We recommend you keep the following 6 considerations in mind when handling a large lump sum of assets.

1. Investments
Our primary focus is on managing your investments, and the only way that we generate our fees is on the value of the assets that you hire us to manage. Determine what your ultimate savings and investment goals are, including retirement, college funding, charitable giving, etc. Once we know what these goals are, we can identify how much of your savings you need to be allocating towards each of these goals. Knowing these goals will also allow us to identify what your ideal investment allocation mix is for these new assets.

Build an investment plan that “fills the buckets,” identifying how much you need allocated to an income strategy to YIELD the income you need in retirement so you are not basing the success of your retirement plan on the outcome of equity returns and the stock market’s success. The income portion of the portfolio is built with assets that are highlighted HERE (Investing for INCOME). The assets that are not needed to fill the income bucket are rolled to the “Growth Bucket.” These assets are invested with a long time horizon in mind with the ultimate goal of capital appreciation. These assets will be invested in a fashion noted in “Investing for Growth.” The goal is for these assets to grow over time in a tax-efficient and strategic manner so that as inflation occurs, clients can move some appreciated assets to the Income Bucket to account for inflation and growing needs. Even before the INCOME bucket is filled, we must determine what amount of cash you need to cover emergency needs, short-term cash funding needs and SWAN (Sleep Well at Night) cash.

2. Cash Flow Management
The basic question to all investment planning is, “How much is coming IN vs. how much is going OUT?” Matching your income needs with your current income cash flow, including Social Security, pensions, etc., is crucial to understanding how your investments will meet your income goals. This is more than a budget, it’s an understanding of how you are going to match your income needs with your cash flow sources.

As you are preparing for retirement, we need to make sure that you are saving and diverting your excess cash to the right places (Roth vs. 401(k) vs. 529 plans vs. gifting to children).

3. Tax Planning
CIA will work with your tax professionals (and ours) to ensure that all investment strategies are being used in the most tax-efficient manner. Municipal bonds vs. taxable bonds, individual MLPs vs. ETFs with 1099s, dividend stocks or interest-bearing bonds – these are just some of the considerations that should be discussed to maximize a plan’s effectiveness. Other tax strategies need to be understood as part of a total wealth management plan including:

4. Estate Planning
This new windfall could change the way you think about your savings, retirement, and ultimately your estate and forever legacy. You might need to consider changing who is responsible for handling your estate in your will and also who the beneficiaries might be of certain parts of your estate, whether it be family members, charities or organizations. CIA works with our own network of estate planning attorneys or our client’s own trusted team to make sure that account structure and plans are married properly with the estate plan. Decisions such as what types of accounts to hold assets in (trusts, JT tenancy, individual, etc.), as well as proper beneficiary designations are crucial to carrying an estate plan out from a will through passing assets on to heirs. If a plan has not been put in place, we will work with our clients and help them communicate their larger goals and wishes to a professional when the drafting a document process begins.

5. Insurance Analysis and Planning
It should be noted that CIA does not sell insurance nor is compensated for recommending you purchase some. We analyze and help our clients make decisions regarding insurance objectively with regards to their entire financial picture, without concern or thought of compensation.

6. Retirement Plan Management
Making sure that the allocation of your retirement plan assets are correct based on the investment plan above is crucial to claiming success on the official retirement date.