James R. Giles, CFP, CRPC, CSNA of The Giles Group at Merrill Lynch Wealth ManagementThe Giles Group at Merrill Lynch Wealth Management: (from left to right) Melanie Konoski, Cindy Sellers, Jim Giles and Anna Giles.



An entrepreneur’s personal wealth is typically concentrated in a single asset: his company. Business owners devote themselves to assessing and taking risks in order to grow their enterprises. But too often they don’t apply that same focus to their personal assets. In fact, some of the attributes that make for a successful entrepreneur can be diametrically opposed to the imperatives of wealth preservation.
Entrepreneurs should begin by considering their personal wealth objectives. Many business owners may want to take an even more disciplined approach to portfolio construction than other types of investors. This is partly because they may have more to lose, but also because many of the elements of a solid financial strategy can require additional care when there are significant assets tied up in a business endeavor. It’s important for entrepreneurs to ensure that their portfolio is tailored not only to their particular circumstances but also to the type of business they own.
Understanding your investment personality. 
Getting a better handle on your financial tendencies can help you invest in a way that’s better aligned with your goals. You may consider yourself a risk taker generally, but risk taking in an investment context isn’t the same as it is in business. When you invest cash in your company, your decision is based on careful analysis of a market you know well. However, financial decision making in your portfolio is more in the market’s control.
An investment strategy aligned with your investment personality may help you stay invested when the markets zigzag. One way to help address the issue is to engage in an exercise akin to stress-testing a portfolio against a range of possible 
scenarios. By somewhat preparing investors for potential market turbulence, stress tests can help guard against counterproductive behavior which can reduce long-term returns.
Prioritizing your goals. 
What are your short- and long-term financial and life goals? When do you anticipate retiring, selling your company or turning it over for someone else to run? Consider your personal goals separately from your business objectives. Business owners often reinvest substantial sums in their companies. But if you plan to pay for your children’s college education, 
for instance, and you know what it will take to reach that goal, you can consciously siphon off cash from your monthly income to allocate to a tax-advantaged college savings program.
Creating an investment strategy. 
The process often starts with a bit of mental accounting. Conceive of your wealth in terms of two distinct buckets. 
The first bucket is your entrepreneurial capital—your stake in your businesses. The second is a diversified portfolio that includes assets designed to compensate for the risk inherent in your businesses. 
It’s important to make sure your portfolio contains enough liquidity to serve as a cushion against recessions, industry down cycles, or any rough business patch. Because that first entrepreneurial bucket is likely highly illiquid (as it’s tied up in your company), entrepreneurs may want to build as much as twice the liquidity into their personal portfolios as non-
business-owner investors. Suitable liquid assets generally include a combination of cash, intermediate-term bonds and a line of credit that serves as a form of insurance against potential business pitfalls.
It’s a good idea to apply for a line of credit before you need it. A credit line can give you the ability to take advantage of opportunities that crop up suddenly. Lastly, business owners shouldn’t overlook disability insurance. An inability to work could end up reducing not only your family’s income but also the value of your business.
Choosing a retirement plan that serves your goals. 
Some tax-qualified plans offer noteworthy benefits for business owners, allowing you to put away considerable sums while also helping retain employees via profit sharing. If your business has 100 or fewer employees, a SIMPLE (savings incentive match plan for employees) IRA is a relatively inexpensive option, offering most of the benefits of a 401(k) while imposing fewer IRS reporting requirements. Because participation is voluntary, employees can choose whether and how much of their pre-tax wages to contribute. Employers then match up to 3% of annual compensation, which they can deduct as a business expense. Or they can choose to contribute a flat 2% of compensation for all employees, regardless of whether they contribute. 
Reviewing and updating your strategies. 
Be prepared to connect with your Merrill Lynch Financial Advisor regularly—at least a few times a year—to go over how you’re making progress toward your goals. As business conditions change and life goals evolve, entrepreneurs may need 
to modify their portfolios from time to time in order to stay on course. For an entrepreneur, maybe the most important impetus for having a disciplined, diversified wealth management strategy in place is a very simple one. It can help protect your assets by letting you do what you do best: take smart risks.
For more information, contact Merrill Lynch Financial Advisor James R. Giles at 410-213-9097 or

Merrill Lynch Wealth Management makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated and other subsidiaries of Bank of America Corporation.“Merrill Lynch” refers to any company in the Merrill Lynch & Co., Inc., group of companies, which are wholly owned by Bank of America Corporation. Bank of America Corporation ("Bank of America") is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and nonbanking financial services. Neither Merrill Lynch nor its financial advisors provide tax, accounting or legal advice. Clients should review any planned financial transactions or arrangements that may have tax, accounting or legal implications with their personal professional advisors.

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