Investments Q2 2024 401(k) Data https://www.fidelity.com/about-fidelity/Q2-2024-retirement-analysis 
2. Bank of America 2024 Participant Pulse Report https://www.napa-net.org/news/2024/5/401k-participants-end-q1-higher-balances-contribution-rates/ 
3. Bureau of Labor Statistics 2024 Employee Benefits Survey https://www.bls.gov/news.release/ebs2.t01.htm
4. Morningstar Active vs. Passive Barometer 2024 https://www.morningstar.com/business/insights/blog/funds/active-vs-passive-investing
5. S&P Indices Versus Active (SPIVA) U.S. Scorecard https://archive.themathergroup.com/insights/market-updates/active-management-vs-index-based-investing-an-update-on-performance
6. Vanguard Advisor’s Alpha Study https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/quantifying-evolution-advice-and-value-investors.html
7. Russell Investments Value of an Advisor Study (2023) https://carverfinancialservices.com/the-value-of-guidance-studies-show-higher-net-returns-when-you-work-with-a-financial-advisor/
8. Envestnet 2024 Industry Research https://www.financial-planning.com/list/5-financial-advisor-trends-to-watch-in-2024
9. CNBC 2024 401k Mistakes Study https://www.cnbc.com/2023/11/30/dont-make-these-common-401k-plan-mistakes.html
10. Kiplinger 2024 401k Analysis https://www.kiplinger.com/retirement/retirement-planning/seven-401-k-mistakes-that-could-tank-your-retirement
11. Shortlister 401k Statistics 2025 https://www.myshortlister.com/insights/401k-statistics 

  

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8368962.1

Dentists know precision better than anyone. Every millimeter counts in the chair. Still, when the topic shifts to money, things get blurry fast.

You’re trained to care for people, not manage finances. You give everything to your work, put in the hours, and still sense something isn’t adding up.

Spreadsheets only go so far. You’ve built something substantial, and now it needs the same focus you bring to your work. Once your finances have that kind of attention, growth feels steady, not accidental.

The Income Illusion

According to the American Dental Association, general dentists earn an average of $180,000 annually, and specialists often cross $300,000. These are substantial numbers by any measure. Still, income alone rarely translates into lasting wealth.

Student loans, overhead, payroll, and taxes can turn even a thriving practice into a constant uphill run. The more the business grows, the more layered the decisions become.

From what I’ve seen, many dentists reach their 40s or 50s and realize they’ve built something remarkable but never mapped out where it’s all heading. The goal isn’t endless growth; it’s finding clarity, control, and purpose in how money works for you.

The Framework for Dental Wealth

Strong financial planning is not complicated, but it must be coordinated. Four key areas create the foundation for lasting wealth for dentists.

1. Practice Profit and Cash Flow

Your practice is the engine behind everything. When it runs efficiently, everything else follows.

Start by separating personal and business finances. It’s a small discipline that creates massive clarity. Understand your true margins, track overhead, and maintain 3-6 months of reserves for peace of mind.

After reaching stability, focus turns to direction. Each extra dollar needs intention, working toward growth, security, or freedom from debt.

2. Tax Strategy That Fits Your Reality

Dentists face unique tax challenges. The proper structure can save thousands each year. Entity choice, compensation mix, and retirement plan design all matter.

We’ve seen practices lower their effective tax rate by 4-6% simply by correctly aligning salary, distributions, and qualified plan contributions. That’s money that stays in your world instead of leaving it.

Collaboration isn’t optional. It’s how real progress happens. Your CPA and financial advisor should be in constant communication, not working in silos. Tax planning isn’t an April project. It’s an all-year conversation.

3. Retirement and Investment Planning

You deserve a clear path to independence, not burnout.

Building retirement security takes planning and consistency. A strong approach connects qualified retirement plans with diversified investments outside the practice. For most professionals, that includes:

• A 401(k) with profit sharing or a defined benefit plan
• A taxable investment account for flexibility
• A transition or sale plan for the practice itself

The sale of your practice can strengthen your future plan, especially when it’s part of a broader strategy that’s already working.

4. Risk and Protection

The work you do powers everything that follows. Protecting that income keeps the engine running when life throws a curve. Strong coverage means having:

Disability insurance tied to your specialty income

Updated malpractice and umbrella policies

Buy-sell agreements funded and reviewed every few years

Protecting your work is part of leadership. It’s how you preserve what matters most for those who rely on you.

The Common Drains on Dental Wealth

Substantial income and good investments can’t do much without alignment. Financial pieces need to work as one system, not separate parts.

Tax Overpayment

When advisors and accountants don’t coordinate, valuable deductions get missed. Aligning those teams can produce immediate results.

Idle Cash

Extra cash tends to be kept in checking accounts as a safety net. Keeping a solid reserve makes sense, but the rest should be used for investment, growth, or paying down debt.

Unplanned Exits

Delaying retirement planning costs leverage. Starting early builds control, clarity, and stronger outcomes when it’s time to step away.

The Three Phases of a Dental Career

Each stage of your career requires a different focus. The sooner you adapt your plan, the smoother your path.

Early Career (0–10 Years)

Focus on debt control and foundation building. Keep personal spending reasonable, pay down high-interest loans, and start small retirement contributions. Time, not timing, is what builds wealth.

Mid-Career (10–25 Years)

These years carry the most momentum. Expansion works best when it’s guided by intention. Each decision, from new equipment to a second location, moves you toward a defined goal.

Growth for the sake of growth often burns cash. Know your numbers and protect your margins.

Transition and Retirement (25+ Years)

Now the focus shifts to preservation and purpose. Start shaping your exit well before you plan to step away. Clean financials, updated systems, and consistent production all boost practice value.

Buyers put a premium on structure and clarity.

The Practice Sale Reality

Selling a practice is one of a dentist’s most significant financial moments. It deserves the same discipline you bring to complex clinical work: steady, structured, and carefully planned.

Buyers look for consistent revenue, organized financials, and strong hygiene programs. The less the business relies on you, the higher its value.

Start early and build systems that others can follow. Keep clear records. Each step adds freedom and lasting worth.

The Mindset Shift

Financial success begins with a clear vision of your future.

We’ve worked with many dentists who felt weighed down by financial uncertainty. The stress started to lift once their full picture, including investments, taxes, insurance, and estate planning, came together.

Effective planning transforms financial complexity into structure, direction, and confidence.

Building a Team That Works Like Yours

Your team runs like clockwork, with hygienists, assistants, and the front office all aligned. Your financial structure should operate similarly.

The Great Lakes Private Wealth approach connects tax, investment, retirement, and estate strategies within one unified framework.

Our role is straightforward. We help your money work with the same drive and purpose you bring daily. When every part of your financial life moves together, progress feels natural.

The Bottom Line

Dentistry demands focus and energy every day. Financial planning should bring clarity, not stress.

A coordinated strategy helps you keep more of what you earn, build confidence for retirement, and protect what you’ve worked so hard to create.

We don’t run our business on autopilot, and your financial plan shouldn’t either.

When your wealth feels scattered or uncertain, structure brings order and direction. The right plan can work with the same precision you expect from your practice.

Sources

1. American Dental Association – “The dentist workforce” https://www.ada.org/resources/research/health-policy-institute/dentist-workforce 

2. Bureau of Labor Statistics – “Occupational Outlook for Dentists” https://www.bls.gov/ooh/healthcare/dentists.htm 

3. Dental Economics – “Dentists: 7 steps to create a legacy that’s built to last” https://www.dentaleconomics.com/sponsored/document/14286958/dentists-7-steps-to-create-a-legacy-thats-built-to-last 

This information is for educational purposes and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. Individual results may vary. 8518278.1.

You’ve probably noticed that markets have a rhythm of their own. They rise, they fall, and sometimes they move in circles.

For many families, the real challenge is not the ups and downs but the uncertainty that follows. Those “what should I do now?” moments often feel heavier than the market swings.

Market volatility can feel unsettling, especially when savings and future plans are at stake. However, the picture becomes much clearer once you understand what drives those movements and how active management helps navigate them.

Let’s examine volatility in more detail, understand why it occurs, and consider how an active approach can help you remain confident and focused even when the headlines make it challenging to stay calm.

What “Market Volatility” Really Means

In simple terms, volatility measures how much and quickly investment prices move up or down.

Market conditions shape how prices move each day. In stable times, changes are usually modest, but they can become sharp and unpredictable during periods of higher volatility. Analysts often track this through the CBOE Volatility Index (VIX), known as the “fear gauge,” which measures expected market swings over the next month.

The Chicago Board Options Exchange data shows that the VIX has averaged around 19 over time. In moments of uncertainty, though, that number can quickly double or even triple. In 2020, at the pandemic’s peak, it briefly climbed above 80 (the highest level since 2008).

Volatility is not always negative. It is a regular part of how markets move through their cycles. However, when uncertainty grows during inflation surges, interest rate adjustments, or global conflicts, it often challenges investor confidence and patience.

Why Volatility Happens

Markets react to information. When that information is unclear or unexpected, prices adjust quickly. Some of the most common drivers of volatility include:

• Economic Data: Reports on inflation, employment, or GDP growth often spark market movement.

• Federal Reserve Policy: Interest rate changes influence everything from mortgage costs to corporate earnings.

• Corporate Earnings: Surprises, positive or negative, can move entire sectors.

• Geopolitical Events: Wars, trade disputes, or supply chain disruptions can trigger emotional reactions in global markets.

• Investor Behavior: Fear and greed remain two of the most powerful forces in finance.

Volatility will always occur. The advantage lies in knowing how to respond, and active management helps you do just that.

What It Really Takes to Manage Markets Actively

Behind the term “active management” lies something simpler and steadier than most imagine: paying attention. It means staying engaged, understanding the market’s shifts, and making thoughtful choices that reflect long-term goals.

In an actively managed portfolio, advisors take a continuous, hands-on approach. They review holdings, evaluate sectors, and adjust asset classes to align your investment strategy with your goals. The aim is to respond to meaningful changes with clarity and discipline rather than emotion. The process unfolds through a few essential steps:

1. Rebalancing regularly. Adjusting your portfolio when some investments grow faster than others, keeping your overall mix aligned with your target allocation.

2. Managing risk exposure. Reducing heavy concentrations in overvalued sectors and adding diversification where it strengthens stability.

3. Identifying opportunities. Volatile markets can create openings where quality investments become undervalued. Active managers work to recognize and act on those moments early.

4. Coordinating with your whole plan. Connecting investment choices with your broader financial picture, including taxes, cash flow, and long-term goals.

In a market that never moves in a straight line, active management helps investors stay focused, flexible, and ready to adjust.

The Human Side of Volatility

Over the years, guiding families through market ups and downs has taught me something important: volatility challenges the heart long before it challenges the numbers.

When a portfolio moves sharply, even briefly, that feeling of uncertainty can take over. The mind drifts into what-ifs instead of long-term goals, and that reaction is entirely human. Research shows that investors who check their accounts more frequently during volatile

periods are more likely to make emotional, short-term decisions that weaken long-term results.

According to Dalbar’s Quantitative Analysis of Investor Behavior (2024), the average equity investor trailed the S&P 500 by about 2% per year over the past two decades, mainly because of choices driven by fear or overconfidence, selling in downturns, and returning only after markets recover.

Active management brings clarity and steadiness when emotions run high, keeping every decision grounded in your long-term plan.

Turning Market Volatility Into Opportunity

Volatility is part of every market cycle. With active management, it becomes a chance to stay disciplined, adaptable, and focused on lasting goals.

1. Spotting Opportunity

Sharp market movements can create openings for investors who think ahead. Rebalancing or adding strong, high-quality assets when prices drop can strengthen a portfolio over time. Active managers help identify those moments and decide where new capital can make the most significant difference.

2. Flexibility Over Rigidity

Index-based strategies move automatically with the market. Active management allows thoughtful adjustments as conditions shift, such as reducing exposure to overheated sectors or adjusting international allocations. This flexibility helps portfolios stay aligned with changing realities.

3. Coordination That Adds Value

Active management also involves deciding when to realize gains or losses in taxable accounts. Coordinating investments with tax and income planning can improve efficiency and help keep a long-term strategy on course.

4. Personalization That Reflects Your Life

No two investors share the same story. Active management builds a plan that fits your life, aligning decisions with your goals and how you grow.

Putting Volatility in Perspective

Market history tells a reassuring story. Over the past 50 years, the S&P 500 has faced corrections (declines of 10% or more) roughly once every 20 months, based on data from CFRA Research. Even with those frequent setbacks, the market posted positive annual returns about 75% of the time.

Volatility reminds us that markets are alive and always moving. Businesses adapt, consumers adjust, and innovation keeps progress in motion. Those who stay invested long enough often see that movement turn into opportunity.

Active managers help investors stay steady through these cycles. We stay close to what drives market shifts daily so you can focus on the bigger picture. Most importantly, we ensure that your strategy continues to reflect your comfort level and long-term goals instead of reacting to short-term noise.

What You Can Do Right Now

Feeling uneasy about the market is more common than most people admit. What matters is taking small, intentional steps that bring clarity and confidence back to your plan.

1. Review your allocation. Make sure your level of risk still matches your goals. A quick portfolio check can reveal whether adjustments are needed.

2. Check your time horizon. Money you need soon should be in stable assets, not the stock market.

3. Simplify where possible. Consolidating accounts into one coordinated strategy can help reduce overlap and facilitate balance.

4. Stay curious. When something feels unclear, reach out and ask. Financial choices carry weight, and good decisions start with good conversations.

Remember, it’s not about reacting to today’s volatility. It’s about preparing for tomorrow’s goals.

Confidence Through Connection

When clients call during volatile markets, the first thing I do is listen. Then, we look at the plan together and discuss what’s happening, why it’s happening, and what (if anything) needs to change.

Most of the time, the emotion settles once we walk through the data. That’s what a financial partnership should feel like: accessible, steady, and focused on helping you understand, not just react.

True confidence carries you through market cycles. It grows from understanding what you own, why you own it, and how each decision supports your goals.

If you’d like to discuss how your portfolio is positioned for the current environment, or whether an active management approach makes sense, feel free to contact us anytime. That’s what we’re here for.

Sources

1. Chicago Board Options Exchange (CBOE) – CBOE Volatility Index (VIX) Historical Data https://www.cboe.com/tradable_products/vix/ 
2. CFRA Research – S&P 500 Historical Correction Data https://www.cfraresearch.com/ 
3. Dalbar, Inc. – Quantitative Analysis of Investor Behavior 2024 https://www.dalbar.com/ProductsAndServices/QAIB 
4. CFA Institute – Coaching Investors Beyond Risk Profiling: Overcoming Emotional Biases https://blogs.cfainstitute.org/investor/2025/09/16/coaching-investors-beyond-risk-profiling-overcoming-emotional-biases 
5. Forbes Advisor – Navigating Market Volatility With Confidence https://www.forbes.com/sites/davidkudla/2025/07/29/navigating-market-volatility-with-confidence 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8518268.1

Working with business owners over the years, I’ve noticed a familiar pattern: many successful entrepreneurs are experts at running their businesses but often overlook the bigger financial picture.

You might have your daily operations running smoothly, your cash flow managed, and your taxes handled by a good CPA. Those fundamentals are essential, but they’re just the starting point for comprehensive small business financial planning.

The most successful business owners I work with understand that their business isn’t just a source of income, it’s a wealth-building tool that should be coordinated with their personal financial goals. They’ve moved beyond basic business banking to create integrated strategies that serve both their business needs and their family’s long-term financial security.

Let me share what that comprehensive approach looks like and how it can make a meaningful difference in building business stability and personal wealth.

The Integration Challenge

One of the biggest opportunities with business owners is treating their business and personal finances as separate entities instead of coordinating them as part of an integrated strategy.

Your business financial decisions directly impact your personal financial situation, and vice versa. Effective small business financial planning recognizes and uses these connections to your advantage.

Cash Flow vs. Wealth Building

Managing monthly cash flow is essential for business survival, but it’s different from building long-term wealth. Many business owners get so focused on monthly operations that they miss opportunities for strategic wealth accumulation.

For example, how you pay yourself from your business (salary vs. distributions vs. retained earnings) has significant implications for your personal tax situation, retirement savings capacity, and overall financial planning.

Tax Strategy Coordination

Business and personal tax planning should work together, not against each other. The timing of income recognition, equipment purchases, retirement contributions, and other financial decisions can be coordinated to optimize your overall tax situation.

Some business owners make decisions that save business taxes but create personal tax problems, or vice versa. A coordinated approach often produces better overall results.

When Small Business Financial Planning Gets Complex

Based on experience working with various business owners, here are situations where business financial planning becomes more sophisticated:

Profitable Growth Management

Success creates new challenges. As your business grows, you face decisions about reinvestment, cash management, and scaling operations while maintaining profitability.

Growing businesses often experience cash flow timing issues even when they’re profitable. Revenue might increase, but you’re investing in inventory, equipment, staff, and facilities. Managing this growth cycle requires careful planning.

Business Structure Optimization

Many businesses start as sole proprietorships or simple LLCs, but as they grow, different entity structures might provide better tax advantages or liability protection.

The choice between S-Corp elections, traditional corporations, or other structures depends on your income level, growth plans, and personal financial goals. These decisions have long-term implications for both business operations and personal wealth building.

Employee Benefits and Retirement Plans

As you add employees, you face health insurance, retirement benefits, and other compensation decisions. These choices affect your business expenses, benefits, and ability to attract quality staff.

Some business owners don’t realize they can structure employee benefits in ways that provide maximum advantage to themselves while still offering meaningful benefits to their team.

Key Components of Comprehensive Business Financial Planning

When we work with business owners on small business financial planning, here’s what that typically includes:

Cash Flow Management and Forecasting

This goes beyond basic budgeting to include seasonal planning, growth funding, and maintaining appropriate cash reserves.

Many businesses have seasonal fluctuations or cyclical patterns that require planning. Systems predicting and managing these patterns can prevent cash flow crises and reduce stress.

Business and Personal Goal Coordination

Your business should serve your personal financial goals, not work against them. This means aligning business growth plans with your retirement timeline, family financial needs, and lifestyle objectives.

For example, if you want to retire in 15 years, your business strategy should include building transferable value and planning for succession or sale.

Risk Management

Business insurance, liability protection, and financial risk management become more critical as your business and personal wealth grow.

This includes evaluating business insurance coverage, personal liability protection, and coordination between business and personal insurance policies to avoid gaps or unnecessary duplication.

Exit Planning and Succession

Even if retirement is decades away, thinking about how you’ll eventually transition out of the business affects current financial decisions.

Building a business that can operate without you, creating transferable value, and planning for succession (whether to family, employees, or third parties) takes time and should influence current business structure decisions.

The Owner’s Compensation Strategy

One area where I see significant opportunities is how business owners pay themselves. This decision significantly affects taxes, retirement savings, and personal financial planning.

Salary vs. Distributions

The mix of salary and distributions affects your payroll taxes, Social Security benefits, and retirement plan contribution capacity. The optimal approach depends on your business structure, income level, and personal financial goals.

Timing of Distributions

Taking money out of the business can affect your personal tax situation. Strategic timing of distributions can help manage tax brackets and coordinate with other income sources.

Retirement Plan Maximization

Business owners often have access to more powerful retirement savings options than employees, including SEP-IRAs, solo 401(k)s, and defined benefit plans. The choice depends on your income, number of employees, and retirement timeline.

Some business owners can contribute significantly more to retirement accounts than they realize, potentially saving substantial amounts in current taxes while building retirement security.

Common Business Financial Planning Mistakes

Based on working with numerous business owners, here are patterns I see that can be costly:

Keeping Everything in the Business

Some owners accumulate large cash balances in business accounts instead of taking strategic distributions and investing for personal wealth building. While maintaining working capital is important, excessive business cash doesn’t typically provide optimal investment returns.

Ignoring Personal Financial Goals

Business owners sometimes get so focused on business growth that they neglect personal financial planning. Your business should be a vehicle for achieving personal financial security, not an end in itself.

Mixing Business and Personal Expenses

While some mixing is unavoidable, maintaining clear boundaries helps with tax compliance and makes business financial analysis more accurate. It also helps when planning for a business sale or transfer.

Inadequate Record Keeping

Financial records are essential for tax compliance, business analysis, and eventual valuation. Many owners don’t realize that poor record keeping can significantly reduce business value when it’s time to sell.

Technology and Business Financial Planning

Modern business owners have access to financial management tools that can significantly simplify business financial planning:

Automated Accounting Systems

Cloud-based accounting platforms can automate many bookkeeping tasks and provide real-time financial reporting. This saves time and provides better information for economic decision-making.

Cash Flow Forecasting Tools

Software that connects to your bank accounts and accounting system can provide cash flow projections and help identify potential problems before they become critical.

Integration Between Business and Personal Planning

Some financial planning tools can analyze business and personal financial situations together, providing a more complete picture for decision-making.

However, technology has limitations. While these tools can organize information and perform calculations, they typically can’t provide strategic guidance for complex situations or help coordinate business decisions with personal financial planning.

Working with Professional Advisors

Most successful business owners work with a team of professional advisors, including:

CPA or Tax Professional

Someone who understands business tax law and can help coordinate business and personal tax strategies.

Attorney

For business structure, contracts, and legal compliance issues.

Financial Advisor

To help coordinate business financial decisions with personal wealth building and retirement planning.

Business Banker

A banker who understands business banking needs and can provide appropriate credit facilities and cash management services.

The key is finding advisors who understand how these different areas connect and can work together rather than in isolation.

Questions to Consider

Here are some questions that might help you evaluate your current small business financial planning approach:

About Your Strategy:

• Do you have written financial goals for both your business and personal situation?
• How do you coordinate business financial decisions with personal financial planning?
• When did you last review your business structure for tax efficiency?

About Your Operations:

• Do you have reliable cash flow forecasting?
• Are you taking advantage of available retirement savings opportunities?
• How do you determine the optimal way to pay yourself from the business?

About Your Future:

• What’s your plan for eventually transitioning out of the business?
• Are you building transferable business value?
• How does your business timeline coordinate with your retirement plans?

If you’re uncertain about several of these areas, it might be worth having a conversation with advisors who specialize in business financial planning.

The Coordination Advantage

The most successful business owners I work with consider business financial planning part of their overall wealth-building strategy. They understand that business decisions and personal financial decisions are interconnected.

This coordinated approach often produces better results than managing business and personal finances separately. It can reduce overall taxes, improve cash flow timing, and help ensure business success translates into personal financial security.

Making It Work for Your Situation

Small business financial planning isn’t one-size-fits-all. A solo consultant has different needs than a growing manufacturing business. A service business has different considerations than a retail operation.

The important thing is having a systematic approach that addresses your specific situation and coordinates business and personal financial goals.

Your business is likely one of your largest assets and your primary source of income. Making sure it’s structured and managed to support your overall financial goals is worth the time and effort.

We keep our finger on the pulse of both business and personal financial planning because they’re too interconnected to manage separately.

What you see is what you get: if your business financial planning only covers basic banking and tax compliance, you’re missing opportunities to build wealth more effectively.

The key is a comprehensive approach recognizing the connections between business success and personal financial security.

Sources

1. Small Business Administration – Business Guide https://www.sba.gov/business-guide 
2. Internal Revenue Service – Small Business and Self-Employed https://www.irs.gov/businesses/small-businesses-self-employed 
3. U.S. Chamber of Commerce – Small Business Resources https://www.uschamber.com/co/start/strategy 
4. SCORE – Small Business Mentoring https://www.score.org 
5. National Association of Small Business Investment Companies https://www.nasbic.org 
6. Small Business Development Centers https://americassbdc.org 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8433595.1.

Keywords: small business financial planning, business financial planning

Meta Description: Comprehensive financial planning strategies for small business owners. Learn how to coordinate personal and business financial goals.

One of your most important investment decisions isn’t picking individual stocks or timing the market. It’s choosing between active management and passive management strategies for your portfolio.

This choice affects how much you pay in fees, the level of risk you take on, and ultimately, how much money you’ll have for retirement. After working with families for decades, I’ve seen both approaches work well and fail spectacularly, depending on the situation.

Let me explain the fundamental differences between these strategies and help you determine which approach might work better for your specific circumstances.

Understanding Active Management

Active management means professional portfolio managers make investment decisions to outperform a specific benchmark or index.

These managers research companies, analyze economic trends, and make buy and sell decisions based on their analysis. They’re betting they can beat the market through superior stock selection and timing.

How Active Management Works

Active managers typically employ teams of analysts who study financial statements, interview company executives, and evaluate market conditions. Based on this research, they decide which securities to buy, sell, or hold in the portfolio.

The goal is straightforward: deliver returns that exceed what you’d get from simply buying and holding a broad market index.

Active Management Strategies

Active managers use various approaches:

Growth Investing: Focusing on companies expected to grow faster than the overall market

Value Investing: Seeking undervalued companies trading below their intrinsic worth

Sector Rotation: Moving money between different industries based on economic cycles

Market Timing: Adjusting portfolio allocation based on market conditions

Understanding Passive Management

Passive management takes the opposite approach. Instead of trying to beat the market, passive management strategies aim to match market performance by tracking a specific index.

The most common passive approach is index fund investing, where the fund owns the same securities in the same proportions as a particular index, like the S&P 500.

How Passive Management Works

Passive funds use a rules-based approach. If you own an S&P 500 index fund, the fund manager buys all 500 stocks in the same weightings as the index.

The fund makes corresponding changes when companies are added to or removed from the index. No research team analyzes individual companies or tries to time market movements.

Types of Passive Investments

Index Funds: Mutual funds that track specific indexes

Exchange-Traded Funds (ETFs): Tradeable funds that typically track indexes

Target-Date Funds: Automatically adjust allocation based on retirement timeline

The Cost Difference

This is where the rubber meets the road for most investors.

Active Management Costs

Active management is expensive. Active funds have a higher expense ratio than passive funds, as they incur more costs for the fund manager’s expertise, research, and trading.

You’re paying for:

• Portfolio managers’ salaries
• Research teams and analysts
• Trading costs from frequent buying and selling
• Administrative overhead

Typical expense ratios for actively managed funds range from 0.5% to 2.0% annually, with many falling in the 0.8% to 1.2% range.

Passive Management Costs

Passive management strategies are much cheaper to operate. Usually, the average for passively managed ETFs and mutual funds is between 0.03% and 0.3%.

The lower costs exist because passive funds don’t need:

• Expensive research teams
• Frequent trading
• Active portfolio management decisions

Why Costs Matter

Here’s a simple example: On a $100,000 portfolio, the difference between a 0.1% expense ratio and a 1.0% expense ratio is $900 per year. Over 20 years, that difference compounds significantly.

The enemy of good is perfect, but keeping costs low is one of the few things you can control when investing.

Performance Comparison

The performance debate between active and passive management is complex and often misunderstood.

The Long-Term Picture

While active fund managers in the Eurozone saw a short-term increase in success, their long-term performance was poor, with only 4.7% of them outperforming their benchmark over 10 years.

This statistic reflects a broader pattern: while some active managers outperform in short periods, very few consistently beat their benchmarks over extended timeframes after accounting for fees.

Market Conditions Matter

Active management strategies have tended to benefit investors more in certain investing climates, while passive management strategies have tended to outperform others. For example, when the market is volatile or the economy is weakening, active managers may outperform more often than when it is not.

Active management has typically outperformed passive management during market corrections, because active managers have captured more upside as the market recovers.

This suggests that neither approach works best in all market conditions.

The Shifting Landscape

According to a study by Statista, passively managed index funds only comprised 19% of the total assets managed by investment companies in the U.S. in 2010. Still, this share had ballooned to 48% by 2023.

This massive shift toward passive management reflects investor frustration with active management fees and performance, but it also creates potential opportunities for skilled active managers.

Tax Efficiency

This aspect often gets overlooked, but it can significantly impact your after-tax returns.

Passive Management Tax Advantages

Index funds and ETFs are generally more tax-efficient because they trade less frequently. Lower turnover means fewer taxable events for shareholders.

Most passive funds only buy and sell securities when the underlying index changes, which happens infrequently.

Active Management Tax Considerations

Active managers’ frequent trading can generate more taxable capital gains distributions, especially in taxable accounts. These distributions occur whether you sell your shares or not.

However, tax-managed active funds specifically focus on minimizing tax consequences, which can help reduce this disadvantage.

When Active Management Might Make Sense

Market Inefficiencies

In less efficient markets, like small-cap stocks or emerging markets, skilled active managers may have better opportunities to add value through research and stock selection.

Specialized Strategies

Some investment strategies don’t lend themselves to passive approaches:

• Specific sector expertise
• Alternative investments
• Risk management-focused strategies

High-Net-Worth Situations

Wharton finance professor Jeremy Siegel strongly believes in passive investing, but he recognizes that high-net-worth investors have access to advisers with stronger track records. In that case, a management fee is not as burdensome.

Wealthy investors may have access to top-tier active managers with strong long-term track records.

When Passive Management Makes More Sense

Broad Market Exposure

For core holdings in large-cap U.S. stocks, passive management strategies have consistently delivered market returns at low cost.

Cost-Conscious Investors

If keeping investment costs low is prioritized, passive management strategies typically offer the most cost-effective market exposure.

Long-Term Investors

Investors with 10+ year time horizons often benefit from passive management strategies’ lower costs and consistent market exposure.

Simplified Portfolio Management

Passive approaches require less monitoring and decision-making, which appeals to investors who prefer a hands-off approach.

The Hybrid Approach

Many successful portfolios strategically use both active management and passive management strategies.

Core and Satellite Strategy

This approach uses low-cost passive funds for core market exposure (maybe 70-80% of the portfolio) and active strategies for smaller positions in specialized areas where active management might add value.

Asset Class Specific

You might use passive management strategies for efficient markets (large-cap U.S. stocks) and active management strategies for less efficient markets (small-cap international stocks).

Common Misconceptions

“Passive is Always Cheaper”

While passive management strategies are generally less expensive, not all passive funds are cheap. Some specialty index funds can have surprisingly high expense ratios.

“Active Managers Always Underperform”

While most active managers underperform after fees over long periods, some consistently skilled managers add value. The challenge is identifying them in advance.

“Index Funds Eliminate All Risk”

Passive funds still carry market risk. If the S&P 500 drops 40%, your S&P 500 index fund drops 40% too.

Making the Decision

Consider Your Situation

Investment Amount: Large portfolios may justify higher fees for active management access

Time Horizon: Longer timeframes generally favor lower-cost passive approaches

Risk Tolerance: Some investors prefer the potential for active managers to reduce downside risk

Complexity Preference: Passive management strategies require less ongoing decision-making

Questions to Ask Yourself

About Costs: Am I comfortable paying higher fees for potential outperformance?

About Control: Do I want professional managers making active decisions, or do I prefer market exposure?

About Time: How much time do I want to spend researching and monitoring managers?

About Performance: Am I satisfied with market returns, or do I need to try for better?

Implementation Considerations

Due Diligence for Active Managers

If you choose active management, research is critical:

• Review long-term track records (10+ years)
• Understand the manager’s investment process
• Evaluate fee structures carefully
• Consider manager tenure and stability

Passive Strategy Selection

Even passive management requires decisions:

• Which indexes to track
• Expense ratio comparisons
• Fund provider selection
• Rebalancing frequency

The Bottom Line

Active and passive management can work, but serve different purposes and investor needs.

Passive management strategies offer low-cost market exposure with no manager risk, making them excellent core holdings for most investors. They’re particularly effective in efficient markets and for long-term investors focused on keeping costs low.

Active management can add value in less efficient markets or through specialized strategies, but success depends heavily on manager selection. The higher costs mean active managers must outperform significantly to justify their fees.

A combination approach makes sense for most families I work with: passive management strategies for core market exposure and selective active management in areas where skilled managers might add value.

Things happen for you, not to you. But whether you choose active management or passive management, make sure your choice aligns with your goals, timeline, and comfort level with costs and complexity.

We don’t run our business on autopilot, and your investment strategy shouldn’t run on autopilot either. Whatever approach you choose, ensure you understand what you’re paying for and getting.

Sources and Additional Information

1. Morningstar: Active vs. Passive Funds Performance https://www.morningstar.com/business/insights/blog/funds/active-vs-passive-investing 
2. Hartford Funds: The Cyclical Nature of Active & Passive Investing https://www.hartfordfunds.com/insights/market-perspectives/equity/cyclical-nature-active-passive-investing.html 
3. Morgan Stanley: A New Take on the Active vs. Passive Investing Debate https://www.morganstanley.com/articles/active-vs-passive-investing 
4. The Motley Fool: Active vs Passive Investing Differences https://www.fool.com/investing/how-to-invest/active-vs-passive-investing/ 
5. Vanguard: What is an Expense Ratio? https://investor.vanguard.com/investor-resources-education/education/expense-ratio 
6. Bankrate: What Is An Expense Ratio And What’s A Good One? https://www.bankrate.com/investing/what-is-an-expense-ratio/ 
7. Thrivent: Active & Passive Fund Management Differences https://www.thriventfunds.com/insights/mutual-fund-focus/active-passive-fund-management-whats-the-difference.html 
8. S&P Global: The Active vs. Passive Debate https://www.spglobal.com/en/research-insights/articles/the-active-vs-passive-debate 
9. Wharton: Active vs. Passive Investing Returns Analysis https://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-wealth-management-initiative/wmi-thought-leadership/active-vs-passive-investing-which-approach-offers-better-returns/ 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8434413.1.

Meta Description: Compare active and passive investment strategies for wealthy investors. Learn the differences between approaches and considerations for each.

Keywords: active management, passive management

Estate planning is one of those topics that many people know they should address, but often put off. When they finally get around to it, the temptation is strong to use an online service or DIY kit to save money and get it done quickly.

I understand the appeal. Online estate planning tools are convenient, seemingly affordable, and let you work at your own pace. These tools might provide adequate basic protection for some people with very straightforward situations.

As I work with families on their estate plans, I see situations almost daily where DIY approaches create problems that cost far more to fix than they would have cost to do correctly in the first place.

Let me explain when DIY estate planning might work, when it definitely doesn’t, and how to determine which approach is right for your family’s situation.

The Appeal of DIY Estate Planning

I won’t pretend that DIY estate planning doesn’t have advantages. Let me acknowledge what makes these services attractive before explaining their limitations.

Cost Considerations

DIY software can cost anywhere from $40 for a simple will to $700 for an estate plan for a married couple, including a trust. Most estate planning packages range between $100 and $400.

Compare that to attorney fees, which generally run $400-800 for joint will packages, while joint trust packages range from $1,500-4,000.

That cost difference can be significant for young families just starting out or people in straightforward situations.

Convenience and Control

Online tools allow you to work at your own pace and in your own time, and you might be more motivated to get started if you can do this independently.

There’s something to be said for being able to create basic documents from your kitchen table rather than scheduling appointments and coordinating with professionals.

Better Than Nothing

Here’s an important point: a DIY will or trust is generally better than no estate plan. 60% of people haven’t created a will or made any estate planning documents, leaving their assets unprotected.

If the choice is between a basic DIY plan and no plan, the DIY option wins every time.

When DIY Estate Planning Can Work

Let me clarify situations where online estate planning tools might provide adequate protection.

Very Simple Situations

If you’re young, single, have minimal assets, and want everything to go to one or two people, a basic online will might be sufficient for now.

“Very simple” typically means:

• Under $100,000 in total assets
• No real estate ownership
• No minor children
• No complicated family dynamics
• Clear, straightforward wishes about asset distribution

Temporary Solutions

Sometimes, DIY planning serves as a temporary solution while you organize your finances or save up for professional help.

Having basic documents in place while you prepare for more comprehensive planning can provide some protection during the transition period.

Supplemental Documents

Certain estate planning documents, like basic advance directives or simple powers of attorney, can sometimes be adequately handled through quality online services if your situation is straightforward.

Where DIY Estate Planning Falls Short

Let’s talk about where online tools and DIY approaches often create problems that cost families significant money and stress later.

State Law Complexity

Estate planning laws vary significantly from state to state. What works in California might not work in Michigan. Online tools often use generic language that might not comply with specific state requirements or take advantage of state-specific benefits.

Each state has different:

• Witness and notarization requirements
• Community property vs. common law rules
• Homestead exemptions
• Trust administration procedures
• Tax implications

Tax Planning Limitations

Tax planning is where DIY approaches often create the most expensive mistakes. Online tools typically can’t address:

Generation-skipping transfer tax strategies

Charitable remainder trusts

Grantor trust structures

State-specific tax advantages

Business succession tax planning

For families with estates over $13 million (the 2025 federal exemption), inadequate tax planning can result in hundreds of thousands or even millions in unnecessary taxes.

Family Dynamics

Every family has unique dynamics that generic templates can’t address. I’ve seen DIY plans create conflicts because they didn’t account for:

Blended family situations with multiple marriages

Children with different financial needs or capabilities

Family members with addiction or spending problems

Disability considerations

Geographic dispersion of family members

Asset Titling and Funding Issues

Creating trust documents is only half the job. The other half is properly transferring assets into the trust, which is called “funding.” Many DIY plans fail completely here.

I regularly see families who created online trusts but never transferred their houses, investment accounts, or business interests into them. When they pass away, the family discovers that the trust is essentially worthless because it doesn’t actually own anything.

Business Ownership Complications

DIY estate planning is almost always inadequate if you own a business, partnership interest, or professional practice. These situations require specialized planning for:

Business valuation and transfer strategies

Buy-sell agreements

Succession planning

Tax optimization

Liquidity planning for estate taxes

Real-World Consequences of DIY Mistakes

Let me share some examples of what happens when DIY estate planning goes wrong.

The Unfunded Trust Problem

A successful small business owner used an online service to create a revocable trust, proud of saving thousands in attorney fees. When he passed away, his family discovered that while he had a beautifully written trust document, he had never transferred his business, investment accounts, or real estate into the trust.

Everything went through probate anyway. Probate fees can be pretty substantial, with attorney’s fees and court costs potentially taking up to 5% of an estate’s value, and the average uncontested probate may take longer than a year.

The family spent more on probate costs and delays than professional estate planning would have cost initially.

Tax Planning Oversights

Another family used online tools to create what they thought was tax-efficient planning. They didn’t realize their state had different rules for trust taxation than the online tool assumed.

The result was unnecessary state income taxes of nearly $15,000 per year. Over time, this mistake cost far more than comprehensive professional planning would have cost.

Guardianship Issues

A couple with young children used an online will that included guardianship nominations. However, the document didn’t include the necessary language for the guardian to access funds for the children’s care, and it didn’t address what would happen if their first choice wasn’t available.

When tragedy struck, the family had to go through expensive court proceedings to sort out the children’s financial care and modify the guardianship arrangements.

When You Definitely Need an Estate Planning Advisor

Based on my experience working with families, here are situations where DIY estate planning typically isn’t sufficient and you should consider working with an estate planning advisor.

Significant Assets

If your estate is worth more than $500,000, professional guidance from an estate planning advisor usually pays for itself through better tax planning, asset protection strategies, and avoiding costly mistakes.

Real Estate Ownership

Owning real estate, especially in multiple states, creates complications that online tools often can’t handle properly. An estate planning advisor can help with:

• Avoiding probate in multiple states
• State-specific property tax advantages
• Transfer tax optimization
• Asset protection strategies

Minor Children

Parents of minor children need more than basic guardianship nominations. Comprehensive estate planning addresses:

• Financial management for children’s inheritance
• Educational funding strategies
• Special needs considerations
• Age-appropriate distribution schedules
• Backup plans if primary guardians aren’t available

Blended Families

Second marriages, stepchildren, and blended families require careful planning to balance competing interests. Generic templates can’t address:

• Providing for a current spouse while preserving inheritance for children from previous marriages
• Coordinating with existing support obligations
• Managing family dynamics and potential conflicts

Business Ownership

Any business ownership, from a small LLC to a major corporation, requires specialized planning that DIY tools can’t provide. An estate planning advisor experienced with business succession can coordinate these complex strategies.

Complex Family Situations

Families dealing with addiction, mental health issues, financial irresponsibility, or special needs require individualized planning that considers each family member’s specific circumstances.

Charitable Goals

If you want to include charitable giving in your estate plan, professional guidance can help structure gifts for maximum tax efficiency and family benefit.

The Hidden Costs of DIY Mistakes

When people choose DIY estate planning to save money, they often don’t consider the potential long-term costs of getting it wrong.

Probate Costs

Improperly executed documents or unfunded trusts often result in probate anyway. Attorney’s fees and court costs may take up to 5% of an estate’s value.

Family Conflicts

Ambiguous language or incomplete planning often leads to family disputes. Legal fees to resolve these conflicts can easily exceed the cost of proper initial planning.

Tax Penalties

Missing tax planning opportunities or creating unintended consequences can cost thousands of unnecessary taxes annually.

Lost Opportunities

Poor planning might miss opportunities for asset protection, tax optimization, or charitable giving that could have provided significant benefits.

What Professional Estate Planning Actually Provides

You get more than document preparation when you work with qualified estate planning advisors.

Comprehensive Analysis

Professional estate planning advisors analyze your financial situation, family dynamics, and goals to create integrated strategies.

State-Specific Expertise

Qualified attorneys understand state-specific laws and can structure plans to take advantage of local benefits while avoiding state-specific pitfalls.

Tax Optimization

Experienced estate planning advisors can implement strategies to minimize estate, gift, income, and generation-skipping transfer taxes.

Implementation Support

Professional services include helping you adequately fund trusts, retitle assets, and coordinate with other advisors.

Ongoing Relationship

Estate plans need regular updates as laws change and life circumstances evolve. Professional relationships provide ongoing support and updates.

Family Communication

Experienced estate planning advisors can help facilitate family discussions about estate planning goals and minimize potential conflicts.

Coordination with Investment Strategies

One of the key advantages of working with comprehensive estate planning advisors is their ability to coordinate estate planning with your investment strategies. This coordination can optimize tax efficiency, asset protection, and wealth transfer goals in ways that DIY tools cannot match.

How to Choose the Right Approach

Here are questions to help determine whether DIY planning might work for your situation or whether an estate planning advisor is worth the investment.

About Your Situation

Asset Complexity: Do you own real estate, business interests, or have assets over $500,000?

Family Situation: Do you have minor children, a blended family, or complex family dynamics?

Geographic Considerations: Do you own property in multiple states or plan to move?

Tax Concerns: Could estate or gift taxes affect your situation?

About Your Comfort Level

Legal Complexity: Are you comfortable researching and understanding state-specific legal requirements?

Implementation: Can you handle transferring assets, updating beneficiaries, and coordinating with financial institutions?

Updates: Will you remember to update documents when laws change or life circumstances evolve?

About Your Priorities

Cost vs. Risk: Are you comfortable with the risk of costly mistakes to save on upfront costs?

Time Investment: Do you have time to research, implement, and maintain your estate plan properly?

Peace of Mind: Is the confidence that comes with professional oversight important to you?

The Middle Ground Approach

For some families, a hybrid approach makes sense.

Start with Professional Planning

To establish proper structure and documentation, begin with comprehensive professional planning with an estate planning advisor. This ensures your foundation is solid and legally sound.

Ongoing Maintenance

Once you have proper documents, routine updates might be handled through online tools or simple attorney services.

Regular Professional Reviews

Schedule periodic reviews with estate planning advisors to ensure your plan stays current with law changes and life circumstances.

What to Look for in Estate Planning Advisors

If you decide to work with professional estate planning advisors, consider these factors.

Qualifications and Experience

Look for attorneys who specialize in estate planning and regularly handle situations similar to yours. Consider credentials like:

• Board certification in estate planning
• Advanced degrees in taxation (LL.M.)
• Experience with similar family situations

Comprehensive Approach

Choose estate planning advisors who coordinate estate planning with overall financial planning, tax strategies, and family goals.

Communication Style

Find advisors who clearly explain complex concepts and involve you in planning. Confidence, not arrogance, should guide their approach.

Fee Transparency

Understand exactly what services you’re receiving and how fees are structured. Some attorneys charge flat fees for specific services, while others use hourly billing.

Team Approach

Many complex situations benefit from teams that include estate planning attorneys, tax professionals, financial advisors, and insurance specialists working together.

Implementation Is Key

Proper implementation is critical whether you choose DIY or professional estate planning with an advisor.

Asset Titling

Ensure assets are properly titled to work with your estate plan. This might mean transferring property into trust names or updating beneficiary designations.

Regular Updates

Estate plans need updates when:

• Laws change
• Family circumstances change
• Financial situations evolve
• You move to a different state

Family Communication

Ensure family members understand your wishes and know where to find essential documents and information.

Document Storage

Keep original documents safe but accessible. Provide copies to appropriate family members and advisors.

The Bottom Line

DIY estate planning can work for people with simple situations who understand the risks and limitations. But for most families, especially those with significant assets, complex situations, or important family considerations, working with qualified estate planning advisors provides value that far exceeds the cost.

Sixteen percent of people with a trust, will, or estate plan created it without consulting a professional. While this might work for some, it often leaves families with inadequate protection when they need it most.

What you see is what you get. If you choose DIY planning, ensure you understand exactly what you’re getting and, more importantly, what you might be missing.

For many families, we’re in the don’t screw it up phase of life. Estate planning mistakes can cost your family thousands of unnecessary taxes, probate costs, and conflicts. The peace of mind from knowing your plan is comprehensive, properly implemented, and legally sound is worth far more than the cost savings of DIY alternatives.

Remember, estate planning isn’t just about having documents. It’s about creating a comprehensive strategy that protects your family and achieves your goals. Professional estate planning advisors help ensure your plan works when your family needs it most.

Sources

1. Vanilla – Estate Planning Statistics and Facts You Need to Know https://www.justvanilla.com/blog/estate-planning-statistics-and-facts-you-need-to-know 
2. Grow Law Firm – Top Estate Planning Law Statistics and Trends for 2025 https://growlawfirm.com/blog/estate-planning-law-statistics 
3. Sprouse Shrader Smith – Estate Planning Attorneys vs. DIY Estate Planning Services https://www.sprouselaw.com/estate-planning-attorneys-vs-diy-estate-planning-services/
4. FindLaw – Deciding Between an Attorney or Online Forms for Estate Planning https://www.findlaw.com/legalblogs/law-and-life/deciding-between-an-attorney-or-online-forms-for-estate-planning/
5. Thomas McKenzie Law – DIY vs Estate Planning Attorney in California: Pros and Cons https://www.thomasmckenzielaw.com/diy-vs-hiring-an-estate-planning-attorney-in-california-pros-and-cons/
6. LegalZoom – How Much Does Estate Planning Cost? 2025 Guide https://www.legalzoom.com/articles/estate-planning-cost
7. Lawyers.com – How Much Does Estate Planning Cost With and Without an Attorney? https://legal-info.lawyers.com/trusts-estates/cost-of-creating-an-estate-plan-and-administering-an-estate/how-much-does-an-estate-planning-attorney-cost.html
8. Fritch Law – The Cost Conundrum: Will vs. Trust https://fritchlaw.com/2025/05/22/average-cost-of-a-trust-and-will/
9. Margerie Law – How Much Does Estate Planning Really Cost? https://www.margerielaw.com/how-much-does-estate-planning-cost/
10. Fidelity – Estate planning: do you need one? https://www.fidelity.com/viewpoints/personal-finance/do-you-need-an-estate-plan
11. American Bar Association – Estate Planning Information & FAQs https://www.americanbar.org/groups/real_property_trust_estate/resources/estate-planning/ 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8434399.1.

Meta Description: Learn when you need professional help beyond basic estate planning documents. Discover how advisors coordinate estate and investment strategies.

Keywords: estate planning advisor, estate planning

Most people assume all financial advisors are basically the same. They’re not.

Some have spent years earning professional certifications and maintaining rigorous standards. Others obtained a basic license and retired their business.

The difference can cost you thousands of dollars over time or, worse, derail your retirement plans entirely.

Let me explain what separates certified advisors from the rest and, more importantly, when it matters for your money.

The Certification Landscape

First, let’s clear up some confusion. The term “certified financial advisor” isn’t actually an official designation. What people usually mean when they say this is a financial advisor who holds professional certifications.

The most common and respected certifications include:

• CFP (Certified Financial Planner): The gold standard for comprehensive financial planning
• CFA (Chartered Financial Analyst): Focuses on investment analysis and portfolio management
• ChFC (Chartered Financial Consultant): Similar to CFP, with emphasis on insurance and estate planning
• PFS (Personal Financial Specialist): For CPAs who specialize in financial planning

Meanwhile, “regular advisors” might hold basic licenses like Series 7 or Series 66, allowing them to sell securities and provide investment advice but not require the same depth of education and ongoing requirements.

The Real Difference: Education and Standards

Here’s what separates certified advisors from those with basic licensing.

Education Requirements

Getting a CFP certification requires completing a comprehensive education program covering financial planning, insurance, investments, taxes, retirement planning, and estate planning. It’s not a weekend course.

The CFP Board requires candidates to complete coursework equivalent to a bachelor’s degree program in financial planning, plus pass a rigorous 6-hour exam.

Compare that to basic licensing, which typically requires studying for a few weeks and passing a relatively straightforward exam.

Experience Standards

Most serious certifications require significant real-world experience. CFP candidates need at least 6,000 hours of professional financial planning experience or 4,000 hours of apprenticeship experience.

This experience requirement matters. Managing money in textbooks differs from managing it when markets are volatile and clients are worried about their retirement.

Ongoing Education

Certified advisors must complete continuing education requirements to maintain their credentials. CFP holders need 30 hours of continuing education every two years.

This ongoing education requirement helps ensure advisors stay current with changing tax laws, investment strategies, and financial planning techniques.

Fiduciary vs. Suitability Standards

This is where things get really important for you as a client.

The Fiduciary Standard

Many certified financial planners operate under a fiduciary standard, which means they’re legally required to put your interests first. Period.

When someone is managing your family’s financial future, this legal obligation matters. It means they can’t recommend investments that pay them higher commissions if those investments aren’t the best choice for your situation.

The Suitability Standard

Many “regular” advisors operate under a suitability standard. This means their recommendations need to be “suitable” for your situation, not necessarily the best available option.

The difference? Under suitability standards, an advisor could recommend a mutual fund that pays them a 5% commission instead of a similar fund that pays them 1%, as long as both funds are “suitable” for your needs.

Scope of Services

Comprehensive vs. Product-Focused

Certified financial planners typically provide comprehensive financial planning services. They look at your complete financial picture: cash flow, taxes, insurance, investments, retirement, and estate planning.

Many regular advisors focus primarily on selling investment products or insurance policies. There’s nothing inherently wrong with this, but it’s a different approach.

Think of it this way: a comprehensive financial planner is like a family doctor who considers your overall health, while a product-focused advisor is more like a specialist who focuses on one area.

Planning vs. Sales

In my experience, certified advisors are more likely to start with a financial plan and then recommend products that fit the plan.

Product-focused advisors might start with products they want to sell and build a plan around those products.

The enemy of good is perfect, but having a comprehensive plan before choosing products generally leads to better outcomes.

Fee Structures Matter

Fee-Only vs. Commission-Based

Many certified financial planners work on a fee-only basis. You pay them directly for their advice, and they don’t receive commissions from product sales.

This structure aligns their interests with yours. They make money when you pay their fee, not when they sell you something.

Commission-based advisors earn money when they sell you products. This doesn’t automatically make them bad advisors, but creates potential conflicts of interest.

Fee Transparency

Certified advisors, particularly those operating under fiduciary standards, are generally required to provide clear fee disclosure. You should know precisely what you’re paying for and for what services.

Some commission-based advisors advertise “free” advice, but you pay through product fees and commissions. These costs are often less transparent but can be significant over time.

Accountability and Oversight

Professional Standards Boards

Certified advisors are subject to oversight by professional standards boards. The CFP Board, for example, can investigate complaints and revoke certifications for misconduct.

This professional oversight provides an additional layer of protection for clients.

Regulatory Oversight

All legitimate financial advisors, whether certified or not, are subject to regulatory oversight. However, the level of oversight can vary significantly.

Registered Investment Advisors (RIAs) are subject to SEC or state oversight and regular audits. Broker-dealers operate under different regulations and have different requirements.

When Certification Matters Most

Complex Financial Situations

Working with a certified advisor often makes sense if you’re a business owner, high-income earner, or have complex financial needs. They’re more likely to have the training and experience to handle sophisticated planning strategies.

Comprehensive Planning Needs

A certified comprehensive planner is typically the better choice if you want someone to coordinate all aspects of your financial life rather than just manage investments or sell insurance.

Peace of Mind

Some people simply feel more comfortable working with advisors who have invested the time and effort to earn professional certifications. While the credentials don’t guarantee good advice, they do indicate a certain level of commitment to the profession.

When Basic Licensing Might Be Sufficient

Simple Investment Management

If you have straightforward needs and want someone to manage a portfolio of index funds, you might not need a highly certified advisor.

Product-Specific Needs

If you need help with a specific product, like life insurance, working with a knowledgeable agent specializing in that area might be more appropriate than a comprehensive planner.

Cost Considerations

Certified advisors often charge higher fees than those with basic licensing. If cost is your primary concern and your needs are simple, this might factor into your decision.

Red Flags to Watch For

Fake Certifications

Some advisors use impressive-sounding titles that aren’t actually recognized certifications. “Certified Senior Advisor” or “Certified Retirement Specialist” might sound official, but often require minimal training.

Always verify certifications through the issuing organization’s website.

Outdated Certifications

Ask when the advisor earned their certification and whether they’re current with continuing education requirements. An advisor who earned a CFP 20 years ago but hasn’t kept up with requirements is no longer a CFP.

Overemphasis on Credentials

Good advisors let their work speak for itself. Avoid advisors who spend more time discussing their credentials than understanding your situation.

Questions to Ask Any Advisor

Regardless of certifications, here are questions you should ask any potential advisor:

About Their Credentials:

• What certifications do you hold?
• When did you earn them, and are you current with continuing education?
• Are you a fiduciary?

About Their Business:

• How do you get paid?
• What services do you provide?
• How often will we meet?
• Who else will I work with at your firm?

About Their Approach:

• Can you explain your investment philosophy?
• How do you develop financial plans?
• What’s your process for monitoring and adjusting strategies?

The Bottom Line

The difference between certified and regular financial advisors often comes down to education, standards, and the scope of services.

Certified advisors typically have more comprehensive training, higher professional standards, and broader planning capabilities. However, they also generally cost more.

The right choice depends on your specific needs, the complexity of your situation, and your budget.

What matters most is finding an advisor who understands your goals, communicates clearly, operates under standards you’re comfortable with, and has the knowledge and experience to help your family succeed.

Things happen for you, not to you. But having the right advisor can help ensure those things work in your favor.

We don’t run our business on autopilot, and you shouldn’t accept autopilot service from any advisor, regardless of their certifications.

Sources

1. CFP Board Education Requirements https://www.cfp.net/certification-process/education-requirement 
2. CFP Board Experience Requirements https://www.cfp.net/certification-process/experience-requirement 
3. CFP Board Certification Process https://www.cfp.net/certification-process 
4. CFP Continuing Education Requirements https://www.kaplanfinancial.com/cfp 
5. SmartAsset: Fiduciary Duty vs. Suitability Standards https://smartasset.com/financial-advisor/fiduciary-vs-suitability 
6. Sandy Spring Bank: Fiduciary Standard vs. Suitability Standard https://www.sandyspringbank.com/wealth/news/financial-planning/fiduciary-standard-vs-suitability-standard
7. Beacon Pointe: Does Your Advisor Use the Right Standard? https://beaconpointe.com/does-your-advisor-use-the-right-standard-fiduciary-vs-suitability
8. FINRA Professional Designations Database https://www.finra.org/investors/professional-designations 

This information is for educational purposes only and is not intended as investment, tax, or legal advice. Past performance is not indicative of future results. Investment advisory services offered through Summit Financial, LLC, a SEC Registered Investment Advisor. 8434387.1.

Meta Description: Discover why working with a certified financial advisor makes a difference. Learn the credentials that matter and how to verify your advisor’s qualifications.

Keywords: certified financial advisor, financial advisor