By Anthony Nasca and Brad Stanek, Financial Advisor & Certified Exit Planning Advisor CEPA ® and Financial Advisor, CFP ®, respectively

Ask ten wealth managers to define wealth management, and you will likely receive 10 different answers, many of them centered around investing. However, in this article series, we aim to present a more comprehensive definition of wealth management— one that encompasses a broader spectrum of strategies that we call Advanced Planning.

While proper investment consulting is crucial for generating portfolio returns, what if we also included tax minimization, thoughtful estate planning, wealth protection strategies and charitable giving to help propel your wealth forward? We classify these strategies into four pillars: Wealth Enhancement, Wealth Protection, Wealth Transfer, and Charitable Giving.

Many marine dealers we speak with are excellent operators. Even in challenging environments, they are balancing inventory turns, manufacturer relationships, service absorption, staffing and retention, financing, and customer loyalty. Yet, even strong operators can reach year-end and ask themselves:“ Where did all the profit go?”

The answer is often tied to the unique financial rhythm of the marine industry. Dealers may carry significant inventory, manage floorplan financing, fund payroll through seasonal cycles, invest in facilities and equipment, and make large decisions around bonuses, distributions, and taxes in a relatively short period of time.

That is why Wealth Enhancement should be viewed as more than simply earning a higher return on investments or generating higher sales. For dealer principals, it often begins with asking: How do we make intentional decisions around taxes, debt, cash flow, retirement plans and owner distributions so that more of the business’ success becomes personal financial progress?

One of the most important distinctions for dealer principals is the difference between tax preparation and tax planning. Tax preparation looks backward. It reports what already happened. Meanwhile, tax planning looks forward. It helps evaluate what can still be done before key deadlines pass.

By the time a tax return is being prepared, many planning opportunities may already be limited. That is why marine dealers should consider meeting with their CPA and financial advisor before year-end, or early enough in the planning cycle to make informed decisions.

In a prior article, we discussed how a well-designed 401( k) plan can serve multiple purposes for marine dealers. It may help improve employee retention, provide potential tax advantages and allow principals to build wealth outside the dealership.

If your dealership already has a 401( k) plan, it may be worth asking when the plan was last reviewed. Does the plan design still fit your employee base? Are owners and highly compensated employees able to maximize contributions?

A retirement plan should not be a“ set it and forget it” benefit. When properly reviewed, it can be part of a broader Wealth Enhancement strategy that supports employees, benefits principals, and may help manage taxable income for the business.

For dealers with strong earnings, a discretionary profit-sharing provision may be worth discussing with your retirement plan advisor and CPA.

The word“ discretionary” is important here. It means the company may have flexibility regarding whether to make a contribution in a given year, depending on profitability, cash flow and other business priorities.

Profit sharing can also be designed in different ways, subject to applicable plan rules and testing requirements. Depending on the plan design, contributions may be allocated differently among employee groups, including owners, executives, family members, managers, technicians, salespeople and administrative staff. Whether or not you are preparing to sell or transition your dealership in the next five or 10 years, it is important to run the business with that possibility in mind.

Dealer principals should have a clear sense of what their business may be worth today, what factors drive that value and what actions could help improve it over time. Clean financials, disciplined reporting, documented processes, strong management, consistent profitability and reduced dependence on the owner can all make the business stronger today and potentially more transferable in the future.

Equally important is knowing your number. In other words, what would you need from a future sale, succession event, or long-term ownership strategy to support your personal financial goals? That number should account for lifestyle needs, retirement income, taxes, family priorities, estate planning goals and the wealth you have already accumulated outside the dealership.

Marine dealers are encouraged to review their wealth strategy with the same discipline they bring to operating their dealership. A strong year in the showroom, service department or marina should not only produce business profit; it should also help create lasting personal wealth, reward key employees, manage tax exposure and strengthen the financial foundation of the dealership.

Disclaimers: This material has been prepared for informational purposes only. It does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Morgan Stanley Smith Barney LLC(“ Morgan Stanley”) recommends that investors independently evaluate particular investments and strategies.