What Farmer’s Should Know About Managing Their Assets
Most farmers and ranchers know they need a formal plan for managing their assets now and planning for succession in the future. But making financial decisions for your family business—the farm—can be confusing and just plain stressful. So where do you start? Who can you trust? Who’s on your side?
Chances are, farmers will have an accountant or bookkeeper to track their accounts receivable & payable and process tax returns—but that’s just the tip of the iceberg. “When you don’t know, you don’t know,” says Alex Vasichek, one of the few Agriculture-Focused Financial Planning Professionals in the Fargo, ND area.
“Most people don’t know where to begin, so human nature being what it is, they do nothing.” To streamline the process, it’s important to seek out financial advisors who act as a “one-stop shop” for financial and succession planning, which means they’ll quarterback the entire process.
Step 1
First, they’ll meet with the owner/primary decision-maker to discuss and assess the family’s needs and goals.
Step 2
Then they’ll prepare a comprehensive financial
strategy in cooperation with
an experienced team of professionals—accountants, attorneys, and insurance specialists—to help put the plan into action.
Step 3
Finally, the team continually reviews the plan as economic conditions and family situations dictate
Change Happens Sooner Than You Think
Most financial advisors re-evaluate their clients’ position every five to 10 years. We will meet with our clients annually or semiannually and review estate planning every three to five years.
Why is that important? “Clients assume that once they’ve established a trust or a will they don’t have to revisit it,” warns Vasichek.“A lot can happen in just a few years.” For example, land values have skyrocketed over the last five years; especially in North and South Dakota and Nebraska.
Technology has allowed farmers to farm bigger in less time, creating more value for the farmstead.
In addition to fluctuations in asset valuation, the status of family relationships are continually in flux:
• Married couples divorce and remarry.
• Principal stakeholders may pass away.
• Children and grandchildren are born.
• Potential heirs develop behavioral or health problems that lead to a change in their status within the family business.
“Most people don’t know where to begin, so human nature being what it is, they do nothing.”
– Alex Vasichek, Elevate Financial
“Nothing surprises me anymore” muses Vasichek, who is also a Farm Succession Coordinator. “We’ve seen it all, so we can draw on our experience to support clients’ transitions through these trying family situations to find solutions that maintain the integrity of their succession plans—and the family itself.
Don’t Be Afraid to Ask Questions
While a skilled financial advisor will do most of the heavy lifting, it’s always helpful when clients are armed with information and questions:
• Do your own homework so you can discuss potential risks and rewards with your financial professional.
• Discuss fees. While some advisors earn commissions on the financial products they sell, look for an advisor who operates under a fiduciary standard of care.
• Define your needs, such as how much and what type of advice you want.
• Make sure you can always reach out to your advisor or team personally; not just virtually.
• Find out whether your financial advisor and other professionals have a history of working with farmers and ranchers.
Agriculture is a Different Beast
Elevate Financial works side-by-side with farmers, so they recognize that not all decisions are based solely on financial success. “In some cases, legacy and tradition can be just as important,” adds Vasichek.
“Agriculture is a different beast. Over time, farmers, even those nearing the ends of their careers, can insist on buying land; even if it’s overpriced. That’s when our agriculture-based experience really pays off. We’d rather find ways to protect existing assets for future generations and make sure the new land will hold its value over time, rather than challenging our client’s wishes.”
Whether you’re a longtime farmer/rancher or just starting to build your empire, an Agriculture-Focused Financial Planner may be able to help you along the way.
